The effect of irrigation agriculture on the economy of Limpopo Province, South Africa

The development of irrigation systems is strategically used to improve food security and achieve the Sustainable Development Goals (SDGs 2) of ending hunger and poverty with the alignment of the South African National Development Plan (NDP). This study contributes to the construction of the 2017 and 2021 National Social Accounting Matrix (SAM) for South Africa. A 2017 and 2021 National SAM for South Africa incorporates regional accounts. Only in the Limpopo Province of South Africa are agricultural industries, labour, and households captured at the district level. In contrast, the agricultural sector, labour, and household accounts in other provinces remain unchanged. However, the 2021 provincial SAM for Limpopo Province was successfully categorised according to irrigation systems and sources of water use. The irrigation systems were further disaggregated according to the maize industry, with the land account disaggregated according to the sources of water used for maize production. Most of the studies on the impact of electricity price increases found that it negatively impacted the economy in terms of a decline in GDP and an increase in unemployment. Different empirical studies reported that affordability is a big concern due to the high total cost of production and increases in the market prices for commodities. The study on the impact of electricity tariff increases on provincial and district agricultural sectors was successfully evaluated using the cost-push-price model. The modelling studies significantly contributed to evaluating various irrigation systems using SAM-based modelling and water sources for crop production, such as maize in the arid and semi-arid conditions of Limpopo Province. The Social Accounting Matrix (SAM) aimed to improve the database’s quality for modelling, including, but not limited to, policy analysis, multiplier analysis, price analysis, and Computable General Equilibrium (CGE). Most of the studies on the impact of electricity price increases had a negative impact on the economy in terms of a decline in GDP and an increase in unemployment. These studies further reported that affordability is a big concern due to the high total cost of production and increases in the market prices for commodities. Researchers rarely empirically assess the impact of electricity tariff increases on provincial and district agricultural sectors. Thus, another significant contribution was to evaluate the price of electricity increases according to irrigation and rainfed agricultural industries. In addition, the study also contributed by categorising electricity according to distribution and production. The studies on irrigation techniques and water uses in the maize industry reported that the drip irrigation system was found to consume more groundwater and obtain yield and net profit with a reduced application. Most of the studies applied statistical analysis such as ANOVA (Analysis of Variance). However, no studies have directly computed in detail various irrigation systems by the source of water used in crop production, such as maize in the arid and semi-arid conditions of Limpopo Province, using Social Accounting Matrix (SAM) based modelling. The modelling studies would significantly contribute to evaluating various irrigation systems by using sources of water for crop production, such as maize in arid and semi-arid conditions of Limpopo Province, using SAM-based modelling. The main objective of the study was to evaluate the effect of irrigation agriculture on the economy of Limpopo Province, South Africa. The first SAM multiplier analysis showed that output multiplier effects were more significant for rainfed agriculture than irrigation agriculture. However, irrigation agriculture had the highest institutional income, land return, and value-added multiplier compared to rainfed agriculture. The type of crop did not influence the findings, with irrigation consuming more input per unit of output. The results implied that innovative technology practices would improve water efficiency and increase the financial advantage of farmers while minimising environmental burdens. The second analysis from the SAM price model showed that the cost of production for rainfed agriculture is much higher than that of irrigation agriculture in all regions of South Africa. Limpopo and Northern Cape provinces of South Africa had the highest costs of production increases for irrigation agriculture compared to other provinces. The policy implication of expanding the electricity sector will not only boost the agricultural sector in one region/province but will also increase output in other regions/provinces of the economy. The increase in electricity prices and the shortage of electricity provide an incentive for agricultural industries to invest in appropriate mitigation strategies, such as renewable energy sources. The third analysis from poverty indices concluded that irrigation is more advantageous in alleviating poverty than non-irrigation in Limpopo Province. The findings imply that investment in irrigation infrastructure is critical for enhancing irrigation access for many financially disadvantaged farmers. Therefore, increasing productivity is essential by investing in irrigation and ensuring farmers have full access to credit facilities. The third analysis from the 2021 provincial SAM for Limpopo Province reported that micro and drip irrigation systems had the largest output multiplier effect. This implies that these irrigation systems play a significant role in increasing maize output, saving water, and improving food security, further allowing farmers to adopt these irrigation systems. However, pivot, sprinkler, drip, and micro-irrigation generate less value added and institutional incomes than other irrigation systems such as canal, flood, and coupling line irrigations. This implies that to enhance the value addition of pivot irrigation, farmers should significantly restrict water application to farms with reduced hectares to maximise profit. Water schemes and groundwater had the highest farm return on maize in the province. The study concludes that the groundwater and water schemes play a significant role in growing and sustaining maize and other agricultural industries to reduce food insecurity. The government should consider introducing financial incentives to farmers currently experiencing challenges installing irrigation systems and borehole water on farms. Therefore, investment in irrigation infrastructure for these systems would improve affordability and accessibility for all farmers and further create better incomes. The findings may not be applicable to other South African provinces due to regional variations in climate, resources, and agricultural practices. The environmental impact of irrigation, particularly water scarcity, is not explicitly addressed in terms of sustainability concerns. The study emphasises innovative technologies without acknowledging potential limitations in access or affordability for farmers lacking technology. The sole focus on profitability might overlook broader social or environmental considerations. Water scarcity was the most limiting factor due to climate change. However, improving water availability is required by implementing technologies to improve water management for sustainable agricultural production. Future research should consider disaggregating agriculture according to different crops to evaluate the economic impact of irrigation and rainfall at the regional level. The data should display racial and gender group classifications of households. The SAM did not include all districts in South Africa; therefore, researchers, academia, and stakeholders must consider focusing on other districts and possibly adding other accounts (sectors) from local municipalities. Further research is needed to compare the long-term economic, social, and environmental impacts of irrigation and rainfed agriculture in Limpopo by extending the SAM model to capture the environmental impact of irrigation on water resources and assessing the social equity implications of irrigation, including access to water and land for small-scale farmers.