The agricultural transformation model describes the process whereby the structure of a country’s economy changes as it develops from a low to a high income country. The model’s four main elements are rapid and sustained growth of national income per capita in all economic sectors increasing the productive capacity of the economy; declining relative importance of agriculture in the economy in terms of share of GDP and employment; increasing agricultural productivity and declining agricultural labour force in absolute and relative terms . These are mainly a result of increased supply in the agricultural sector and the consequent creation of a marketable surplus due to technological improvements and a decrease in the demand for agricultural products as a proportion of income due to Engel’s law. Thus, throughout the Agricultural Transformation Process, agriculture is observed to be a declining sector with declining internal terms of trade. Although this model describes the transformation of a subsistence economy to a developed market economy, this process is not inevitable and as the case of Zimbabwe demonstrates can be thrown into reverse by a confluence of political turmoil, collapse of investor confidence, counterproductive government policies and extraneous variables such as world commodity prices, adverse weather and disease.
When Zimbabwe was a colony and whites controlled the land, the economy saw per capita earnings reaching a record high that they haven’t reached since, although admittedly blacks earned only a 20th of what whites did. Thus we see that Zimbabwe did start off displaying characteristics that fit into our model such as the increase in national income in all sectors and the increase of agricultural factor productivity in commercial farming seen in the following graph .
This increase in factor productivity and consequently output, was mainly due to technology and capital introduced by white farmers who owned most of the commercial farms. Thus, commercial farming in Zimbabwe was booming in that era without being subject to great volatility. On the other hand as shown in the following graph the situation was very different in communal and smallholder farms mainly owned by blacks .
In the above graph output is considerably lower and more volatile than in the commercial sector which accounts for the contraction in the economy after the white farmer exodus as described below.
Political turmoil meant that the economy started to take steps backwards, the consequences of which Zimbabwe still faces today. Specifically, from about 1975, the economy started to suffer seriously from the sanctions implemented in 1965 following the white minority regime’s unilateral declaration of independence which caused declining earnings for commodity exports. This created problems for the economy as Zimbabwe’s main income came from exports of primary goods as is the case for most economies at the beginning of the transformation process model. However, even though agricultural exports were hindered, there was growth in manufacturing due to the reorientation of Zimbabwe’s development strategy from exports of primaries to import substitution. Therefore even though the Zimbabwean economy was being slowed down by sanctions, it had progressed to a phase in our model where the country, given the difficulties it faced, could switch to sectors that yielded greater incomes such as manufacturing. So there was transfer of resources from the agricultural to other economic sectors. Even though this was a result of the sanctions imposed as opposed to Zimbabwe’s genuine development. This resource transfer shows that the country was undergoing an industrialisation process which in relative terms was quite rapid considering the fact that it took centuries for most currently developed market economies to achieve this resource transfer. However, from 1974 Mozambique, formerly one of Zimbabwe’s strongest trading partners, severed all economic ties. This deterioration of Zimbabwe’s diplomatic relations and the worsening guerrilla conflict led to commercial farmers leaving as the market for their products was shrinking. After this point we see that the economic progress of Zimbabwe starts to slide away from the predictions of our model and takes a turn backwards, even though after sanctions were lifted, real growth from 1980-1981 reached 20% indicating that the country could combat its economics problems as it still remained productive and had overcome its unfavourable political circumstances. However, depressed foreign demand for minerals, one of Zimbabwe’s primary exports and a drought cut growth from 1982-1984. In 1985 the economy rebounded again due to a 30% jump in agricultural production which, as our model predicts, would be able to assist the economy to get back on its feet as the incomes generated in agriculture could fund other economic sectors. However this growth in production was short lived as it dropped to a 0% growth in 1986 and a -3% in 1987 due to a drought and a foreign exchange crisis. From 1988 to 1990 Zimbabwe averaged a 4.5% growth, which wasn’t enough to make up for the damage caused in the past especially considering that agricultural output and productivity weren’t high enough to create the necessary marketable surplus to spark development again. The above situation was worsened by the land reforms carried out by President Mugabe that aimed at reducing inequality but instead when accompanied by interference and intimidation of the judiciary as well as strict price controls and exchange rate fixing led to a drop in investor confidence and a consequent decline in foreign direct investment from US$444.3 million in 1998 to US$3.8 million in 2003 . This was extremely dangerous for the country as it was this investment that could have reversed its slumping growth and help contain the country’s budget deficit which reached 109.8% of GDP. The governments land measures led to the second exodus of white farmers in the beginning of the 21st century which crippled the economy depriving it of technological know how and causing shortages of basic commodities.
