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The ability to determine the fragility of agribusiness value chains is valuable to agribusines management practitioners and scholars in a context where risk and uncertainty are increasingly pervasive, consequential and unpredictable. The paper argues for determining the fragility of a chain to adverse events rather than trying to predict the probability and impact of such events. The paper specifically proposes a framework to detect and quantify non-linear consequences in response to progressively deteriorating chain fragility factors. The paper’s approach is a novel alternative to the traditional value chain ‘risk assessment’. Application of the framework to the South African lamb chain reveals that a number of specific factors, like quality and safety performance and cash flow position, have consistently high fragility scores throughout the chain while some factors are uniquely localized to a specific role-player or activity, which highlights the techno-economic uniqueness of individual activities in a chain.

This paper presents new evidence on the employment effects of a large increase in agricultural minimum wages in South Africa using anonymized tax data. We add to the minimum wage literature by differentiating employment effects resulting from the destruction of existing jobs and from the slower creation of new jobs. Using data from tax years 2010/11 to 2016/17 and difference-in-difference models, our results show that employment decreased by approximately 14 percentage points following the minimum wage increase.

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 f...

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 regulation. Ultimately, the managerial decisions are expected to come full circle; if the certification scheme is better-managed consumers may be willing to pay higher premiums which might, in turn, convince farmers to become part of this prestigious certification scheme.

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 margina...

Two of the experimental methods used to estimate willingness‐to‐pay (WTP) for a non‐market good, the Becker‐DeGroot‐Marschak (BDM) mechanism and the non‐hypothetical choice experiment (nHCE) often lead to significantly different WTP estimates, complicating the choice between the methods. In Zambia the same group of researchers used both techniques to evaluate WTP for orange maize, which provides more vitamin A than other varieties. This provided an opportunity to analyse the sources of the difference. In the BDM experiment, one group of respondents was provided with more training opportunities than the other, and made higher bids. Accounting for lexicographic behaviour in the nHCE reduced the estimated WTP. These two design factors together resulted in a decrease in the WTP difference for orange maize (1,279–632 ZMK) although the difference remains statistically significant. More training was also shown to eliminate the effects of different orders in which maize varieties were presented.

In South Africa, Karoo Lamb is a prestigious product associated with free range production. This study examined the influence of subjective and objective Karoo Lamb knowledge, the importance of label information, and demographics on consumers' willingness to pay a premium for Karoo Lamb products. A panel of 355 consumers who had previously purchased lamb/mutton products completed an online questionnaire. The importance of Karoo Lamb label information, subjective Karoo Lamb knowledge and population group had a significant positive impact on willingness to pay a premium for Karoo Lamb. Objective Karoo Lamb knowledge and other demographics did not have a significant impact.

On 13 January 2021, we lost a very good friend, and the country lost one of its preeminent policy advisors in the fields of agricultural development and land reform, yet another victim of the Covid...

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.

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 lev...

The strengthening of the intellectual property rights (IPRs) for plant varieties provide incentives for breeding companies to invest more resources in plant breeding. The main objective of this paper was to analyze the effects of strengthening the wheat variety intellectual protection on wheat productivity and the release of new varieties. The strength of IPR systems was measured using an intellectual property (IP) protection index, and plant breeders&rsquo, rights (PBRs) granted for wheat varieties. The empirical analyses were based on correlation and multiple regression analyses. The results showed that strengthening IPR systems in South Africa contribute to improving wheat productivity and increasing the number of wheat varieties released. Furthermore, although the robust coefficients of the other IPR variables are positive, they are statistically insignificant for all scenarios. There is a need for more incentives beyond granting PBRs and strengthening of IPR systems to be provided in the whole wheat sector to stimulate increased investments and the release of new varieties.

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.

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. Numero...

Purpose – African agri-food systems are undergoing major structural change in response to growing urbanization, rising incomes and shifting patterns of food consumption. The purpose of this paper is to explore four major dimensions of this surprisingly rapid structural shift in African food systems. Design/methodology/approach – This chapter synthesizes the six chapters and in addition discusses future implications for agricultural education and training (AET) in Africa. Findings – AET institutions face multiple pressures as a result of these ongoing changes. High fertility rates have produced a youth bulge that currently strains educational capacity at all levels and places huge pressures accommodating 700 million youth job market entrants over the coming 30 years. Research limitations/implications – Countries vary considerably in a number of socio-economic and political dimensions making it difficult to completely generalize on each and every issue. Cross-country comparison to the level of determining w...

