The objective of this study is to conduct a comprehensive analysis on the competitiveness of the agribusiness sector in South Africa. Neither a clear definition of competitiveness nor a comprehensive framework for analysing competitiveness has been developed for agriculture in South Africa. Hence, a definition for competitiveness has been formulated as being the ability to compete successfully in order to achieve sustainable growth within the global environment, while earning at least the opportunity cost of returns on resources employed. The definition is driven by factors related to the comparative and competitive advantages of an industry and the manner in which this is manifested by sustainable trade. Five important aspects regarding competitiveness emerged, namely: competitiveness is a dynamic process, and not an absolute state of affairs; competitiveness can only be assessed within a relative sense; competitiveness is a tool to enable a continuously exploitation of the market reality for gain and profits relative to other competitors; competitiveness is a holistic viewpoint on the ability to sustain the gains achieved through trade and it is dependant on certain key success factors and constraints that must be identified and managed; and in order to sustain competitiveness it is important to continuously attract scarce resources from other economic endeavours. A 5-step framework has been developed for measuring and analysing competitiveness in the agribusiness sector. Three instruments emerged from this viz the Agribusiness Competitiveness Status index (ACS) based on the Relative Trade Advantage (RTA) method; the Agribusiness Executive Survey (AES) based on the determinants of competitiveness, as described by Porter; and the Agribusiness Confidence Index (ACI) measuring the status of the decision-making environment in which agribusinesses are positioned to perform The ACS index supports the definition developed on competitiveness. From the measurement it is evident that the South African agribusiness sector is marginally competitive but ever increasing. A definite positive trend is present in the competitiveness of the sector from 1992 onwards. There are, however, varying rates of competitiveness between the different value chains in the sector; some are highly competitive i.e. wine, some are marginally competitive i.e. sunflower and some are not competitive i.e. cotton. A general notion of decreasing competitiveness exists in the value chains - implying that value adding opportunities in the sector are restricted. The AES is used to determine the views and opinions of executives in the agribusiness environment on factors constraining and enhancing competitiveness. The high cost of crime, inflexible labour policy and the competence of the personnel in the public sector are some of the factors constraining the competitiveness of the sector. The production of affordable, high quality products, intense competition in the local market and continuous innovation are some of the important key success factor enhancing the competitiveness of the sector. The sector also demonstrates a positive trend in the determinants of competitiveness. A clear relationship exists between changes in the decision-making environment and the competitiveness performance of the sector. This relationship influences the sustainability of the competitiveness status of the sector. The ACI analysis indicated that trends in the business confidence of the sector are influenced by a complex set of activities and expectations which includes climatic conditions, changes in the exchange and interest rates, economic growth and changes in turnover and nett operating income. The framework developed in this study combine quantitative and qualitative analyses to develop strategies to enhance the competitiveness of the sector. The analytical and empirical content and the resulting findings therefore enable this study to act as a basis for strategic planning, policy development and strategic positioning by the agribusiness sector in South Africa and will allow for future monitory and analysis of competitive performance. A number of agricultural industries i.e. wine, beef, wool have already made use of this framework with good effect. For further research it is recommended that the framework be used to do comprehensive industry analysis on the competitiveness of the most important food chains in Southern Africa. This information can be used to investigate opportunities for supply chain integration in Southern Africa that can provide the agricultural drive required by NEPAD to be successful. / Thesis (PhD (Agricultural Economics))--University of Pretoria, 2006. / Agricultural Economics, Extension and Rural Development / unrestricted

The world agricultural industry, despite numerous supply and demand challenges, has to significantly increase its production capacity to satisfy the increased demand for food and successfully address the issues surrounding food security. Access to credit is however a key enabler in this regard, while a lack of it limits the adaptive capacity of agricultural producers. The financing needs of agricultural producers however vary and are influenced by the different production systems which have different investment, revenue and risk patterns. The sector is unique in that the risk and uncertainty in agriculture are increased by the nature of agricultural production systems, which is in many cases driven by unpredictable external factors such as adverse weather conditions. In addition agricultural production systems also function within the total food system which consists of a number of interrelated subsystems, each presenting agricultural producers with a unique set of risk factors that need to be taken into account. The development of new and innovative financing solutions for the sector therefore requires a thorough understanding of the multidimensional nature of agriculture and the unique characteristics of the sector. The purpose of this study was to contribute to the development of new and innovative financing solutions for the agricultural sector in South Africa.

