Only recently have major research efforts been put into investigating the potential of South African smallholder agriculture to stimulate economic growth, create employment and alleviate poverty in the black rural areas. Following on some of the pioneer work on this subject, this paper applies the concept of "growth linkages" in the analysis of smallholder agricultural production in Eastern Cape. It shows that an injection of smallholder income into the rural economy will result in significant rural income growth beyond the initial injection. Exploitation of this potential would require a deliberate policy focus to aid agricultural transformation in the smallholder farming areas. Such support should be directed towards activities in which smallholder farmers have a comparative advantage, such as in citrus and livestock in the Eastern Cape. Such a policy will then favor autonomous development of rural non-tradables, such as rural services, local construction materials, and perishable prepared foods.
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