A number of past studies of South African agricultural production and productivity performance used a hybrid Tornqvist-Theil approach to forming output aggregates based on a series of Laspeyres-type aggregations of sub-sectoral outputs rather than using the underlying commodity-specific price and quantity data directly. As a result, the studies suffer index number bias and a number of shortcomings that are due to the underlying price and quantity data. These shortcomings include inconsistencies over time in the inclusion of production originating from homeland farmers as well as changing statistical methods and definitions used in forming the national estimates of agricultural production. By addressing these data and measurement issues, including the use of the Fisher Ideal indexing methods, we generate an output quantity index that differs substantially from those presented in past studies. For example, the hybrid Tornqvist-Theil approach suggests that South African agricultural output grew by an...

This paper uses the water-reallocation scheme created within the National Water Act (1998) to analyze the impacts of water policy on farm livelihoods in South Africa. Based on one of the most water stressed catchments in the country, the Olifants river basin, we provide an integrated modeling approach combining water and agricultural modules to investigate the impacts of compulsory licensing and water market on crop production and investment made to improve water use efficiency. The model maximizes net farm profits and takes into account the characteristics of the agricultural sector in the region in classifying farmers between large-scale (LSFs) and emerging (EFs) groups, according to their land acreage, irrigation efficiency and historical heritage. Compulsory licensing is analyzed through curtailment of water-use rights from large-scale to emerging farmers. The water market is investigated to provide conditions under which farms trade water to complete their irrigation schedules. Our results show that, though compulsory licensing might promote a rise in emerging farmers and a re-balance of past riparian-based water allocation schemes, care should be given to the level of that curtailment rate in order to balance equity measures with efficiency objectives. Indeed, we found that the losses associated with water curtailment for LSFs are not entirely captured by the EFs. Therefore, beyond water policy, there are other factors, which also influence farms’ profits and water use efficiency. The results also demonstrate that a water market provides a good opportunity to increase water use efficiency. The introduction of water market induces LSFs with good water storage facilities a possibility to trade their remaining water-use rights. It also offers EFs an alternative to diversify their water supply sources when they encounter shortfalls in amount of water allocated.

Misconduct in global meat supply chains are omnipresent and even more so in differentiated chains where credence attributes such as origin and taste are used to differentiate the product. By definition, these attributes signal asymmetric information which implies that in the presence of bounded rational individuals with conflicting interests, misconduct in the form of opportunistic behavior is bound to prevail. Increased information exchange through farmer networks is, however, expected to reduce opportunistic behavior. In the case of a differentiated meat product, such as Karoo Lamb, the paper studies the farmer-abattoir transaction with the purpose of recommending strategies that can be implemented to reduce the farmer's tendency to behave opportunistically. The paper employs the PLS approach to SEM and reveals a significant negative relationship between information shared and opportunistic behavior. The results indicate significant positive relationships between trust in the abattoir and information shared as well as between farmer networks and information shared. These results are indicative of the support provided to the information shared construct by higher levels of trust between farmers and abattoirs and established farmer networks. It is, therefore, recommended that differentiated meat supply chains, through their various associations, concentrate their efforts to promote information sharing by building stronger, trust centered relationships and by supporting farmer networks. This article is protected by copyright. All rights reserved

Changes in the features of food demand and consumption have moved from the mass consumption model towards an increasing qualitative differentiation of products and demand. This movement towards addressing consumers’ demand for food products with more advanced quality attributes has led to increasingly complex food qualification processes and a proliferation of standards. Accompanying these changes in the agro-food system is a growing consumer concern for food safety and quality. One important attribute of “quality” is the origin of a food product. This paper focuses on lamb originating from the Karoo region of South Africa and tests consumers’ willingness to pay a premium for this specific origin attribute of the product. A random nth price auction was conducted to obtain willingness to pay estimates for a premium on a 500g packet of certified Karoo lamb loin chops. Various demographic and behavioural variables were linked to participants’ individual bids in order to determine the possible influen...

