During the last century, human life and the quality of living have been impacted significantly through continuous developments in science and technology. Man has evolved himself from a hunter and gatherer to the modern man whose lives are enriched with products that relate to information and communication technology, biotechnology and info-space technology. The domestication of biotechnology may dominate our lives during the next fifty years at least as much as the domestication of computers has dominated our lives during the previous fifty years. The advent of genetically modified organisms (GMOs) has brought rapid change to world agricultural production and trade. Evidence shows that Genetically Modified (GM) crops can have a yield advantage over conventional crops. Currently 46% of the total area utilised in maize production in South Africa is planted with GM maize. South Africaâs main trading partners in maize have differing GMO regimes, and many of them may well change their current stances and regulations as the international conventions and agreements on GMOs further evolve. Over and above this regulatory framework, consumer attitudes to GM foods are also changing. The objective of the study is to calculate and quantify the potential impacts of GM maize on the South African maize trade, by applying the GTAP model. This will provide scientific input to South African policy makers on GM maize related regulations in the domestic market, as well as on their stances in the international conventions. The GTAP model is generally accepted by trade researchers as the most suitable tool to analyse the impact of trade policy decisions on trade flows and national welfare on a global level due to its regional and sectoral coverage as well as its theoretical compliance. The results suggest that the South African policy to allow the domestic production of approved GM maize events was to the benefit of the country. Policy measures that will restrict the countryâs access to new GM maize events will gradually disadvantage both the domestic producers and consumers of maize. The consumers will suffer a decrease in total welfare whilst the producers will be disadvantaged in terms of imported competition. For this reason, commodity clearance before general release should be the exception rather than the rule. In terms of future studies on this issue to further refine the results of this study specific effort should be afforded to improve the changes made to disaggregate the maize sector from other grain sectors, nationally and internationally, in the GTAP model. In addition, it is recommended that trade flows between countries as included in the GTAP model should be scrutinised in detail to check for the correctness of actual flows. This would entail a proper evaluation of the base data of the GTAP model specific to countries playing a relatively smaller role in the international trade of agricultural products. Neglecting to do the aforementioned could result in incorrect policy recommendations.

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.

Apples constitute the bulk of deciduous fruit produced in South Africa, i.e. in 2000, apples made up the largest percentage of the deciduous fruit crop (43%). From 1991/92 to 2002/03 production averaged 574 850 tons per annum with a standard deviation of 43 922 tons. The average distribution of the apple crop between the local market, exports and processing is more or less even. Because of its potential lucrative nature much emphasis in the apple industry is afforded to exports, but relatively little is known about how price transmission takes place on the domestic fresh produce markets (FPMs). Moreover, it is increasingly recognized that the formulation of market-enhancing policies to increase the performance of the local market requires a better understanding of how the market functions. Aggregate market performance is better understood by studying the level of market integration that exists, which in turn is affected by transaction costs in the value chain. Hence, the primary objective of this study was to measure market integration for apples on the South African FPMs to determine the existence of long-run price relationships and spatial market linkages. Specific issues addressed in this study include, (i) determination of the effect of deregulation of the marketing of agricultural products in 1997 on average real market prices, price spread and volatility (risk), (ii) determination of how FPMs where apples are sold are linked and how prices are transmitted across these markets, (iii) determination of the threshold prices beyond which markets adjust and return to equilibrium, and (iv) establish the response of the FPMs to price shocks and how long it takes for shocks to be eliminated. The FPMs included in this study are Johannesburg, Cape Town, Tswhane, Bloemfontein, Port Elizabeth, Durban, Kimberley and Pietermaritzburg. The criteria for selecting the FPMs were based on net market positions (surplus or deficit area), geographical distribution, the volume of trade and the importance of the market to the national apple trade flow. The investigation revealed a statistically significant decline in real prices in six of the eight markets investigated, a statistically significant relation in prices (price spread) between the Johannesburg FPM and five other FPMs, as well as that the price spreads between these markets declined after deregulation, and that the variation in real apple prices declined for five of the eight markets after deregulation. Standard autoregressive (AR) and threshold autoregressive (TAR) error correction models were compared to determine whether transaction cost has significant effects in measuring market integration. Larger adjustment coefficients were found in the TAR model. This is an indication that price adjustments are faster in threshold autoregressive TAR models than in AR models. Also half-life deviations in the TAR model are much smaller than in the AR model. The TAR model requires less time for one-half of the deviation from equilibrium to be eliminated than the standard AR model. Therefore, it is better to use TAR models than AR models because TAR models give a more reliable result. In addition, the parameter estimates of the threshold vector error correction model were analyzed. The results show that bidirectional and unidirectional causality exist between Johannesburg FPM prices and other markets. Regime switching estimates to investigate market integration in the selected markets show that no persistent deviation from equilibrium existed for all but one market pair and no clear evidence was found to support improved market integration after market deregulation in 1997. A nonlinear impulse response function to investigate the impact of positive and negative price shocks in the Johannesburg FPM on other FPMs revealed that it takes about six to twelve months for positive and negative shocks to be completely eliminated in all the markets. Generally, the results obtained confirmed strong market integration in terms of apples for selected FPMs.

