In this study the demand relations for meat in South Africa are estimated and interpreted. Two demand model specifications, namely the Rotterdam and Linearized Almost Ideal Demand System (LA/AIDS), were estimated and tested in order to determine which model provide the best fit for South African meat data. Tests for separability included an F and Likelihood ratio version. Both tests rejected the null hypothesis of weak separability between meat, eggs and milk as protein sources, indicating that the demand model for meat products should be estimated separately from eggs and milk. Consequently, separability tests between the four meat products fail to reject the null hypothesis, confirming that the four meat products should be modelled together. According to the Hausman exogeneity test, the expenditure term is exogenous. As a result, a Restricted Seemingly Unrelated Regression (RSUR) was used to estimate both models. Annual time series data from 1970 to 2000 were used. Both models were estimated in first differenced format, whereafter the estimated parameters were used to calculate compensated, uncompensated and expenditure elasticities. In a non-nested test, the Saraganâs and Vuongâs likelihood criterion, selected the LA/AIDS model. In terms of expected sign and statistical significance of the elasticities, the LA/AIDS also proved to be more suitable for South African meat data. Although the magnitudes of most own price and cross-price elasticities were significantly lower than previous estimates of demand relations for meat in South Africa, several reasons, including estimation techniques and time gaps, were offered as explanations for these differences. The uncompensated own price elasticity for beef (-0.7504) is the largest in absolute terms, followed by mutton (-0.4678), pork (-0.36972) and chicken (-0.3502). In terms of the compensated own price elasticities, which contain only the pure price effect, pork (-0.30592) was the most elastic, followed by mutton (-0.27713), chicken (-0.1939) and beef (-0.16111). The expenditure elasticities of beef (1.243) and mutton (1.181) are greater than one, indicating that beef and mutton are luxury goods in South Africa. The expenditure elasticity for beef is the most elastic; indicating that South African consumers as a whole, will increase their beef consumption as the total expenditure on meat products increase.

In this study demand relations for primary oilseeds in South Africa is estimated and interpreted with the use of econometric models. Two different models, namely the Linear Approximate Almost Ideal Demand System (LA/AIDS) and the two-step Error Correction Model (ECM), were applied to annual oilseed data for the years 1971-2002. The F ratio test for separability failed to reject the null hyp othesis of weak separability in most cases, indicating that sunflower seed, soybeans, groundnuts and cotton could be included in the same system and modeled together. The Hausman test for exogeneity was conducted and proved that the expenditure variable included in the estimated equations is indeed exogenous. The exogeneity of the expenditure variable provides assurance that the Restricted Seemingly Unrelated Regression (RSUR) method of estimation will provide efficient parameter estimates. Both the short run models are estimated in differenced form, from where the parameter estimates obtained were used to calculate compensated, uncompensated and expenditure elasticities of demand. The compensated own price elasticity of soybeans is the largest in absolute terms, with coefficients ranging from -0.579 in the LA/AIDS to -0.666 in the ECM. Seed cotton has the second largest compensated own price elasticity with -0.399 and -0.542 respectively in the two models. The compensated cross product elasticities indicate a predominantly substituting relationship between these oilseeds, even though not all of them are significant. According to the calculated uncompensated own price elasticities, seed cotton is the most price responsive i.e. (-0.745) in the ECM and soybeans (-0.617), in the LA/AIDS. According to the expenditure elasticities sunflower seed (1.105) and cotton (1.064) can be regarded as luxury oilseeds in South Africa. Soybeans, with expenditure elasticities of between 0.454 and 0.493 in the two respective models, can be regarded as a normal good. Groundnuts can also be regarded as a luxury commodity even though it has an expenditure elasticity of just below one. The fact that the compensated own price elasticity of groundnuts is smaller in absolute terms than the expenditure elasticity is also an indication of a luxury product, as proved by Hicks and Juréen (1962).