Currently Zimbabwe’s 7.1 million subsistence farmers occupy 63.06% of the country’s agricultural land s and there are only 4000 commercial farmers who cultivate the remaining 33.03%. The problems created by Mugabe’s land reforms have been aptly pointed out by Dennis Walker “once the land has been redistributed, the commercial farms will be broken up, the remaining white farmers reduced by exile or imprisonment; Zimbabwe’s government, already morally bankrupt, will decline towards economic collapse.” Indeed, since 2000 the national economy has contracted by 40%, inflation has gone over 1000% and persistent shortages of foreign exchange, local currency, fuel and food have occurred further hampering the economy and showing that Zimbabwe was again turning into a subsistence agricultural economy. Zimbabwe was suspended from the IMF in February 2004 because it stopped repaying foreign dept after the World Food Programme ended. Thus, the IMF has refused to send desperately needed support to the country which means that at the moment it is a subsistence economy with no funds to invest in technology or the development of its other economic sectors. In July 2005, they asked South Africa for a billion dollars in emergency loans as the economy has been converted from an agricultural exporter to an agricultural importer with import spending reaching $2.059 billion.
This shows that the country contradicts all four elements observed during the transformation process, as agriculture still employs 60-70% of its population and it still produces 60% of the raw materials needed for industry yet it is so unproductive it only accounts for 15-19% of the country’s total GDP. Still, even though it accounts for a relatively low percentage of GDP in absolute terms, it is considerably higher than the 2% observed in most developed market economies, which indicates the nation has moved back to a subsistence agricultural system indicated by the 80% of the population living below subsistence levels. Moreover, the country seems to be going consistently backwards as seen by its -7.7% growth rate. There is however another phenomenon that greatly hinders the emergence of marketable surplus or even the creation of the preconditions for growth. The country has high birth rates together with high death rates due to HIV infections and unavailability of treatment which leaves population growth at a low 0.62% making increase in food production difficult due to the dependency between population and food production as illustrated by the following triangle.
As seen above, the only way for Zimbabwe to grow, is if an increase in population leads to an increase in food production as labour is the only variable factor of production in a subsistence economy. However, together with low population growth the marketable surplus is further hampered by the government’s land reforms making it almost impossible for the country to overcome the economic crisis it is facing.
Thus even though at the beginning of its growth phase Zimbabwe displayed all the characteristics in terms of GDP growth, agricultural output growth and movement of factors from the agricultural sector to other sectors indicated it was progressing according to our model, the policies of its government and the instability faced during its struggle for independence in conjunction with extraneous variables have led it to take backwards steps resulting in the country being nowhere near achieving agricultural transformation.
| Indicator | Zimbabwe | South Africa | Sub Saharan Africa | World |
| Fertilizer use (kg/arable ha, 1980) | 61 | 87 | 16 | 86 |
| Fertilizer use (kg/arable ha, 1995) | 62 | 51 | 13 | 94 |
| Tractors (per 1 000 ha cropland, 1993) | 7 | 8 | 3 | 21 |
| Ag output (percent of GDP, 1996) | 14 | 5 | 24 | na |
| Ag output growth (percent/yr, 1980-1990) | 2.4 | 2.9 | 1.8 | 2.8 |
| Ag output growth (percent/yr, 1990-1996) | 4.5 | 1.4 | 2.1 | 1.7 |
| Cereal yield (kg/ha, 1980) | 1359 | 2117 | 1100 | 2230 | Cereal yield (kg/ha, 1995) | 1163 | 1918 | 1041 | 2561 | Ag productivity (US$/ha, 1980) | 34 | 45 | 53 | na | Ag productivity (US$/ha, 1993) | 41 | 49 | 68 | 236 | Ag productivity (US$/worker, 1980) | 294 | 2361 | 458 | na | Ag productivity (US$/worker, 1995) | 266 | 2870 | 392 | na |