In recent years the three Prairie Pools have actively expanded their primary operations to include a number of investments both within and outside of the agricultural sector. The Pools' investment strategies are economically interesting because they are being pursued within the context of a co-operative organizational structure which requires that the users of the cooperative business also own, control, and benefit from its operations. This thesis examines the possible economic incentives agricultural co-operatives may have to invest in vertically integrated and diversified activities using the case of the Western Canadian co-operative elevator companies as an example. The analysis undertaken in this thesis is structured in two ways. First, the economic literature regarding co-operative formation and conventional firm expansion is surveyed. This analysis suggests that an important difference between vertically integrated investments and diversified investments is that they are motivated by the realization of distincly different sets of economic benefits for the co-operative firm and its members. It is argued that co-operative vertical integration can convey benefits to members indirectly through the market, in the form of increased producer margins and improved market access. However, these benefits may not impact the "bottom line" of the co-operative firm. Diversification can, on the other hand, provide a co-operative with direct monetary benefits in the form of improved financial performance and increased profits, which can translate into increased patronage refunds available to members. The second component of this analysis involves the development of a simulation model to examine the implications of an additional hypothesis proposed to explain co-operative expansion. The proposed hypothesis is based on the notion that perhaps the indirect market benefits from cooperation and co-operative expansion are being undervalued. This undervaluation can result in a preoccupation with the monetary benefits from co-operative business, and may therefore cause a bias towards diversified investments. The model developed in this thesis illustrates that, although such a bias may improve a co-operative's rate of return, it may also result in significant opportunity costs for agricultural producers due to a decrease in a co-operative's pro-competitive effect on primary markets. / Land and Food Systems, Faculty of / Graduate

Supply chain management is emerging as an important source of competitive advantage for agribusinesses globally and in South Africa. The objective of this study was to describe and analyse the emerging governance structures in agribusiness supply chains. Governance structures are the formal and informal institutions that prohibit, permit, or require certain actions and provide the incentives for exchange. Agribusiness managers can choose from a continuum of governance structures which include spot or cash markets, specifications contract, relation-based alliance, equity-based alliance and vertical integration. These structures are distinguished by the composition of market and managed control of the transaction processes. In this study the constructivist and positivist inquiry paradigms were adopted to address the complexity and interrelation of factors involved in the choice of governance structure. The study was conducted in two stages. The first stage entailed a survey of agribusiness managers to elicit their opinions and perceptions on the strategic direction, preferred present and future coordination mechanisms, strategic focus, the future shape of the agro-food industry and the major factors driving these trends in the South African agribusiness complex. These were compared with global trends. This section was conducted in the positivist paradigm to extend the validation and generalisation of the second stage which was conducted in the constructivist paradigm. The second stage entailed the analysis of three case studies to identify the drivers for supply chain formation and the expression of these drivers, strategic considerations and transaction characteristics in appropriate governance structures. The choice of governance structure is influenced by the drivers of change, product characteristics, processes of the supply chain, transaction characteristics and costs. The most significant drivers of change were company competency, consumer behaviour and technology. The perishable nature of most agricultural products, in particular, requires special control and traceability systems to ensure chain transparency in order to certify and assure consumer safety and product quality. These drivers, product characteristics and systems determine the characteristics of the required transaction to facilitate the creation of customer value. Key concepts that emerged in the description of transaction costs are bounded rationality, opportunism, asset specificity and information asymmetry. The optimal governance structure maximises desired transaction requirements while minimising the costs of exchange. The analysis of the case studies showed that these factors cannot be considered in isolation. In each of the cases a different factors was instrumental in the determination of the optimal governance structure. The study identifies a six step decision process for agribusiness managers and researchers to relate drivers of competitiveness to appropriate governance structures. The emergence of supply chains is driven by evolving consumer demands and societal values on the one hand and the need for agribusiness and inter-agribusiness competency to transform these needs and values into consumer value on the other hand. South African agribusiness are employing technology and closer vertical coordination to improve production processes, quality assurance, traceability and process transparency. In line with global trends South African agribusiness will have to establish ever more sophisticated systems to satisfy consumer needs and societal values as these evolve to include less tangible needs and values such as environmental and ethical concerns. / Thesis (PhD ( Agricultural Economics))--University of Pretoria, 2005. / Agricultural Economics, Extension and Rural Development / unrestricted

