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

Abstract

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,