Department of Agricultural Economics

Permanent URI for this community

https://scholar.sun.ac.za/handle/10019.1/25

Browse

Now showing 1 - 20 of 239

The African Continental Free Trade Area (AfCFTA) : opportunity or pipedream for South Africa’s agricultural exports
(Stellenbosch : Stellenbosch University, 2022-12) Annandale, Desmond Lawrence; Jooste, André; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
ENGLISH SUMMARY: The conclusion of the Uruguay Round of multi-lateral trade talks gave rise to a new era of agricultural trade that is more fair and competitive, globally (UNCTAD, 2020). However, failure to achieve set deadlines to further liberalise total trade (agricultural and other) on a global scale shifted the goal posts for countries to focus more on Preferential Trade Agreements. Between 2012 and 2021, the number of Regional Trade Agreements on the African continent increased from 28 to 45, focused on structural reforms designed to aid in opening up economies to execute export-orientated policies, which are more market driven, competitive and democratic. The African Continental Free Trade Area is the most recent addition to the Free Trade Agreements on the African continent. Africa is characterised by rapid Gross Domestic Product growth, population expansion, urban migration, changing dietary patterns, and a growing working-age population (Ekobena, Coulibaly, Keita and Pedro, 2021; van Berkum, 2021). Additionally, it is forecast that agribusiness trade is expected to grow by up to 30% by 2050 (Moyo, 2020). However, Africa’s share in receiving South Africa’s agricultural exports has been decreasing. Therefore, the research question is whether the African Continental Free Trade Area presents an opportunity for South Africa to further expand agricultural exports into the continent, or is it just a pipedream? To address this question, various trade indices were used to analyse the nature of trade between countries in different Regional Economic Communities (REC’s) on the African continent. The indices used in this study include, the Regional Trade Introversion index, the Intra-Industry Trade coefficient, the Regional Orientation Index and Gini-Index and lastly the import Gini-Hirschman Index. A grouping of agricultural products (processed and unprocessed) that belong in both South Africa’s top 80% agricultural exports to the world and in the top 80% imports of each respective Regional Economic Community from the world was used. Through the combined used of these trade indices, the identification of countries that represent an opportunity for South Africa’s agricultural export sector was done. It was found that the level of trade introversion among the Regional Economic Communities varies greatly, and the level of introversion for the selected processed agricultural products tended to be larger than that of the unprocessed agricultural products. The results for unprocessed products show that several Regional Economic Communities are highly dependent or becoming more dependent on extra-regional trade (e.g., Arab Maghreb Union (AMU), Common Market for Eastern and Southern Africa (COMESA), Economic Community of West African States (ECOWAS), Community of Sahel Saharan States (CEN-SAD), Economic Community of Central African States (ECCAS), Intergovernmental Authority on Development (IGAD)), except the East African Community (EAC). The high level of trade introversion for processed agricultural products in all Regional Economic Communities suggests that South Africa could experience difficulties in exploiting market opportunities despite tariff reductions, but the opposite is true for unprocessed agricultural products, except perhaps in the EAC. Overall, the unprocessed agricultural products show the highest potential for market expansion, supported by the Intra-Industry Trade values and the trade balances of the respective products, including maize, fresh apples, fresh or chilled potatoes and frozen, boneless meat of bovine animals. South Africa’s regional orientation shows that exports of the selected agricultural products are strongly oriented towards SADC. South Africa’s Regional Orientation Index for certain exports of unprocessed agricultural products were highest for the ECOWAS and CEN-SAD Regional Economic Communities, which implies that trade creation effects would be higher than trade diversion effects from increased exports into those Regional Economic Communities due to reduced tariffs. The high Gini coefficients show South Africa’s exports of the selected agricultural products into Africa are highly concentrated in a few markets, mainly SADC. The AMU Regional Economic Community has the lowest import concentration for imports from South Africa of the selected agricultural products implying that South Africa has a minimal market share in the region. A Composite Country Priority Index was also developed to identify potential export markets for South Africa to prioritise on the African continent. The Composite Country Priority Index is composed from three dimensions that affect the trade potential of an export destination, namely (i) Market Conditions, (ii) the Business Environment, and (iii) the Logistical Conditions of each country. The results show that (i) South African exports of processed and unprocessed agricultural products into different countries are not prioritised in the same manner, (ii) different regions pose different levels of opportunities for trade expansion, and (iii) export volumes to some countries are far greater than what is suggested by the Composite Country Priority Index. The latter point can be explained by, among other things, the proximity of certain countries to South Africa, the competitiveness of South Africa’s products as opposed to imports from elsewhere, and the availability of products within the home country. The results of the Composite Country Priority Index analysis emphasise that the Composite Country Priority Index and its comparison with trade values should be used as a basis to further investigate the appropriateness of an identified export market. Finally, this study shows there is no conclusive evidence that the African Continental Free Trade Area is a pipedream for South African agricultural exports, but it is certainly not a silver bullet to significantly expand agricultural exports, at least not in the short to medium term. Furthermore, tariff reductions alone will not lead to notable export increases if Africa’s non-tariff barriers are not resolved. This applies to destination countries and transit countries, as the latter act as the pathway for South Africa’s agricultural exports into Africa.
Agricultural exports and economic growth in Zimbabwe
(Stellenbosch : Stellenbosch University, 2020-03) Gwanongodza, Tafara; Punt, Cecilia; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
ENGLISH ABSTRACT: The main objective of the study is to establish the relationship between agricultural exports and GDP, a proxy for economic growth. The other objective is to establish the relationship between the non-agricultural export sectors with GDP. The study will provide a roadmap for policy making towards the economic growth of Zimbabwe. Secondary data was used in the analysis for a period from 1990 to 2016. The Johansen cointegration results confirmed a long run relationship between the variables. The regression results show that agricultural raw exports have a negative relationship with economic growth, whereas food exports and non-agricultural exports have a positive relationship with GDP. The Granger causality test shows the direction of causation of the variables. The agricultural raw exports and food exports do not Granger cause GDP growth but non-agricultural exports cause GDP growth. The food exports require agricultural produce for raw materials, the growth of the food exports boosts a demand in the agricultural sectors which leads to a surplus for the export market thus stimulating agricultural exports. Food exports include processed high value products which earn more foreign currency on the international market. The non-agricultural sector capital is invested into the food subsector. The non-agricultural exports in Zimbabwe influence productivity in the agricultural sector, boosting food exports which rely on the availability of agricultural raw products. The Zivot-Andrews unit root test with structural breaks shows that dollarization had an impact on GDP and capital. Although the government came up with policies to boost agricultural productivity, such as the Command Agriculture initiative, literature shows that focus should also be on the quality of produce since it has a positive impact on the agricultural export earnings and other export sector earnings.
Agriculture's contribution to economic growth and development in rural Limpopo Province: a SAM multiplier analysis
(Stellenbosch : Stellenbosch University, 2017-03) Pfunzo, Ramigo; Punt, Cecilia; Stellenbosch University. Faculty of AgriSciences. Agricultural Economics.
ENGLISH SUMMARY : The agricultural sector in Limpopo contributes approximately 2.2% to the provincial GDP. Agriculture can play an important role in contributing to economic growth, through agricultural production and job creation as a result of its linkages with the rest of the economy. Consequently, it can play a significantly role in reducing poverty. This study examines the potential agricultural contribution to economic growth and development in Limpopo. It starts with a literature review of the province’s sectoral development and growth. Most importantly, it examines two stages of poverty alleviation and agricultural growth; namely production and consumption linkages. The factors that constrain agricultural economic growth and development are described in detail. For the analysis, the study used the Limpopo Social Accounting Matrix (SAM) for 2006 developed by Conningarth Economists as a database to develop a multiplier model. Because the Limpopo SAM was unbalanced, data manipulation was performed, applying manual balancing to the existing Excel data. Firstly, the results from the SAM multiplier analysis indicated that R1 million injected into the agricultural sector will lead to a notable change in output (R1.67 million) and value-added (R764 000). Some of the agricultural sub-sectors generated a large increment in output – the largest being subtropical fruit and forestry. The water- and electricity industry was ranked first for output (R2.02 million) and third for value-added (R900 000). The financial industry was ranked first for value added (R962 000) and sixth for output (R1.77 million). Secondly, the analysis estimated the impact of a 5% export demand on the rest of South Africa and the rest of the world respectively. The results indicate that vegetables is the largest export demand to the rest of South Africa. On the other hand, for the rest of the world, the demand for exported citrus fruit is the largest. GDP increases by R59.48 million for a simultaneous 5% increase in export demand for output from all agricultural industries by the rest of the world. This exceeds the increase in GDP of R47.54 million for a simultaneous 5% increase in export demand for output from all agricultural industries by the rest of South Africa. Thirdly, the analysis estimated the impact of a 5% increase in investment demand in agricultural activities. The results show that the output from the agricultural sector increases more than that of the non-agricultural sector. The largest increase in output from the agricultural sub-sectors comes from forestry. The income from Black households (R4.47 million) increases more than that of White, Coloured and Asian households (R276 000). The GDP in the economy increases with R9.30 million. Fourthly, the forward and backward linkages for the economic sectors of Limpopo were calculated. The results show that tertiary sector industries are gaining more position on the list of leading industries in Limpopo. Moreover, the investment in the tertiary sector seems important for economic development because of its linkage to other sectors. The results of the study may be used for the development strategy of the Limpopo economy. It was concluded that despite the fact that most of the people in the province live in rural areas and are assumed to engage in the agricultural sector as a source of livelihood, the agricultural sectors actually contribute less to economic growth than non-agricultural sectors in Limpopo, and this is contrary to the original hypothesis. It should be noted, to achieve significant development in Limpopo, more focus should be placed on the water and electricity (output), financial insurance (value-added) and community and personal services (income) sectors for their contribution to economic growth, due to large multipliers when compared to other sectors.
