http://ageconsearch.umn.edu/handle/36234 Search the Channel search http://ageconsearch.umn.edu/simple-search http://ageconsearch.umn.edu/handle/31722 Title: Price asymmetry in South African futures markets for agricultural commodities <br/> <br/>Authors: Mashamaite, P.; Moholwa, B. <br/> <br/>Abstract: This paper tests the existence of price asymmetry in South African futures markets for white and yellow maize, wheat and sunflower seeds using a dynamic price asymmetry model. The sum of coefficients test and the speed of adjustment test are used to determine whether or not prices move up in the same fashion as they move down, over daily and weekly data frequencies. Out of the four commodity futures markets studied over varying data frequencies, only daily wheat is price asymmetric. Wheat daily prices respond faster to price decreases than to price increases. The implication of the results is that past prices do affect current prices and contain information. Hence, the weak-form efficient market hypothesis appears to be contradicted for wheat futures market. Another important implication of the results is that implementing policies accounting for asymmetric behavior through price limit and margin policies will improve the functioning and stability of wheat futures market in South Africa. http://ageconsearch.umn.edu/handle/31723 Title: The effects of entrepreneurial quality on the success of small, medium and micro agri-businesses in KwaZulu-Natal, South Africa <br/> <br/>Authors: Darroch, M.A.G.; Clover, T.A. <br/> <br/>Abstract: This paper estimates a logit model of the effects of entrepreneurial quality on business success in a stratified random sample of 44 small, medium and micro enterprise (SMME) agribusiness owners financed by Ithala Development Finance Corporation, using loan repayment as a proxy for success. These owners were surveyed during October 2003-February 2004 and asked to score four components of entrepreneurial quality identified by Guzman and Santos (2001): preference for working as self-employed, motivation type, energizer behaviours, and personal and external factors. The results show that strong energizer behaviours (such as current and planned business expansion and staff training), more business experience, and family assistance to become an entrepreneur, promote loan repayment, while lack of access to electricity (proxy for lack of access to services) negatively affects loan repayment. Policymakers and public and private financial institutions could give more attention to these factors when implementing policies to promote access to finance by, and the growth of, agribusiness SMMEs. http://ageconsearch.umn.edu/handle/31724 Title: Assessment of smallholder's agriculture's contribution to the economy of Zimbabwe: A social accounting matrix multiplier analysis <br/> <br/>Authors: Juana, J.S.; Mabugu, R.E. <br/> <br/>Abstract: The economy of Zimbabwe has been in shambles since 1991. Output has declined in most of the production sectors, leading to many job losses. Current debates on the problems facing the economy have focused on poor government's incentives and excessive interventions as major constraints of economic development. The government of Zimbabwe, on the other hand has emphasized an agriculturally led economic recovery programme. Specifically, the government has undertaken land reform and investment policies aimed at promoting small-holder agriculture in Zimbabwe. Is this a justifiable action taken by the government? The answer to this question necessitated the use of the 1991 micro SAM for Zimbabwe to empirically analyze the impact of small-holder agriculture on the economy of Zimbabwe. The goal of this paper is to quantify small-holder agriculture's true contribution to the economy in general and poverty reduction in particular. However, to make a more detailed analysis, the other sectors are also included in the analytical framework. The study uses the traditional impact analyses to measure the incidence of a sector specific policy on the economy. The results provide evidence that investment in small-holder agriculture should be seen as investment in the entire economy. The study clearly shows that small-holder agriculture promotes sustainable development and the inclusion of rural communities especially the poorest in economic activities. http://ageconsearch.umn.edu/handle/31725 Title: Attributes of small-scale sugarcane contractors that influence their service quality in KwaZulu-Natal <br/> <br/>Authors: Ortmann, G.F.; Nothard, B.W.; Meyer, E. <br/> <br/>Abstract: The productivity of small-scale sugarcane contractors affects not only their own profitability and sustainability, but that of other stakeholders as well, such as the small-scale sugarcane farmers they contract to and the sugar mills they supply with sugarcane. This study examines the attributes of small-scale sugarcane contractors that affect their quality of service as perceived by small-scale sugarcane growers (SSGs). Information was obtained through interviews conducted with 114 contractors sampled in ten mill group areas in KwaZulu-Natal between September 2002 and July 2003. Further interviews were conducted in the same time period with SSGs for information on contractor service quality (transport and general service timeliness, meeting of daily rateable delivery requirements, low downtimes, good staff management, and minimal disagreements on service terms). Results show that factors affecting a contractor's perceived service quality include gender, training, the quality of information used (industry focused information sources such as the South African Sugar Association Experiment Station (SASEX) and the Ingede magazine, or general sources such as the radio), and sugarcane tonnage transported (size of business). Being a male contractor and having a larger business positively influence service rating as perceived by SSGs. The importance of the quality of information used and increased training levels highlights the need for the continual provision of relevant information and training for sugarcane contractors by extension services (government, SASEX and milling companies). http://ageconsearch.umn.edu/handle/31726 Title: Water markets in the Lower Orange River catchment of South Africa <br/> <br/>Authors: Gillitt, C.G.; Nieuwoudt, W.L.; Backeberg, G.R. <br/> <br/>Abstract: Irrigation farmers in the Lower Orange River were surveyed during October 2003 in order to study whether water marketing has promoted efficiency and to identify factors that affect future investment in irrigation farming. Econometric procedures (principal component and logit model) indicate that purchasers of water rights produce lucrative export grapes and horticultural crops with relatively less raisin, wine or juice grapes and less field crops; are more specialised in production; have more livestock (probably liquidity factor) and have a less negative view of the five-year review period. The water