This study is one of several investigations undertaken over the years to determine the Comparative Economic Advantage of agricultural production in selected Southern African countries. The specific purpose of the Lesotho study was to generate information required to guide decision-makers in agriculture towards productive allocation of resources and identify feasible infrastructure investment options to take advantage of available trade opportunities within and beyond the region. It was also required to analyse the factors involved in the structure and development of inter- and intra-industrial trade (Gini and IIT) for the SACU region of which Lesotho is a part. The inter-industry analysis shows that there is concentration in the market of apples, asparagus, cherries and peaches. On the other hand, the intra-industry analysis with respect to apples, asparagus, cherries and peaches suggests that the SACU countries exported more than they imported during the period 1994-1998. The study also evaluated the comparative economic advantage of irrigated longterm crops in the four agro-ecological zones of Lesotho based on analyses of profitability coefficients and domestic resource costs. For these, the analysis was carried out using the net present value (NPV) approach. Further, economic efficiency and policy distortions were examined by the use of such a measure as the nominal protection ratio (NPR), effective policy ratio (EPR), and net policy effect (NPE). The CEA analysis based on the NPV approach yielded higher private returns relative to economic returns for the measures of economic efficiency and policy distortions in the Lowlands, Foothills, the Senqu River Valley and the Mountains of Lesotho for all the crops examined. It was revealed that apples were dominant and were more profitable in all zones. These results suggest that in the presence of government intervention, Lesotho could exploit comparative advantage in contracting production of apples and peaches in the Lowlands and Foothills so that other activities can expand. In the Mountains, the protection policies have raised the price of apples by 61 per cent above the social price for importing the commodity, i.e. Mountain farmers received 61 per cent more than the export parity prices. In the Senqu River Valley and Mountains, only apples could be contracted. Thus, should economic values of inputs prevail; farmers would receive lower returns, meaning that they may not compete effectively in the world market. The results of DRC based on the returns to land when NPV was employed, indicate that apples, asparagus, cherries and peaches for the Lowlands have comparative economic advantage, with asparagus production being the highest followed by peaches. However, in the Foothills apples are more efficient than peaches although the dominance is weak. However as the majority of farmers lack easy access to land in Lesotho, it is doubtful if results based on the prevailing land prices can have much predictive value. The absence of a clear policy and law enforcement also leads to lack of land price market, which in turn affects the impact of capital gains and losses. In this case, it may be necessary to conduct detailed studies to determine the economic prices of land in Lesotho on the basis of which reliable CEA analysis can be conducted. The study concludes that in the short-term, the commodities examined could contribute to the attainment of food security in Lesotho. For the future, Lesotho producers would benefit to a greater extent from expanding production for the international markets. It must be noted however that the coefficients of the CEA analyses do not provide sufficient information to guide future decisions for investment. For more long-term investment decisions, it is recommended that detailed cost-benefit analyses be carried out for each agro-ecological zone and location identified for any future project aimed at expanding the production of longterm crops in Lesotho.

The potential impact of trade on the economy of Lesotho was assessed using the Lesotho Social Accounting Matrix (SAM) 2000 as a data base to construct a Computable General Equilibrium (CGE) model, to design trade policy scenarios, and to simulate the impact of trade policy scenarios on the Lesotho economy Since the Lesotho SAM was unbalanced, it was necessary to balance the initial matrix, using the cross-entropy optimization procedure with the aid of GAMS software. Four simulation sets were carried out. Results from two sets (duty-free access (DFA) and a +10% increase in world prices) indicate significantly increased textile exports and decreased prices for imported commodities. DFA will also be associated with increased textile imports, while a +10% increase in world prices will lead to increased crop imports. Demand and supply prices of textile commodities produced and sold domestically will decrease, as will composite goods prices in the textile sector. Average output price of textiles will decrease with DFA and with a 10% increase in world prices; the aggregated marketed commodity quantity for textiles will increase. Output prices of fruit and vegetable processing and intermediate aggregate inputs for the textile sector decrease with DFA. An increase of 10% in world prices will lead to increased water service prices. The textile sector will experience increased value added prices in both scenarios. Gross domestic product (GDP) for the textile sector will increase significantly. Lesotho will gain in welfare, measured in terms of equivalent variation (EV). Effects on labour categories depend on changes in productive activities. In the textile sector, labour demand, labour income, and capital income will