The impact of trade liberalisation on South African agricultural productivity

This study attempts to examine the empirical relationship between trade and total factor productivity (TFP) in the agricultural sector using both cross -sectiona, (across nine agricultural commodities), and time -series analysis. The Error Correction Model of ordinary least square (OLS) results from the cross -sectional analysis confirm that export shares and capital formation were found to be positive and significant; whereas, import shares and real exchange rate were found to be related negatively. However, the net effect of export and import shares had a positive effect. This implies that trade liberalisation causes productivity gains. Moreover, the time -series analysis goes in the same direction as the cross -sectional results, showing that there is a robust relationship among TFP, degree of openness, and capital formation. Whereas, debt was found to be inversely related, this implies that agricultural industries / farmers lack debt management skills.TFP, OLS, Trade liberalization or degree of openness, capital formation, International Relations/Trade,

Water markets an alternative for central water allocation?

South Africa is entering a whole new era in water management. In the face of efforts to curtail runaway government spending and protect the environment, water institutions must foster the conservation and efficient allocation of existing supplies. They must also take water's growing recreational and environmental value into account. The crucial question is, can the current water institutions meet today's requirements? Despite the resulting inefficiency and waste, traditional resource economists continue to identify taxes, regulations, subsidies, and governmental allocation as solutions to today's water problems. Internationally, there is enough evidence to prove that central allocation with almost any resource gave rise to gross inefficiency. The main reason is the distortions on the value placed on resources within such a centralised planning environment. Resources are either valued to high or to low. What is the value of freshwater and how can water be allocated in such a way as to reflect the scarcity value of water? A non-linear spatial equilibrium model was developed to simulate the impact of a potential water market in the Upper-Berg River: Western Cape. This paper explores water markets as an alternative to central water allocation decisionsResource /Energy Economics and Policy,

Optimisation of different land use regimes in the Mhala district

Communal, commercial and nature conservation land use alternatives occur together at the perimeter of Manyeleti Game Reserve in Mhala district. The different land use alternatives were compared with one another with the purpose of determining the best possible land use. Communal households and the Seville scheme households perform poorly in support of household welfare. This holds disastrous implications for future generations if nothing is done. The Uthla scheme households perform better and generate larger incomes, but at the expense of communal households. Both schemes are highly subsidised by government. Manyeleti Game Reserve is mismanaged and the worst land use alternative in the area, providing no benefit to people living at its perimeter and needs government support for its continued survival. Using multi criteria analysis a combination of communal and conservation land use alternatives is found to be the best alternative, maximising the communities' welfare and conserving the environment.Land Economics/Use,

Recent Trends in Agricultural Land Prices in South Africa: A Preliminary Investigation Using Cointegration Analysis

The main objective of this paper is to report preliminary findings on the recent trends in agricultural land prices in South Africa against the backdrop of growing concerns over their rising levels. Given the important role of land prices, the impact such increases would have on significant national development efforts, including the on-going land reform programme and other aspects of agricultural restructuring, provide strong justification for this investigation. The cointegration approach was employed within a framework that allowed for both long-run and short-run dynamics of the relationships to be identified. Building on previous structural modelling of farmland prices in the country, and using much expanded time series spanning forty-nine years, it was possible to establish some patterns of causation in the relationships between farmland prices and a range of macro-aggregates, including interest rate on debt, the rate of inflation, Gross Domestic Product, among others. Although the important role of foreign buyers is suggested by some of the results, there is need for further studies on this subject, using alternative data sets. The finding of a Granger causality relationship between farmland prices and GDP is interesting to the extent that it reflects buying power and confirms impressions about the crucial role of farmland prices in national economic management and the successful implementation of the on-going agrarian reforms in South Africa.Land Economics/Use, C22, E3, Q15, Q18, Q24,

Mentorship Alliance between South African Farmers: Implication for Sustainable Agriculture Sector Reform

South Africa's agricultural sector is characterized by a skewed participation of the population. There are vastly white commercial farmers and black subsistence farmers. This is attributed to the past government's intervention in the economy, which lead to exclusion of and discrimination against the blacks regarding access to land. The new government is committed to redressing this imbalance through agricultural reform and development strategies namely land, agrarian, trade and market reforms. One of the government's primary policy thrusts is to provide access to agricultural land for people not adequately represented in the agricultural sector. However, the government lacks sufficient resources to provide land and support services to the farmers been settled. This study is motivated by the insights to explore the complementarities of white established commercial farmers on one hand and the black newly emerging farmers' characteristics and the need for a framework within which the stakeholders can contribute to the success of the reforms. The study contributes to the discussion regarding mentorship between these farm types, by addressing an identified knowledge gap with respect to the objective, implementation and reward for mentorship. Mentorship alliance that can transform the South Africa's agricultural sector into a more efficient and competitive sector and enhance the success of South African economic reforms, is conceptualized. The mentorship is expected to be loosely structured, without the complicated legal and contractual processes involved in corporate business alliances. However, it is hoped that the alliance would be a precursor for highly committed joint ventures in the industry.E6, O1, Q15, P0, L12, Agricultural and Food Policy, Farm Management,

