Department of Agricultural Economics

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Browsing Department of Agricultural Economics by Author "Bestbier, Ruan Henri"

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    Factors Influencing Trade Patterns of South Africa’s Fresh Apple Exports, with a Focus on Non-Tariff Barriers
    (Stellenbosch : Stellenbosch University, 2016-03) Bestbier, Ruan Henri; Punt, Cecilia; Stellenbosch University. Faculty of Agrisciences. Dept. of Agricultural Economics.
    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.