Identifying the determinants of compensation is important from employee and firm financial perspectives. This analysis examines the compensation of three different skill level categories - managerial, specialized, and general. The types of compensation examined include salaries, bonuses, benefits, and total compensation. Neoclassical theory is represented in the models by net return, managerialist theory by annual sales volume and form of ownership, and human capital theory by both education after high school and agribusiness work experience. Also controlled for in the models are the potential effect of salary on bonuses and benefits. Major findings include that annual sales volume, education after high school, and agribusiness work experience are the important determinants of salaries and total compensation. Bonuses for managers tend to increase with annual sales volume, and bonuses for employees in specialized and general skill level categories tend to be lower for those employed by cooperatives. Benefits tend to increase with salary. From the employee’s perspective, these findings indicate that, in order to maximize salary and total compensation, employees should seek employment in larger firms, attend college, and gain work experience. To decrease the variability of compensation associated with a high reliance on bonuses, specialized and general skill level employees may want to seek employment in a cooperative. Employees should realize that increases in benefits are linked to increases in salaries. From the firm’s perspective, smaller firms need to recognize that larger firms provide higher compensation. Hence, smaller firms may have to offer other amenities to attract, retain, and motivate employees. To attain more educated and experienced employees, firms will have to provide higher compensation. Cooperatives desiring performance oriented employees may have to alter their compensation packages to include higher bonuses. / Master of Science

In the literature there are mixed results on the link between credit and agricultural output growth. Some authors argue that credit leads to growth in agricultural output. Others view growth as one of the factors that influence credit supply, thus growth leads and credit follows. By and large, studies have not endeavoured to establish the short-run impact of agricultural credit on output. They are generally limited in establishing the long-run relationship between credit and agricultural output and thus present a research gap in this respect. This study contributes to the existing body of literature by focusing on the finance-growth nexus at sectoral level as a departure from extant literature that has focused on the macroeconomic level. Using South African data, the study investigated the causal relationship between the supply of credit and agricultural output as well as whether the two are cointegrated and have a short-run relationship. The study found that bank credit and agricultural output are cointegrated. Using the error correction model (ECM), the results showed that, in the short-run, bank credit has a negative impact on agricultural output, reflecting the uncertainties of institutional credit in South Africa. However, the ECM coefficient shows that the supply of agricultural credit rapidly adjusts to short-term disturbances, indicating that there is no room for tardiness in the agricultural sector. The absence of institutional credit will immediately be replaced by availability of other credit facilities from non-institutional sources. Conventional Granger causality tests show unidirectional causality from (1) bank credit to agricultural output growth, (2) agricultural output to capital formation, (3) agricultural output to labour, (4) capital formation to credit, and (5) capital formation to labour, and a bi-directional causality between credit and labour. Noteworthy and significant for South Africa is that for the agricultural sector, the direction of causality is from finance to growth, in other words supply-leading, whereas at the macroeconomic level, the direction of causality is from economic growth to finance, in other words, demand-leading. Applying a structural equation modelling approach to survey data of smallholder farmers, the positive relationship between bank credit and agricultural output observed from analysis of secondary data was confirmed. / Business Management / DCOM (Business Management)

In the literature there are mixed results on the link between credit and agricultural output growth. Some authors argue that credit leads to growth in agricultural output. Others view growth as one of the factors that influence credit supply, thus growth leads and credit follows. By and large, studies have not endeavoured to establish the short-run impact of agricultural credit on output. They are generally limited in establishing the long-run relationship between credit and agricultural output and thus present a research gap in this respect. This study contributes to the existing body of literature by focusing on the finance-growth nexus at sectoral level as a departure from extant literature that has focused on the macroeconomic level. Using South African data, the study investigated the causal relationship between the supply of credit and agricultural output as well as whether the two are cointegrated and have a short-run relationship. The study found that bank credit and agricultural output are cointegrated. Using the error correction model (ECM), the results showed that, in the short-run, bank credit has a negative impact on agricultural output, reflecting the uncertainties of institutional credit in South Africa. However, the ECM coefficient shows that the supply of agricultural credit rapidly adjusts to short-term disturbances, indicating that there is no room for tardiness in the agricultural sector. The absence of institutional credit will immediately be replaced by availability of other credit facilities from non-institutional sources. Conventional Granger causality tests show unidirectional causality from (1) bank credit to agricultural output growth, (2) agricultural output to capital formation, (3) agricultural output to labour, (4) capital formation to credit, and (5) capital formation to labour, and a bi-directional causality between credit and labour. Noteworthy and significant for South Africa is that for the agricultural sector, the direction of causality is from finance to growth, in other words supply-leading, whereas at the macroeconomic level, the direction of causality is from economic growth to finance, in other words, demand-leading. Applying a structural equation modelling approach to survey data of smallholder farmers, the positive relationship between bank credit and agricultural output observed from analysis of secondary data was confirmed. / Business Management / D. Com. (Business Management)