Analysing the competitive performance of the Eswatini sugar industry
(Stellenbosch : Stellenbosch University, 2021-03) Simelane, Xolisiwe; Van Rooyen, Johan; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
ENGLISH SUMMARY : The primary objective of this study was to analyse the competitive performance of the Eswatini sugar industry, since 2001, and developing strategic recommendations for improved competitiveness of this industry. A five-step analytical framework was applied based on the Volrath-Porter approach recently followed by Boonzaaier and Van Rooyen (2017), Barr (2019) and Mtshiselwa (2020) for competitiveness analysis in southern African agribusiness. Step 1 of the analytical framework involved defining competitiveness in the context of the Eswatini sugar industry. In this study the term was defined as ‘the ability of sugar industry to be competitive by trading production in domestic and international markets and achieve sustainable business growth whilst striving to earn at least the opportunity cost of resources’ (Freebairn, 1986, Van Rooyen, Esterhuizen & Botha, 2011; Dlikilili & van Rooyen, 2018). This definition provides a base for the analysis and measurement methods used. The second step of the study was the empirical measuring of the competitive performance using the relative trade advantage (RTA) technique (Vollrath, 1991) as a measure of competitiveness. The data used was sourced from two reliable sources viz. FAOSTAT and ITC Trademap from 2001 to 2019. From these measurements trendlines were established and three phases were identified and analysed. Phase 1 shows generally increasing competitiveness with RTA figures (2001-2006) ranging from 1.5 to 2.9 for the FAO and 1.8 to 4.6 for ITC. During phase 2, (2007 - 2012) it showed a fluctuating “bubble type” trend by first increasing until 2009 and declining gradually to 2012. The competitive performance was noted with RTA values for FAO ranging between 3.8 to 3.4 inter alia due to economic meltdown and removal of the preferential trade arrangements benefitting Eswatini. Phase 3 shows recovery and sustained increasing competitiveness from 2013 onwards with rising RTA values of 3.4 to 5.2 for ITC and 2.9 to 4.9 for FAO. The Eswatini sugar industry was also compared with its rivals internationally by measuring the RTA values over time (2001 to 2019) using the ITC data. Average RTA values from the past five years - allowing to compare relative competitiveness of an industry in context of the economy of the respective country - were obtained for the following respective countries: Brazil (5.04), Thailand (4.61), South Africa (3.56), Mozambique (2.09), Kenya (3.01), Malawi (2.03) and Zimbabwe (2.75). Brazil and Thailand showed to be the most competitive as opposed to the other countries. Eswatini (3.82) was found to be generally competitive when compared to its African competitors after South Africa. From these results it was concluded that an in-depth analysis was required to consider the various factors impacting on the competitive performance of the Eswatini industry, which was conducted in steps 3 and 4. The third step of the study involved ascertaining factors that influence the competitiveness of the sugar industry. Factors enhancing or constraining the competitive performance of the sugar industry of Eswatini were identified and analysed through qualitative methods by using focus group discussions and interviews with experts and executives along the sugar industry value chain. Through the Eswatini sugar executive survey (ESES), 48 factors influencing the competitiveness of the industry were identified and responses recorded on the Likert-scale (with 1 – constraining; 3 – neutral; and 5 – enhancing). Step 4 of the study grouped the 48 factors influencing the competitive performance of the sugar industry into six Porter Competitive Diamond determinants. In general, the sugar industry rating score indicated four enhancing determinants being the demand conditions (3.54/5), related and supporting industries (3.45/5), government support and policy (3.41/5) and lastly the strategy structure and rivalry (3.36/5). The production and chance factors revealed to constrain the industry with 2.83/5 and 2.42/5 values, respectively. Principal component analysis (PCA) was carried out to identify variations and consensus in the views of respondents with regard to factors identified for each determinant. The results revealed that there were variations in opinions regarding the 48 factors. It is worth mentioning that the PCA results should be considered with care as the sample size was not optimal. The different value chain components/players, grouped into two clusters which were primary producers and agribusiness, were analysed to obtain the variation in views within the chain. It was observed that the producers rated competitiveness performance lower than the agribusiness actors, as such there were differences in views among the respondents along the chain. The last step applied the findings from the previous analysis, which reflected alignment between the producers and the agribusiness. It investigated proposed strategies that could be applied to enhance or sustain the competitiveness of the sugar industry. Industry strategies were formulated in collaboration with industry role players to improve competitive performance of the industry. In view of this, the importance of collaboration between all the value chain actors should be strengthened through information and business intelligence sharing, technological innovations and policy development and coordination between industry and government. New product development also needs attention to counter ‘anti-sugar movements’ and to grow local market demand. It was also proposed that the industry employ risk management strategies that will help to deal with the uncertainty of fluctuations of currencies. Emphasis was put on the role of government for continued negotiations and exploration of new markets for the industry as it contributes immensely to the economy. Research on climate change was mentioned to improve competitiveness of the industry in future as it will help mitigate the effects on the sugar cane production. From the analyses and findings of the research, some recommendations were made for further studies to improve the measurement and analysis of competitive performance of the Eswatini sugar industry. This included full value chain analysis, with representative participation of the different functional groupings, to conclude an in-depth investigation on the performance of various role players in the value chain, the linkages between sugar smallholders and the value chain. Also cost benefit application to support economically viable and financially affordable infrastructure development such as irrigation infrastructure and water storage facilities and road and bridges was recommended to expand the scope; and to consider the role of government policy on competitiveness performance.