Countries in Africa are pledging more resources for agricultural development and agricultural research, in line with the 2003 Maputo declaration. However, experts have reasoned that the quantity of resources is as important as the quality of spending. If resources are allocated efficiently, more could be achieved with the same resources. Ensuring an effective strategy and basis for prioritising crop research investments so as to improve productivity is a major challenge in Zambia and other African countries. This study investigates the economic returns of investment in crop research and sets priorities for research investment using the Dynamic Research Evaluation for Management (DREAM) model. The findings show that maize, soya beans, groundnuts, cotton, millet, sunflower and sorghum are the crops that should receive priority in terms of funding for research under the efficiency objective. However, the study showed that the allocation of financial resources towards crop research in Zambia is not a...

This study, conducted in central Malawi, assessed the way a research intervention using an agricultural innovation system affected rural livelihoods. Propensity score matching was used to establish one village as a control, against which the impact of the intervention on two study villages [0]could be measured. Using the Enabling Rural Innovation intervention as a case study, it was established that rural livelihood outcomes pertaining to crop and livestock production, household income, asset ownership and fertiliser use were significantly improved by this intervention. In-depth analysis, however, demonstrated that although the participating households had more robust livelihoods during the intervention, when the research programme was phased out the effect was reduced. The authors recommend that local agricultural extension officers should receive more capacity building and budgetary support to ensure proper understanding of agricultural innovation systems concepts and correct application so as to sustai...

The assimilation of refugees into their host community economic structures is often problematic. The paper investigates the ability of refugees in rural South Africa to accumulate assets over time relative to their host community. Bayesian spatial–temporal modelling was employed to analyse a longitudinal database that indicated that the asset accumulation rate of former Mozambican refugee households was similar to their host community; however, they were unable to close the wealth gap. A series of geo-statistical wealth maps illustrate that there is a spatial element to the higher levels of absolute poverty in the former refugee villages. The primary reason for this is their physical location in drier conditions that are established further away from facilities and infrastructure. Neighbouring South African villages in close proximity, however, display lower levels of absolute poverty, suggesting that the spatial location of the refugees only partially explains their disadvantaged situation. In this regard, the results indicate that the wealth of former refugee households continues to be more compromised by higher mortality levels, poorer education, and less access to high-return employment opportunities. The long-term impact of low initial asset status appears to be perpetuated in this instance by difficulties in obtaining legal status in order to access state pensions, facilities, and opportunities. The usefulness of the results is that they can be used to sharpen the targeting of differentiated policy in a given geographical area for refugee communities in rural Africa. Copyright © 2011 John Wiley & Sons, Ltd.

This paper reflects on the standing and impact of the work of agricultural economists in South Africa to illustrate the critical decisions faced by the profession as it contemplates its future. The focus is on the agricultural economic scholarship per se and not on the policy and practice issues of the discipline. Following the review of agricultural economic research output in South Africa the paper then also raises questions about relevance and impact of the discipline and the quality of training. Given these concerns the paper makes the case for improved coordination and perhaps consolidation of the discipline and presents a proposal for the establishment of a national institute that will consolidate and improve training at the various universities as well as adequately fund and direct research.

Most partial equilibrium models of the agricultural sector have not incorporated a dynamic and interlinked module for agricultural input expenditure. The South African Bureau for Food and Agricultural Policy (BFAP) model, which models a major share of agricultural output in South Africa, has also up to now not integrated input expenditure into the modelling framework. In most models, input costs are treated as exogenous and the recursive link between the input and output sides of the sector is overlooked in the models that attempt to incorporate input expenditures. This article addresses both issues by integrating agricultural input expenditures into the South African sectoral partial equilibrium model by endogenising input costs and recursively linking both the input and output sides of the agricultural sector. Thus, the impact of increasing the input cost may not only signal a fall in the gross value added and net farming income, but also a growth in subsequent years when the recursive effect of the impact is fully accounted for.

