This study is one of several investigations undertaken over the years to determine
the Comparative Economic Advantage of agricultural production in selected
Southern African countries. The specific purpose of the Lesotho study was to
generate information required to guide decision-makers in agriculture towards
productive allocation of resources and identify feasible infrastructure investment
options to take advantage of available trade opportunities within and beyond the
region. It was also required to analyse the factors involved in the structure and
development of inter- and intra-industrial trade (Gini and IIT) for the SACU region
of which Lesotho is a part. The inter-industry analysis shows that there is
concentration in the market of apples, asparagus, cherries and peaches. On the
other hand, the intra-industry analysis with respect to apples, asparagus, cherries
and peaches suggests that the SACU countries exported more than they imported
during the period 1994-1998.
The study also evaluated the comparative economic advantage of irrigated longterm
crops in the four agro-ecological zones of Lesotho based on analyses of
profitability coefficients and domestic resource costs. For these, the analysis was carried out using the net present value (NPV) approach. Further, economic
efficiency and policy distortions were examined by the use of such a measure as
the nominal protection ratio (NPR), effective policy ratio (EPR), and net policy
effect (NPE).
The CEA analysis based on the NPV approach yielded higher private returns
relative to economic returns for the measures of economic efficiency and policy
distortions in the Lowlands, Foothills, the Senqu River Valley and the Mountains of
Lesotho for all the crops examined. It was revealed that apples were dominant and
were more profitable in all zones. These results suggest that in the presence of
government intervention, Lesotho could exploit comparative advantage in
contracting production of apples and peaches in the Lowlands and Foothills so that
other activities can expand. In the Mountains, the protection policies have raised
the price of apples by 61 per cent above the social price for importing the
commodity, i.e. Mountain farmers received 61 per cent more than the export parity
prices. In the Senqu River Valley and Mountains, only apples could be contracted.
Thus, should economic values of inputs prevail; farmers would receive lower
returns, meaning that they may not compete effectively in the world market.
The results of DRC based on the returns to land when NPV was employed,
indicate that apples, asparagus, cherries and peaches for the Lowlands have
comparative economic advantage, with asparagus production being the highest
followed by peaches. However, in the Foothills apples are more efficient than
peaches although the dominance is weak. However as the majority of farmers lack
easy access to land in Lesotho, it is doubtful if results based on the prevailing land
prices can have much predictive value. The absence of a clear policy and law
enforcement also leads to lack of land price market, which in turn affects the
impact of capital gains and losses. In this case, it may be necessary to conduct
detailed studies to determine the economic prices of land in Lesotho on the basis
of which reliable CEA analysis can be conducted. The study concludes that in the short-term, the commodities examined could
contribute to the attainment of food security in Lesotho. For the future, Lesotho
producers would benefit to a greater extent from expanding production for the
international markets. It must be noted however that the coefficients of the CEA
analyses do not provide sufficient information to guide future decisions for
investment. For more long-term investment decisions, it is recommended that
detailed cost-benefit analyses be carried out for each agro-ecological zone and
location identified for any future project aimed at expanding the production of longterm
crops in Lesotho.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ufs/oai:etd.uovs.ac.za:etd-01192007-110542 |
| Date | 19 January 2007 |
| Creators | Makosholo, Malefu L |
| Contributors | Prof HD van Schalkwyk, Prof A Jooste |
| Publisher | University of the Free State |
| Source Sets | South African National ETD Portal |
| Language | en-uk |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.uovs.ac.za//theses/available/etd-01192007-110542/restricted/ |
| Rights | unrestricted, I hereby certify that, if appropriate, I have obtained and attached hereto a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to University Free State or its agents the non-exclusive license to archive and make accessible, under the conditions specified below, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report. |
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