Doctoral Degrees (Agricultural Economics)

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Browsing Doctoral Degrees (Agricultural Economics) by Advisor "Grové, B."

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    Effects of customs union tariffs on domestic rice competitiveness: the case of irrigated rice in Niger
    (2010-08) Abdourahmane, Touré Ali; Grové, B.; Groenewald, J.
    Niger’s irrigated rice production system was evaluated within the context of the country’s common external tariff regime. The effects of the common external tariff (CET) on the performance of the irrigated rice production system were evaluated at various comparison points where local rice enters into competition with imported rice and by considering the main rice marketing systems (retail and wholesale markets). These comparisons were made taking into account the various brands of imported rice that are commercialised in the country. The results of the policy analysis matrix (PAM) base scenario for the irrigated rice system under the CET show that the system is generally competitive (positive private profitability) and has potential for growth (positive economic profitability). These results are disaggregated by type of rice quality, type of rice market (retail or wholesale) and by two points of comparison (Niamey and Tillabery). At both points of comparison, the PAM indicators show positive financial profitability, indicating that the system is generally competitive and that operators are making some financial gains. Moreover, the irrigated rice production enterprise reveals positive economic profitability for both retailers and wholesalers. Therefore, as an economic activity, it generates net positive income for the national economy per unit of land devoted to this activity. It can be maintained that despite the fact that the inputs used in irrigated rice production are affected by the various common external tariff (CET) measures, the activity still performs to a level that permits the various actors to earn some positive income and sustain their businesses. Despite its competitiveness and efficiency, however, irrigated rice production still performs below potential because it lacks certain additional incentives. To investigate this issue, various sensitivity analyses were performed, using single factors as well as simultaneous changes in several factors. These sensitivity analyses were performed in order to diagnose the effects of possible policy changes on elements such as financial and social profitability, production incentives, and protection coefficients. The sensitivity analyses show that private and social profits, ceteris paribus, are sensitive to improvements in technological factors such as farm-level productivity and post-harvest techniques that enhance the milling conversion rate of paddy into milled rice. The incentives and protection coefficients are also found to be sensitive to possible policy changes. Furthermore, private and social profits, including incentives and protection coefficients, are sensitive to changes in economic factors relating to the reduction of import duties on inputs, as well as to increases in import duties on imported rice and changes in exchange rates. Niger’s irrigated rice system generally performs well under the CET regime, but because certain resources are diverted away from it, the system is in fact being taxed. There is a need to provide greater incentives to everyone active in the system, in the form of technological improvements (farm-level productivity improvement and post-harvest quality enhancement). Greater incentives should also be given in terms of improving marketing channels, especially retail marketing, where a great number of women rice traders are active. More research needs to be conducted on this aspect.
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    Modelling economic-environmental trade-offs of maintaining nitrate pollution standards
    (University of the Free State, 2014-01) Matthews, Nicolette; Grové, B.
    The main objective of this research was to develop the methods and procedures to more accurately quantify the trade-offs between improving production risk and environmental degradation using state-contingent theory to quantify economic and environmental risk with empirical distributions. The first step in developing the economic-environmental trade-offs is to model the risk efficiency of fertiliser applications through the development of a utility maximisation programming model. Separate state-contingent nitrogen maize yield response functions estimated from simulated crop yields for each state of nature characterise production risk empirically. The unexplained variability not captured by the response function is taken into account by adding the residuals to the expected response to produce a stochastic response function. The same procedure quantified the environmental fate of fertiliser applications. An upper partial moment (UPM) ensured that the optimised farmers’ response complied with an environmental pollution goal of 28kg/ha. The upper frequency method (UFM) was developed to ensure a stricter probability bound which was used to determine the conservativeness of the UPM. The results showed that the state-contingent representation of production risk were able to capture the changes in outcome variability without any distributional assumptions. More importantly, fertiliser can act as a risk-reducing input, risk-increasing input or both depending on soil choice while not considering the environment. The risk-reducing nature of fertiliser emphasises the importance of taking risk preferences into account when modelling economicenvironmental trade-offs. The UPM results indicated that an environmental constraint hold substantial compliance costs for agricultural producers. To minimise compliance costs producers had to make extensive and intensive margin changes to ensure compliance. Soil choice is identified as being more important than fertiliser application method in reducing compliance costs. An interesting finding is that environmental compliance resulted in fertiliser being a risk-reducing input. Comparison of the modelling results of the UPM and UFM showed that the UPM is very conservative in estimating the economic-environmental trade-offs. The size of the conservativeness is very situation specific and is determined by the combination of fixed resources used, fertiliser application method, compliance probability and the conservativeness measure used. The main conclusion is that state-contingent theory provides the opportunity to model the impact of management decisions on outcome variability due to the effect of the state of nature in which the production decision is made and not due to the input use decision. The state-contingent theory is therefore the more appropriate mechanism to model the influence of uncertainty on production risk and more importantly environmental risk. The application of the state-contingent theory requires transformation functions, which captures the relationship between management decisions and outcome variability due to the state of nature. Much more research is necessary on the development of appropriate transformation functions.
