Analysing the South African table grape industry within a partial equilibrium framework

This paper presents a partial equilibrium model for the South African table grape industry, focussing on the fresh market segments. The model is a dynamic recursive model solving various equations simultaneously, reaching a state of equilibrium once total production equals total demand and equilibrium is established in the export- and domestic market for fresh grapes. Results over the next eight years are presented in the form of a baseline outlook and two “what if†questions. Answering these questions quantifies the sensitivity of the export price to changes in demand and supply. The model is housed and maintained in the Bureau for Food and Agricultural Policy at the Western Cape Department of Agriculture and Universities of Pretoria and Stellenbosch.partial equilibrium, table grape industry, projections, Demand and Price Analysis, Productivity Analysis,

The Impact of Increasing Excise Duties on the Economy

Excise duties have increased considerably over the past few years, raising concerns on the effect this may have on the economy. However, these increases are welcomed by those concerned about the costs of externalities associated with excessive alcohol consumption, including productivity loss, foetal alcohol syndrome, liver cirrhosis, traffic accidents, etc. This study contains results on the impact of a 10% increase in excise duties on the South African economy, using a static computable general equilibrium model. The impact on gross domestic product, trade and prices, as well as changes in the factor market and the welfare of households of the Northern and Western Cape (the two major wine producing provinces in the country) are analysed. The results indicate that the majority of households in South Africa will be worse off in terms of real consumption expenditure and all households in the Northern and Western Cape will lose out. In addition, lower income households will lose out most, as they spend a larger share of their budget on beverages and tobacco. However, these results do not capture the benefits from any reduction in negative externalities following the decline in demand due to a price increase in alcoholic beverages, and hence are likely to represent an upper bound of any welfare losses. Additional analyses indicate that the gain in productivity required to offset the negative impact of increasing excise duties is rather small.Computable General Equilibrium Models, Research Methods/ Statistical Methods, C68,

The Impact of a Higher Fuel Levy on the Western Cape

The Western Cape Provincial Government's proposal to introduce a provincial fuel levy within a band of 10 and 50 cents per litre raises concerns on the impact this may have on the economy, especially at a time of high international oil prices. This study reports the results of a computable general equilibrium (CGE) analysis of the impact of higher tax rates on petroleum products on the economy, with specific focus on prices, employment and household expenditure. The results show that increasing the tax rate on petroleum products results in higher petroleum prices, which again put upward pressure on intermediate input costs. Households in the Western Cape will experience a decrease in per capita expenditure, as unemployment increases and returns to factors employed decrease. The impact is however very small. The impacts on agricultural activities differ among regions, but the net effect is a contraction in agricultural output.Resource /Energy Economics and Policy,

MODELLING LONG-TERM COMMODITIES: THE DEVELOPMENT OF A SIMULATION MODEL FOR THE SOUTH AFRICAN WINE INDUSTRY WITHIN A PARTIAL EQUILIBRIUM FRAMEWORK

Econometric demand and supply models of agricultural commodities and crops have been around for a long time with extensive research and adaptations being made in the grain and livestock sectors. This much attention has, however, not been afforded to long term commodities. This paper presents a partial equilibrium framework for modelling long term commodities using the South African wine industry as an example. The model structure and important assumptions are presented, after which the usefulness of the model is tested in the form of baseline projections and the analysis of a typical “what if” question. The wine model presented in this paper is housed and maintained in the Bureau for Food and Agricultural Policy (BFAP) at the Department of Agriculture, Western Cape and the Universities of Pretoria and Stellenbosch.wine market, South Africa, partial equilibrium model, Crop Production/Industries, Demand and Price Analysis,

The Impact of Increasing Excise Duties on the Economy

Excise duties have increased considerably over the past few years, raising concerns on the effect this may have on the economy. However, these increases are welcomed by those concerned about the costs of externalities associated with excessive alcohol consumption, including productivity loss, foetal alcohol syndrome, liver cirrhosis, traffic accidents, etc. This study contains results on the impact of a 10% increase in excise duties on the South African economy, using a static computable general equilibrium model. The impact on gross domestic product, trade and prices, as well as changes in the factor market and the welfare of households of the Northern and Western Cape (the two major wine producing provinces in the country) are analysed. The results indicate that the majority of households in South Africa will be worse off in terms of real consumption expenditure and all households in the Northern and Western Cape will lose out. In addition, lower income households will lose out most, as they spend a larger share of their budget on beverages and tobacco. However, these results do not capture the benefits from any reduction in negative externalities following the decline in demand due to a price increase in alcoholic beverages, and hence are likely to represent an upper bound of any welfare losses. Additional analyses indicate that the gain in productivity required to offset the negative impact of increasing excise duties is rather small

