Agricultural public spending, growth and poverty linkage hypotheses in the Eastern Cape Province of South Africa
- Authors: Ndhleve, Simbarashe
- Date: 2012
- Subjects: Poverty -- Economic aspects -- South Africa -- Eastern Cape , Rural poor -- South Africa -- Eastern Cape , Sustainable development -- South Africa -- Eastern Cape , Rural development -- South Africa -- Eastern Cape , Agricultural industries -- South Africa -- Eastern Cape , Government spending policy -- South Africa -- Eastern Cape , Finance, Public -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Doctoral , PhD (Agricultural Economics)
- Identifier: vital:11157 , http://hdl.handle.net/10353/493 , Poverty -- Economic aspects -- South Africa -- Eastern Cape , Rural poor -- South Africa -- Eastern Cape , Sustainable development -- South Africa -- Eastern Cape , Rural development -- South Africa -- Eastern Cape , Agricultural industries -- South Africa -- Eastern Cape , Government spending policy -- South Africa -- Eastern Cape , Finance, Public -- South Africa -- Eastern Cape
- Description: The adoption of the Millennium Development Goal 1 (MDG1) of reducing the rate of poverty to half of the 1990-level by 2015, the advent of democracy in South Africa, among other things, have raised concerns over the potential role of the agricultural sector. There is a belief that the sector has the capacity to successfully reduce poverty among the rural masses and contribute to addressing the problem of inequality in South Africa. In line with that thinking, South Africa‘s agricultural sector has attracted considerable fiscal policy interest. For instance, South Africa‘s statistics show that public investments in agricultural development programmes have been growing. In spite of this, rural poverty is still a major concern on an overall basis. However, this might not be the case in the Eastern Cape Province and the situation might be different for each district municipality. This study assesses the linkages between public agricultural investment, agricultural growth and poverty reduction in the Eastern Cape Province. The study also addresses the question whether Eastern Cape Province is on course to meet several regional development targets. The study also aims to provide an estimate of the amount of agricultural investment required to attain the agricultural productivity growth rate which is sufficient to meet MDG1. The study reviewed the various theories of public spending, linkages between public investment and agricultural growth and how these components affect the incidence of poverty. The conventional wisdom that public expenditure in agriculture positively affects economic growth and this growth consequently reduces poverty was noted. The reviews also revealed that in many developing countries, the current level of public agricultural investment needs to be increased significantly for countries to meet the MDG1. This study employed the decomposition technique and growth elasticity of poverty concept to estimate the response of poverty to its key determinants. The size of public spending, prioritization of public spending and the intensity in the use of public funds emerged as important in increasing agricultural production. The relationship between government investment in agriculture and agricultural GDP shows iv that public funds were largely behind the province‘s success in increasing agricultural production throughout the period from 1990s to 2010. Agricultural spending went to sustainable resource management, administrative functions and then farmer support programme. Exceptional growth in the size of spending was recorded in respect to agricultural economic function, structured agricultural training, sustainable resource management and veterinary services. Overall output from the agricultural sector fluctuated, and the sector contributed less than 5 per cent to the total provincial GDP. Correlations between growth in agricultural sector and changes in the incidence of poverty in Eastern Cape show that during the period 1995 to 2000, increases in the agricultural GDP per capita may have failed to benefit the poor as poverty increased in all the reported cases.–However, for the period between 2005 and 2010, the situation was different and it was observed that increases in agricultural GDP per capita and were associated with reduction in the incidence of poverty. Growth elasticity of poverty (GEP) estimates reveal that agricultural GDP per capita was more important in reducing poverty in 5 out of the 7 district municipalities. Non-agricultural GDP per capita was only important in two district municipalities. It emerged that most of the district municipalities are not in a position to meet any of the regional set goals. This situation is largely attributable to the province‘s failure to boost agricultural production which is an outcome of low and inefficient public expenditure management, inconsistent and misaligned policies and failure to fully embrace the concept of pro-poor growth. Varied provisional estimates for the required agricultural growth rate and the increase in public spending on agriculture required in order to reach MDG1 were calculated for each district municipalities. All the district municipalities of Eastern Cape will need to increase public investment in agriculture for them to achieve MDG1.
