Zerihun Gudeta Alemu

Factors enhancing market participation by small-scale cotton farmers

Abstract This paper uses data collected from 177 small-scale farming households in Mpumalanga in an effort to identify factors that significantly influence the degree of commercialisation or market participation. A logistic regression model was applied within the transaction costs framework. Results support the hypothesis that transactions costs rank among the main determinants of commercialisation. The following variables were statistically significant: age, ability to speak/understand English, region, ownership of transport, access to market information, distance to market, dependency ratio, trust, land size and ownership of livestock. Increases in the latter four have negative effects on commercialisation. The negative relationship between land size and commercialisation probably indicates that increased market participation is also afunction of input (land) productivity.

THE DEMAND FOR MEAT IN SOUTH AFRICA: AN ALMOST IDEAL ESTIMATION

Abstract A Linear Approximated Almost Ideal Demand System (LA/AIDS), estimated in first differences, was used to anticipate the demand relations for meat (beef, chicken, pork and mutton) in South Africa from 1970–2000. Two tests for weak separability, including an F and Likelihood ratio version, failed to reject the null hypothesis of weak separability, confirming that the four meat products are separable, and should be modelled together. According to the Hausman exogeneity test, the expenditure term in the South African meat demand model is exogenous. As a result, a Restricted Seemingly Unrelated Regression (RSUR) was used to estimate the model, whereafter the parameters were used as to calculate compensated, uncompensated and expenditure elasticities.

Producer price and price transmission in a deregulated Ethiopian coffee market

Abstract Coffee producers in Ethiopia have historically received a very small share of the export price of green coffee. Reasons that are often mentioned are heavy government intervention and high marketing and processing costs. Prior to 1992, government regulation of the domestic coffee market in the form of fixed producer prices and the monopoly power of the Ethiopian Coffee Marketing Corporation put a substantial wedge between the producer price and the world price of coffee by imposing an implicit tax on producers. The domestic coffee marketing system in Ethiopia was liberalised after 1992, which was envisaged to have a positive effect on producer prices and price transmission signals from world markets to producers. This paper, with the help of Cointegration and Error-Correction Model (ECM), attempts to analyse its impact. As findings indicate, the reforms induced stronger long-run relationships among grower, wholesaler and exporter prices. The estimation of the ECM shows that the short-run transmission of price signals from world to domestic markets has improved, but has remained weak in both auction-to-world and producer-to-auction markets. This might be explained by the weak institutional arrangement coordinating the domestic coffee system and contract enforcement. In general, the domestic price adjusts more rapidly to world price changes today than it did prior to the reforms. However, there is an indication that negative price changes transmit much faster than positive ones.

Factors influencing access to produce markets for smallholder irrigators in South Africa

The objective of this paper was to determine the factors influencing access to produce markets for South African smallholder irrigators. Market access was measured according to whether all of the produce that was meant to be sold the previous season was sold or not. Data were collected from six smallholder irrigation schemes in three provinces: the Eastern Cape, Limpopo and Mpumalanga. A principal component analysis was performed to deal with the problem of multicollinearity, yielding six principal components from 14 original explanatory variables: physical access to the market, farmer skills, nature of access to the market, inventory of support services, ability to respond to opportunities, and off-farm income. A logit regression analysis was then performed, with the principal components as explanatory variables. The results show that physical access to the market, farmer skills and nature of access to the market are highly significant factors in influencing market access for these smallholders.

GRAIN-SUPPLY RESPONSE IN ETHIOPIA: AN ERROR-CORRECTION APPROACH

Abstract This paper quantifies the responsiveness of producers of teff, wheat, maize and sorghum to incentives using an error-correction model (ECM). It is found that planned supply of these crops is positively affected by own price, negatively by prices of substitute crops and variously by structural breaks related to policy changes and the occurrence of natural calamities. It has found significant long-run price elasticities for all crop types and insignificant short-run price elasticities for all crops but maize. Higher and significant long-run price elasticities as compared to lower and insignificant short-run price elasticities are attributable to various factors, namely structural constraints, the theory of supply and the conviction that farmers respond when they are certain that price changes are permanent. The paper concludes that farmers do respond to incentive changes. Thus attempts, which directly or indirectly tax agriculture with the belief that the sector is non-responsive to incentives, harm its growth and its contribution to growth in other sectors of the economy.

Quantifying the impact of phytosanitary standards with specific reference to MRLs on the trade flow of South African avocados to the EU

Abstract In this study a gravity model was used to investigate the impact of country specific MRLs that are more stringent than the MRLs set by CODEX on avocado exports by South Africa to the EU with specific reference to Prochloraz. The results revealed that the more stringent Prochloraz MRLs indeed have an impact on avocado exports to the EU. The simulation results show that the revenue foregone due to the more stringent Prochloraz MRLs is US

Agricultural development policies of Ethiopia since 1957

15.27 million. In relative terms this is significant, and should the Prochloraz MRLs be relaxed to the CODEX levels the contribution of the avocado industry to the gross domestic value of agricultural products would increase significantly. Furthermore, several studies have revealed the potentially negative impacts of abnormal levels of Prochloraz. The question arises why there are anomalies in the application of Prochloraz MRLs between countries and whether the CODEX MRL already account for these negative impacts. In depth analysis should be done with respect to the anomalies prevailing for Prochloraz MRLs to provide a proper scientific basis for applying them. Other recommendations are that much more attention should be given to the development of the national market for avocados and that other markets than the EU market should be explored for exports.

Choosing between the AIDS and Rotterdam models: A meat demand analysis case study

Agriculture is the backbone of the Ethiopian economy. It constitutes over 50 per cent of the Gross Domestic Product (GDP), accounts for over 85 per cent of the labour force and earns over 90 per cent of the foreign exchange. Studies on agricultural development policies of Ethiopia are very few. A frequently quoted article, which is one of the basic reference materials in this study, is the article by Dejene.

Economic Analysis of Phosphorus Applications under Variable and Single-Rate Applications in the Bothaville District

Abstract Due to the inability of economic theory to choose ex ante between the Almost Ideal Demand System (AIDS) and the Rotterdam model, a non-nested test was used. The results of the non-nested test points to the Linearized-AIDS model applied to 31 years of meat consumption data in South Africa. When comparing the estimated demand relations of the two models, the LA/AIDS model also proved to be a better fit for South African meat demand.

Contribution Of Agriculture In The Ethiopian Economy: A Time-Varying Parameter Approach

Abstract Variable-rate (VR) application of inputs in South African cash crop production is mainly concerned with fertilizer and lime, and this indicates the importance of these inputs in cash crop production. However, the profitability of VR application of inputs has not yet been investigated under South African conditions. This paper studies the maize yield response to variable-rate application of phosphorus (P) and the profitability thereof in South Africa, on the basis of data collected on a 104-hectare experimental field on a farm in the Bothaville district. The strip-plot design of 180 strips was used for this on-farm research experiment. This design involved treatments that run in the same direction across the field as planting and harvesting. The objective is to determine the maize crop response functions under different P rates and to estimate the profitability of VR relative to the single-rate (SR) application of P. The methodology involves modelling maize yield response functions for P under VR and SR treatments, and for different management zones. A spatial quadratic regression model is developed, according to which yield is estimated as a function of applied P, the treatment and management zones. The results indicate that yield response to P varies between VR and the SR application methods, as well as between management zones. Variable-rate treatment results in higher profits than the SR treatment.