The economic evaluation of, for example, trade liberalisation requires complex models that can take different forms and which are based on economic theory. Of particular importance in partial and general equilibrium models is the behavioural function that governs the interactions between different variables. For example, in these models changes in trade regimes and tariffs alter the domestic price of imported goods relative to that of domestically produced goods, and such changes in relative prices affect the fraction of the demand supplied by imports. If such behaviour is not modelled correctly, trade impacts can be either under- or overestimated. Estimates of the elasticity of substitution between goods differentiated by their place of origin are therefore required. A review of the literature revealed that estimates of Armington elasticities are not available for agricultural products in the majority of countries, including South Africa, in spite of the importance of including Armington elasticities when evaluating the impact of trade policies. The focus of this study was on the estimation of Armington elasticities for selected agricultural products in South Africa. In this study, non-nested CES Armington elasticities were estimated using the econometric approach for the following agricultural products: Meat of bovine animals (fresh or chilled); meat of bovine animals (frozen); meat of swine (fresh, chilled or frozen); maize or corn; wheat and meslin; soybeans (broken or not broken); and sunflower seeds (broken or not broken). Three econometric models, namely geometric lag, single-equation error correction, and ordinary least square, were estimated based on the time series properties of the data. All the products considered in this study have significant Armington elasticities at 10 percent level of significance. All the products except soybeans have short and long-run elasticities. The estimates of Armington elasticities range between 0.60 and 3.31 for the short-run elasticities, and between 0.73 and 3.21 for the long-run elasticities. These values suggest that imported and domestic agricultural products are not perfect substitutes. The long-run elasticity estimates show that meat of bovine animals (frozen) is the most import sensitive product followed by maize, meat of bovine animals (fresh or chilled) and sunflower seeds, while wheat and meat of swine (fresh, chilled or frozen) are the least import-sensitive products. The short-run elasticities show that soybeans is the most import-sensitive product followed by meat of bovine animals (fresh or chilled), while meat of swine (fresh, chilled or frozen) is the least import-sensitive product. The dummy variables representing seasonality were found to be statistically not significant for livestock products, with the exception of the fourth quarter for meat of swine (fresh, chilled or frozen). However, dummy variables for the grain products were statistically significant. The results show that seasonality is an important factor in determining import demand for grain products. Dummy variables included to control for outliers were not significant, nor was the dummy variable included for trade liberalisation. The value of this study is that the estimated Armington elasticities will allow researchers to evaluate more precisely the economic impacts of trade liberalisation and changes in tariffs, as well as other trade policies, in partial and general equilibrium models that include South African agriculture.