Analysing the competitive performance of the South African subtropical fruit industry
(Stellenbosch : Stellenbosch University, 2018-12) Sibulali, Ayabonga; Van Rooyen, Johan; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
ENGLISH SUMMARY : The main purpose of this study was to investigate the competitive performance of the South African subtropical fruit industry in the global markets in view of recent general findings that the industry showed a declining trend of competitiveness (refer to the Agric-Competitiveness Matrix by Van Rooyen; Boonzaaier, 2017; BFAP, 2018). To determine the competitive performance of the industry and to arrive at the conclusions of the study, a five-step analytical and a systematic framework , applied in agri-business competitiveness studies by Esterhuizen (2006), Van Rooyen, Esterhuizen and Stroebel (2011), Jafta (2014), Boonzaaier (2015), Angala (2015), Boonzaaier and Van Rooyen (2017), Abei (2017) and Dlikilili (2018) was used. This framework was adapted and extended to accommodate the nature of the industry and to introduce Delphi-based consultative processes and statistical methods, such as principal component analysis (PCA) and Cronbach’s alpha analysis. In this study, competitiveness is defined as the: “ability of the South African subtropical fruit industry to trade products in both domestic and international markets on a sustainable basis; and to attract resource investment such as land, labour, technology, management skills and talent, and capital from other competing economic activities while earning at least the opportunity cost of returns on such resources employed” (adapted from Freebairn,1987). This definition, together with the Porter Competitive Diamond of enquiry, shifts the analysis away from a comparative advantage to a competitive advantage focus. Competitive performance of the South African subtropical industry was measured over time, based on its global trade orientation, and compared to the performance of the industry relative to that of its direct major international rivals. To achieve this, the Relative Trade Advantage (RTA) formula, developed by Vollrath (1991), was considered as appropriate to quantitatively measure competitive performance. Trade data from the Food and Agriculture Organization (FAO), available for the period 1961 to 2013, and from the International Trade Centre (ITC) for the period 2001 to 2016, was used. The results of the FAO RTA analysis show that the industry consistently recorded RTA values below one throughout the studied years (1961 to 2013), i.e. only marginally competitive performance. However, when using the ITC datasets, it showed a stronger marginally competitive trend, with RTA values around 1 in most of the years, and with that in 2010 (RTA of 1.55) being comparatively greater than in the other periods, followed by a decreasing trend over recent years to a RTA of -0.08 in 2016. The reason for differences in FAO and ITC RTA trends is found in the details of the respective databases used– with the FAO excluding mangos and macadamias. These are two of the most important competitive subtropical product groups for South Africa. The ITC based results, which included these products (i.e. mangos and macadamias), were thus used in the analysis, as confirming a generalised declining trend in competitive performance by the industry since 2011. As to individual products, great variation was however registered. The macadamia nut industry, with its high competitive performance – RTA >120 in 2014/15, proves to be the top-performing South African subtropical fruit industry, followed by avocado industry and mangos, all consistently recording RTA values above one. Banana, papayas and kiwi fruit were trading uncompetitive in the global markets. In relation to the value-adding activities of this industry, only pineapple juice was considered (due to no data being available for other processed subtropical fruit products), and while juice is rated competitively, there is an observable decline for fresh pineapples. The South African avocado industry, when compared to the other major Southern Hemisphere production regions to which it enjoys similar production seasons, had a relatively low rate of performance and was outperformed by all the competing countries. Chile had the highest RTA value for avocados, of 93.98, in 2003. In comparison to the Northern Hemisphere production regions – where the industry enjoys counter-seasonal production – the South African avocado industry, with RTAs of 3.13, outperformed Spain, with RTAs of 1.32 in 2016. The macadamia nut industry, which leads the competitive performance stakes in the South African subtropical fruit industry when compared to the other major Southern Hemisphere production regions to which it enjoys similar production seasons. It outperformed Australia and Zimbabwe, with an RTA value of 124.1 in 2014. When South African macadamia nuts are compared to the other major Northern Hemisphere production regions – in relation to which it enjoys counter-seasonal production. The local macadamia nut industry, with a RTA value of 128.3 in 2015, outperformed Hong Kong, China (with a RTA of -3.30 in 2015) and Guatemala (with a RTA of 52.1 in 2015). The next step in the analysis, involved a survey that was conducted among expert industry-level role players to determine the factors that influence (positively or negatively) the competitive performance of the SA subtropical fruit industry. A two-round Delphi method was introduced, using respondents to the first survey as the focus group. In the first round of the Delphi process, such participants were requested to rate the impact of identified factors on a Likert scale. A total of 101 factors were found to be positively or negatively affecting the competitive success of the industry. The enhancing factors included the use of advanced technologies, the use of labour-saving machines, economies of scale, and the availability of competitive local input suppliers, while constraining factors included the cost of skilled labour, the quality of unskilled labour and the cost of the new, specialised technologies. The role of the political process was viewed as highly constraining, together with administrative “red tape” and administrative/compliance factors impacting on the industry. The Porter Competitive Diamond model was next applied and fitted the 101 factors into the six Porter Competitive Diamond determinants, again illustrating constraining and enhancing determinants. Principal component analysis (PCA) was performed, showing interesting pointers to differences and consensus in the views of industry participants with regard to the impact of factors identified for each determinant. The results reveal that there was strong consensus (similarity) in opinions regarding 30 factors influencing the industry’s competitive performance. These correlated factors (consensus factors) were subjected to Cronbach’s alpha analysis to assess their levels of internal reliability. From the results, only three of the 30 factors showed no internal consistency reliability and they were removed, leaving 27 final factors. These 27 final factors were subjected to the round two Delphi analysis. In this round, the same participants were then again asked to rate and discuss the long run relevance of these factors as determinants of competitiveness. The final step in the analysis involved proposing industry-wide strategies to enhance the industry’s declining global competitive performance. Based on the X-Y scatterplot of impact rating (from Delphi round 1) and the long run relevance rating (from Delphi round 2), critical factors to be improved and maintained were identified that aided the formulation of strategies. A strategic agenda of 19 actions were proposed. These included, amongst others: innovation through value chain collaboration; the establishment of a Subtropical Fruit Industry Strategy Plan (SFISP), as a basis of collaboration between industry role players; and government; industry-specific human resource development; effective domestic marketing; the further development of foreign markets; improved logistics and efficient distribution infrastructure; and continued engagement with government through strategic planning regarding key industry issues such as labour policy, trade policy, development of new markets, and technological innovation support.
Analysing the competitiveness performance of the South African apple industry
(2014-12) Jafta, Asanda; Van Rooyen, Johannes Cornelius; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
ENGLISH ABSTRACT: The South African apple industry is influenced by a number of factors, including increased globalisation of markets, trade liberalisation, advances in information technology and consumer preferences. These factors have a continuous effect on the competitiveness of the industry and force producers and processors to position themselves as capable competitors in the global free-market environment. This study measures and analyse the competitiveness of the South African apple industry, including some aspects in the value chain, in an attempt to address the following research question: What is the global competitive advantage of the South African apple industry relative to its competitors. To adequately address this research question, a five-step methodology was used to direct the study: The first step was to define competitiveness in the apple industry. Due to the diversity of definitions of competitiveness as a concept, this study adopted the following working definition based on how Esterhuizen, 2006; Freebairn, 1986 define competitiveness. In their view competitiveness is defined as the ability of an industry (apple industry) to trade its products successfully in order to achieve sustainable business growth within the global environment, while earning at least the opportunity cost of returns on resources employed” This definition is accepted in this study because it is noted that competitiveness is most often associated with trade performance. With the above in mind, and in view of the importance of open global apple trade, competitive performance in the South African apple industry is strongly linked to trade performance. The second step was to measure competitive performance based on the accepted definition. Data from the Food and Agricultural Organisation of the United Nations and Trade Map was used to examine the competitiveness of the industry. Three internationally recognised indexes were used to calculate the comparative and competitive advantages of the apple industry in South Africa, namely the Revealed Comparative Advantage (RCA#) index, the Net Export index (NXi), and the Relative Revealed Comparative Trade Advantage (RTA) index. The results show that South Africa’s apple industry has sustained a competitive advantage, with most of the recent RCA# and RTA index values moving towards 10. When compared with its competitors, Chile and New Zealand show a strong competitive performance, with RTA index values above 10. However, South Africa has a relatively better global competitive advantage over Italy, Argentina, France, Poland, China and the United States of America and are sustaining a third position on the “international apple podium”. Netherlands and Brazil are internationally uncompetitive in the production of apples In step 3 the Apple Executive Survey (AES) was used to identify the factors that constrain and enhance the competitiveness of the South Africa apple industry so that the industry can improve on those factors that constrain competitiveness in order to improve its competitive performance status. The most important factors that were found to have a negative impact on the competitiveness of the South African apple industry were quality of low-skilled labour, cost of crime, availability of skilled labour, SA labour policy, the cost of infrastructure, trust in the political system, administrative regulations, health-related issues (HIV/Aids), the cost of capital and land reform policy. The findings indicate that much needs to be done in these focus areas to boost the competitiveness of the industry in the international market. Factors that enhance the competitiveness of the industry were growth in the international market, the availability of unskilled labour, the availability of transport, competition in the domestic market, industry expenditure on research and development (R&D), the quality of infrastructure, the availability of storage facilities and South African (SA) competition policy. The industry needs to capitalise on these factors in order to improve its competitiveness. In step 4 the Porter Model was then used to group these factors in to the main determinants for competitiveness to prepare the date for an strategic analyses in step 5 where recommendation were made on actions to enhance and rectify or mitigate some of the challenges that are faced by the apple industry in South Africa – these includes: skills training, development of alternative markets, improved cooperation between the apple industry and the government is necessary in supporting the apple industry through infrastructure development, R&D, globally aligned regulations and support to trade promotion.