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- Date Issued: 2012
Risk preferences and consumption decisions in organic production: the case of Kwazulu-Natal and Eastern Cape provinces of South Africa
- Authors: Kisaka-Lwayo, Maggie
- Date: 2012
- Subjects: Food security -- South Africa , Sustainable development -- South Africa , Organic farming -- South Africa , Natural foods industry -- South Africa , Risk management -- South Africa , Consumers -- South Africa
- Language: English
- Type: Thesis , Doctoral , PhD (Agricultural Economics)
- Identifier: vital:11188 , http://hdl.handle.net/10353/492 , Food security -- South Africa , Sustainable development -- South Africa , Organic farming -- South Africa , Natural foods industry -- South Africa , Risk management -- South Africa , Consumers -- South Africa
- Description: Despite phenomenal success of the commercial agricultural sector in South Africa and significant progress in integrating smallholders since democratic reforms, food security concerns remain. Recent global increases in food prices have further exacerbated vulnerabilities and made it imperative to examine alternative food production questions in the country. Organic agriculture is identified as one of the sustainable approaches to farming and offers insights towards a paradigm shift in food and nutritional security. Notwithstanding, consumer awareness, knowledge and consumption of organic foods are significantly lower in developing than developed countries. Risks associated with adoption of organic practices need to be explored to address the supply and demand constraints. Similarly, while consumer awareness of organic foods is the first step in developing demand for organic products, it does not necessarily translate to consumption. Therefore it is important to investigate these issues. The objectives of this study were to: (i) describe the demographic and socio-economic characteristics of organic farmers and consumers; (ii) establish the determinants of farmers‘ decision to participate in organic farming distinguishing between the fully-certified organic, partially-certified organic and non-organic farmers; (iii) elicit farmers risk preferences and empirically analyse farmers sources of risk and risk management strategies; (iv) explore consumer awareness, perceptions and attitudes regarding organic products; and (v) identify the factors that influence consumer‘s preference and consumption of organic products. A total of 400 respondents were surveyed, consisting of 200 smallholder farmers in KwaZulu-Natal and 200 consumers in the Eastern Cape. The KwaZulu-Natal study was conducted earlier and identified the following as major sources of risk, lack of consumer awareness of organic products and lack of information among producers about consumer preferences for organic products. This informed the need to undertake a consumer awareness and preference study, in order to inform producers. The Eastern Cape is a bordering province to KwaZulu-Natal with similar socio economic conditions and a major consumer of produce from KwaZulu-Natal. It was also expected that in the intervening period there could have been awareness about the product. An vii indication of its appeal would not be in the consumption of the product by the people who grow it, but by consumers who reside in bordering regions. Producer and household questionnaires were used to record household activities, socio-economic and institutional data as well as household demographics through personal interviews. The Arrow Pratt Absolute Risk Aversion (APARA) coefficient was used to measure the farmer‘s degree of risk aversion and the experimental gambling approach to establish the risk classification. Consumers were also asked about their awareness and knowledge about organics, attitudes and perceptions towards organics, preference and consumption patterns. The ordered probit results indicate that older farmers, who are less risk averse and reside in the sub-ward Ogagwini, Ezigani, and Hwayi were more likely to be certified organic farmers. Similarly, the propensity to adopt organic farming is positively correlated to household size, livestock ownership, asset base and tenure security. The risk analysis indicates that at higher pay-offs most farmers are intermediate to moderately risk-averse, with little variation according to personal characteristics, and that non-organic farmers tend to be more risk averse than fully-certified and partially-certified farmers. In general, price, production and financial risks were perceived as the most important sources of risk. Using Principal Component Analysis (PCA), seven principal components (PCs) explaining 66.13% of the variation were extracted. Socio economic factors having a significant effect on the various sources of risk are age, gender, education, location, information access and risk taking ability. The most important traditional risk management strategies used by the surveyed farmers are crop diversification, precautionary savings and participating in social networks. There was general awareness of what constituted organic foods with many consumers associating organic foods with health and nutrition, chemical free and produced using indigenous methods of production. However, there was low awareness of organic products among consumers with little or no knowledge of organic certification and standards. According to the logit model the major factors influencing consumer awareness of organic products are: gender, education, employment status, and location of the respondents, person/household member responsible for shopping and the price perception of the decision maker. The discriminant analysis showed that the consumption of organic products is significantly affected by age of the consumer, viii location, person/household member responsible for shopping, consumer awareness of organics, price perception and label trust. The findings from this study provides useful practical insights for policy makers, farm advisers and researchers in the design of effective and efficient policies, programmes and projects which can affect the adoption of organic practices, increase smallholder farmers capacity to manage risk and drive growth in the organic food market.
