Factors Influencing Trade Patterns of South Africa’s Fresh Apple Exports, with a Focus on Non-Tariff Barriers

Bestbier, Ruan Henri (2016-03)

Thesis (MScAgric)--Stellenbosch University, 2016.

Thesis

ENGLISH ABSTRACT: The South African fresh apple industry is continuously faced with international trade barriers which decrease the competitiveness of the industry in this ever changing global market. Fresh apple exporters from developing countries such as South Africa are struggling as more major importers from developed countries such as the European Union (EU) have turned to implementing non-tariff barriers (NTB’s) to protect their domestic industry. Keeping the latter in mind, South African fresh apple exports to traditional markets such as the European Union have been declining over the past decade, despite it being South Africa’s single biggest market segment. However, exports to non-traditional markets such as Africa, the Far East and Middle East have been increasing. Technical barriers to trade and sanitary and phytosanitary (SPS) measures were identified as major non-tariff barriers, especially that of the stringent Maximum Residue Limits (MRL’s) implemented by the EU. International trade literature indicates that gravity models have been extensively used to examine and predict trade patterns and several individuals have attempted to derive a method which can serve to quantify the effects of NTB’s on bilateral and multilateral trade flows. However, none of these methods have been able to be specifically used as an explanatory variable (NTB proxy) within a gravity trade model in order to estimate the impact NTB’s have on the trade of a single commodity i.e. fresh apples in this case. The objective of this study was to determine the main factors that explain the recent trends in South Africa’s apple exports. A gravity trade model was estimated using a fixed effect and Ordinary Least Squares (OLS) regression technique. The variables in the model reacted differently to apple exports compared to that of total exports from South Africa. The following variables were found to be statistically significant: the target country’s GDP and population, the ad valorem tariff rate equivalent and the distance between South Africa and the target country. The variables that typically explain total trade flows, which were found to be statistically insignificant for apple exports were: South Africa’s GDP and population, the nominal exchange rate and the common language dummy variable. It was also evident that there exist statistically significant differences between the EU and non-traditional markets in terms of the volume of apple exported to these regions. Factors other than tariffs and non-tariff barriers which could contribute to the shift in traditional export patterns of apple South Africa include market prices, consumption patterns, market-specific requirements and the production of certain niche cultivars, adverse weather patterns and labour availability during harvesting and packing periods.

AFRIKAANSE OPSOMMING: Die Suid-Afrikaanse appel bedryf staar voortdurend verskeie internasionale handelsbeperkings in die gesig, wat die mededingendheid van die industrie binne die groter wêreld mark, negatief beïnvloed. Die uitvoere van vars appels deur ontwikkelende lande soos Suid-Afrika, is gedurig onder druk wanneer invoerders van ontwikkelde lande soos die Europese Unie (EU), nie-tarief handelsbeperkinge instel om hul plaaslike mark te beskerm. Deur laasgenoemde in gedagte te hou, is dit duidelik dat appel uitvoere vanaf Suid-Afrika na die Europese Unie die afgelope dekade drasties afgeneem het, ten spyte daarvan dat dié mark die enkele grootste uitvoermark vir Suid-Afrika is. Nietemin het appel uitvoere na nie-tradisionele uitvoermarkte soos Afrika, die Verre-Ooste en Midde-Ooste toegeneem. Tegniese, sanitêre-en fitosanitêre nie-tarief handelsbeperkinge, veral die maksimum residu limiete (MRL’e) wat deur die EU ingestel word, was geïdentifiseer as die belangrikste handelsbeperkinge van toepassing op die huidige appel bedryf in Suid-Afrika. Verskeie literatuurstudies het bewys dat gravitasie handelsmodelle gereeld gebruik word om handelspatrone te ondersoek en te voorspel en dat verskeie individue probeer het om ‘n metode te vind wat die effek van verskeie nie-tariefbeperkinge op bilaterale en multilaterale handelsvloeie te kwantifiseer. Ongelukkig kan geen een van dié metodes gebruik word om ‘n toepaslike onafhanlike veranderlike te skep wat in ‘n gravitasie handelsmodel gebruik kan word om die spesifieke effek van nie-tarief handelsbekerkinge op die handel van ‘n enkele kommoditeit of produk, in die geval vars appel uitvoere, vas te vang nie. Die doelwit van die studie was om die hooffaktore wat die onlangse uitvoerpatrone van die Suid-Afrikaanse appelbedryf beïnvloed, te bepaal. ‘n Gravitasie handelsmodel is beraam deur die gebruik van ‘n vaste effek en gewone kleinste kwadrate (OLS) regressie tegniek. Die veranderlikes wat toegepas was op totale appeluitvoere in die model het anders gereaggeer in vergelyking met totale uitvoere vanaf Suid-Afrika. Die volgende veranderlikes was statisties betekenisvol: die teiken land se bruto binnelandse produk (BBP) en bevolking, die ad valorem tarief ekwivalent en die afstand tussen Suid-Afrika en die teiken land. Die veranderlikes wat tipies totale handelsvloei verduidelik, maar nie statisties betekenisvol bevind is vir vars appel uitvoere vanaf Suid-Afrika nie, was: Suid-Afrika se BBP en bevolking, die nominale wisselkoers en die fopveranderlike vir ‘n gemeenskaplike taal. Dit was ook duidelik dat daar statisties betekenisvolle verskille tussen die EU en die nie-tradisionele uitvoermarkte bestaan in terme van die volume appels uitgevoer na hierdie markte. Faktore behalwe tariewe en nie-tarief beperkings wat ook ‘n beduidende bydrae kan lewer tot die verandering in die uitvoerpattrone van vars appels vanaf Suid-Afrika, sluit in: markpryse, verbruikerspatrone, mark-spesifieke vereistes en voorkeure, die produksie van sekere nismark kultivars, nadelige klimaatspatrone asook die beskikbaarheid van arbeid gedurende die oes en pak periode.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/98386
This item appears in the following collections: