Regulation of South African agriculture : performance of agricultural marketing boards

Abstract

Bibliography: p. 207-217.The object of this thesis is to examine the policies of South African agricultural marketing boards, both as separate entities and within the broader context of South African agricultural policy. Stabilisation and subsidisation are examined from a theoretical standpoint and the analysis supported with empirical evidence. The possibility of a centralised policy of price control is considered and a technique suggested whereby such a policy might be implemented. It is suggested, however,· that market uncertainty and the vast amount of information necessary make such an ambitious programme of market control unworkable in practice. The policies followed by some of the major marketing boards are examined. Three possibilities are identified: i) Revenue maximisation ii) Revenue stabilisation iii) Price/quantity stabilisation In view 6f the wide differences between the boards in respect of type of product handled and export possibilities, it is to be expected that they will follow divergent policies. The evidence presented suggests, however, that the boards have not used their monopoly powers in the manner predicted by conventional economic theory. In the case of several of the boards, price policy seems to have been neutral. The reason for this disparity between theory and empirical obsel'.lvat:ion is discussed. The behaviour of South African agricultural marketing boards is related to evidence on regulatory authorities in the United States. It is suggested that close parallels exist. Due to different property rjghts arrangements, the conventional monopoly profit maximisation mode.I is inapplicable. Instead, marketing boards follow a variety of other policies. Whilst the objectives of the marketing boards may not always be clear, it can be concluded that in certain significant cases, the results have been little different from those generated by the free market. It is stressed, however, that marketing boards are political rather than economic organisations and political constraints are likely to be overriding. This view is further confirmed by an examination of agricultural policy over the last fifty years. It is argued that policy has been dictated by political reality rather than economic rationality. The role of the economist has been to offer evidence in support of predetermined policies