There are strong indications and evidence that the agricultural and food system as well as the rural areas across the world are experiencing major change. Increased urbanization and the increased affluence in emerging economies combined with the demand for agricultural commodities for biofuels is changing the landscape of global agricultural and food systems and rural landscapes as we used to know it. The recent crisis in the global financial system and the sharp volatility in food prices also provides further evidence that the global agricultural landscape is indeed likely to be totally different. Associated with all of this are changes in the mesa environment of agriculture, such as the way that donor aid to agriculture and agricultural RD the increased share of the private sector in agricultural RD and the increased use of information and communication technologies (ICT) in agricultural production and agricultural markets. Finally, the agricultural sector is still strongly linked with the ecological and environmental resource base, which suggests that environmental issues and climatic threats are still relevant issues in this new landscape. It is therefore fitting that the conference theme of the 27th International Conference of Agricultural Economists that took place in Beijing in August 2009 was “The New Landscape of Global Agriculture.” The Beijing conference provided an ideal opportunity for members of the International Association of Agricultural Economists (IAAE) to deal with the smorgasbord of challenges, new realities, and dimensions of world agriculture. At the same time, it created the opportunity to think about the adjustments needed in the discipline of agricultural economics in order to address these emerging and likely more complex issues. Among other things, this calls for an expansion of the traditional toolkit of agricultural economists and to become much more multidisciplinary in order to ensure that agricultural economists continue to play an important role in this changing and complex landscape and to prevent the “extinction” of the discipline, as Joachim von Braun warned us in 2003 (Von Braun, 2005). The need for more interdisciplinary work does, however, expose significant barriers to this proposed interdisciplinary exchange. These barriers are caused in large part (but not exclusively) by our ignorance of other disciplines’ methods, theories, and empirical findings; by language/jargon; and by disciplinary arrogance. With this in mind, it was decided to depart from standard practice by inviting a number of keynote speakers from outside the discipline of agricultural economics to speak at our conference. This interesting experiment paid off, since these speakers helped to stimulate the debate and introduce the issues to be discussed in the other sessions of the conference. Despite the focus on disciplinary matters, the conference theme naturally opened the opportunity to include keynote papers on the financial and food crises to address some of these more recent issues (including the debate on biofuels) that are shaping agriculture globally. We cannot be silent on these issues and papers prepared on these topics presented important reviews of the literature and challenged our discipline with further research questions. The conference was appropriately launched by the presidential address of David Colman. He challenged

The need for increased agricultural production to meet the growing demand for food, coupled with concerns for environmental sustainability, economic growth and poverty reduction has increased demand on the already scarce water in South Africa. At the same time, because of agriculture's minimal contribution, compared to the industrial and mining sectors, to South Africa's GDP and employment, the call to reallocate water from agriculture to non-agricultural use has been intensified. This study updates the 1998 Social Accounting Matrix (SAM) for South Africa and uses the computable general equilibrium model to analyze the impact of water reallocation from agriculture to the non-agricultural sectors on output growth, value added at factor cost, which captures the payments from the production sectors to the factors of production, and households' welfare. Using different water reallocation scenarios, the simulation results indicate that water reallocation from agriculture to non-agricultural sectors beyond the level of a market allocation scenario will lead to a decline in sectoral output and a significant deterioration in the welfare of poor households. It thus undermines development efforts aimed at reducing the existing level of poverty in the country.

Summary Interest in agriculture for growth and poverty reduction reawakened in the early 2000s made all the keener by the sudden rise in cereals prices on world markets in 2007–08. But is it still possible to drive agricultural growth through small farms, as happened in the green revolution? Whether small farms have a future was debated at a workshop held in Wye, United Kingdom, in June 2005. It concluded that small farm development is not just desirable for poverty reduction, but also feasible, even in changing circumstances and particularly those of more concentrated supply chains with more demanding buyers. That said, while much that needs to be done is straightforward, such as provision of public goods, fostering the institutional innovations to allow small farmers to deal with the emerging supply chains will require patient work, tailored to specific circumstances. The future of all smallholders may well not lie in farming, but the measures to stimulate the rural nonfarm economy and provide jobs for those leaving farming—a favorable rural investment climate, provision of public goods, institutional development—are largely the same as those for agricultural development as well.