Climate variability and climate change have become important research topics also in economics. The objective of this thesis is not to forecast the future but to learn from the past by studying how two important climate change-related topics have affected Indonesian households. Delayed monsoon onset, El Niño, will become more frequent with climate change whereas palm oil production is a contributor to climate change. The first essay examines how variability in monsoon onset affects rural households' welfare in terms of household expenditure and farm profits. Using the Indonesia Family Life Survey (IFLS) data I find that households in the middle tercile of the expenditure distribution face the biggest albeit temporary losses from delayed monsoon onset. Half of the expenditure decline is due to increase in household size. Conditional on onset, rainfall intensity has only minor effects. The second essay uses the IFLS data to study how schooling and child labour are affected by delayed monsoon onset. The probability of continuing from primary to secondary school is reduced when a delayed onset coincides with the transition year. In other respects, monsoon onset does not affect education of rural children. However, riskier distribution of rain postpones school entry for young children. Moreover, delayed onset increases child labour. Using district-level data on palm oil production and area planted and national household survey (SUSENAS) the third essay studies the impact of oil palm expansion on household expenditure and health. Instrumental variable estimates exploit the historical production and district forest area as an exogenous source of variation. I find that smallholder production has a weak negative impact on household expenditure but this effect is not present among rural households. More, total production increases incidence of asthma in Kalimantan. The findings suggest that palm oil is not a panacea to increase rural welfare.

While it is clear that urban food systems need to be made resilient so that broader sustainability goals can be maintained over time, it has been a matter of debate as to how resilience should be conceptualised when applied to social-ecological systems. Through a case study of peri-urban Wuhan, this research develops and applies a resilience based conceptual framework for periurban food systems analysis in order to explore the potential for an enhanced understanding of resilience that can contribute to promoting sustainability in urban food systems. The evidence of this thesis suggests that the current approach to governance of Wuhan's periurban vegetable system is building an increasingly exclusionary pattern of resilience. It is a form of resilience building which is likely to undermine broader normative sustainability goals around social justice and environmental integrity and have mixed future implications for food system resilience as a whole, particularly in relation to livelihood outcomes for peri-urban farmers and food safety outcomes for urban consumers in general. The key lessons from this research are that the concept of resilience can be used to support either a narrowing down or an opening up of normative framings of system outcomes and can contribute to obscuring or revealing the multiple processes of change unfolding across the levels of system context, structures and actors. These dualities in the way that resilience thinking can contribute to normative and analytical framings need to be explicitly acknowledged if serious unintended consequences of resilience building interventions are to be avoided. Six important principles for conceptualising resilience in urban food systems are suggested: to 1) disaggregate system outcomes, 2) differentiate function and structure, 3) analyse positive and negative resilience, 4) identify external and structural shocks and stresses, 5) analyse resilience in relation to multiple and multi-scale processes of change and 6) recognise the impacts of those processes on marginalised system actors. Finally, a heuristic framework is presented for guiding the design of resilience analyses of human dominated social-ecological systems.

Thesis (M.Sc. ( Agricultural Economics )) --University of Limpopo, 2005 / The deregulation of agricultural markets in South Africa led to the establishment of a futures market for agricultural products, which was opened in January 1995. The marketing of Agricultural products act No. 47 of 1996 was passed at the end of 1996. The new Marketing of Agricultural Products Act (Act No. 47 of 1996) in South Africa has created an environment in which farmers, traders and processors are able to react positively to transparent prices that are market related. Agricultural futures markets serve several important functions, such as price risk management, price discovery and forward pricing. Economists around the world have studied vertical and spatial price relationships, and the behaviour of price changes in futures markets using asymmetry tests. Price asymmetry results in futures markets have a number of important implications. Firstly, traditional models in time series may be slightly biased when forecasting future prices, because they assume price symmetry. Secondly, asymmetry results may imply that the weak-form efficient markets hypothesis appears to be contradicted, thus indicating that past prices do affect current prices and do contain information. Lastly, if persistent asymmetry is found in futures markets, market regulators and policy makers may wish to use asymmetric information to improve the functioning and stability of futures markets through improved price limit and margin policies. Implementing policies iv accounting for asymmetric behaviour may help avoid market crashes and sudden unexpected price adjustments adversely affecting market participants. This study tests the existence of price asymmetry in South African futures markets for white and yellow maize, wheat and sunflower seeds using a dynamic price asymmetry model. The sum of coefficients test and the speed of adjustment test are used to determine whether or not prices move up in the same fashion as they move down, over daily and weekly data frequencies. Out of the four commodity futures markets studied over varying data frequencies, only daily wheat is price asymmetric. Wheat daily prices respond faster to price decreases than to price increases. The implication of the results is that past prices do affect current prices and contain information. Hence, the weak-form efficient market hypothesis appears to be contradicted for wheat futures market. Another important implication of the results is that implementing policies accounting for asymmetric behavior through price limit and margin policies will improve the functioning and stability of wheat futures market in South Africa. / National Research Foundation, and the University of Limpopo