http://ageconsearch.umn.edu/handle/33780 Search the Channel search http://ageconsearch.umn.edu/simple-search http://ageconsearch.umn.edu/handle/8009 Title: SAFEX maize price volatility scrutinised <br/> <br/>Authors: Geyser, M.; Cutts, M. <br/> <br/>Abstract: Commodity prices in general are known to have a high volatility. This is in fact what attracts speculators. The South African futures exchange (SAFEX) is not immune to this volatility. Volatility increases the risk of paying higher prices for a specific commodity, and it also makes the use of derivative instruments to hedge against price risk more expensive. Given the importance of South Africa as a regional supplier of maize and price discovery mechanism, investigations into the volatility of the maize price are not only important, but also indispensable if all parties involved are to manage this risk. The question therefore is whether the SAFEX maize price volatility can be explained by using fundamental factors or whether this volatility is unexplainably high. http://ageconsearch.umn.edu/handle/8010 Title: Impact of Alternative Land Management Options on Soil Fertility and Erosion in Uganda <br/> <br/>Authors: Birungi, P.B.; Hassan, R.M. <br/> <br/>Abstract: Using a data set collected in eight districts of Uganda, this study investigates how investment in soil fertility management (SFM) and conservation practices may affect natural resource outcomes, particularly the extent and level of soil erosion and soil nutrient loss. The study used ordered probit models and the results suggest that investment in SFM and conservation practices greatly improves soil fertility and reduces soil erosion. From a policy perspective, public investment to encourage use of SFM and conservation technologies would help the country achieve sustainable agricultural production. http://ageconsearch.umn.edu/handle/8011 Title: Perceptions of key business and financial risk by large-scale sugarcane farmers in KwaZulu-Natal in a dynamic socio-political environment <br/> <br/>Authors: Nicol, R. Mac; Ortmann, G.F.; Ferrer, S.R.D. <br/> <br/>Abstract: This study identifies sources of risk that commercial sugarcane farmers in the province of KwaZulu-Natal (KZN), South Africa, presently perceive to pose the greatest threat to the viability of their businesses. Sugarcane contributes approximately 82% of the income from field crops in KZN, with 72% of the crop planted by large-scale growers. Data obtained in 2006 via structured personal interviews of 76 large-scale sugarcane farmers from a stratified random sample of 110 farmers in two separate mill-supply areas of KZN were used to elicit farmers’ perceptions of various sources of risk. The most important risk sources were found to be the threat posed by land reform, minimum wage legislation and the variability of the sugar price, in that order. Land reform and minimum wage legislation did not feature prominently in past studies of KZN farmers during the 1990s. Factor analysis identified additional risk dimensions that exist within the remaining risk sources. Regional differences between the two study areas were also evident. Recommendations include that government improve accessibility to information regarding future plans for land and labour policies, and that farmers become more proactive in terms of obtaining information to reduce uncertainty and resultant efficiency barriers. http://ageconsearch.umn.edu/handle/8012 Title: Secure land rental contracts and agricultural investment in two communal areas of KwaZulu-Natal <br/> <br/>Authors: Dengu, T.; Lyne, M.C. <br/> <br/>Abstract: This study tests the hypothesis that an efficient rental market for cropland is a significant determinant of agricultural investment in the communal areas of KwaZulu-Natal. An efficient rental market creates an opportunity cost for under-utilisation, which tends to transfer resources to more effective users. The efficiency of a rental market is compromised by the presence of transaction costs that reduce returns for both lessees and lessors. Transaction costs include risk arising from a possible breach of the rental contract. Potential losses caused by a breach of contract can be reduced by introducing a credible third-party to witness the contract. Likewise, moral hazard can be reduced by contracting with trusted persons. Data from household surveys conducted in two communal areas of KwaZulu-Natal were used to estimate a regression model explaining levels of investment in crop production amongst tenant farmers. The results confirm that tenants invest more when they contract with friends or family, and if their contracts are formally witnessed by a credible third-party. Interventions that reduce potential losses caused by a breach of contract are therefore expected to promote market efficiency and investment in crop production. In the short-run, the Provincial Department of Agriculture should sanction rental contracts negotiated by lessors and lessees. Ultimately, legal reform that leads to predictable contract enforcement in the communal areas is required to improve market efficiency and levels of investment in agriculture. http://ageconsearch.umn.edu/handle/8013 Title: