Doctoral Degrees (Agricultural Economics)

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Browsing Doctoral Degrees (Agricultural Economics) by Subject "Agriculture -- Economic aspects -- South Africa"

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    Capacity building strategies for sustainability farming SMMEs in South Africa
    (University of the Free State, 2009-11) Mmbengwa, Victor Mbulaheni; Groenewald, J. A.; Van Schalkwyk, H. D.
    English: South Africa’s land reform programme is faced with many challenges associated with its sustainability. It is widely believed that one of the major causes of the collapse/failure of farming SMMEs is lack of capacity in many aspects of running farming as a business. Critical success factors for these SMMEs are capacity, market accessibility, business management skills, effective extension services, adequate support programmes as well as adequate financial injection. Therefore, any entrepreneur in this business must have skills in both marketing and management, coupled with adequate support systems. To address the above-mentioned problems, a comprehensive study of farming small, micro, medium enterprises (SMMEs), pre- and post-settlement support, the involvement of youth and women, accessibility of markets, linkages, small, micro, medium enterprises (SMMEs’) institutional structures and other support services, was carried out. An intensive desktop study which included amongst others reports from government, consulting agencies, development and training institutions was used. Workshops with experts, farming stakeholders, agricultural economics departments from universities, government officials and farming small, micro, medium enterprises (SMMEs) were conducted. Participatory action research methodologies were employed during workshop sessions. Empirical evidences were drawn from eighteen case studies and surveys conducted by both Land Bank and National Department of Agriculture. Various tools of analysis were used to analyse different data sets used in this study. For instance, case studies used narrative coupled with strength, success, weakness, failure, opportunities and threats (SSWFOT) and ridge regression (RR). The data set from the Land Bank survey was analysed using GENMOD, MEAN, frequency (FREQ) and multiple logistic regression models. The data set from National Department of agriculture was analysed using frequency (FREQ) and multiple regression analysis. Case studies revealed that micro and small scale farming enterprise severely lack important key success indicators such as sustainable markets, input supply; increased income, sustainable production, skills development and professional business operation. On the contrary, it was found that medium sized enterprises have adequate levels of important key success factors that are lacking in micro and small scale farming enterprise, but also shows a need to improve on sustainable markets and input supply. These cases also revealed that financial capacity depends on marketing capacity. Consequently unit increases in marketing capacity have a corresponding increase in financial returns. The Land Bank survey revealed that perceptions of emerging farmers portray a lack of capacity and exposure. It also showed that skills, financial support, and infrastructure are important requisites for sustainable farming small, micro, medium enterprises (SMMEs). Extension support and sustainable production were found to be crucial for farming success in the emerging farming sector. It was also found that lack of understanding of the importance of formal markets; benefit of training and extension support may be the main contributors to the unsustainable nature of the emerging farming sector in South Africa. Therefore, this sector requires access to formal markets, extension support services and training in order to be profitable. The National Department of Agriculture data set revealed that there are many more micro enterprises compared to their small and medium counterparts. In addition, women are most beneficiaries for agrarian development; their involvement surpasses that of men, youths and disabled people. The results also indicate the training received to be insufficient, with much of the training being inappropriate for farming. There is a need to devise strategies to convert micro enterprises into small and medium enterprises with since a high conversion rate to small and medium levels can help to reduce poverty, unemployment and above all increase women’s empowerment and thereby improving the socio-economic impact of these farming enterprises. The results have good implications for the present and future owners of small, micro, medium farming enterprises. The study has formulated comprehensive and sustainable strategies as a guideline for agribusiness entrepreneurs, with the overall objective of eradicating poverty in rural areas and commonages through increased agricultural production.
