Johann F. Kirsten

Performance of land reform projects in the North West Province of South Africa : changes over time and possible causes

ABSTRACT Anecdotal evidence as well as selected studies on the performance and progress of South Africa’s land reform programme generally present mixed to rather negative results. Few longitudinal studies exist on the progress of redistributed farms, resulting in an incomplete picture of the performance and progress of land reform projects. In this article, we report on the progress and performance of a group of land reform projects in the North West province of South Africa over five years. As part of a comprehensive audit of land reform projects in the North West province, 43 farms were studied in 2005 to assess their performance, based on their production status. Five years later, in 2010, 37 of these farms were visited again to review their progress. The results indicate that the production status (and thus performance) of land reform projects is not static. Although some projects either improved or maintained their initial production status, the overall trend shows deterioration in performance. Numerous factors are responsible for the decline, including group characteristics where farms are owned by groups of beneficiaries. This article is thus the first to use two surveys of a group of land reform projects to show the true status of farms in their post-transfer phase in South Africa.

Estimating and attributing benefits from wheat varietal innovations in South African agriculture

ABSTRACT It is well accepted that biological innovations, particularly varietal improvements, have greatly contributed to agricultural yield and output growth in the past. At the same time, public funding for breeding programmes such as at the Agricultural Research Council in South Africa has dwindled. In an effort to confirm the importance of continued funding of varietal improvement programmes, this paper estimates the benefits from wheat varietal innovations and attributes them to the different institutional sources (public, private and others) that have contributed to varietal changes in South Africa. The empirical analyses used data on market shares of wheat varieties planted by farmers and annual quantities of wheat produced across different wheat-production areas in South Africa (summer dryland, dryland winter, and irrigation). A vintage regression model was estimated to calculate the proportional yield gain from wheat varietal improvements. The results indicated that the rate of gain in yield as a result of releases of new wheat varieties (variety research) was 0.8 per cent per year (equivalent to 19.84 kg/ha/year) for dryland summer varieties, and 0.5 per cent for both irrigation (equivalent to 32.20 kg/ha/year) and dryland winter varieties (equivalent to 16.65 kg/ha/year). The attribution of benefits among different institutional sources confirms that not accounting for attribution of benefits by source and time period results is overestimation of benefits to any specific research programme. Attribution of benefits by institutional source showed that Sensako dominated, while the share of the ARC-SGI substantially declined, after deregulation of the wheat sub-sector. The results highlight the impact of the decline in public funding for wheat variety improvement research after deregulation and provide a strong argument for continued public funding for variety improvement in South Africa.

Does research and development (R&D) investment lead to economic growth? Evidence from the South African peach and nectarine industry

Agricultural research programmes in Africa have experienced waning state financial allocations. Efforts to change these funding trends have been fettered by the limited evidence of research investment benefits and the long lags associated with these returns. In a bid to provide such information, this article seeks to calculate the benefits of investments in the Agricultural Research Council’s peach and nectarine research programme – one of Africa’s successful and oldest research programmes. It uses the supply response function to model South Africa’s peach and nectarine industry and estimates the effect of deciduous fruit prices, production costs, research investment and weather on production. A lag distribution of research and development (R&D) investment is estimated using the polynomial distribution function and the derived elasticities are used to calculate the marginal internal rate of return. The study’s results reveal that investment in the peach and nectarine programme is associated with a marginal internal rate of return of 55.9%. This means that every R100 invested yields a R55.9 increase in value in the peach and nectarine industry. In light of these findings, it is concluded that R&D investment is worthwhile and recommends that the funding allocated to this programme be increased.

The Karoo Meat of Origin certification scheme: a silver bullet?