Analysing the South African table grape industry within a partial equilibrium framework

This paper presents a partial equilibrium model for the South African table grape industry, focussing on the fresh market segments. The model is a dynamic recursive model solving various equations simultaneously, reaching a state of equilibrium once total production equals total demand and equilibrium is established in the export- and domestic market for fresh grapes. Results over the next eight years are presented in the form of a baseline outlook and two “what if” questions. Answering these questions quantifies the sensitivity of the export price to changes in demand and supply. The model is housed and maintained in the Bureau for Food and Agricultural Policy at the Western Cape Department of Agriculture and Universities of Pretoria and Stellenbosch

The impact of property rates on agricultural land, focusing on Limpopo

Municipalities across the country are in the process of implementing property rates on all property, following the Local Government: Property Rates Act (2004) that came into effect on 1 July 2005. This study investigates the economic impact of property rates on agricultural land, using a static computable general equilibrium model. The direct and indirect effects of property rates on the macro-economy, factor incomes, household welfare, prices and agricultural output are discussed. The results indicate that the impact of raising property rates depends on the use made of the additional revenue by government. There is a small negative impact on the economy and the overall welfare of households decline if government spends the additional revenue. On the other hand, if government allows a compensating reduction in sales taxes, the impact on the economy is positive and the overall welfare of households increase. However, the welfare of households in Limpopo declines irrespective of the use made of the revenue. Introducing property rates has a marginal progressive impact on the welfare of households in the event of an increase in government expenditure or a reduction in sales taxes. Property rates do not influence prices directly and, irrespective of the use made of the revenue, the impact on production and resource allocation is limited

The impact of property rates on agricultural land, focusing on North West

Municipalities across the country are in the process of implementing property rates on all property, following the Local Government: Property Rates Act (2004) that came into effect on 1 July 2005. This study investigates the economic impact of property rates on agricultural land, using a static computable general equilibrium model. The direct and indirect effects of property rates on the macro-economy, factor incomes, household welfare, prices and agricultural output are discussed. The results indicate that the impact of raising property rates depends on the use made of the additional revenue by government. There is a small negative impact on the economy and the overall welfare of households decline if government spends the additional revenue. On the other hand, if government allows a compensating reduction in sales taxes, the impact on the economy is positive and the overall welfare of households increase. However, the welfare of households in North West declines irrespective of the use made of the revenue. Introducing property rates has a marginal progressive impact on the welfare of households in the event of an increase in government expenditure or a reduction in sales taxes. Property rates do not influence prices directly and, irrespective of the use made of the revenue, the impact on production and resource allocation is limited

The Impact of a Higher Fuel Levy on the Western Cape

The Western Cape Provincial Government's proposal to introduce a provincial fuel levy within a band of 10 and 50 cents per litre raises concerns on the impact this may have on the economy, especially at a time of high international oil prices. This study reports the results of a computable general equilibrium (CGE) analysis of the impact of higher tax rates on petroleum products on the economy, with specific focus on prices, employment and household expenditure. The results show that increasing the tax rate on petroleum products results in higher petroleum prices, which again put upward pressure on intermediate input costs. Households in the Western Cape will experience a decrease in per capita expenditure, as unemployment increases and returns to factors employed decrease. The impact is however very small. The impacts on agricultural activities differ among regions, but the net effect is a contraction in agricultural output

The impact of property rates on agricultural land, focusing on the Western Cape

Municipalities across the country are in the process of implementing property rates on all property, following the Local Government: Property Rates Act (2004) that came into effect on 1 July 2005. This study investigates the economic impact of property rates on agricultural land, using a static computable general equilibrium model. The direct and indirect effects of property rates on the macro-economy, factor incomes, household welfare, prices and agricultural output are discussed. The results indicate that the impact of raising property rates depends on the use made of the additional revenue by government. There is a small negative impact on the economy and the overall welfare of households decline if government spends the additional revenue. On the other hand, if government allows a compensating reduction in sales taxes, the impact on the economy is positive and the overall welfare of households increase. However, the welfare of households in the Western Cape declines irrespective of the use made of the revenue. Introducing property rates has a marginal progressive impact on the welfare of households in the event of an increase in government expenditure or a reduction in sales taxes. Property rates do not influence prices directly and, irrespective of the use made of the revenue, the impact on production and resource allocation is limited