increase significantly. Lesothoâs net commodity exports and gross government expenditure will also increase. Erosion of existing preferential access (EEP) and common external tariffs for non-SACU member states (CET) will reduce the quantity of textile products exported; with EEP, the price of imported textiles will increase and the quantity decrease. CET will have similar effects on the skins and hides sector. Demand and supply prices of textile commodities produced and sold domestically (with EEP) and pharmaceutical products (with CET) will increase. Prices of composite textile goods will increase slightly. Average output price for textiles at EEP and pharmaceutical products at CET will increase, and the aggregated marketed commodity quantity for the textile sector will decrease in both scenarios. With EEP, prices of output and intermediate aggregate outputs of textiles and micro industry outputs will increase. CET effects will be smaller. The textile sector at EEP and accommodation-catering services at CET will experience decreased prices of value added. Gross domestic product (GDP) of the textile sector will decrease. Welfare or equivalent variation (EV) will decline. Employment in the textile sector will decline with a concomitantly small decrease in labour and capital income. The EEP regime will lead to decreased total government consumption expenditure, while CET will cause a slight increase; this translates into decreased net commodity imports. Effects vary among economic sectors. Performance in U.S. markets indicates that Lesothoâs textile exporters have been competitive under MFA/ AGOA arrangements. This competitiveness can, however, be jeopardized by lower costs in some Asian countries. The policy makers should develop permanent comparative advantage to avoid the risk of losses when temporary tariff preferences are discontinued. Lesothoâs export trade is highly concentrated, both in terms of products (textiles) and markets. Diversification of products and markets is prerequisite for avoiding failure and for sustainable development of the country; considerable manufacturing potential for export diversification exists in furniture, bricks, sandstone and ceramics, wool and mohair products, pharmaceutical products, and the recently revitalised diamond industry. Export trade development and market penetration to non-US destinations should receive attention. In this process, the government should strengthen the capacity of the private sector to deal effectively with rapid change and growing competition by means of, for example, knowledge dissemination, technological transfers, and negotiations for improved market access for textile and other potential export products.

Even though livestock farming has been identified in the Integrated Sustainable Rural Development Strategy as the agricultural sub-sector with the most likely chance of improving household food security and addressing poverty alleviation in the small-scale farming areas of South Africa, the reality is that the small-scale cattle sector has not achieved its full potential despite many efforts through research and development programmes. Previous studies have mainly identified factors impeding participation of small-scale farmers in both informal and mainstream markets and the extent or degree at which participation is affected. The purpose of this study was to investigate the probability of small-scale cattle farmers participating in mainstream markets and measure the impact of change of selected variable on the probability to participate. This is a departure from previous research in that the study attempts to identify those factors that have the greatest probability to increase participation in mainstream markets by smallscale farmers. The study was conducted in three different areas, namely Hammanskraal, Ganyesa and Sterkspruit. The sampling technique used in Hammanskraal is the stratified random sampling technique. In Ganyesa all the identified farmers were interviewed. Since the number of small-scale farmers was unknown in the Sterkspruit area the snowball sampling technique was used. The total sample size is 150 small-scale cattle farmers. A logit model is used in this study. Since multicollinearity in the data was identified principle component (PC) analysis was used to deal with this problem. After PCâs were calculated and PCs with the smallest eigenvalues were eliminated, principle component regressions (PCR) were fitted using the standardized variables to improve the estimation power of the logistic regression model. Partial effects of the significant continuous variables (i.e. herd size, desired market distance, household size, lobola, dependents, theft, household assistance and mortality) on the probability to use mainstream markets are relatively small. However, partial effects for the significant discrete variables (i.e. market information, remittances, training and farming systems) are more significant. The increase in the probability to participate in mainstream markets if the initial conditions are addressed range between 0.3 and 0.6. Simulations with regard to a base group of households revealed training and access to information will have the largest positive impact on the probability of small-scale cattle farmers to market their cattle through mainstream cattle markets if initial conditions improve. Although desired distance to markets, herd size and household size have the potential to increase off-take to mainstream markets, its potential impact is less that training and access to information. The impact of remittances and lobola on the small-scale cattle sub-sector, risk behaviour and the informal market are areas that need further research.