This article argues that significant shortcomings currently exist with respect to the analysis of risk and uncertainty in agricultural commodity markets, given the possibility that uncertainty will only increase in future. Based on this argument, a framework is proposed whereby intuitive logic scenario thinking is applied in conjunction with stochastic econometric modelling in order to mitigate this weakness. A case study is presented whereby the proposed framework is applied, to show the success of applying the framework given the current turmoil experienced in the general economy as well as in agricultural commodity markets. The case study results indicate that the application of the proposed framework should lead to improved decisions with respect to policy and business strategy pertaining to agricultural commodity markets, despite increased uncertainty.

Despite the reported large margins between producer prices for maize and retail prices for maize meal and the fact that maize meal is a staple food for most of the South African population, there have been only limited investments in small- and medium-scale maize milling in South Africa since the deregulation of the maize markets. The apparent failure of small- and medium-scale maize millers to emerge and compete effectively in the maize milling industry in South Africa raises questions about their scale and level of efficiency. Against this background, this paper analyses the profit efficiency of these enterprises, using a translog stochastic profit frontier model. Findings from the profit efficiency analysis show an average profit efficiency score of 80.6 per cent for the small-scale mills and 87.4 per cent for the medium-scale mills. There is therefore a significant unexplored potential in these categories of mills.

Supermarkets have expanded rapidly in SADC during the last decade, leading to fears that small-scale farmers and food processors could be excluded from access to urban markets. To assess the impact of supermarket chains on various participants in the supply chain, a survey was carried out in Botswana, Namibia and Zambia in 2004, 2005 and 2007. To determine the factors that influence the choice between the supermarket or traditional market channel and the impact of participation in the supermarket supply chain, a two-step treatment model was used. The results showed that over 80% of all processed food products in Botswana, Namibia and Zambia were imported from South Africa, and that supermarkets used a mixture of procurement systems for fresh fruit and vegetables and processed food products. Participation in the supermarkets channel had a positive impact on small-scale farmers’ incomes. Farmers who supplied fresh fruit and vegetables to supermarkets had a significantly higher income than those who supplied to traditional markets in Zambia. The expansion of South African supermarkets into the SADC countries may be beneficial to small-scale farmers and therefore efforts should be made to incorporate them into the supermarkets’ fresh fruit and vegetable supply chain.

Most of the climate change models for South Africa predict a reduction in freshwater availability by 2050. Population growth is projected at 3% per annum, implying increased domestic water use. In addition to these factors, the concern for ecological sustainability and increased water pollution due to increased industrial, mining and agricultural activities, water availability for sectoral production activities is expected to decline. This decline has an impact on sectoral output, value added and households’ welfare. Using a computable general equilibrium approach, this study investigates the possible impact of global change on households’ welfare. The simulation results show that water scarcity due to global change can potentially lead to a general deterioration in households’ welfare. The poor households, whose incomes are adversely impacted, are the most vulnerable to the consequences of the impact of global change on water resources in South Africa. This vulnerability can only be reduced if welfare policies that maintain food consumption levels for the least and low-income households are implemented.

This article presents a deterministic farm-level model developed to link to an existing partial equilibrium sector-level model of the grain and livestock sectors of South Africa. The objective is to create a linked system of models consisting of a sector- and farm-level model with the capability to analyse the likely effects of changes in policies and markets at both the sector and representative farm level in South Africa. A representative farm in the Free State Province is used to validate the farm-level model. The farm-level model is used to simulate a baseline as well as two scenarios of the representative farm for the period 2003 to 2010. Results indicate that the farm-level model simulates the representative farm rather accurately compared to historical data. The baseline and scenario results indicate that the linked system of models can be useful for policy and business decision-makers to analyse the impact of change in policies and markets at both the sector- and farm level.

