RESULTS OF A TRADE SIMULATION MODEL FOR THE SOUTH AFRICAN FRESH ORANGE INDUSTRY

This paper shows the development of a trade simulation model for the South African fresh orange industry using the programme STELLA. The model consists of seven production models (for different regions and cultivars), a local market model, an export model and an exchange rate model. Production models run on an annual basis, whereas trade models run on a monthly basis to capture seasonality of fresh orange markets. This model compares a base scenario with a scenario of the Free Trade Agreement between South Africa and the European Union. Results indicate that the Free Trade Agreement has minor positive effects on the South African fresh orange industry. The difference in gross margins in 2011 is predicted to be approximately two percent. This is lower than the tariff cut in the months June until September because of no benefits on the local market and in other months on the European Union market.