Not available

The broad objective of the study was to generate information that will facilitate the integration of small-scale emerging agriculture into the South African economy. The specific main objectives were to: · Identify the constraints to market participation and commercial orientation of the small-scale emerging farmers; · Identify potential successful and unsuccessful farmers; · Assess the potential role of joint venture initiatives as a commercialization model; · Assess the impact of market participation to farmersâ livelihoods and their welfare in general; · Analyse both the structure and performance of the cotton industry as well as the profitability of the cotton crop; · Discuss the implications of the findings for policy and possibly additional research necessary to improve small-scale agriculture. The study was conducted in two cotton growing regions of the Mpumalanga Province, namely Moutse and Nkomazi. A sample of 177 small-scale cotton growers was drawn from emerging cotton growers. The basis for analysing and understanding of the major factors behind the success or failure of small-scale farmersâ commercialisation lies within the New Institutional Economics school of thought. Contract farming is an institutional marketing arrangement widely used by sample farmers to reduce transaction costs. Its main advantage is that it offers farmers a guaranteed market. For processing companies (ginners) the advantage is that production is more reliable and guaranteed than open market purchases. As a result of guaranteed market, cotton has the highest commercialisation index of 0.99 and 1 in Moutse and Nkomazi respectively. The main challenge facing the continuation of contract farming is the non repayment of loans with a resultant decline in the level of support that farmers receive Cotton plays an important role in the farmersâ livelihood in terms of employment, income, household gender relations and food security. The role of cotton in rural development is, however, constrained both by external and internal factors. Low international prices arising mainly as a result of subsidy policies in the wealthy countries constitute the greatest limiting factor to cotton farmers in developing countries. Profitability analysis shows a gross margin of R1 072 per hectare in Moutse which is 52% higher than Nkomazi gross margin. Three main critical variables that influence the profitability of cotton production are production levels, costs and price as influenced by the quality of seed cotton produced. Break-even analysis reveals that when price is set at R3.65/kg , the break-even yield for Moutse and Nkomazi is estimated to be 1 073kg and 917kg per hectare of seed cotton respectively. When the seed cotton price declines larger quantities of seed cotton have to be produced to break-even. Cluster analysis revealed two main groups of farmers categorised according to their entrepreneurial skills, namely very successful and less successful farmers. The very successful group is dominated by a group of relatively young farmers with a high level of entrepreneurial skills . In addition, this group has a relatively high percentage of risk takers (10%) compared to 2% for less successful farmers. The hypothesis that transaction costs and other closely related factors influence commercialisation was empirically tested using logistic regression. Statistically significant factors were found to be age, ability to speak English, region, ownership of transport, access to market information, distance to market, dependency ratio, trust, ownership of livestock and land size. The results do not support the hypothesis that the level of commercialisation increases with land size. A unit increase in land size decreases the probability of commercialisation by 17%. In view of these findings, the following policy proposals are suggested: There is a need to develop a typolo gy of small-scale cotton producers in order to operate different kinds of credit schemes based on farmersâ level of production, yield and perceived risk. Secondly, contract farming is the future of agricultural production and marketing and should therefore be promoted. In this regard, there is a need for a well developed and efficient legal system in which the government has a role to play. Thirdly, consolidation of farmersâ organisation is critical. If well developed, banks should, inter alia, consider group lending through working with effective farmers organisations. Finally, successful integration of small-scale agriculture relies heavily on the selection of beneficiaries. Future research studies should take cognisance of non-homogeneity of small-scale farmers and their aspirations. There is a need for a study that focuses on attributes of a successful entrepreneur and such attributes should be used for the selection of land reform beneficiaries.

In recent years, concern has been expressed over rising agricultural land prices in South Africa. A major concern was that this situation would impede the successful implementation of the on-going land reform programme. This study aimed to examine the trends and draw conclusions about their determinants against the backdrop of recent policy developments to restructure the agricultural sector and empower the black population to participate more effectively in the nationâs agricultural economy. On the basis of a comprehensive literature review, it was established that land issues have played an important role in past and present configuration of the economy and politics of South Africa. In South Africa as elsewhere in the world, agricultural land prices are central to how land enters the political and economic equations for which reason they are important subjects for research as well as developmental interventions. Despite the implementation of far-reaching governance reforms and agricultural restructuring over the past 12 years, no recent model of farmland prices has explicitly considered these new issues. This study therefore employed cointegration analysis to model the long-run and short-run dynamics of the relationships so as to identify the key determinants as well as attempt a tentative forecast within the constraints imposed by limited data availability to the extent that the available time series permits. To that extent, this study contributes in an important way to the debate and provides a basis for more sophisticated and focused work in the future. Building on previous structural modelling of farmland prices in the country, but using much expanded and some new time series spanning forty-nine years, it was possible to establish clear patterns of relationships between real farmland prices and a range of macro-aggregates, including real interest rate on debt, the rate of inflation, real Gross Domestic Product (GDP) per capita, among others. The results suggest that real farmland prices have strong positive relationships with real GDP per capita and real farm debt per hectare. The importance of real net farm income and the real exchange rate of the rand were also demonstrated. Although the inflation rate was found to be positively related with real farmland prices, the relationship was found to be insignificant. Overall, strong policy effects were confirmed by significant structural breaks in the series. But the fitted error correction model suggests that the systems rapidly adjust to its long-run equilibrium, with most of the deviations being corrected within the next year. While there is no basis to conclude from the results that rising farmland prices are hurting the land reform process, there is no question that sudden increases in prices generate uncertainties and call for measures to ensure greater stability. Actions to moderate the impact of price increases on smallscale and emerging farmers should therefore be explored, particularly by making redistributable agricultural land more abundant and accessible to small-scale farmers unable to compete in the unregulated land market. This will include drawing from the existing pool of state land and purchasing indebted farms for redistribution. Adjusting the rate of interest to keep consumption spending in check can have additional benefits in land price stabilization. Importantly, a fixation on rising agricultural land prices may be diverting attention from the crucial support needed by newly settled farmers to make agricultural land more productive through improvements in the input delivery systems, extension services to enhance the knowledge base of new entrants into the farming business, rural road networks, etc.