The main objective of this research was to develop models and procedures that would allow water managers to evaluate the impact of alternative water conservation and demand management principles in irrigated agriculture over the long-run and the short-run while taking risk into account. One specific objective was to develop a generalised whole-farm stochastic dynamic linear programming (DLP) model to evaluate the impact of price incentives to conserve water when irrigators have the option to adopt more efficient irrigation technology or cultivate high-value crops over the long-run. The DLP model could be characterised as a disequilibrium known life type of model where terminal values were calculated with a normative approach. MOTAD (Minimising Of Total Absolute Deviations) was used to model risk. Another specific objective was to develop an expected utility optimisation model to economically evaluate deficit irrigation within a multi-crop setting while taking into account the increasing production risk of deficit irrigation in the short-run. The dynamic problem of optimising water use between multiple crops within a whole-farm setting when intraseasonal water supply may be limited was approximated by the inclusion of multiple irrigation schedules into the short-run model. The SAPWAT model (South African Plant WATer) was further developed to quantify crop yield variability of deficit irrigation while taking the non-uniformity of irrigation applications into account. Stochastic budgeting procedures were used to generate appropriately correlated inter- and intra-temporal matrixes of gross margins necessary to incorporate risk into the long-run and short-run water use optimisation models. A new procedure (standard risk aversion) was developed to standardise values of absolute risk aversion with the objective of establishing a plausible range of risk aversion levels for use with stochastic efficiency analysis techniques. A procedure was developed to conduct stochastic efficiency with respect to a negative exponential utility function using standard risk aversion. The standardised risk aversion measure produced consistent answers when the risk premium was expressed as a percentage of the range of the data. Long-run results showed that the elasticity of irrigation water demand was low. Overall risk aversion and the individual farming situation will have an important impact on the effectiveness of water tariff increases when it comes to water conservation. Although the more efficient irrigation technology scenario had a higher net present value when compared to flood irrigation, the ability to pay for water with the first mentioned scenario was lower because the lumpy irrigation technology needs to be financed. Failure to take risk into account would cause an over- or underestimation of the shadow value of water, depending on whether water was valued as relatively abundant or scarce. The conclusion was that care should be taken when interpreting the derived demand for irrigation water (elasticity) without knowing the conditions under which they were derived. Cognisance should also be taken of the fact that higher gross margins per unit of applied water would not necessarily result in greater willingness to pay for water when the alternatives were evaluated on a whole-farm level. The main conclusion from the short-run analyses was that although deficit irrigation was stochastically more efficient than full irrigation under limited water supply conditions, irrigation farmers would not willingly choose to conserve water through deficit irrigation and would be expected to be compensated to do so. Deficit irrigation would not save water if the water that was saved through deficit irrigation were used to plant larger areas to increase the overall profitability of the strategy. Standard risk aversion was used to explain the simultaneous increasing and decreasing relationship between the utility-weighted premiums and increasing levels of absolute risk aversion and was shown to be more consistent than when constant absolute risk aversion was assumed. The modelling framework and the models that were developed in this research provide powerful tools to evaluate water allocation problems that are identified while busy implementing the National Water Act. Only through the application of these type of models linked to hydrological models will a better understanding of the mutual interaction amongst water legislation, water policy administration, technology, hydrology, human value systems and the environment be gained to enhance water policy formulation and implementation.