Analysis into the effectiveness of the provincial agricultural research systems of KwaZulu Natal and the Western Cape
(Stellenbosch : Stellenbosch University, 2001-03) Lutge, Rolf; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
ENGLISH ABSTRACT: With the advent of Globalisation, the need for improved competitiveness ill agriculture, as in all sectors, has become increasingly important in obtaining satisfactory levels of growth and development. International producers are competing for South African markets while local producers must not only defend these markets, but also seek out opportunities globally. Agricultural research has been identified as one of the more important agricultural support services contributing towards the goal of increased competitiveness. Innovation and new technology are central towards achieving satisfactory competitiveness, and in order for these to be adequately available, the agricultural research system in place must be effective and efficient in its tasks and responsibilities. The objective of this study was to determine whether or not the agricultural research systems of KwaZulu Natal and the Western Cape conform to the current challenges presented by the market, technology and economic environments. The effectiveness and efficiency of these systems regarding structural interactions, research investments and the involvement of the private sector was critically analysed with regard to the stakeholders within the system, namely: producers, co-operatives, private sector agribusiness companies and agricultural research institutes. The findings are discussed in terms of their implications for the agricultural sectors concerned and recommendations made for potential improvements and future areas of research. It was found that most of the structural interactions between the various stakeholders investigated were conducted inefficiently and have thus resulted in a lack of cooperation, poor relationship building, and sub-optimum productivity and growth. Furthermore, it was established that investment in agricultural research is too low. Although research expenditure growth rates and expenditure per fulltime researcher are high, most of the growth rates are on the decline and most of the organizations do not employ fulltime researchers, while the actual total amounts invested are low. Investment in market research for current products is satisfactory, while investment in market research prior to conducting research is poor. Finally, increased private sector involvement has not been realized. Incentives for greater private sector involvement based on profitability, have not been adequately developed. Of those companies who have recognized the need for increased commitment to research, all but one have predicted zero to low increases in research expenditure for the future, while current research expenditures are also low. There are many areas in which the agricultural research systems of the two provinces concerned must improve. A culture inductive of greater research spending and private sector participation should be fostered to overcome the causes and motives behind these problem areas. Currently, the research systems investigated seem incapable of effectively and efficiently supplying the agricultural sectors concerned with the much needed new technologies, innovations and research management necessary to adequately increase competitiveness. However, if all the shortcomings of the system are recognized and a new demand driven orientation adopted, the research systems of South Africa will in the future be more likely to promote increased productivity and growth in agriculture through greater competitiveness.
Analysis of capital sources, owner objectives, and determinants of performance of wine farms in the Western Cape
(Stellenbosch : University of Stellenbosch, 2009-12) Nakana, Elvis; Mkhabela, T. S.; University of Stellenbosch. Faculty of Science. Dept. of Agricultural Economics.
AFRIKAANSE OPSOMMING: Die Wes-Kaapprovinsie van Suid-Afrika beskik oor ’n diverse kapasiteit wat landbouproduksie betref en dit dra tot die sektor se algemene stabiliteit by; vandaar die bevordering van die Wes-Kaap as ’n aantreklike beleggingsektor. Die wynbedryf, wat ’n belangrike integrerende deel van die landbousektor in die Wes-Kaap uitmaak, speel ’n baie belangrike rol in die ekonomie van die Provinsie en bied ontsaglike geleenthede met betrekking tot landboukundige beleggings in die Provinsie. Die Suid-Afrikaanse wynbedryf is bekend vir sy produkte van hoë gehalte. Tans word indirekte aanwysers soos die inkomste van produsente, die aantal nuwe wynkelders, asook die ouderdomsamestelling van wingerdstokke in Suid-Afrika, gebruik om die beleggings- netto toevloeiing in die wynbedryf te bereken. Die hoofdoel van hierdie studie is om die mees algemene bronne van kapitaal van wynplase en die mees algemene doelwitte wat wynboere in die Wes-Kaap probeer om te bereik, te identifiseer. Nog ’n doelwit is om daardie wynplaas- en eienaarskenmerke te identifiseer wat die prestasie van wynplase in die Wes-Kaapprovinsie van Suid-Afrika beïnvloed. Om die ontleding te vergemaklik is die hoofprobleem in drie spesifieke doelwitte of subprobleme verdeel. Die studie het van verskeie metodes en tegnieke gebruik gemaak in ’n poging om relevante en akkurate data te verkry. Die verskillende bronne wat geraadpleeg is het persoonlike beraadslaging met deskundiges in die bedryf, artikels wat in verskeie akademiese vaktydskrifte en boeke gepubliseer is, referate wat by konferensies gelewer is, verhandelings van nagraadse studente, en ander artikels op die Internet ingesluit. Data-ontledings wat met die eerste en tweede subprobleme verband gehou het is met die gebruik van statistiese pakkette soos Excel en Stata in die vorm van veelvoudige kruistabulerings uitgevoer. In die derde probleem, naamlik om wynplaas- en eienaarskenmerke te identifiseer wat die prestasie van wynplase in die Wes-Kaap beïnvloed, is ’n intervalregressiegelykstelling bereken deur van die Stata- statistiese sagtewarepakket gebruik te maak.
An analysis of financial implications of switching between crop production systems in Middle Swartland
(Stellenbosch : Stellenbosch University, 2015-04) Makhuvha, Mmbengeni Constance; Hoffmann, Willem H.; Stellenbosch University. Faculty of Agrisciences. Dept. of Agricultural Economics.
ENGLISH ABSTRACT: Sustainability issues and the structural over-supply of wheat in the Western Cape since the middle 1990‟s have caused the introduction of alternative crop rotation systems in the Middle Swartland, a dry-land winter cereal production area of the Western Cape. Crop rotation systems typically consist of cereals and oilseed crops and pastures. Alternative crop rotations systems are currently scientifically evaluated at the Langgewens Experimental farm. Currently more than half the cultivated area in the Swartland is still under wheat production, a third of which is wheat monoculture. An issue regarding the adoption of such a crop rotation system is the cash flow and affordability of implementing such an alternative system. The goal of this study is to determine the cash-flow implications of a shift from wheat monoculture to a crop rotation system. Typical strategies available to producers to support such a shift are investigated. The complexity of farm systems as well as the interrelationships between crops within such a crop rotation system necessitates the implementation of a systems approach. A multi-period, whole-farm budget model was constructed to capture the interrelationships of the farm system and to express the financial performance thereof in standard profitability criteria. The farm model is based on a typical farm for the Middle Swartland. The model was used to determine the expected profitability of various crop rotation systems and to evaluate alternative strategies to accommodate the shift to alternative systems. The Langgewens crop rotation trial results are used to determine expected profitability of various crop rotation systems. A wheat-monoculture system serves as basis for the shift to alternative systems with the focus on the practical implications of such as shift. The profitability calculations show that various crop rotation systems are expected to be more profitable than wheat monoculture. The most profitable system is one year canola followed by three years of wheat, followed by a wheat/medic system with Dohne Merino sheep on the medic pastures. The shift from wheat monoculture is simulated by four scenarios. The first evaluated the financial implications of a shift form monoculture to the three year wheat and one year canola system. The second simulates a shift from monoculture to a wheat/medic system within two years and using own funds. The third scenario simulate the same shift with own funding, but over a ten year period. The fourth is similar to the second, but borrowed money is used to fund the shift.Lower input costs and consistently higher yields results in higher expected gross margins for the crop rotation systems, especially with nitrogen fixing plants. The inclusion of medic and medic/clover pastures and alternative cash crops such as canola and lupins show a higher yield on investment than wheat monoculture. Insight into the factors that producers should consider was also generated by this study, concerning changes to crop rotation systems. These factors include; time period over which a shift is planned and the availability of financing options. It seems that a quicker shift, using borrowed funds, is more profitable over the longer term.