In the Lower Vaal and Riet Rivers, changing irrigation water quality has raised concern about the long-term sustainability of irrigation due to reduced yields of certain crops and the withdrawal of some very profitable crops. The main aim of this study is to develop and apply models to determine the long-term financial and economic viability of irrigation farming in the Lower Vaal and Riet Rivers, with specific aims to: evaluate the relationship between changing water quality, soil conditions and crop production; determine the impact on yield, crop choice, agronomic and water management practises, expected income and costs; develop models for typical farms in different river reaches, and apply these models to test the outcome of alternative scenarios regarding internal water quality management practises and external policy measures. Five case study farmers were selected, one from each of the different sub-areas of the OVIB study area. The case study farmers were representative of their sub-areas with regards to the hectares of irrigation water rights held, and jointly, also sufficiently representative of the OVIB region. With the contradicting aims of improved water use efficiency and increased leaching for salinity management, the importance of a financial optimisation model was evident to solve the apparent paradox between saving water due to itâs scarcity value and âwastingâ water to leach out salts that build up in soils through the process of irrigation. SALMOD was constructed using GAMS and consists of a simulation and optimisation section that calculate the optimal crop enterprise, management and resource use combination that maximises farm returns under different water quality, management and policy scenarios. The management options built into SALMOD are the appropriate leaching fraction to implement and crop yield to accept for the optimal crop / resource combination calculated. The fixed capital management options included in SALMOD are the installation of artificial drainage, the change of irrigation system and the building of on-farm storage / evaporation dams for return-flow management. The % reduction in TGMASC from the long-term average ECiw (74 mS/m) to the worst expected Vaal River ECiw as predicted by Du Preez et al, (2000) for 2020 (159 mS/m), is 84% and 58% for the small farmers from Bucklands and Atherton respectively, between 13% and 16% for the Olierivier farmer, depending on whether the Vaal River of the Riet River has the major impact, 1% for the large and financially strong Vaallus farmer and 3% for the small yet resource strong New Bucklands farmer (see Table 5.38). These results clearly show that the small and resource poor farmers will be the most affected by irrigation water salinity deterioration. Scenario results from SALMOD further show that: - Leaching is financially viable for all case study farmers - Accepting lower yields on soils with insufficient leaching capacity is also financially viable - For farmers with limited area of well drained soils it can be financially viable to install artificial drainage - The option of building on-farm storage dams when returnflows are constrained to 100 mm per hectare water rights held, is financially infeasible for all case-study farms and for all scenarios - It is not financially viable for farmers to replace their current irrigation systems with more efficient water saving systems, but in some instances to replace them with systems that can apply a greater leaching fraction - At the worst-case scenario salinity conditions, farmers with below 60 ha water rights, and who donât grow cotton, will go out of production. SALMOD has proved to be a valuable farm level salinity management tool. SALMOD is also potentially useful at regional and national level for determining the farm level financial impacts of various water quality and quantity scenarios where the farmers are affected by irrigation water salinity.