The Uruguay Round of trade negotiations resulted in three main areas of trade liberalization in agriculture, namely market access, domestic support, and export subsidies. In terms of market access, the introduction of tariff rate quotas (TRQs) was one of the main tools to facilitate greater market access. After the liberalization of the agricultural sector and phasing out of past protection mechanisms South Africa introduced a process of tariff reform in compliance with WTO regulations. Furthermore, a system of TRQs was introduced in compliance with WTO regulations. Literature on South African agricultural trade shows that very little research has been conducted on the impacts of TRQs. In this study the impacts of further TRQ liberalization on the South African livestock industry were investigated using four TRQ liberalization scenarios, namely: 33 per cent expansion of import quotas, 33 per cent reduction in ad valorem MFN tariffs, a combination of the first two scenarios and a complete removal of tariffs. The approach followed in this study is spatial partial equilibrium in nature and consists of the primary (beef cattle, broilers, pigs, and sheep) and secondary (beef, poultry, pork and sheep meat) sub-sectors. The model delineates South Africa into its nine provinces, as well as neighbouring important meat producers â Namibia and Botswana. For the four secondary products (beef, poultry, pork and sheep meat) the border prices declined by between 0.89 and 2.39 per cent for scenario one, 2.35 and 7.96 per cent for scenario two, 2.96 and 9.97 per cent for scenario three and 8.25 and 25.19 per cent for scenario four. The largest decline in beef and sheep meat prices due to liberalization was recorded in the Eastern Cape and KwaZulu-Natal Provinces. Cattle and sheep numbers owned by emerging producers are more than those of the established commercial farmers in these two provinces. The implication is that the development efforts by government aimed at commercializing emerging commercial stock farming in order to address equity and poverty may be slowed down considerably with further trade liberalization. The study used the consumer and producers surplus concepts, as well as the equivalent variation concept to measure the impact on welfare of potential trade policy changes mentioned. Welfare as measured by consumer surplus increases by R230.8 million in scenario 1 to R1 880.8 million in scenario 4. Producer surplus decreases by R77.6 million in scenario 1 to R656.89 million in scenario 4. Welfare as measured by equivalent variation increased by R60.6 million in scenario 1 to R468.2 million in scenario 4. The equivalent variation concept revealed much more moderate changes to consumer well being. The reason for this is that consumer and producer surplus estimations assume linearity of the demand and supply curves, whereas the model used in this study accounts for the non-linearity of demand and supply curves. Consumer and producers surplus estimates nevertheless provide useful insight into the relative impact of trade policy changes. Should further TRQ liberalization be considered in the South African livestock industry, consideration should first be given to expanding the existing quota rather than reducing tariffs. Further research on the following aspects is recommended, (i) products differentiated by place of origin based on the Armington assumption, (ii) expansion of current modelling framework to include additional products and (iii) explicit modelling of TRQs such as the creation of rents and its distribution.

Trade policies form the main economic âbufferâ between one national economy and another, i.e. the general and specific elements of each nationâs trade policy interact directly or indirectly with those of other nations in all economic transactions across international borders. A nationâs trade policy involves specific actions to encourage and promote or discourage foreign trade through the legal, financial and institutional environment within which foreign transactions occur. This study evaluates the trade policy applicable to the beef and maize sub-sectors in South Africa. Issues that are investigated include whether trade policy provides more or less protection than needed, whether it creates more openness for trade and the revealed comparative advantage of beef and maize. According to the RCA and RCA# the beef sub-sector in South Africa shows a revealed comparative disadvantage for 17 out of the 22 years since 1980. The maize sub-sector, on the other hand, shows a revealed comparative advantage for 18 out of the 22 years since 1980. It appears as if both the beef and maize sub-sectors have adjusted favourably since the implementation of the Marrakesh Agreement and subsequent deregulation of the domestic market. Favourably in this context means that both sub-sectors appear to have discounted the changing trade and regulatory environments into their respective supply chains. It is however important to take note that the results do not show the real state of competitiveness that exists in these sub-sectors. The reason for this is that the RCA measures should not be used to make definite conclusions whether an industry, sector or sub-sector in a country is competitive nor whether it uses scare resources in an efficient manner. The RCA measures explain in more accurate ways, relative to a simple analysis of export trends, how a country features in the context of word trade. Hence, one possible application of RCA measures is to deduct the impact of changes in trade policies on an industry, sector or sub-sector. Cognisance should also be taken that the RCA measures fail to distinguish between a regionâs factor endowments. The study also shows that the ERP calculation is lower than the NRP for beef and higher for maize. This means that the protection for inputs is higher than that of the output in the case of the beef sub-sector and vice versa in case of the maize sub-sector. The results from the ERP calculations show that the beef sub-sector is taxed, whilst the maize sub-sector are subsidized. Furthermore, this study recommends the market niche should be exploited more. However it is necessary to give attention to: (i) Small scale farmers (ii) Increased efficiency and (iii) Considering issues such as food safety.