With South Africa’s urban population approaching 60%, supermarkets and fast food chains have become important players in the South African food system. These large players in the food sector have systematically modified their procurement practices especially with regard to fresh fruit and vegetables and are now circumventing spot markets in favour of sourcing via in-house sourcing companies who mainly procure from preferred supplier producers. This paper draws extensively from a global research programme which seeks to highlight the market changes that potentially contribute to continued exclusion of the small producers from mass consumer markets. This paper illustrates, through a series of case studies, how integration of small-scale farmers into the urban retail market can be facilitated and how the challenges posed by the changing food system could possibly be overcome. The case studies illustrate various initiatives through which small-scale farmers and agribusinesses can be integrated into mainstream agri-food systems and may be used as models for an innovative approach to include small-scale farmers while still maintaining profitable business operations. They highlight the need for a multi actor approach for the successful participation of smallholder farmers in order to allow them to join the supply chain at any point within the channel.

This paper presents an overview of contracting arrangements in agribusiness procurement practices in South Africa. The objective of this paper is to contribute to a better understanding of the structures and issues of raw commodity procurement in South African agribusiness supply chains. The results suggest that a wide range of institutions are employed to procure raw commodities for the South African agroprocessing sector and that companies are increasingly moving away from the open market as a source of supply for raw commodities, and are utilising contractual arrangements instead. According to the main findings, 78.5% of the total volume of fruit and vegetables procured by agribusiness companies for processing is based on some form of contracting arrangement. The balance is procured through a combination of the open market, own estates, agents and imports. It is only in the case of potatoes, onions, beans and peanuts that a stronger reliance on the spot market is evident. South African retailers source 70% to 100% of their fresh produce directly from farmers (usually through growing programmes). The procurement of meat, poultry and eggs appears to favour vertical integration (and in some cases own production), medium- to long-term contracts and long-term ‛informal’ supply arrangements with selected groups of farmers.

Mohair is an exclusive natural animal fibre with niche market appeal. It is, however, questionable whether it is inherently suited to a commodity-based marketing system in a marketing environment that requires marketing systems to convey far more information than commodity-based systems do. Historically, mohair has been considered a commodity and the marketing system for mohair has been structured accordingly. It is, however, argued that, the exchange between mohair growers and the buyers of greasy mohair requires increased levels of coordination to govern the exchange in a transaction costs efficient manner. The inefficiencies created by an inappropriate or incomplete marketing system for South African mohair are expected to lead to a loss of consumer value and a loss of potential profit throughout the mohair supply chain if a more coordinated governance structure is not implemented to curb these costs and augment the current spot market exchange.

This paper investigates the responses of agribusiness managers to drastic changes in the policy and marketing environment of South African agriculture. The process of deregulation and liberalisation of agricultural markets exposed agribusiness managers to international trends, which required new institutions and relationships. Based on a survey conducted among business managers, we explored emerging growth strategies, strategic focus areas and coordination preferences. Results suggest that managers prefer a growth strategy based on market penetration and market development. Important strategic drivers are value-adding and power drive. Managers expressed their preference for increased coordination and cooperation resulting in relation-based contracts and equity-based alliances.

The industrialization of agriculture and the potential problem of small-scale farmer marginalization calls for a fresh approach to the design of agribusiness supply chain arrangements in developing countries. The objective of the paper is to contribute to a better understanding of institutional arrangements that can promote stable smallholder agribusiness contracting arrangements in a developing country context. A case study approach, incorporating a transaction cost framework, is used to test whether trust can significantly change the contract characteristics of supply. The results suggest that although the presence of trust can influence the contract characteristics of a supply arrangement, it may not be significant because of other factors in a developing country context. Bearing this in mind, a number of institutional arrangements are recommended in order to promote more stable contract conditions.

Urbanisation and a growing middle class with changing consumption patterns provide an ideal setting for supermarkets to prosper. With South Africa's urban population approaching 60 per cent, supermarket retail chains are now important players in the agro-food sector. Over the last two decades they have begun to purchase produce from in-house sourcing companies who buy mainly from large-scale farmers. Together with the strict requirements of the retail groups, this makes it difficult for small-scale farmers to supply these retailers. This paper highlights the market changes that could continue to exclude small producers from mass consumer markets. It uses a case study to show how small farmers can be integrated into the urban retail market and, using evidence from this study, proposes a number of strategies to help them participate in the mainstream agro-food supply chains and an innovative model for including them while maintaining profitable business operations. 1Respectively, Professor, Research Fellow,...

