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.

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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.

The role that agriculture should play in economic development has been recognised for years. In recent years, concern has been expressed over rising agricultural and food prices. The world market prices for major food commodities have risen sharply to historic highs of more than 60 percent above levels just two years ago. Many factors have contributed to the rise in food commodity prices. Some factors reflect trends of slower growth in production and more rapid growth in demand that have contributed to a tightening of world balances of grains and oilseeds over the last decade. Other factors that have added to global food commodity price inflation include the declining value of the US dollar, rising energy prices, increasing agricultural costs of production, growing foreign exchange holdings by major food-importing countries, and policies adopted recently by some exporting and importing countries to mitigate their own food price inflation (Trostle, 2008). Mozambique has a vast extension of land and diversity of natural resources. Resources are inadequately used, the rural income continues to fall, and poverty is increasing. The rural standard of living has been deteriorating year by year. To date, estimations reveal that between 60 and 80 percent of cultivated land in all the provinces is concentrated in areas between 0.2 and 1 ha. For a sample of 192 farmers, using a translog stochastic production frontier like that of Bravo-Ureta and Pinheiro (1993), who estimated a Cobb-Douglas total value product frontier for analysis purposes, the study found that the average economic efficiency (EE), technical efficiency (TE) and allocative efficiency (AE) for the sample were 11.6%, 83.0% and 13.7% respectively. These results suggest that there is considerable room to maximise resource usage and increase agricultural output without additional input and given the existing technology. The adoption of new technologies designed to enhance farm output and income has received particular attention as a means to accelerate economic development. However, output growth is not only determined by technological innovations, but also by the efficiency with which available technologies are used in the absence of inefficiency factors. As Bravo-Ureta and Pinheiro (1993) noted, the evidence presented in this study suggests that there is much room for improving the efficiency of natural resource management in general. The results based on frontier methodology are generally consistent with the notion that local actors play an important role in the management of local resources; consequently, public investments designed to enhance human and social capital at local level can be expected to generate additional skills and output even in the absence of new technologies. The participation of citizens in all stages is crucial. It is recognised that qualitative variables have influence and potential importance in efficiency. Governance is considered within the framework of power, process and practice and how these have shaped peasant access to and control and use of natural resources. Over the years, state visions of appropriate agriculture development have largely been extended to the peasant sector through a centrally directed structure and process. Pioneering efforts at decentralising entrustments over the use and management of resources to the peasant communities have largely resulted in recentralisation at the district level, where such efforts are still practised in the trickle-down mode. This is in part because the policy thrust seeking to empower the peasant communities is supply-led, and thus defined according to the terms and processes of external agents, including funders and central governments. The research found that by improving institutionsâ, citizensâ and communitiesâ capacity to address local governance and decision-making through prominent, decentralised natural resources management policies, they could participate more effectively in local development, gain experience in democratic processes, and hold local officials responsible for their decisions. The study concluded that natural resources play a strategic role in rural economies both as a potential source of long-term development and as the essential contributor to sustained food security. Access by the poor to natural resources (land, forests, water, fisheries, pastures, etc.) is essential for sustainable poverty reduction. Many rural communities are dependent on natural resources in one way or another. Decentralising natural resource management and using local decision-making power is critical to improve the revenue generation of citizens and local authorities. Local representative bodies need power over the resources that affect rural sustainable livelihoods in order to become legitimate actors around which civic organisations and citizens rally for justice, sustainable livelihoods and economic improvement. Decentralising natural resource management (NRM) can give local governments allocative powers over lucrative opportunities, both of which can help build local government legitimacy. In short, local development can emerge.

Nigerâs irrigated rice production system was evaluated within the context of the countryâs common external tariff regime. The effects of the common external tariff (CET) on the performance of the irrigated rice production system were evaluated at various comparison points where local rice enters into competition with imported rice and by considering the main rice marketing systems (retail and wholesale markets). These comparisons were made taking into account the various brands of imported rice that are commercialised in the country. The results of the policy analysis matrix (PAM) base scenario for the irrigated rice system under the CET show that the system is generally competitive (positive private profitability) and has potential for growth (positive economic profitability). These results are disaggregated by type of rice quality, type of rice market (retail or wholesale) and by two points of comparison (Niamey and Tillabery). At both points of comparison, the PAM indicators show positive financial profitability, indicating that the system is generally competitive and that operators are making some financial gains. Moreover, the irrigated rice production enterprise reveals positive economic profitability for both retailers and wholesalers. Therefore, as an economic activity, it generates net positive income for the national economy per unit of land devoted to this activity. It can be maintained that despite the fact that the inputs used in irrigated rice production are affected by the various common external tariff (CET) measures, the activity still performs to a level that permits the various actors to earn some positive income and sustain their businesses. Despite its competitiveness and efficiency, however, irrigated rice production still performs below potential because it lacks certain additional incentives. To investigate this issue, various sensitivity analyses were performed, using single factors as well as simultaneous changes in several factors. These sensitivity analyses were performed in order to diagnose the effects of possible policy changes on elements such as financial and social profitability, production incentives, and protection coefficients. The sensitivity analyses show that private and social profits, ceteris paribus, are sensitive to improvements in technological factors such as farm-level productivity and post-harvest techniques that enhance the milling conversion rate of paddy into milled rice. The incentives and protection coefficients are also found to be sensitive to possible policy changes. Furthermore, private and social profits, including incentives and protection coefficients, are sensitive to changes in economic factors relating to the reduction of import duties on inputs, as well as to increases in import duties on imported rice and changes in exchange rates. Nigerâs irrigated rice system generally performs well under the CET regime, but because certain resources are diverted away from it, the system is in fact being taxed. There is a need to provide greater incentives to everyone active in the system, in the form of technological improvements (farm-level productivity improvement and post-harvest quality enhancement). Greater incentives should also be given in terms of improving marketing channels, especially retail marketing, where a great number of women rice traders are active. More research needs to be conducted on this aspect.

This thesis assesses the vulnerability of smallholder farmers to food insecurity in Gweru and Lupane districts of Zimbabwe and links this to climate change. Current changes in climate for most parts of Zimbabwe have resulted in increased frequency of droughts, dry spells and erratic rainfall. This has resulted in loss of food production and smallholder farmers are most vulnerable to these climatic catastrophes as they affect the food security status of the household. Few studies have been done at local and household levels, most climatic studies have been done at global and national levels. This study seeks to contribute to this knowledge gap. Poverty and food security studies have proved that poor and food insecure households are more vulnerable to climate change, considering that they have limited options to curb against climate change. Using data obtained from a survey carried out in Gweru and Lupane districts in Zimbabwe, descriptive statistics analysis was undertaken to characterize the households, in terms of gender, education of the household head, cropping patterns of the household, perceptions to climate change and also organizations working within the communities and how they help reduce vulnerability to climate change. Results show that cereal crop production is common and important in these two districts, considering that the largest pieces of land are allocated to cereals. Thus cereals constitute a large proportion to the householdâs food security. Chuadhuriâs model of measuring vulnerability to poverty was used to measure vulnerability to food insecurity for households in Gweru and Lupane districts. Results show about 88% of the households in both districts are vulnerable to food insecurity thus, have more chances of being negatively impacted by climate change.