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    New institutional economic analysis of emerging irrigation farmers' food value chains
    (University of the Free State, 2012) Jordaan, Henry; Grové, B.
    The main objective of this research was to develop and apply an integrated framework that will allow researchers to comprehensively investigate agri-food chains within which emerging farmers operate to identify potential leverage points that will contribute towards improving the financial performance and hence the livelihoods of emerging farmers. An integrated value chain (VC)-New Institutional Economics (NIE)-Structure-Conduct-Performance (SCP) framework was developed to allow for considering the constraints associated with institutional failure, high transaction costs, and the lack of support structures that typically exclude emerging farmers from participating in commercial agri-food chains, but also vertical coordination and collective action that contribute to the successful participation of emerging farmers in commercial agrifood chains. The integrated VC-NIE-SCP framework allows for a comprehensive analysis of the behaviour and performance of emerging farmers in their social, physical and institutional environment. The integrated VC-NIE-SCP framework was applied to the case of emerging raisin producers from Eksteenskuil who export raisins via the fairtrade initiative. Correctly aligned incentives through the Fairtrade initiative (price premium for good quality raisins) incentivised the farmers to comply with the strict rules of Fairtrade, but also to establish additional rules by registering the EAC to improve their ability to meet the strict rules and regulations of the fairtrade initiative. The incentives through fairtrade also incentivised the support structures to actively support the farmers to comply with the strict rules and regulations. Support structures, especially the board of directors of EAC, play a major role in the operations of the farmers from Eksteenskuil in the fairtrade value chain. Correctly aligned incentives thus have a major influence on the behaviour of the farmers and other role-players that may support them to meet the strict requirements of participating in commercial agri-food chains. The technical and cost efficiency levels of the respondents were examined to gain insight into their current performance and the scope for improving their performance in their current technology set. A cash flow optimisation model was also developed to model the potential impact of recommended changes on the financial performance of the farmers from Eksteenskuil. The results show that there is major scope to improve the financial performance of the raisin producers from Eksteenskuil by improving the levels of efficiency with which they use their production inputs. The current incentive structure, however, is not conducive to improving the efficiency levels of the farmers. The lack of secure land tenure means that the farmers do not have the primary incentive to invest in their land. Insecure tenure also contributes to the lack of cash flow which is central to most of the stumbling blocks that constrain the behaviour, and hence the performance, of emerging farmers. Land tenure reform has to be concluded promptly to contribute to an enabling environment for emerging farmers to allow them to improve their livelihoods through irrigated agriculture. Emerging farmers need effective support, extension and education to successfully operate in the liberalised market environment. Providing such support to emerging farmers, however, should not be the sole responsibility of government. The private sector has a major contribution to make in this regard. Key role-players in agri-food chains exhibit the necessary skills to successfully operate in the chain. Government should rather focus on creating incentives for such role-players to get involved with emerging farmers to develop the necessary skills of the farmers. Correctly aligned incentives that create a vested interest for such firms in the performance of emerging farmers may convince the private sector to effectively support the farmers. Such a vested interest may convince the key role-players to enter into vertical coordinated relationships (i.e. strategic alliances) with emerging farmers, giving farmers access to the accompanying benefits of effective support, and a ready market for their produce. Government then can focus on meeting its responsibility of providing the farmers with an enabling environment. The main conclusion from this research is that the integrated VC-NIE-SCP framework provides a holistic approach to identify workable solutions that may improve the financial performance of emerging farmers, and hence the livelihoods of emerging farmers. By understanding the social and institutional dynamics in the system within which the emerging farmers operate, the incentive structure can be adjusted accordingly to effectively guide the behaviour of all parties involved to contribute towards the successful participation by emerging farmers in the mainstream of the economy. Each case, however, needs to be assessed comprehensively to ensure that recommendations will optimise the benefits for the farmers under consideration.