Due to the lack of information on the factors that affect the marketing of cowpeas in Senegal, this study investigates key aspects for the successful marketing of cowpeas in Senegal. The contribution this study makes lies in the information it generates to empower role-players in the cowpea value chain to better understand (i) the demand relations of cowpeas in Senegal, (ii) the information needs of role-players and the extent to which markets are integrated, and (iii) for which characteristics of cowpea consumers are willing to pay premiums. An Almost Ideal Demand System (AIDS) model is applied to one period cross sectional data to estimate demand relations of cowpeaâs in Senegal. The own price elasticity of cowpea is -1.23 while its expenditure elasticity is 0.97 showing that cowpea is a normal necessity. A sample of 443 respondents was taken to determine the information needs of different role-players in the cowpea supply chain. Availability of price information on local and export markets are deemed vitally important by all role players. Information pertaining to quantities supplied and demanded, and buyersâ preferences are not regarded by all role-players as equally important. The most appropriate mode to dissemination cowpea related information should depend on the accessibility of a particular mode by role-players. Bivariate correlation coefficients, co-integration tests, Granger Causality tests and Ravallionâs model are used to investigate level of market integration. The results show that cowpea markets as a whole are not integrated. This is not a surprising result since it can be linked to the general lack of market information. The influence of cowpea characteristics on cowpea prices is analyzed with a hedonic pricing model. The results show that large grain size and sugar contents are characteristics for which consumers are willing to pay premiums in all markets. The implication of the results of this study has several dimensions, i.e. (i) role-players in the cowpea supply chain now has information to guide pricing strategies, (ii) changes in expenditures on cowpeas can be properly discounted in marketing strategies, (iii) interventions can be designed to address the needs of information users and to address the non-integrated nature of cowpeas markets, and (iv) research programs and role-players should focus their research and marketing activities on those characteristics for which consumers are willing to pay premiums.

The current marketing of agricultural products in general, and of bananas in particular, poses special problems for Eritrean farmers. Poor climatic conditions coupled with crude and inefficient agricultural technologies render agricultural output sub-optimal. The major production problems include shortage of capital and scarcity of land; shortage of farming materials; spoilage of bananas during harvesting due to inappropriate harvesting techniques and facilities and lack of technical know how. In addition, the main marketing problems comprise transport problems to stores; general storage problems; lack of information and spoilage during transport. Taking the above into account it should be noted that current trends towards the increased globalization of markets, trade liberalization, advances in information technology, consumer preferences and improved logistics means that the competitiveness of fruit industries in various regions and countries, as affected by the performance of their supply chains, is becoming increasingly important and will be even more important in the future. Cognisance should also be taken of the fact that much confusion exists regarding the exact meaning of the term competitiveness. Comparative advantage and competitiveness are related, but are often mistakenly exchanged for one another. Comparative advantage explains how trade benefits nations through more efficient use of their resource base when trade is totally unrestricted. Competitive advantage defines trade patterns as they exist in the real world, including all the barriers to free trade ignored by comparative advantage (Worley, 1996). Vitally important is to take cognizance of the fact that the establishment of a competitive supply chain is a prerequisite for an industryâs competitiveness and success. Based on this analysis, this study proposes what should be done to achieve a workable SCM for the banana industry in Eritrea. In its broader sense, the proposed structure of the SCM involves the introduction of horizontal strategic alliances between existing banana producers and the marketing group and a vertical relationship along the supply chain. Given that bananas comprise a considerable portion of the international trade makes it significant to this study. Bananas are also symbolic of the wide range of injustices present in international trade today. The Lomé Convention, which placed certain Latin American banana exporting countries at a disadvantage, was the root cause of trade disputes, and the eventual replacement of this Convention will have an impact on the future banana export prospects of ACP countries. Eritrean producers, like those of other ACP countries, therefore have little time to adjust and become competitive against âdollarâ bananas on the European market, which at this point enjoy a production cost and quality advantage.