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  • About
  • The Global ETD Search service is a free service for researchers to find electronic theses and dissertations. This service is provided by the Networked Digital Library of Theses and Dissertations.
    Our metadata is collected from universities around the world. If you manage a university/consortium/country archive and want to be added, details can be found on the NDLTD website.
81

THE POTENTIAL IMPACT OF TRADE ON THE ECONOMY OF LESOTHO

Bahta, Yonas Tesfamariam 25 January 2008 (has links)
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.
82

FACTORS AFFECTING PARTICIPATION IN MAINSTREAM CATTLE MARKETS BY SMALL-SCALE CATTLE FARMERS IN SOUTH AFRICA

Montshwe, Bolokang Derrick 02 February 2007 (has links)
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.
83

STOCHASTIC EFFICIENCY OPTIMISATION ANALYSIS OF ALTERNATIVE AGRICULTURAL WATER USE STRATEGIES IN VAALHARTS OVER THE LONG- AND SHORT-RUN

Grové, Bennie 19 March 2009 (has links)
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.
84

MODELING TARIFF RATE QUOTAS IN THE SOUTH AFRICAN LIVESTOCK INDUSTRY

Oyewumi, Olubukola Ayodeji 12 May 2006 (has links)
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.
85

THE EFFECT OF THE SOUTH AFRICAN TRADE POLICY REGIME ON THE BEEF AND MAIZE SUB-SECTORS.

Bahta, Sirak Teclemariam 17 June 2005 (has links)
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.
86

INVESTIGATION OF KEY ASPECTS FOR THE SUCCESSFUL MARKETING OF COWPEAS IN SENEGAL.

Faye, Mbene Dieye 17 June 2005 (has links)
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.
87

CHAIN MANAGEMENT AND MARKETING PERFORMANCE OF THE BANANA INDUSTRY IN ERITREA.

Zereyesus, Yacob Abrehe 17 June 2005 (has links)
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.
88

TRADE AND WELFARE IMPLICATIONS OF GENETICALLY MODIFIED MAIZE ON SOUTH AFRICA

van Wyk, Marcel 24 June 2008 (has links)
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.
89

MODELING TARIFF RATE QUOTAS IN THE SOUTH AFRICAN LIVESTOCK INDUSTRY

Oyewumi, Olubukola Ayodeji 31 August 2006 (has links)
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.
90

MEASURING MARKET INTEGRATION FOR APPLES ON THE SOUTH AFRICAN FRESH PRODUCE MARKET: A THRESHOLD ERROR CORRECTION MODEL

Uchezuba, David Ifeanyi 31 August 2006 (has links)
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.

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