An analysis of land redistribution and the land market in the Boland region of the Western Cape
(Stellenbosch : Stellenbosch University, 2005-12) Maphutha, Jacob Mampuputlane; Vink, N.; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
ENGLISH ABSTRACT: South Africa is experiencing major political, economic and social changes and in its policy orientation towards the event of globalisation. These changes are intended for the empowerment of those previously disadvantaged and for the levelling of the playing field for future equality of opportunities. In empowering these individuals it is recognised that agriculture is one of the important sectors that would serve as a vehicle for the development of the country. It is the main source of economic growth and the bedrock of economic development. Agriculture depends strongly on land, which is also an asset that can be used to generate income. For this reason land reform in the form of grants is one of the important tools employed in South Africa to redistribute land to the disadvantaged in order to enable them to improve their income and also to develop rural areas. As this programme is based on a market-assisted approach, its success depends on land markets that function well and are stable enough to carry it. The objective of this study was to determine the state of land redistribution and to analyse the land market in the Boland region of the Western Cape province. The effectiveness of land redistribution was analysed with regard to the number of transactions that took place in the years 1998, 1999 and 2000 in terms of citizenship, race, mode of land acquisition amongst the disadvantaged (government grants, private acquisitions and inheritances), quantity and quality factors. The findings were discussed in terms of their implications for the success of the programme and their influence of the land market. Finally recommendations were made for potential improvements as well as for further research. It was found that land redistribution by means of government grants was rather slow and most of the transactions took place through private purchases, mostly through mortgage loans provided by the Land Bank of South Africa. Although private transactions redistributed more wealth measured in terms of size pf land, the accompanying land was less superior using price per hectare as a proxy for quality compared to land purchased with the assistance of the government. Transactions for the latter were mainly through joint ventures with current owners. The study also revealed that the land market in the Boland is one of the major obstacles to the speedy transfer of land not because of the foreign investment, but due to the nature of the sectors. The two main agricultural sectors are viticulture and deciduous fruit which have experience high growth in income and export. The analysis conducted established that there was no significant difference between properties bought by foreigners, white and Black South Africans. Future trends in land prices could not be predicted but it is expected that agricultural land prices will be well above the capitalisation value of future profits arising from the level of foreign investment as well as economic gain. Based on the finding the areas to be emphasised by the land reform programme in this region are joint venturing and the promotion of subsidies on mortgage loans as well as extending the government's role in the land market. Increased government spending and involvement of the private sector, including financial institutions and established commercial farmers, are some of the things to be encouraged to facilitate the process and ultimately to overcome poverty. The sole reliance on the current regional land market seems incapable of effectively and speedily redistributing land to beneficiaries, whereby equality can be achieved in the long run. However, if all the shortcomings of the land market are recognised and a new policy is adopted, land reform in the Boland and in South Africa will in the future be more likely to promote increased access to land, resulting in higher productivity, growth and a globally competitive agriculture.
Analysis of smallholders’ farm diversity and risk attitudes in the Stellenbosch local municipal area
(Stellenbosch : Stellenbosch University, 2015-04) Tshoni, Simphiwe; Van Rooyen, C. J.; Anseeuw, W.; Stellenbosch University. Faculty of Agrisciences. Dept. of Agricultural Economics.
ENGLISH ABSTRACT: The objective of this study was to consider whether smallholders operate within homogenous or differentiated farming systems i.e. a similar “‘one type”’ system or a system that could be described as a smallholder typology consisting of a number of farming types. The enquiry firstly described and analysed farm diversity and then developed risk attitude profiles of smallholder farmers in the Stellenbosch local municipal area in the Western Cape province of South Africa. The problem statements, directing this study is that there is a general misconception that smallholders are all “‘the same’” and that they all operate within one ‘“representative farming model”’; and that the majority of smallholders are risk averse. These views also argue that all smallholder farmers are not primarily directed at profit objectives, but that social considerations are most relevant and that different social orientations are shaping farming systems. These views are investigated in this study and the hypotheses directing this analysis is that smallholders in the study area are not a homogenous group; rather types within a broader farming typology, with different orientations and objectives and with different risk attitude profiles. The study originated as part of an international collaborative investigation – the South African Agrarian Diagnoses project, a joint research project of the Agro Paris Tech/Agence Francaise de Development, the Standard Bank Centre for Agribusiness Development and Leadership, Stellenbosch University and the University of Pretoria in to farmer diversity and farmer typologies in South Africa. This investigation looked at smallholder farming in different agrogeographical areas in South Africa, with this particular study focussing on potential smallholder farmer diversity in the Stellenbosch local municipal area. The Stellenbosch local municipality and Western Cape Department of Agriculture provided logistical support, information to this investigation and participated in focus group sessions. Smallholder activity in this study was defined to include both small scale farming activities and the mobilisation of smallholders/farm workers in so-called ‘“farm worker equity schemes’” – a type not included in the other regions. Data was collected from eight smallholders’ farming communities and the four different farm workers’ equity share schemes through surveys and interviews. The following towns and hamlets: Franschhoek, Kylemore, Lanquedoc (Herbal View and Spier Corridor), Pniel, Jamestown, Raithby, Lynedoch and Koelenhof; and four farm workers’ equity share schemes were: Swartrivier vineyard project, Koopmanskloof vineyard project, Enaleni Trust and Poker Hill vineyard project. Personal interviews and focus group discussions were conducted and cluster analysis was used for the diversity (typology) analysis and the Likert scale was employed to measure risk attitude profiles. A non-probability sampling approach was used to select a sample size of 49 respondents. The reason for using non-probability sampling technique was that when one wants to do the diversity analysis, one must try to include many respondents in the sample and the farmers that are included must be representative of the population from which they are selected. The variables selected as determinants of farm diversity included information about: demographics and households, land ownership and occupation, farming activities, farming objectives, agricultural inputs, labour, equipment, farming constraints, access to markets, financial support services, educational and training services, extension services and reasons for quitting farming activities. From this, different farming types and typologies were identified, described and structured. Preference indications for different risk management strategies were then used to measure and describe the risk attitudes of different types of smallholder farmers using the Likert risk attitudinal scale. The results and findings confirmed the study hypotheses relating to diversity in smallholder farming in the target area, namely that smallholders in this geographical area are not a homogenous group and rejects the stated hypotheses that most smallholder farmers are risk averse. A Stellenbosch smallholder typology, with six different farming types were established viz: type 1 – farmland-occupying but non-farming households (10.2% of the sample), type 2 – pensioner – livestock farmers (16.3% of the sample), type 3 – part-time cattle farmers (14.3% of the sample), type 4 – commercial equity share farmers (16.3% of the sample), type 5 – retirement planning crop producers (20.4% of the sample), and type 6 – commercial crop producers (22.5% of the sample). With regard to risk profiles, risk attitudes varied between these types and also within each type, hence risk attitudes for smallholders are also not found to be similar. The results revealed that those smallholder farmers moving on a development path towards commercial agriculture (types 4, 5 and 6) were risk preferring; less commercially orientated farm types (types 1, 2 and 3), showed risk averse and risk neutral orientations. The risk profile percentages of farmers interviewed were 43.2%, 34.1% and 22.7%, respectively for risk preferring, risk neutral and risk averse; this finding rejects the stated hypotheses. From these results, a number of issues, relevant to development support programmes, were proposed for further agricultural economic research. The most important of these are related to: appropriate development support strategies related to farm types and the potential development paths for each type; and the structuring of appropriate ‘“risk management instruments”’ for each type, in particular to support smallholder farmers; with a development trajectory towards commercial farming, i.e. to support emerging commercial farmers – an important category of farming listed in current government policy and in the National Development Plan.
An analysis of spatial market integration: a case of Zambian dry bean markets connected by informal trade to Tanzania and the Democratic Republic of Congo
(Stellenbosch : Stellenbosch University, 2017-03) Sunga, Chalwe; Punt, Cecilia; Traub, Lulama Ndibongo; Stellenbosch University. Faculty of AgriSciences. Agricultural Economics.
ENGLISH SUMMARY : Intra regional trade has the potential to contribute to food supply balance between surplus and deficit countries. However, this critical role can only be accomplished if surplus and deficit zones across countries are integrated. Most previous studies examining integration in food markets in Eastern and Southern Africa (ESA), partly attribute weak inter country market integration to restrictive trade policies and transfer costs. Yet, little evidence has been gathered to examine how international markets free from direct political influence may perform. This thesis examines spatial integration between ESA dry bean markets where inter-market trade is predominantly conducted through informal channels. By focusing on a pair of markets in Zambia and Tanzania, and a pair of markets in Zambia and the Democratic republic of Congo (DRC), the study employed the Myers and Jayne (2012) extension of the Threshold Autoregressive (TAR) model, which explicitly incorporates transfer costs and allows the long run price equilibrium relationship to vary depending on the magnitude of inter-market bean trade. The analysis also adopted the Gonzalo and Pitarakis (2002) approach in locating the value and number of trade based thresholds. The study combined bean prices, transfer cost and trade volume data covering the period January 2006 to June 2016, for Kitwe, in Zambia and Lubumbashi, in the DRC; and Kasama, in Zambia and Mbeya, in Tanzania. The empirical results revealed significant variations between the studied market pairs. Firstly, the study found no evidence to support informal trade based threshold effects in either market pairing, suggesting that the functioning of informal markets is independent of exogenous limitation to trade. Secondly, results indicated that there is a long run price equilibrium relationship between Kasama and Mbeya, implying that the two markets are integrated. In the case of Lubumbashi and Kitwe however, results indicated that the two markets are segmented. The latter finding implies that any significant price deviations above transfer cost between Lubumbashi and Kitwe may continue to grow without any tendency to equilibrium. Lastly, the adjustment process to price shocks, as measured by the speed of price transmission, is more rapid between Kasama and Mbeya markets (1.72 months) than Lubumbashi and Kitwe markets (5.3 months) despite both markets being dominantly connected by informal trade. This study therefore concludes that unless other market operating environment aspects are improved, a policy focus on informal trade and intra-regional trade liberalization in Eastern and Southern Africa may not by itself always guarantee integrated intra-regional food markets. It is therefore recommended that the food market operating environment be improved beyond simply liberalising regional trade.