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    Economic implications of trade liberalisation on the South African red meat industry
    (University of the Free State, 2001-05) Jooste, André; Van Schalkwyk, Herman; Von Lampe, Martin
    English: Successful agricultural trade relations have to a large extent become a function of how well countries are able to measure the possible impact of increased trade liberalisation. Many studies worldwide have attempted to gauge the impact of agricultural trade liberalisation on world production, consumption, trade and prices by means of mathematical programming models. Given the importance of the red meat sector in South Africa's agricultural economy, it is of the utmost importance that the red meat industry understands the implications and consequences of trade liberalisation. Such knowledge would enable this industry to pro-actively provide input to Government on the possible 'effects of trade liberalisation on the domestic red meat industry, that could be used in multi- or bilateral trade agreements. Furthermore, the industry would be in a position to identify threats and opportunities and make the necessary strategic decisions. In South Africa many studies have investigated various different issues of economic importance pertaining to the red meat industry. None of them have attempted to investigate the impact of trade liberalisation within the mathematical programming framework. This study employs a spatial partial equilibrium model embedded in the mathematical programming framework to analyse the possible effects of a reduction of tariffs, increases in world prices of red meat, changes in the exchange rate, the abolishment of the Lomé Convention and changes in population size. The model includes two-stage spatially separated markets for red meat products in South Africa that encompass behavioural parameters to gauge the impact of exogenous changes related to trade liberalisation. In the case where all tariffs on red meat imports are abolished, changes in prices of red meat products will be substantial. Producer prices for cattle, sheep and pigs will decline by 21.11 per cent, 13.90 per cent and 11.99 per cent, respectively. Beef, sheep meat and pork prices will, on average, decline by 27.88 per cent, 28.56 per cent and 13.16 per cent, respectively. Demand will increase substantially for all three meat types. From a welfare point of view consumers will experience welfare increases. Producers, on the other hand, will experience a drop in welfare. In monetary terms the welfare gains by consumers are greater than the welfare losses by producers, which constitutes a net welfare gain to society. Furthermore, the red meat industry in South Africa should carefully consider preferential access granted to third countries under FTA's. Preferential access could easily lead to a reduction in the marginal tariff rate which, in turn, would result in lower domestic prices of red meat. In the case where the world price increases more than 10 per cent for beef, 18 per cent for mutton and 6 per cent for pork, zero imports would result. The losses in welfare to consumers are greater than the gains in welfare by producers. The impact of a 40 per cent depreciation in the exchange rate is very similar to the situation when world prices are assumed to increase, whilst the effect of a possible abolishment of Lomé on the South African beef market would be minimal. Finally, an increase in the population size combined with an increase in world prices will only partly offset the impact of a total reduction in tariffs. Also, increases in demand due to lower prices will largely be met by higher imports.
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    The impacts of multilateral and bilateral trade agreements on agriculture trade in SACU
    (University of the Free State, 2011-12) Mokoena, Madime Reuben; Jooste, A.; Alemu, Z. G.
    International markets for agricultural products were characterised by,. amongst others, quantitative restrictions, tariff-based protection, border protection, non-tariff barriers, ete before 1995. Likewise, agricultural sector in South Africa (SA) was also faced by similar trade distorting measures during the post-apartheid era. In response to globalisation challenges, SA committed to move from protective to liberal trade regime in the agricultural sector, as witnessed by its trade diplomacy engagements with the international community in the context of multilateral, bilateral and/or regional approaches. At the multilateral level, SA has successfully implemented its commitments as negotiated in terms of the Agreement on Agriculture (AoA) during the Uruguay Round (UR) of General Agreement on Tariffs and Trade (GATT) negotiations that gave birth to the World Trade Organization (WTO). At the bilateral level SA 'has signed a Preferential Trade Agreement (PTA) with the European Union (EU) called the Trade, Development and Co-operation Agreement (TDCA) (better known as the EU-SA TDCA and includes a Free Trade Agreement). At the regional level, the Southern African Customs Union (SACU) member states including SA have signed a Protocol on Trade or a Regional Trade Agreement (RTA) with the non-SACU countries of the Southern African Development Community (SADC). The main objective of the study was to measure the impact of trade agreements on the agricultural trade between SA and its trading partners. A gravity model using panel data was employed to analyze the ex-post impacts of the implementation of the trade treatments, i.e. WTO AaA, EU-SA TDCA and SADC Trade Protocol on agricultural trade flows between SA and its agricultural trading partners. Various statistical tests were undertaken to select the suitable models for the datasets of total agricultural and selected agricultural products trade flows between SA and its agricultural trading partners. After the statistical tests were undertaken, 189 feasible models in total were selected, of which . 161 were dynamic models and 28 were static models. Furthermore, 152 Fixed Effects (FE), 2 Random Effects (RE) and 7 pooled Ordinary Least Squares (OLS) estimators were found to be efficient and suitable for the dynamic models; and 14 FE and 14 RE estimators were found to be efficient and suitable for the static models. The highest number of selected dynamic models suggested that passed trade is the predictor for current trade. The per capita ODPs of SA and of its trading partners, the real effective exchange rates and distance have also played a significant and expected role in influencing agricultural trade flows between SA and its agricultural trading partners. The results of the study have indicated that agricultural trade flows between SA and its agricultural trade partners have responded positively to the implementation of WTO AaA. The implementation of EU-SA TDCA and SADC Trade Protocol during the first five years (for the period 2000 - 2004) have not delivered the expected results, as the majority of agricultural trade flows between SA and EU countries as well as between SA and SADC countries were not affected and some of the agricultural trade flows between SA and EU countries as well as between SA and SADC countries were negatively affected. While the majority