Salinisation of irrigation schemes has become a problem in various schemes in South Africa. One such area that experiences salinisation problems selected for this research is the Lower Vaal and Lower Riet irrigation areas, upstream from where these two rivers converge and flow into the Orange River. By understanding the dynamics and interactions between irrigation water quality and the soil salinity status on crop yield over time, mistakes made in the past by choosing unsustainable irrigation sites and practices can be prevented in the future. Furthermore the impact of various natural or artificial (e.g. policy mechanism) scenarios on existing schemes can be more accurately modelled, leading to increased economic efficiency and sustainability of the irrigation industry, together with its primary and secondary linkages, as a whole. Aims: The overall aim of the WRC study on which this thesis is based was to develop and integrate multi-dimensional models for sustainable management of water quantity and quality in the Orange-Vaal-Riet (OVR) convergence system. More specifically the following sub-objectives had to be addressed: 1. To better understand the polluting chemical processes and interactions in and in-between the plant and surface-, vadose zone-and ground-water, to achieve efficient and sustainable water quality management 2. To develop new economic models at both, a. Micro level, namely dynamic long term simulation models, and at b. Macro level, using a regional dynamic Input / Output model1 3. To integrate these new economic models with models from the other disciplines of: a. Hydrology2 (incorporating a salt mass balance and flow), and b. Agronomy (crop growth in the presence of salinity model) 4. To determine and prioritise best management practices at: a. Micro level, (i.e. per hectare and irrigation block level) and at b. Regional level. 5. Through a better understanding of the multi-dimensional interactions, to enhance water use efficiency as the quantity and quality of water available for agriculture inevitably decreases 6. To develop policy guidelines to ensure social, environmental and economic sustainability 7. To achieve all these aims based on using the complex OVR convergence system as a study area, but developing a method and models that can be applied elsewhere with relative ease. This thesis however only covers the micro-economic aspect of the WRC project conducted by the author, and how it is driven by the hydrological and bio-physical processes and how it links and translates to the macroeconomic (regional) impact. Model: The economic base model of the integrated model uses hydrology and biophysical data and algorithms as input into the monthly time-step, per hectare Crop Enterprise Budget based, MSExcel simulation model (SMsim) to generate the base data. The resulting stochastic and spatially differentiated data set of per hectare total gross margin above specified costs data is then converted to sub-WUA, WUA, combined WUA and regional area level data for comparison and interpretation at these various levels and for input into the macro-economic regional level model (ISIM) and the index for socio-economic welfare (ISEW) for sustainability evaluation between alternative scenarios. Results: The results of this thesis inter alia show that the installation of irrigation drainage to facilitate leaching is a far better option than planting more salt tolerant crops. In the WRC project on which this thesis is based the results of a macro-economic analysis based on the micro-economic results from this thesis show that although at sub- WUA level it may not be financially feasible to install drainage in some sub-WUA areas, the secondary and regional socio-economic and environmental impacts justify the spending of government grants for drainage installation as the secondary benefits on the regional economy exceed the costs of the drains.

This study focuses mainly on the economic impact of maize-based ethanol production on the South African animal feed industry. Over the past few years the world has witnessed substantial developments in the global production and the production capacity of ethanol. Bio-fuels are becoming an increasingly important source of energy globally. This tremendous industry growth is mainly driven by: increased energy and more specifically petroleum prices, the reliability of traditional crude oil exporters along with political motives, adverse pollution effects (methyl tertiary butyl ether â MTBE) and more specifically emission gases from fossil fuels leading to environmental pressure for the use of cleaner burning fuels. Together with this growth, various researchers locally and globally have focused on ethanol production, but little work has been done on the economic impact that ethanol production will have on the animal feed industry. These impacts include substitution of the raw materials of animal feed, the price sensitivity of raw material prices (equilibrium prices), changes in feed costs and the consumption of distillerâs dried grains with solubles (DDGS) by different animal species. In order to simulate the results, the two main scenarios were analysed using three different models, namely the BFAP model, the APR model and the Nieuwoudt/McGuigan model. By applying the BFAP model to these scenarios, the equilibrium prices of animal-feed raw materials were simulated for the year 2015. The other two models were then applied to these prices in order to evaluate the impact of ethanol production on the animal feed industry. Two main scenarios is constructed with 8 combinations, the main variables in the scenarios is the oil price and the blending ratios. The results revealed that there is no significant effect on the animal feed industry. Various raw materials are affected, but only by small percentages. The only raw material that shows any significant change is lucerne with a 20% decrease in consumption. A few species were dominant consumers of DDGS, namely broilers, pigs and dairy cattle. In terms of the animal feed costs, there was only a 2% decrease with the introduction of ethanol production. The introduction of ethanol production resulted in various price reactions, including an increase in the price of yellow maize and a decrease in the prices of various oilcake raw materials. Under a scenario of high blending ratios and oil prices the yellow maize price increases with R169/ton and the soya oilcake price decreases with R347/ton.