Smallholder agriculture in South Africa has been identified as the vehicle through
which the goals of poverty reduction and rural development can be achieved. To
fulfill such potential, the need arise to understand diversity among these households
to formulate effective policy interventions. This paper develops a farm typology of
smallholder households according to their dominant livelihood strategies. Using
multivariate statistics, Principle Component Analysis (PCA) and Cluster Analysis
(CA), farming households are grouped in 7 distinct, homogeneous clusters. Results
show the importance of social grants, specifically old age pensions and child support
grants, in determining livelihood strategies of many smallholder farmers in the former
homeland regions. Further evidence suggests that only a small number of households
are able to market their produce. Essential characteristics of this group are the
prevalent labor market attachment, higher usage of family labor and access to credit.