Economic Analysis of the Milk Supply Chain in Swaziland

The Dairy industry in Swaziland is made of several of actors where small holder farmers are the main producers. A majority of the farmers sell their milk to informal markets rather than the formal market due to high prices offered by informal market. The study analysed the performance of the milk supply chain in Swaziland. A descriptive quantitative research design was used in the study and data were collected by personal interviews using structured questionnaires. The data were collected from 93 farmers, 16 retailers and 1 processor. Data were analysed using descriptive statistics and Gross margins. There were 73.1% male farmers and 50.5% had between 8 and 14 years of formal education. The channel that involved the processor had high marketing margins of E8.13, while the one involving cooperatives and shops had E4.00 and E3.00 respectively. There is a need for improving extension service, encourage cooperatives and improve the price of milk offered by the processor to enhance profitability of milk farmers. Keywords: Marketing margins, marketing channels, milk supply chain, Parmalat, producer’s shar

Intersectoral linkages and Agricultural growth in Swaziland for the period 1971-2011

Agriculture plays an important role in the Swazi economy as it is the primary source of employment, livelihood and food security. The future success of the contribution of agriculture to economic growth depends largely on how agriculture stimulates growth of the other sectors and especially how the other sectors growth spills over and stimulates agricultural growth. Using bound test approach to cointergration, Granger causality and Impulse Response framework, the study therefore examined the interrelationships between agriculture and the rest of the sectors of the economy and their impact on economic growth over the period of 1971 to 2011 in Swaziland. The empirical results indicated that a long run relation exists among agriculture, the rest of the economy and overall economic growth. Granger causality analysis indicated that there is bidirectional causality between agriculture and economic growth, unidirectional causality between agriculture and services, running from services to agriculture and independence between agriculture and industry. The Impulse Response showed that contribution to GDP forecast error by the industry sector is the highest, followed by agriculture and service sectors. This study recommended that agriculture should be given more priority in order to grow the economy. Keywords: Agriculture growth, ARDL, Granger causality tests, Inter-sectoral linkages, UECM, Variance decomposition

Determinants Of Foreign Direct Investment Inflows In Swaziland’s Agricultural Sector

Foreign direct investment plays a significant role in the development and growth of developing countries. The main objective of the study was to analyse the determinants of foreign direct investment inflows in Swaziland’s agricultural sector from 1990 to 2014. The study examined the long-run and short-run effects by using the cointegration th eory and the error correction model. The dependent variable was agriculture foreign direct investment inflows stock, while the explanatory variables were; government foreign debt, nominal GDP, trade openness, exchange rate, inflation and investment promotion. The study used the Breusch-Pagan-Godfrey test for heteroscedasticity. The Engle-Granger cointegration test was conducted to test the hypothesis that there was no cointegration between the dependent variable and the independent variables. The long-run regression results revealed that nominal GDP and investment promotion were positive and significant determinants of agriculture FDI (p<0.01). Their coefficients were 1.393 and 0.983 respectively. In the short-run, trade openness and investment promotion were significant and positive (p<0.01) with coefficients of 1.483 and 1.05 respectively. The error correction model was within the acceptable range and it had the expected negative sign. Its coefficient was -0.431 suggesting that about 43% of the short-run shocks were adjusted back to the long-run path within a year. The study recommends that the Swaziland Government must focus on increasing the rate of GDP growth mainly through the encouragement of processing of raw materials to finished goods and also improve on openness to trade. Keywords: Agricultural foreign direct investment, cointegration model, trade openness, nominal GDP.

THE IMPACT OF MACROECONOMIC POLICIES ON AGRICULTURE IN SWAZILAND: AN EMPIRICAL ANALYSIS (1980-2012)

Policymakers in Swaziland view agriculture as an engine to foster economic growth, reduce poverty and eradicate inequality among the populace when the right policies are formulated and implemented within their rightful institutional framework. This study is an empirical investigation of the effect of macroeconomic policies on the agricultural sector in Swaziland using annual time-series data for the period 1980 to 2012. The study used the bound test approach to cointegration to analyse the data. The cointegration results revealed that there was long run relationship amongst the variables of agriculture GDP and export. The results also revealed that real money supply, real exchange rate, real GDP, and real government expenditure had a significant long run impact on agriculture GDP with elasticity coefficients of 0.07, 0.24, 0.88 and -0.3 respectively, while short run coefficients were -0.002,0.23,-0,94 and -0.4 respectively.  In the case of agriculture exports, the results further revealed that real money supply, real government expenditure, discount rate, real exchange rate and real GDP had a significant impact on the sector`s exports with long run elasticity coefficients of 0.13,-0.32,-0.01,0.5 and 2.53 respectively, while short run elasticities were 0.06,0.35,0.01,0.46 and -1.34 respectively.The Central Bank of Swaziland needs to adopt policies aimed at providing affordable credit to agriculture. In terms of the low response of the agricultural sector to macro-policy variables the study recommends that policymakers should intensify the promotion of finished or processed agriculture exports and create a disincentive to imports. Keywords: Agriculture, exports, prices, macroeconomic policy, cointegration, autoregressive distributed lag model (ARDL), Swaziland