Measuring the Price Volatility of Certain Field Crops in South Africa using the ARCH/GARCH Approach <br/> <br/>Authors: Jordaan, H.; Grove, B.; Jooste, A.; Alemu, A.G. <br/> <br/>Abstract: The conditional volatility in the daily spot prices of the crops traded on the South African Futures Exchange (yellow maize, white maize, wheat, sunflower seed and soybeans) is determined. The volatility in the prices of white maize, yellow maize and sunflower seed have been found to vary over time, suggesting the use of the GARCH approach in these cases. Using the GARCH approach, the conditional standard deviation is the measure of volatility, and distinguishes between the predictable and unpredictable elements in the price process. This leaves only the stochastic component and is hence a more accurate measure of the actual risk associated with the price of the crop. The volatility in the prices of wheat and soybeans was found to be constant over time; hence the standard error of the ARIMA process was used as the measure of volatility in the prices of these two crops. When comparing the medians of the conditional standard deviations in the prices of white maize, yellow maize and sunflower seed to the constant volatilities of wheat and soybeans, the price of white maize was found to be the most volatile, followed by yellow maize, sunflower seed, soybeans, and wheat respectively. These results suggest that the more risk-averse farmers will more likely produce wheat, sunflower seed and to a lesser extent soybeans, while maize producers are expected to utilise forward pricing methods, especially put options, at a high level to manage the higher volatility. http://ageconsearch.umn.edu/handle/8014 Title: The deregulation of agricultural markets in South Africa and New Zealand: a comparison <br/> <br/>Authors: Sandrey, R.; Vink, N. <br/> <br/>Abstract: Reforms of agricultural marketing structures have been a major feature of agriculture in New Zealand and South Africa over the past two decades. The reforms in New Zealand varied, and were often measured and considered, with export control either officially or de facto existing in some sectors while others were cut adrift very quickly. Not surprisingly, the results have been mixed. In South Africa all controls were effectively cut adrift, and the jury is still out on the results. A feature of the New Zealand experience has been the adoption of new technologies and even new farming sectors. Productivity showed a distinctive break at 1984, the year of the reforms; up to that date an average of 1.5 percent, past that date an average of 2.5 percent. A similar analysis of productivity in South Africa shows that increases seem to be the result of labour shedding only. The results do not bode well for South African agriculture. The sector is hamstrung by poor physical resources; hardly benefited from the Agreement on Agriculture; seems to be hampered by a lack of innovativeness; and has to contend with the transformation of the sector. Reasons for optimism include the fact that the sector as a whole has benefited from deregulation of agricultural markets, and the prospect that new entrants will bring a new sense of innovation into the industry. http://ageconsearch.umn.edu/handle/8015 Title: Towards more inclusive long-term bulk water resource management <br/> <br/>Authors: de Lange, W.J.; Kleynhans, T.E. <br/> <br/>Abstract: Fresh water resources provide a platform for complex and often emotional issues to develop, particularly in resource scarcity situations. Bulk water infrastructure contains elements of a public good and proved vulnerable to failures in market and government driven allocation strategies. Common to both are uncaptured costs and benefits due to shortcomings in cost quantification techniques. Natural ecosystems stands to lose the most since ecosystem services are often not quantifiable in monetary terms and therefore neglected in allocation decision-making. This paper took on the challenge of expanding current decision-support in order to promote more inclusive long-term water management. A case-study approach with the focus on a choice related problem regarding different long-term bulk water resource management options was applied in the Western Cape province. The paper incorporated components of economic valuation theory, a public survey and a modified Delphi expert panel technique. Both spatial and temporal dimensions of the decision-making context were expanded. Two surveys were completed to accommodate these expansions. The first focused on public preference in water allocation management and the relative merit of accommodating public preference in highly specialised decision-making such as long-term water allocation decision-making. The second survey utilized a modified Delphi technique in which an expert panel indicated the relative merit of two alternative long-term allocation strategies. A willingness to pay for “greener” water was observed and may be used to motivate a paradigm shift from management’s perspective to consider, without fear of harming their own political position, “greener” water supply options more seriously even if these options imply higher direct costs to public.