INDIRECT EFFECTS OF DIFFERENT AGRICULTURAL TRADE SCENARIOS: A SOUTH AFRICAN CASE STUDY

One of the most important policy measures used by government to influence agricultural production and trade patterns are tariffs. A substantial depreciation in the exchange rate will not be enough to compensate for the negative effects of removing tariffs if the playing field is not level for producers in South Africa. Although the import multiplier show that less inputs will be imported, this saving on foreign exchange is not big enough to outweigh the total impact of imports on the balance of trade. The value-added multiplier clearly indicate that reinvestment and consumer spending (buying power) in agriculture will receive a severe blow. Employment will be reduced, thus increasing the supply of labour into other sectors.International Relations/Trade,

THE EFFECT AND PERSISTENCE OF MAJOR CHANGES IN ECONOMIC POLICIES ON THE LONG-TERM PERFORMANCE (TREND) OF ETHIOPIAN AGRICULTURE

Agriculture in the Ethiopian economy has survived three major structural breaks, namely the 1974 change of policy in favour of a command-based economic system, the 1984 famine and the 1992 change of policy that introduced a market economy. A regression procedure was applied to analyze the effect of these breaks on the slope and intercept of agricultural GDP. In addition, statistical properties were studied to measure the degree of persistence of shocks in agricultural GDP. In the regression equation, only the 1984 famine was found to be significant. The non-significance of policy parameters in the regression equation could be associated with a lack of infrastructural facilities and the subsistence nature of Ethiopian agriculture. The study of the statistical property of agricultural GDP revealed that agricultural GDP is a trend stationary process, which implies that fluctuations on agricultural GDP series, which mostly occur due to good or bad weather conditions, are temporary and dissipate in a short period of time.Political Economy, Productivity Analysis,

Deregulation of the Maize Marketing System of Swaziland and Implications for Food Security

Recent shortfalls in the supply of maize in the Kingdom of Swaziland have exacerbated the country's growing food insecurity and led to fresh calls for full deregulation of the maize marketing system. The proponents of deregulation believe that it eliminates inefficient production and service units by transferring resources to their best alternative uses. While the theoretical foundations for that position are not questionable, no studies have to date explicitly investigated the effects of the current arrangements and the potential effects of full deregulation. This paper reports on a study that examined the welfare effects of the regulation of the country's maize industry and considered the likely impacts of full deregulation of the industry. Using a partial equilibrium model, the study established that the current market arrangements for the maize industry are distortionary and make the maize marketing system of Swaziland highly uncompetitive. The results show that high efficiency losses result from the misallocation of productive resources and that these have been rising over the years. Consumption deadweight losses were also shown to be equally serious and put at risk the attainment of food security for the generality of the Swazi population. The paper sees deregulation as an important practical step to improve the competitiveness of the maize industry and enhance food security through creating the basis for more effective management of the internal maize distribution channel in Swaziland.Crop Production/Industries, Food Security and Poverty, D6, F13, I3, L5, Q18,

The comparative advantage of dryland soybean production in Brits, North West

The effect of policy on the South African soybean industry is analysed, using the policy analysis matrix. The absence of effective protection from cheap imports of soy-cake and -oil, as well as the ineffectiveness of the processing industry, lead to relatively low farmgate prices of soybeans in South Africa. This could result in producers using their resources for more profitable crops, thus depriving the South African feed industry to benefit from more full fat soy in feed rations.Crop Production/Industries,

Grain-supply response in Ethiopia: An error-correction approach

This paper quantifies the responsiveness of producers of teff, wheat, maize and sorghum to incentives using an error-correction model (ECM). It is found that planned supply of these crops is positively affected by own price, negatively by prices of substitute crops and variously by structural breaks related to policy changes and the occurrence of natural calamities. It has found significant long-run price elasticities for all crop types and insignificant short-run price elasticities for all crops but maize. Higher and significant long-run price elasticities as compared to lower and insignificant short-run price elasticities are attributable to various factors, namely structural constraints, the theory of supply and the conviction that farmers respond when they are certain that price changes are permanent. The paper concludes that farmers do respond to incentive changes. Thus attempts, which directly or indirectly tax agriculture with the belief that the sector is non-responsive to incentives, harm its growth and its contribution to growth in other sectors of the economy.Crop Production/Industries,