An analysis of the competitive performance of the Cameroonian cocoa industry
(Stellenbosch : Stellenbosch University, 2017-12) Abei, Lauretta; Van Rooyen, C. Johan; Stellenbosch University. Faculty of Economic and Management Sciences. Agricultural Economics.
ENGLISH SUMMARY : This study is aimed at investigating the competitive performance of the cocoa industry of Cameroon, 1961 to 2013, together with developing strategic proposals to sustain such performance. A five-step analytical framework adapted from Van Rooyen and Esterhuizen (2012), Jafta (2015), Boonzaaier (2015) and Angala (2015), which accommodate aspects of agri-value chain analysis were applied. Recommendations for improved competitiveness were developed with inputs from the industry. Competitiveness in this study was defined as the ability of the Cameroonian cocao industry to sustain trade in international markets and to attract scarce resources such as land, labour, technology, management talents and capital from other competing economic activities while earning at least the opportunity costs of returns on such resources employed [adapted from the work of Freebairn (1986); Esterhuizen (2006) and Boonzaaier and Van Rooyen (2017). From 1961 onwards, the Cameroonian cocoa industry experienced increased but unstable competitive performance levels. Four different stages of competitiveness were identified over this period, namely: - Phase I: Post-colonial period; centrally regulated competitiveness (1961-1986) - Phase II: The economic crisis and liberalisation period (1987 - 1993) - Phase III: Recovering competitiveness (1994-2007) - Phase IV: Increasing but fluctuating competitiveness with global challenges (2008 onwards) Two data bases were used for measurement, through the Relative Trade Advantage (RTA) calculations, namely FAOSTATS, including only agricultural industry time series data from 1961 onwards and multi-sector/all industry ITC Data from 2001. Multisector-based competitiveness (ITC data) for the industry was generally higher than the agriculture-based competitiveness (FAOSTATS), indicating a lower ranking (RTA values) if only agricultural based information is used to determine competitive performance. Similar performance trends were however recorded for both data sets. RTA values range from 10-50 for the agriculture-based competitiveness, i.e. FAOSTATS and from 46 to as high as 204 for the multi-sector based competitiveness, i.e. ITC data. International comparisons between Cameroon and other major cocoa producing countries showed that, although the competitive performance of the country has recently dropped, since 2001, its performance within the international environment is still highly competitive with average ITC RTA of 79.3; just below Cote d’Ivoire (251.6) and Ghana (156.9). When compared to two other major agricultural exports from Cameroon, namely banana and coffee, cocoa proved to be more competitive. The enquiry included value-chain comparisons between the various value-adding processes in the Cameroonian cocoa industry viz. cocoa beans (primary production) and value-added production, i.e. cocoa butter, paste, powder, chocolate, etc. This analysis revealed that cocoa beans were the most competitive while value-adding processing and manufacturing of chocolate and related products were the least competitive in the chain. An improvement of competitive performances of such local value-adding processes will lead to an overall improvement in the performance of the general industry. Through the cocoa executive survey (CES), where leaders and executives of the Cameroon industry were interviewed, 72 factors were identified to directly influence the competitive performance of the industry. Respondents’ ratings of these factors revealed that 54.6% of the factors were constraining to competitiveness while the rest of the factors (44.4%) were seen to enhance the industry’s performance. This indicates that stakeholders view the general environment as not optimal in terms of enhancing competitive performance with room for improvement, despite the relatively high competitive performance measurement (RTA values) at which the cocoa industry of Cameroon operates. This shows an aggressive attitude striving towards improved competitiveness. The 72 factors were grouped under the six Porter competitive determinants to facilitate strategic analysis and industry level planning, namely production factor conditions, demand and market conditions, related and supporting industries, firm’s structure and strategy, government support and policy and chance factors. Results showed that three of the determinants yielded a positive impact on the competitiveness of the industry, i.e. firm strategy and structure (3.02 out of 5), related and supporting industries (2.89 out of 5) and government support and policy (2.62 out of 5). The other determinants being production factor conditions (2.28 out of 5), demand and market conditions (2.42 out of 5 ) and chance factors (2.22 out of 5) were perceived as constraining with chance factors being the most constraining of them. This indicates that the Cameroon cocoa industry, while performing positively, can strive to increase competitiveness considerably by applying selected industry-based strategies. Possible strategies that enhance competitive performance were considered - extending the recent analytical frameworks used by Boonzaaier (2015) and Angala (2015) - by testing the interrelationships within the Porter Diamond. Statistical comparisons were done between the various determinants and their respective factors to determine such interrelationships. This analysis serves as a guide for the industry as to what determinants/factors need to be dealt with in a coordinated manner or unilateral (single determinant focus) to achieve improvement. Results revealed that the Porter diamond determinants exhibit significant interrelationship except for between production factors and chance and opportunity factors; and firm strategy and industry structure and related and supporting industries. These showed little or no interrelationships. In other words, their influence on the industry’s performance is independent of each other re the improvement of the industry’s competitive performance. This study conducted a value-chain analysis approach where respondents were grouped into functional clusters. Cluster 1 represents stakeholders operating in the primary production of cocoa made up of cocoa producers, input and service providers and cocoa bean exporters (the agribusiness cluster) and cluster 2 actors representing the manufacturers and exporters, i.e. those businesses involved in the transformation of cocoa beans into semi-finished and finished products such as chocolate and chocolate related products (cocoa processors). Although the ratings of these two clusters showed similar patterns, indicating agreement/consensus on relevant factors and determinants, cluster 1 participants generally gave lower ratings than their cluster 2 counterpart did, i.e. stakeholders in cluster 2 were more positive about the industry’s performance. This can be related to their position of more direct exposure to final markets, while agribusiness were more exposed to production risks. From the findings, several industry and government level actions were proposed to improve the competitive performance of the industry. Strategies include production cost considerations such as: investment in input production plants, creation of product technology awareness through advertising campaigns and demonstrations at various points in the chain, the need to expand local research and development facilities inter alia through the development of private research activities, and the identification and accessing of new markets through diversification. Strategies to increase competitiveness also related to human capital training and development, the review of the financial and credit policies by financial institutions to promote innovation and expansion and the review the land tenure system to create a more investment friendly environment. Improved collaboration in value-chain management and analysis through the increased sharing of relevant information (seminars, work sessions and research activities), were also viewed as relevant as such actions will enable more informed decisions and strategies to improve the industry’s performance, in particular between farm-level producers and the rest of the value-chain i.e. increased competitiveness will require improved value chain coordination strategies.