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- Date Issued: 2012
The competitiveness of the South African citrus industry in the face of the changing global health and environmental standards
- Authors: Ndou, Portia
- Date: 2012
- Subjects: Citrus fruit industry -- South Africa , Food industry and trade -- Safety regulations , Agricultural industries -- Safety regulations , Food -- Safety measures -- International cooperation , Export marketing -- Law and legislation -- South Africa , Competition, International
- Language: English
- Type: Thesis , Doctoral , PhD (Agricultural Economics)
- Identifier: vital:11162 , http://hdl.handle.net/10353/477 , Citrus fruit industry -- South Africa , Food industry and trade -- Safety regulations , Agricultural industries -- Safety regulations , Food -- Safety measures -- International cooperation , Export marketing -- Law and legislation -- South Africa , Competition, International
- Description: In recent years, concern about food safety linked to health issues has seen a rise in private food safety standards in addition to the regulations set by the Food and Agriculture Organisation (FAO) in collaboration with the World Health Organisation (WHO). These have presented challenges to producers and exporters of agricultural food products especially the producers of fresh fruits and vegetables. In spite of the food safety-linked challenges from the demand side, the vast range of business-environment forces pose equally formidable challenges that negatively impact on the exporting industries’ ability to maintain or improve their market shares and their ability to compete in world markets. The objective of this study was therefore to establish the competitiveness of the South African citrus industry in the international markets within this prevailing scenario. Due to the diversity of the definitions of competitiveness as a concept, this study formulated the following working definition: “the ability to create, deliver and maintain value and constant market share through strategic management of the industrial environment or competitiveness drivers”. This was based on the understanding that the international market shares of an industry are a function of forces in the business environment which range from intra-industry, external and national as well as the international elements. The unit of analysis were the citrus producers engaged in export of their products and the study made use of 151 responses by producers. The study adopted a five-step approach to the analysis of the performance of the South African citrus industry in the global markets, starting with the analysis of the Constant Market Share (CMS) of the South African citrus industry in various world markets, establishing the impact of the business environmental factors upon competitiveness, establishing the costs of compliance with private food safety standards, determining the non-price benefits of compliance with the standards, as well as highlighting the strategies for enhancing long-term competitiveness of the industry in the international markets. South Africa is one of the top three countries dominating the citrus fruit export market. Since its entry into the citrus fruit exports market in the 1900s, the industry has sustained its activity in the international market. The Constant Market Share Analysis shows that, amidst the challenges on the international market side, and the changes in the business environment, over much of which the industry has limited control and influence, the industry has maintained its competitive advantage in several markets. The CMS shows that South Africa’s lemons are competitive in America. Despite a negative trend, the South African grapefruit has been competitive in France, Greece, Italy, the Netherlands and Spain. Oranges have been competitive in the Greece, Italy, Portugal, UK, Asian and Northern Europe markets. Competitiveness in these markets has been due to the inherent competitiveness of the industry. Competitiveness in such markets as the Middle East has been attributed to the relatively rapid growth of these markets. The South African citrus industry has similarly undergone many major processes of transformation. The business environmental factors influencing its performance have ranged reform to the challenges beyond the country’s borders. These factors directly and indirectly affect the performance of the industry in the export market. They have influenced the flow of fruits into different international destinations. Of major concern are the food safety and private standards. Challenges in traditional markets as well as opportunities presented by demand from newly emerging citrus consuming nations have seen a diversification in the marketing of the South African citrus. The intensity of competition in the global market is reflected by the fluctuations in the market shares in different markets as well as the increase and fluctuations of fruit rejection rates in some lucrative markets such as America. A combination of challenging national environmental forces and stringent demand conditions negatively impact on revenues especially from markets characterised by price competitiveness. This study identified cost of production, foreign market support systems, adaptability, worker skills, challenges of management in an international environment and government policies such as labour and trade policies as some of the most influential obstacles to competitiveness. Some of the most competiveness-enhancing factors were market availability, market size, market information, market growth and the availability of research institutions. However, compliance with private standards still poses a challenge to the exporters. The different performance levels of the industry in various markets prove the dissimilarity of the demand conditions in the global market. These are supported by the negative influence associated with the foreign market support regimes as well as the challenges associated with compliance with private food safety standards. While market availability, market growth, market information and size were identified as enhancing competitiveness, the fluctuations and inconsistencies in the competitiveness of the industry in different foreign markets require more than finding markets. Resource allocation by both the government and the industry may need to take into account the off-setting of the national challenges and support of farmers faced with distorted and unfair international playing fields. Otherwise, market availability is not a challenge for the industry save meeting the specifications therewith as well as price competitiveness which is unattainable for the South African citrus producers faced with high production costs. For the purposes of further study, it is recommended that account should be taken of all the products marketed by the industry (including processed products such as fruit juices) in order to have a whole picture of the competitiveness of the industry in the international market. This study also proffers a new theoretical framework for the analysis of the business environment for the citrus industry and other agro-businesses. This framework takes into account the indispensability of the food safety standards and measures as well as the diversity of the global consumer and the non-negotiability of food trade for the sustenance of the growing population.
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- Date Issued: 2012