Browsing by Author "Dlikilili, Xolela"

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    An analysis of the competitive performance of the South African citrus industry
    (Stellenbosch : Stellenbosch University, 2018-03) Dlikilili, Xolela; Van Rooyen, Cornelius Johannes; Stellenbosch University. Faculty of Economic and Management Sciences. Agricultural Economics.
    ENGLISH SUMMARY : The main objective of this research was to measure and analyse the competitive performance of the South African citrus industry. With this purpose in mind, a five-step analytical framework used in competitiveness studies by Ismea (1999),Esterhuizen (2006), Van Rooyen, Esterhuizen and Stroebel (2011), Jafta (2014), Boonzaaier (2015), Angala (2015), and Boonzaaier and Van Rooyen (2017) was adapted and modified to meet the requirements of this study and to accommodate the available database. The first step in the applied analytical framework deals with defining the term “competitiveness” in the context of the South African citrus industry. Consequently, having reviewed the relevant literature and situating the South African citrus industry, in particularly as it is as highly integrated into global trade, competitiveness in this study is defined as: ‘the ability of the local citrus industry to produce and trade citrus fruit on a maintainable basis, in the global markets given the current economic structures and trade regimes, whilst earning returns that are equal or greater than the opportunity cost of scarce resources engaged’. The second step deals with measuring the competitive performance of this industry over time and based on trade performance as per the definition; and comparing such performance with that of its major direct competitors. In order to do this, internationally recognised technique was considered reflecting comparative and competitive advantages, giving preference to measuring competitive advantage through Relative Trade Advantage (RTA) (Vollrath, 1991). Secondary trade data obtained from two data sources, namely the Food and Agriculture Organization (FAO) for the period 1961 to 2013 and the International Trade Centre (ITC) for the period of 2001 to 2016, was used for these measurements. Results from the analysis of both datasets (i.e. FAO and ITC) showed that SA had positive figures throughout the period and has maintained such positive figures since the early 1960s (RTA of 4.6 in 1961(FAO); increasing to a RTA of 15.2 in 2005(ITC); and showing a gradually increasing trend over recent years (with a RTA of 18.6 in 2016, ITC data). From a global comparison perspective (using ITC data), SA - with RTA of 18.6 - is the most globally competitive when compared to Southern Hemisphere-producing regions, which enjoy similar production seasons. When compared to the Northern Hemisphere producing regions – which enjoy counter-seasonal production – SA is outperformed by Egypt (RTA of 30.2) and Morocco (RTA of 18.8). In the analysis of individual citrus fruits, they all showed positive figures throughout the studied years, with oranges (RTA 27.6) being the most competitive citrus fruit type, followed by grapefruits (RTA 26.8), lemon & limes (RTA 16.3) and soft citrus (RTA 9.6) in 2016. In value-adding activities there was an observable decline in the competitive performance as one moves down the value chain for citrus juice (RTA 2.38) and orange juice (RTA 3.9), whereas the grapefruit chain showed increased competitive performance, with grapefruit juice recording maximum RTA values of 30.34 in 2016. Step three involved determining the factors that influence (positively or negatively) the competitiveness status of the local citrus industry. With the view of accommodating a smaller database, the conventional framework was adapted with a two-round Delphi technique. In the first round, experts were served with a questionnaire (the citrus industry survey), developed and tested through interaction with the Citrus Growers Association and designed in the form of the Porter Competitive Diamond model, to rate the impact of factors using a Likert scale (with 1 – constraining; 3 – neutral; and 5 – enhancing). A total of 101 factors were identified, listed and rated in the citrus industry survey, of which 94 were found to be affecting the competitive success of the industry. The enhancing factors included factors such as economies of scale and availability of competitive local input suppliers, whilst constraining factors included opportunism in trade and quality of unskilled labour. The fourth step grouped these factors into the six Porter competitive diamond determinants. Principal component analysis (PCA) was undertaken to pinpoint differences and consensus in the views of experts with regard to the current impact of factors identified for each determinant. The results reveal that there was consensus (similarity) in opinions with regard to 29 factors influencing the industry’s competitive performance. These correlated factors (consensus factors) were further subjected to Cronbach’s alpha analysis to assess their levels of internal reliability. The results show that there was no internal reliability in five of the factors and they were consequently removed, leaving 24 final factors. These 24 final factors were then subjected to the round two Delphi analysis. In this round, experts were asked to rate and discuss the relevance of these factors as determinants of competitiveness. The results reveal that most of these final factors, such as market development, infrastructure improvements, trade policy, labour policy and administrative regulations (red tape), are relevant to the future competitive success of this industry. The final step (Step 5), derived from the findings and analysis in step 4, involved proposing industry-wide strategies to enhance the industry’s global competitive performance. Based on the X-Y scatterplot of impact rating (Round 1) and relevance rating (Round 2), critical factors were identified that aided the formulation of strategies. The most important proposed strategies include effective marketing of citrus fruits domestically; development of foreign markets, improved logistics and distribution infrastructure; continued engagement with government regarding key industry issues (e.g. labour policy, trade policy, development of new markets, etc.).