An analysis of the competitive performance of the Congolese palm oil industry
(Stellenbosch : Stellenbosch University, 2024-03) Diambwa, Mania Donatien; Van Rooyen, Johan; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
ENGLISH SUMMARY: The palm oil industry of the Democratic Republic of the Congo (DRC) provides an interesting case study. Richly endowed with the required natural resource base, the DRC was a leading palm oil producer and the main African exporter of palm oil and second in the world with 150 000+ metric tons from 1961 to 1975. Thereafter and due to neglect and decline, the Congolese palm oil industry reached the point, in the 1990s to 2010, where palm oil had to be imported to meet local demand. Since 2015, indications of recovery have been observed. This study measures and analyses the competitive performance of the Congolese palm oil industry to understand the factors constraining and enhancing competitiveness and to propose strategies for improvement. The New Trade Theory and Porter Diamond model provided a grounded theoretical construct for the analysis as it relates to converting comparative advantages, based on natural resource endowments (for palm oil production in the DRC), into business related competitive advantage positions. The relative trade advantage (RTA), the revealed comparative advantage (RCA), and the normalised revealed comparative advantage (NRCA) were used as quantitative measures, with trade data from FAOSTATS and Trade Map ITC. The RTA measurement shows fluctuating trends for the Congolese palm oil industry from highly competitive to negative ratings, with four phases of competitiveness: Phase 1 - “Post-impendence highly competitive but fluctuating” (1961-1975), with 1 849 as highest RTA and 703 as lowest; Phase 2 - “Decreasing positive competitiveness” (1975-1985), with 489 as highest RTA, and 0 as lowest; Phase 3 - “Neglect and nationalization with marginal to negative competitive performance”(1986-2015), with 50 as highest RTA and -83 as lowest; and Phase 4 - ”Recovery towards competitiveness” (2016 onwards), with 95 as highest RTA and 15 as lowest. From an export competitive performance perspective, RCA and NRCA indices show a marginal positive performance since 2015, indicating some recovery from the net import years. To explore the current reality of the competitive performance of the Congolese palm oil industry, analysis structured through the Porter Diamond model indicated that demand and market conditions (rating 3.4/5) and firm strategy, structure, and rivalry (rating 3.2/5) enhance competitiveness, with production factor conditions (rating 2.4/5) near neutral. Competitive performance is however constrained by weak related and supporting industries (rating 1.7/5), chance factors (rating of 1.8/5), and government policies and support (rating of 1.9/5) Note: 5/5 is viewed as most enhancing; 1/5 most constraining. The conversion of comparative into competitive advantages for the industry thus indicates constraining conditions within the Congolese palm oil industry. Strategies towards improving competitive performance require collaboration between the industry and government and include improving the business climate, power and electricity provision and rebuilding the general infrastructure. Linked to these are actions to be dealt with through private-public cooperation and improved industry value chain collaboration. These include research and development through the upgrading of the Nationale de Recherche Agronomies (INERA), technological innovation, replacement of obsolete equipment and improved processing facilities to increase the extraction rate of palm oil.
An analysis of the competitive performance of the Namibian date industry - 2001 to 2013
(Stellenbosch : Stellenbosch University, 2015-12) Angala, Aleksandera; Van Rooyen, Johan; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics
ENGLISH ABSTRACT: The second step in the study was to empirically measure the competitive performance of the date industry based on this trade orientation, using the relative trade advantage (RTA) method. Trade data from FAOSTAT and Trademap were used. Since 2001, the Namibian date industry has consistently recorded positive trends with RTA values ranging between 0.40 and 4.0. When compared to other international competitors, the results indicate that Tunisia is by far the most competitive country, with RTA values ranging between 278 and 391. Namibia’s date industry leads competitors such as South Africa, the USA, Kenya, Australia and India. In step 3, an industry-wide survey was conducted among executive-level industry role players, which identified 72 factors influencing competitive performance. The 72 factors were rated and analysed through chi-square and one-way analysis of variance (ANOVA) in terms of their current impact as enhancing or constraining and also in terms of their relevance to the industry. The results revealed that all factors were rated highly relevant (i.e. important) to the industry’s competitive performance levels, with 47 percent playing an enhancing role, while 43 percent were constraining competitive performance in the Namibian date industry. Differences between views on the current impact and long-term relevance of factors provided a ‘performance gap’ that the industry had to attend to strategically in order to improve competitive performance. The top three most enhancing factors are the substantial size of the international date market, the availability of unskilled labour, and the suitability of Namibian date production (project) locations. The highest rated constraining factors were identified as: the lack of privately funded scientific research capacity, the slow growth and small size of local markets, and insufficient industry expenditure on research and development (R&D). The fourth step applied Porter’s theory of competitiveness (1990; 1998) to derive the industry determinants of competitive performance. The 72 factors were grouped into the six Porter diamond determinants. Principal component analysis (PCA) was undertaken to identify variations and consensus in the views of respondents with respect to the relevance and impact of factors identified for each determinant. The results revealed that there were variations in opinions with regard to 52 factors and consensus on 20 factors, influencing the industry’s competitive performance. In analysing opinions on the impacts and long-term relevance of the identified factors, two value chain clusters were identified, viz. those opinions or respondents directly involved in the production processes of dates (cluster 1); and those providing supporting functions to the production process (cluster 2). The results indicate that although there are similarities in the opinions within the date industry value chain, important differences do exist and must be noted in strategic planning process by the industry. Differences were recorded with regard to access to quality technology, obtaining long-term credit, diversification in the international market, cost of specialised technology services, the effect of legal and political factors on the industry’s strategic position, the country’s black economic empowerment (BEE) policy and health cost implications. In step 5, the most important findings from steps 3 and 4, together with views gathered from a date industry information session (the DIS) and personal interviews, were included in a strategic decision matrix aimed to develop industry-level proposals to improve competitive performance. This matrix listed constraining factors for which a large degree of industry-level consensus was recorded, together with those actions that could improve performance immediately. Proposals highlighted were: focusing on human resources and skills development; cost-sharing activities; public-private partnerships in the development of project-level socio-economic investment packages, investing in long-term research and development (R&D); upgrading export facilities; local market development and improved collaboration with national retailers; reduction of marketing costs; export-market diversification; developing representative industry-level institutions and an industry-level strategic plan; and mobilising government-level support more effectively in order to create a conducive environment for the industry to compete successfully.
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.).
An analysis of the conversion to organic farming in South Africa with special focus on the Western Cape
(Stellenbosch : Stellenbosch University, 2002-12) Niemeyer, Katharina Barbara; Lombard, J. P.; Stellenbosch University. Faculty of AgriScience. Dept. of Agricultural Economics.
ENGLISH ABSTRACT: Organic agriculture is a growing sector world wide due to the ecological and SOCIOeconomic crisis in conventional agriculture. The International Federation of Organic Agriculture Movements (!FOAM) estimated a growth rate of between 20 and 30 percent annually across the world. This trend is also detectable in South Africa although it is still a relatively new movement. During the last two years the number of farmers who had converted to organic farming has increased sixfold and although they still account only for a minute small percentage of the total agricultural production, the increasing importance of this sector can now be observed. This was the reason for this study, which dealt specifically with the conversion process to organic farming. Based on survey results, knowledge was gathered about organic farmers in South Africa concerning sociodemographic aspects, farming operations, motivations and problems of the conversion process. In the second part of the study, the focus was placed on three farming systems in the Western Cape, including pome fruit, vegetables and table grapes. Six farms were evaluated on the basis of technical, social and economic aspects of the conversion period. Several differences were observed between organic and conventional farmers, including a higher level of education and a younger age of organic farmers. Mainly horticultural holdings were converted, with a potential for exporting. Problems farmers had to face during the conversion period included the lack of knowledge and information, higher weed infestation and high certification and inspection costs. On most of the farms it was still too early to assess the financial impacts of the conversion, but where it was possible, the feedback was mainly positive. The changes that took place during the conversion period included technical changes such as the approach to pest and disease control, fertilization and seed inputs. Essential investments at the beginning of the conversion period were a financial burden. Variable costs rose mainly as a result of an increase in labour and machinery input. The conversion period had no obvious impact on the fixed costs and thus the net farm income. With respect to these findings it was recommended to support the conversion to organic farming not only financially with different instruments such as subsidies for certification costs but also to develop an improved infrastructure for marketing, networking and information exchange. Several areas for research were identified to increase the knowledge of organic farming in the South African context.
Analysis of the economic impact of a disaggregated agricultural sector in South Africa : a Social Accounting Matrix (SAM) multiplier approach
(Stellenbosch : Stellenbosch University, 2018-03) Phoofolo, Makhetha Lambert; Punt, Cecilia; Stellenbosch University. Faculty of Economic and Management Sciences. Agricultural Economics.
ENGLISH SUMMARY : The South African economy is developing and moving towards the secondary and tertiary sectors as indicated by the decline of the agricultural sector’s contribution to GDP in the past years. However, South African agricultural statistical reports still reflect the impact of this sector in economic development based on this declining GDP, direct employment and production value only. This traditional and narrow definition of economic contribution neglects the important indirect and induced economic impact of this sector. The main objective of this study is to quantify the economic impact of the disaggregated agricultural sector within the South African economy using a SAM multiplier model which is a useful methodology to examine the direct, indirect and induced impacts of the sector within the entire economy. The review of the literature reveals that the application of this methodology in studying the role and impact of agriculture is very limited in South Africa. The dataset used in this model is a highly disaggregated national SAM in both agricultural and non-agricultural sectors developed as part of this study for the 2014 base year. The developed detailed 2014 SA SAM has 268 accounts: 104 industries (of which 46 are for agriculture, forestry, fisheries and food processing), 133 commodities, 6 factors, 14 households, 4 tax accounts, one account for transaction costs, core government, savings-investment, stock changes, enterprises, and rest of the world. The model was used for detailed computation of multipliers and policy simulations. The results of this study demonstrated the impact of agricultural sectors on output, and incomes of labor, capital, land, enterprise and households. The results have underlined the impact of agricultural sectors, particularly fruits and vegetables as South African key sectors in generating higher labour income for unskilled and low skilled workers and in generating higher income for the low income households. These results are therefore of relevance to agricultural policy and decision makers as they make it possible to identify promising agricultural and food sectors for investment and subsidies based on these sectors’ greater impact on not only output, but on the generation of income and value added as well.