Stringent sanitary and phytosanitary standards (SPS) have proliferated in the aftermath of the Uruguay Round Agreement on Agriculture (URAA). These standards are currently becoming a major stumbling block in agricultural trade for developing countries. Limited by inadequate resources and expertise, among other things, these countries also have poor participation rate in discussions related to SPS that impedes the representation of their interests and concerns in setting international standards for agricultural products. Using a gravity model, this paper estimates the trade effect of total aflatoxin level set by five OECD countries (Ireland, Italy, Sweden, Germany and USA), on South African food exports. The findings support the hypotheses that stringent SPS standards are limiting trade markedly. The trade elasticity of aflatoxin standard is 0.41 and statistically significant. Moreover, the simulation result based on the assumption that these five OECD countries adopt the total aflatoxin level recommended by CODEX, shows that South Africa would have gained an estimated additional amount of US$ 69 million per year from food exports to these countries from 1995 to 1999.

This paper develops the structure and closure of an econometric regime-switching model within a partial equilibrium framework that has the ability to generate reliable estimates and projections of endogenous variables under market switching regimes. Models used in policy evaluation usually either ignore the possibility of regime switching using just a single method of price determination based on average effects, or incorporate highly stylised components that may not reflect the complexities of a particular market. This paper proposes an approach that the authors believe allows the incorporation of features of regime switching in a multisector commodity level model that capture salient features of the South African market and therefore are able to produce more reliable projections of the evolution of the sector under alternative shocks.

The National Commercialisation of Indigenous Goats Project currently entails the establishment of goat production and processing units at various locations around South Africa. Raw products will be drawn from goats that are owned by currently non-commercialised goat farmers in the regions surrounding each project. The primary markets for the products from these centres are tourism facilities on-site, and marketing activities to national retailers. An opportunity to effect strategic alliances between grass-roots Contract Growing Co-operatives at several locations with a new marketing company, the Kalahari Kid Corporation, through the possibility of a “shared brand” can extend the marketing power of these projects to include wider national distribution and export sales. A system of vertical integration via “Cooperative Contract Growing” is to assist non-commercialised goat farmers throughout South Africa to supply high quality goat products whilst encompassing the consumer's stringent requirements for tractability, quality and consistency of supply.

In this study, the structure of the South African wheat market is analysed using economic theory and econometric modelling techniques. The model is used to make baseline projections regarding the supply and use of wheat in South Africa and to analyse the impacts of various policy alternatives on the wheat sector for the period 2004–2008. Results indicate that the area harvested in the summer as well as winter region will decrease over time. Domestic consumption will marginally increase over time, which will result in higher levels of imports. The ability of the model to simulate policy shocks is illustrated by means of simulating the impact of the elimination of the wheat import tariff on the wheat sector.

Industrial firms world wide have shed non-core business and outsourced these activities. An increasing number of sugar producers in Southern Africa have also outsourced their sugarcane production activities for both strategic and equity reasons. The purpose of the study is to use a transaction cost analysis (TCA) approach to assist the firm, as an outsourcer, make and structure an outsourcing decision. A Case Study methodology, which includes data from two major Southern African sugar producers, is employed to test the research questions. The results indicate that sugarcane production should not be outsourced on a partial specification contract basis but rather co-ordinated by a more relational structure like a strategic alliance. The results also suggest that the suitability of a strategy-based structure can sometimes be contradicted by a transaction cost analysis approach. Finally, the results indicate a conflicting South African agribusiness scenario, namely, the need to expand small-farm supply versus the economic goal of profit maximisation.

The inclusion of small-scale commercial farmers in South African agribusincss supply chains is a national priority and there is an urgent need for managerial accounting (MAS) inputs to successfully accomplish this objective. This paper explores ways that small fanners can be cost effectively incorporated in modern agricultural supply chains. A case study methodology is used to test the research questions. The results demonstrate that small-scale fanners can successfully compete with larger growers with respect to production and cost efficiency. The results also illustrate that small-scale farmers generate higher levels of transaction cost than medium and large scale suppliers. A series of proposals are then developed in order to reduce the transaction cost of small farm supply. In conclusion. smallscale fanners can be successfully incorporated in agribusiness supply chains but only if special measures are taken to reduce differential transaction cost.