The Karoo Meat of Origin certification scheme is the first certification scheme established to differentiate and protect a region of origin meat product in South Africa. Although this scheme has come a long way in protecting the value embedded in the name ‘Karoo’, many challenges and loopholes for non-compliance still exist. These challenges include opportunistic behaviour on the farmers’ side regarding the vulnerable free range claim as well as inconsistent supply and mismatched objectives of supply chain stakeholders. Because of these challenges the niche product has not yet come to its own. The purpose of this case study is threefold. Firstly, to understand the notion of Karoo Lamb as a geographical indication, and the subsequent establishment of the Karoo Meat of Origin certification scheme. Secondly, to identify and understand both the institutional and supply chain challenges that Karoo Lamb is faced with. Thirdly, to guide the certification scheme to evaluate their modus operandi for better regulat...

An investigation into food-away-from-home consumption in South Africa

ABSTRACT Food policy that ignores food-away-from-home (FAFH) in a developing country like South Africa will be misleading given changes in demand for food over time. This study contributes to our understanding of the factors that influence the demand for FAFH in South Africa. Using panel data from the Income and Expenditure Survey, this study analyses the effects of income and socio-demographic variables on FAFH expenditure using a double-hurdle model. The results show that small-sized households headed by younger white females/males and living in an urban settlement are most likely to purchase FAFH while male-headed households spend more than female-headed households. Furthermore, income of the household head is an important determinant of household FAFH expenditures. The income elasticity of expenditure on FAFH is inelastic and a normal good. The small size of the participation elasticities means that growth in the FAFH sector will be driven by households with existing expenditure.

Vertical price transmission and its inflationary implications in South African food chains

ABSTRACT Various studies interrogate the issue of food inflation from a commodity level vantage point but fail to relate how commodity prices manifest in retail prices, and ultimately, how it impacts food inflation. This study uses vertical price transmission analysis, with time series econometric techniques, to determine how underlying commodity prices manifest in final retail prices and the associated reasons for it. Implications for food inflation are also reflected on. Two value chains, namely wheat-to-bread and maize-to-maize meal are considered due to their importance as staples in low(er) income consumer diets in South Africa. Results indicate full price transmission in the wheat-to-bread chain but incomplete price transmission in the maize-to-maize meal chain. In addition, prices in the wheat-to-bread chain are determined at producer and consumer level and bi-directional transmission takes place, whereas maize prices are determined at retail level and transmitted through the chain, to commodity level. Symmetry in price adjustment was not rejected in both chains. Implications of the findings for staple food inflation is that it does not seem that the price determination and price transmission processes in these chains are contributing factors to the inflationary pressures that these chains have experienced over the past decade. Symmetric price transmission in both chains seems to suggest no opportunistic behaviour on the part of firms to exploit situations where commodity prices decrease.

Non-Tariff Measures Affecting Agricultural Trade in SADC

ABSTRACT The establishment of the World Trade Organization in 1995 and the subsequent proliferation of regional and bilateral trade agreements resulted in the decline of global tariffs. However, other trade and regulatory measures have increased and thus restricted potential trade to some extent. These measures, non-tariff measures (NTMs), have also affected intra-SADC trade as there was no evidence of growth in the trade that needed to accompany the decline in tariffs. The extent of the impact of NTMs on SADC trade is still not fully understood due to lack of such data, which has effectively affected the quality of research in this area. In this article, data on NTMs related to SADC agricultural products for ten countries was compiled to shed some light on these measures, as well as to make them transparent. The results confirm that these countries have increased their use of NTMs over the period 2000 to 2010. As a result, on average one product was subjected to 17 NTMs in 2010. The Southern African Customs Union is the leader in the use of NTMs, while Malawi had the least incidences of NTMs. Most of the NTMs are applied on fruits, meat, dairy, vegetables and cereal products. The use of sanitary and phytosanitary measures (SPS) and of export measures was increasing faster than other categories were. Finally, there is an indication that NTMs are used as substitutes for the declining tariffs. NTMs are trade restricting, and if they are not addressed, they will continue to reverse the gains of the SADC free trade area, as well as other initiatives of trade liberalisation.