An analysis of the factors impacting the competitive performance of the South African wine industry value chain
(Stellenbosch : Stellenbosch University, 2019-04) Barr, Alison; Van Rooyen, C. J.; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
ENGLISH SUMMARY : The purpose of this study was to analyse the competitive performance of the South African wine industry and to compare the findings with the results obtained from similar previous studies in 2006 and 2011. The study followed the comprehensive Vollrath-Porter approach, following a five-step analytical method. Due to the sustained export orientation of the South African wine industry, the trade-based relative trade advantage (RTA) measure (Vollrath) and industry opinions through Porter’s competitive diamond were used to measure competitive performance. This study defined competitiveness as “the ability of the South African wine industry to sustain or grow business through trade for South African wine amidst a changing agricultural, political, social, environmental, governance, and production landscape and an unpredictable exchange rate, while consistently earning at least the opportunity cost of resources employed.” The annual competitive performance of the South African wine industry was calculated using the RTA formula and the International Trade Centre (ITC) and Food and Agriculture Organisation (FAO) datasets. The competitive performance of the industry from 2001 could be divided into two clear phases: Phase 1: Fluctuating and increasing competitive performances (2001-2009); and Phase 2: Fluctuating and decreasing competitive performances (2010-2017) Despite being in a state of declining competitive performance, the South African wine industry remains competitive across the entire global arena. The average RTA for 2001-2017 was 5.83, with a peak of 7.15 in 2009 and a lowest point of 3.75 in 2012. Industry insight and opinions into key influencing factors were collected through a two-stage Delphi process. In stage one, a Wine Executive Survey (WES) involved rating 121 factors as either enhancing or constraining competitive performance, rated on a Likert scale with 1 (constraining) and 5 (enhancing). The purpose of the WES was to establish an opinion benchmark for comparison with the empirical RTA measurement; and also to compare the current situation with the 2005 and 2008 WES results. The 2018 WES results – when analysed at value chain cluster level – revealed a high level of alignment between the clusters, which indicated a well-informed value chain. The survey also obtained opinions from different points in the wine industry value chain, from two clusters viz. agribusiness (including wine grape producers and agri-support services); and wine business (including cellars, intermediaries and wine trade). The baseline results from the Wine Executive Surveys in 2005 and 2008 showed that the competitive space decreased substantially from 2005 to 2008. However, the results from the 2018 WES reveal that this competitive space has expanded again, recovering almost to its position in 2005. The 121 rated factors were grouped into the Porter Competitive Diamond – a six-determinant model which included ‘production factors’, ‘demand factors’, ‘firm structure, strategy and rivalry’, ‘related and supporting industries’, ‘government factors’ and ‘chance factors’. The ‘firm strategy, structure and rivalry’ determinant received the highest overall determinant rating of 3.53/5 or 70.6% as most enhancing while ‘government factors’ received the lowest average rating of 2.19/5 or 43.8% as most constraining. These results were confirmed in a priority rating of the six determinants during the focus group session of the second phase Delphi. The most enhancing factors across all Porter determinants were ‘the competitiveness drive of the South African product market’ – rated at 4.59/5 or 91.8% ̶ followed by the ‘importance of well-developed infrastructure’ (4.52/5 or 90.4%) while the two most constraining factors were ‘government consultation and interactions’ (1.17/5 or 23.4%) and ‘government financial support’ (1.24/5 or 24.8%). From an assessment across the value chain, bulk wine is the most competitive category, followed by bottled wine. The least competitive category was ‘spirits obtained by distilling grape wine or grape marc’, which was rated as uncompetitive. The prevalence of a socio-economic theme was observed in some of the most constraining factors across all the Porter determinants. This resulted in a proposal that the Porter Competitive Diamond be expanded to accommodate a seventh ‘socio-economic’ determinant in order to highlight the impact of socio-economic/political transformation factors on the competitive space in the emerging South African environment. This new determinant, grouped from socio economic/political factors identified in the study, highlighted the overall constraining impact of these factors on competitive performance. The most enhancing factor was ‘obtaining unskilled labour’ and the most constraining was ‘crime perceptions’. The addition of such a new determinant to the Porter Competitive Diamond needs to be explored further but mirrors Michael Porter’s own view that economic objectives need to complement social objectives in a developing country environment (2007). Other aspects that need to be considered through future research include a refined process for identifying relevant factors, as well as linking these factors with the progress reported in existing socio-economic/political transformation interventions. This will improve the application of the Porter-Vollrath approach to improve the analysis of competitiveness in the South African agri-food business environment. The results from this study were drafted into a set of strategic findings and recommendations that propose to address the most prevalent and achievable constraining influences on competitive performance. A key area for consideration by the industry is the negative association with government-related factors. The crux of the recommended approach is to re-engage with government in a collaborative approach to transformation while protecting the impact of factors that enhance competitive performance. Important key strategic areas for enhancing competitive performance include access to water, short-term finance solutions and a branded bulk wine packaging format.
An analysis of the financial implications of different tillage systems within different crop rotations in the Swartland area of the Western Cape, South Africa
(Stellenbosch : Stellenbosch University, 2015-04) Knott, Stuart Charles; Hoffmann, Willem H.; Labuschagne, J.; Strauss, J.; Vink, N.; Stellenbosch University. Faculty of Agrisciences. Dept. of Agricultural Economics.
ENGLISH ABSTRACT: The pressure on the world’s natural resources is increased by an expanding global population. The majority of the growth is expected to take place in Africa and Asia. This creates the need for sustainable agricultural practices. To sustain food security, the limited natural resources must be utilised efficiently to optimise agricultural productivity. Conservation agriculture (CA) is one of the most holistic sustainable agricultural practices yet. It reduces environmental degradation, and concurrently it could enhance farm profitability. The practice of CA is able to improve food security while sustaining the environment for the benefit of future generations of both consumers and producers. A large proportion of the commercial grain producers in the Western Cape have adopted CA to varying degrees. A purer form of CA practice is continually pursued to realise its full benefits. Adoption has taken place in the absence of any policy support framework directed to CA, and thus, has been market driven. The reasons for and rates of CA adoption in other regions of the world differed, but was mostly successful, which highlights the driving forces behind adoption of CA in the Middle Swartland. The physical/biological benefits of CA are well known. The financial implications of the various systems within CA, at farm-level are still unknown. This study implements trial data from Langgewens experimental farm to evaluate the financial implications of various farming systems over an extended period. Farm systems are complex, consisting of numerous interrelated components. A whole-farm budget model is developed within a systems approach to compare various farming systems designed within CA principles. A trustworthy whole-farm model providing an accurate representation of a real life farm requires insight across many scientific disciplines. Multidisciplinary group discussions are used to bridge the gap between scientific knowledge. To serve as a basis for comparison, the whole-farm model was based on a typical farm within the Middle Swartland relative homogeneous farming area. Trial data on crop rotations and tillage systems from Langgewens experimental farm served as starting point for the research. The data was fitted for use in financial analysis and as input to the typical farm model. A key role of the inter-disciplinary expert group was to ensure that data and the model design accurately reflect the underlying physical/biological processes of CA. The financial evaluation of the various farming systems showed that conventional agricultural practices of monoculture and deep tillage are financially unsustainable. Farming systems under conventional tillage returned negative net present values (NPV) and an internal rate of return on capital investment (IRR) lower than the real interest rate. This implies that investment in conventional tillage will ultimately lead to financial losses. The financial benefits of CA are directly related to improved soil health, lower weed and pest stress and improved yields. The CA farming systems were less susceptible to variations in external factors, highlighting the resilience of the system that incorporates crop rotation and no-till. The farming systems operated under conventional practices are expected to be unsustainable over a long-term period of 20 years.