The Effects of Market Reform on Maize Marketing Margins in South Africa: An Empirical Study

This paper determines the effect of market reform and price decontrol on the size of maize milling/retail margins in South Africa. Regression models of monthly milling/retail margins are run over the period May 1976 to September 2003. To assess the robustness of our findings, we estimate several different model specifications for representing structural change, vary the sample period to examine the sensitivity of findings to unusual weather and market conditions in the region during the 2001-2003 period, and use different estimation techniques, OLS with Newey-West robust estimators and Feasible General Least Squares. In virtually all models, the results indicate that real maize milling/retailing margins in South Africa have increased since the market deregulation in 1997. Controlling for disturbances in weather, wages, exchange rate levels and volatility, inflation-adjusted margins accruing to millers and retailers have risen 29 to 42 percent between 1997 and 2003. Unlike experiences elsewhere in the region, maize market reform in South Africa has not benefited consumers.Maize milling/retailing marketing margins, Market Reform, Ordinary Least Squares, Feasible General Least Squares., Crop Production/Industries, Marketing,

Measuring Integration and Efficiency in Maize Grain Markets: The Case of South Africa and Mozambique

Price transmission between the South African market and other regional markets is not as straightforward, despite South Africa’s role of a surplus producer for the region. There appears to be a host of local factors that must be taken into account in order to anticipate the likely level of regional food prices. This article assesses the degree of market integration and the speed of price adjustment to spatial price differentials between the SAFEX maize price in South Africa and maize grain and maize meal prices in Maputo, Mozambique. The findings of this study indicate that under certain trading regimes, there is no evidence of a long-run relationship between Mozambican and South African maize grain prices. This implies that any large deviations, within these regimes, which exceed transaction costs, could continue to grow with no tendency towards equilibrium. However, the trade volume data indicates maize grain exports from South Africa into Mozambique in every month except for three within the sample set. Hence, the empirical findings of this paper are unexpected given a simple arbitrage argument. Possible reasons for these findings are highlighted in the article. It is interesting to note that when the same empirical analysis is undertaken for the SAFEX maize prices and maize meal prices in Maputo then there is in fact evidence of a long-run relationship between these prices in a high import regime. These findings are not surprising and are what we would expect since two of the largest milling companies, located in Maputo are responsible for the majority of the volume of maize grain imported into the country from South Africa.price transmission, market integration, cointegration, trade regimes, Crop Production/Industries,

Modelling wheat and sugar markets in Eastern and Southern Africa. Regional Network of Agricultural Policy Research Institutes (ReNAPRI)

The medium-term outlook for wheat and sugar markets in Kenya, Tanzania, South Africa and Zambia depicts a mixed picture with regard to production, consumption, prices and trade development. It takes the latest trends, policies and market information into consideration, but remains subject to many uncertainties on upcoming market development, macroeconomics or policy changes over the period 2015 to 2024.JRC.D.4-Economics of Agricultur

The Effects of Market Reform on Maize Marketing Margins in South Africa: An Empirical Study

This paper determines the effect of market reform and price decontrol on the size of maize milling/retail margins in South Africa. Regression models of monthly milling/retail margins are run over the period May 1976 to September 2003. To assess the robustness of our findings, we estimate several different model specifications for representing structural change, vary the sample period to examine the sensitivity of findings to unusual weather and market conditions in the region during the 2001-2003 period, and use different estimation techniques, OLS with Newey-West robust estimators and Feasible General Least Squares. In virtually all models, the results indicate that real maize milling/retailing margins in South Africa have increased since the market deregulation in 1997. Controlling for disturbances in weather, wages, exchange rate levels and volatility, inflation-adjusted margins accruing to millers and retailers have risen 29 to 42 percent between 1997 and 2003. Unlike experiences elsewhere in the region, maize market reform in South Africa has not benefited consumers

The effects of price deregulation on maize marketing margins in South Africa

There has been continuous controversy over the impact of food market reforms on food security in Africa. In South Africa, the government and media have often questioned the effects of price deregulation of maize meal, the major staple food, on consumers. This article determines the effect of retail price deregulation on the size of maize milling/retail margins in South Africa. Regression models of monthly milling/retail margins are run from the period May 1976 to December 2004. To assess the robustness of our findings, we estimate several different models of structural change, vary the sample period to examine the sensitivity of findings to unusual weather and market conditions in the region during episodes between 2001 and 2004, and run the models using different estimation techniques, OLS with Newey-West robust estimators and Feasible General Least Squares. In virtually all models, the results indicate that real maize milling/retailing margins in South Africa have increased by at least 20% since the deregulation of retail prices in 1991. Moreover, there is evidence of trend growth in the size of the milling margin over time. Simulations indicate that the deregulation of maize meal prices has entailed a transfer of at least US$179 million/year from consumers to agents in the marketing system. Further study is needed to understand why this outcome in South Africa differs from findings in other countries in the region concerning the effects of reform on food marketing margins.

The Effects of Market Reform on Maize Marketing Margins in South Africa.

The Effects of Market Reform on Maize Marketing Margins in South Africa Abstract: This article determines the effect of market reform on the size of maize milling/retail margins in South Africa. Simulations indicate that the deregulation of maize meal prices has caused a 16 to 20% increase in the mean retail price of maize meal since 1997

The Effects of Market Reform on Maize Marketing Margins in South Africa.

The Effects of Market Reform on Maize Marketing Margins in South Africa Abstract: This article determines the effect of market reform on the size of maize milling/retail margins in South Africa. Simulations indicate that the deregulation of maize meal prices has caused a 16 to 20% increase in the mean retail price of maize meal since 1997.maize, marketing, Crop Production/Industries, Marketing, Downloads July 2008 - July 2009: 15, F14,

Opportunities to Improve Household Food Security Through Promoting Informal Maize Marketing Channels: Experience from Eastern Cape Province, South Africa

Maize meal is a staple food in South Africa, particularly among the poor. The South African government by the mid-1980s enacted a series of legislations aimed at reducing the role of government within the market and placing increasing reliance on market forces and the private sector. Ex post studies of the impact of maize market reform in neighboring countries found that, in general, the reforms led to lower maize milling/retailing margins in real terms. However, in the case of South Africa, recent analysis indicates that maize market reform has not reduced processing and retailing margins in the maize meal supply chain. The study objectives are to determine actual and potential consumer demand for the types of maize meal capable of being produced by small-scale mills, to measure the potential impact of small-scale grain retailing and milling channels on households’ disposable income and food security, and to identify the factors responsible for the negligible role of small-scale milling sector in South Africa