of agricultural trade flows between SA and EU countries as well as between SA and SADC countries were still not affected during the second five-year term (for the period 2005 - 2009), there were some improvements due to the significant positive effects of the EU-SA TDCA implementation on three agricultural trade flows (i.e. total agricultural trade, total cut flowers trade and total preserved fruits and nuts trade) as well as the significant positive effects of the SADC Trade Protocol implementation on four agricultural trade flows (i.e. total agricultural exports, total agricultural trade, total cut flowers trade and total fruits and vegetable juices trade). However, the number of agricultural trade flows between SA and ROW countries that have improved significantly for both periods were more than those of the EU and SADC countries, even though ROW countries did not have a trade agreement with SA. The implementation of the EU-SA TDCA and SADC Trade Protocol have created room for potential increases of all the agricultural trade flows between SA and EU countries as well as between SA and SADC countries for both periods. However, some of these potential increases for the period 2000 - 2004 were diverted to the other markets. On average, during the implementation of the EU-SA TDCA for the period 2000 - 2004, about 0.44% of agricultural exports, 0.96% of cut flowers exports and 0.77% of wine exports from SA destined for EU were diverted to other markets Furthermore, about 2.01% of SA's wine imports that were supposed to have been soureed from the EU countries came from SA's other wine trading partners; as well as the diversion of about 0.73% of total wine trade from the SA and EU market to either SA and other wine trading partner market or EU and other wine trading partner market. Similarly, the implementation of the SADC Trade Protocol led to diversion of agricultural exports (about 0.43%), cut flowers exports (about 0.93%), total cut flowers trade (about 0.92%), wine exports (about 0.73%), wine imports (about 1.45%) and total wine trade (about 0.35%) during the same period. \ With regard to the implementation of the EU-SA TDCA and SADC Trade Protocol during the period 2005 - 2009, there was no proof of trade diversion for all agricultural trade flows, except that the was a trade creation for some of the agricultural trade flows between SA and EU countries as well as between SA and SADC countries. In the case of the EU-SA TDCA, there was trade creation on total agricultural exports, total agricultural trade, total preserved fruits and nuts trade and total wine trade. In the case of the SADC Trade Protocol, there was trade creation on total agricultural trade, cut flowers exports and preserved fruits and nuts exports. In conclusion, these findings have clearly shown that tariff reductions alone are not panacea to improve agricultural trade between SA and its major trading partners given the fact that EU-SA TDCA and SADC Trade Protocol were mainly characterized by tariff phase down schedules.
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    Implications of trade liberalisation and economic growth for South African agricultural industries
    (University of the Free State, 2009-12) Teweldemedhin, Mogos Yakob; Van Schalkwyk, H. D.;
    The main aim of this study is to examine the impact of trade liberalisation on agriculture’s ability to contribute to economic growth and poverty reduction in South Africa. Several secondary objectives were examined that address: (i) the impact of trade liberalisation on the South African agricultural international trade performance; (ii) the relationship between trade liberalisation and poverty alleviation; (iii) the impact of trade liberalisation on Total Factor Productivity (TFP) in agricultural industries, and (iv) the short-term source of agricultural adjustments. Different methodologies were applied to achieve the specified sub-objectives, including calculation of the Intra-Industrial Trade (IIT) coefficients’ (with its key determinants) Gravity model, the Error Correction Vector Model and the Exact Maximum Likelihood method. The Gini coefficient of exports and imports was calculated as 0.55 and 0.62, respectively. The aggregate, with respect to the South African agricultural IIT, was higher than the average attributed to advanced countries. This shows that South Africa needs to reinforce the position of a bilateral agreement, which should be accompanied by regional or even multilateral liberalisation. The econometric analysis conducted on determinants of high IIT, gives a more magnified effect of the coefficients of export to import ratios and the TIMB (trade balance). If the South African industries implement and increase trade liberalisation on the diversified level of industrial specialisation, the IIT level would remain high, and significant economic gain might be achieved. The gravity model finding shows that all variables were significant at one percent, and carried the expected sign. Only the EU dummy variable had an inverse relationship, implying that the EU trade agreement creates a negative impact on export capacity for South African farmers. Essentially, South African farmers are not in a position to compete with the subsidised farmers of the development involved. These results have several important policy implications for South Africa. Firstly, trade agreements, whether implemented unilaterally or bilaterally, will enhance potential trade flows between South Africa and other countries or regions. Secondly, from an export promotion standpoint, the distance variable in the model’s results shows that importing countries’ per capita income is elastic and significant in determining export. Therefore, it is important for South Africa to maintain trade links and, in order to realise export potential, to extend these to high per capita income countries or regions. On the other hand, to avoid vulnerability and potential crises in EU regions or countries where the largest proportion of South Africa’s export is directed, it is important that South Africa continues to concentrate its export promotion efforts in other regions of the world. The study has also tested the impact of trade liberalisation using both the cross-sectional and time series approach, covering nine agricultural commodities; the cross-sectional approach covered the period of 1995-2007, and the time-series covered the period of 1970- 2007. Both approaches validate the above proposition with a high degree of statistical reliability. Finally, the study identified the main sources of agricultural economic growth by categorising the variables into five main areas: cyclical reversion, structural policies and institutions, stabilisation policies, cyclical volatility and external conditions. The components of the structural policies and institutions category were found to be statistically significant, and were positive at the specified significance level (only RDGDP was related negatively). This implies that the growth was achieved with improved education, financial depth and trade openness. However, the negative relationship of RDGDP shows that the sector is suffering from debt crisis. Subsequently, farmers need to follow an effective debt management system.