market has facilitated a transfer of water use from relatively lower value crops to relatively higher value crops, and also promoted the use of more advanced irrigation. An investment model using Ridge Regression indicates that the following variables are associated with future investment in irrigation farming; expected profitability, risk perception and risk aversion (Arrow/Pratt). Results confirm that farmers who are more risk averse invest less in the future as can be expected from theory. Policies that increase risk in agriculture will have a significant negative effect on future investment in irrigation. What is significant from the results is that irrigation farmers are highly risk averse (down side). Results also show that farmers who feel that water licenses are not secure expect to invest less in the future. The latter effect is thus amplified as farmers appear to be highly risk averse. This has important policy implications, and measures should be taken to improve the perceived security of water licenses. This could be achieved by keeping farmers more informed about the practical implications of the National Water Act (NWA) and specifically water licenses. http://ageconsearch.umn.edu/handle/31727 Title: Water marketing in the Crocodile River, South Africa <br/> <br/>Authors: Nieuwoudt, W.L.; Gillitt, C.G.; Backeberg, G.R. <br/> <br/>Abstract: Transfers of water in the Crocodile River above and below the gorge (near Nelspruit and Malelane) were studied based on a survey in the area during November 2003, followed up by telephonic interviewing during March 2004. Almost all the water trades (permanent and rentals) observed in this study were from farmers above the gorge to farmers below the gorge. In order to study whether the water market promotes efficiency the data were subjected to several statistical analyses (Principal Components, Ridge Regression, Logit). It is concluded that in the transfer of water some attributes in the purchasing area such as lower production risk (sugar cane) and lower financial risk and better cash flow (bananas and sugar cane) were more important than the income per cubic meter of water. Water supply in this area is highly irregular while farmers were found to be extremely risk averse especially as far as down-side risk is concerned. The average water price in this area in recent years (2002 to 2003) was between R2,000 and R3,000 per ha (1ha = 8,000 cubic meter). Buyers are large progressive farmers that purchase (and rent) from many sellers (or lessees). It is concluded that information (sale prices and rents) is asymmetrical. Few permanent transfers have taken place in the Crocodile River in recent years. It is concluded that there are reasons why transfers at present are not processed and role players should discuss these reasons and possible solutions before further action is taken. http://ageconsearch.umn.edu/handle/31728 Title: Promoting the competitiveness of South African agriculture in a dynamic economic and political environment <br/> <br/>Authors: Ortmann, G.F. <br/> <br/>Abstract: South African (SA) farmers are faced with a dynamic global economic and trade environment caused by the liberalisation of international markets and rapid advances in information and communication technologies In addition to dealing with the deregulation of domestic agricultural markets in the 1990s, SA farmers also have to adapt to a dynamic political environment and other challenges, including land reform, AgriBEE, new labour legislation and minimum wages, property taxes, skills levies, uncertain water rights, HIV/Aids, a volatile exchange rate, and high transport and communication costs. The main factors that will help promote the competitiveness of SA farmers, and the agricultural sector in general, include good governance at all levels of government and industry, institutional innovations for commercial and small-scale farmers, improving the quality of (school) education (particularly in mathematics and science) and skills training, promoting research in agriculture, and farmers adopting new technologies. Government should focus its relatively scarce resources on providing physical infrastructure (especially improved transport and communication infrastructure) and legal infrastructure (secure property rights and contract enforcement) to reduce transaction costs, including risk, so that markets for products and resources work more efficiently; relax restrictive labour laws; reduce uncertainty regarding land claims, AgriBEE and the rural land tax; improve efficiency in disbursing LRAD grants to approved projects; reduce crime rates; and promote education, agricultural R&D and skills training. http://ageconsearch.umn.edu/handle/31722 Title: Price asymmetry in South African futures markets for agricultural commodities <br/> <br/>Authors: Mashamaite, P.; Moholwa, B. <br/> <br/>Abstract: This paper tests the existence of price asymmetry in South African futures markets for white and yellow maize, wheat and sunflower seeds using a dynamic price asymmetry model. The sum of coefficients test and the speed of adjustment test are used to determine whether or not prices move up in the same fashion as they move down, over daily and weekly data frequencies. Out of the four commodity futures markets studied over varying data frequencies, only daily wheat is price asymmetric. Wheat daily prices respond faster to price decreases than to price increases. The implication of the results is that past prices do affect current prices and contain information. Hence, the weak-form efficient market hypothesis appears to be contradicted for wheat futures market. Another important implication of the results is that implementing policies accounting for asymmetric behavior through price limit and margin policies will improve the functioning and stability of wheat futures market in South Africa. http://ageconsearch.umn.edu/handle/31724 Title: Assessment of smallholder's agriculture's contribution to the economy of Zimbabwe: A social accounting matrix multiplier analysis <br/> <br/>Authors: Juana, J.S.; Mabugu, R.E. <br/> <br/>Abstract: The economy of Zimbabwe has been in shambles since 1991. Output has declined in most of the production sectors, leading to many job losses. Current debates on the problems facing the economy have focused on poor government's incentives and excessive interventions as major constraints of economic development. The government of Zimbabwe, on the other hand has emphasized an agriculturally led economic recovery programme. Specifically, the government has undertaken land reform and investment policies aimed at promoting small-holder agriculture in Zimbabwe. Is this a justifiable action taken by the government? The answer to this question necessitated the use of the 1991 micro SAM for Zimbabwe to empirically analyze the impact of small-holder agriculture on the economy of Zimbabwe. The goal of this paper is to quantify small-holder agriculture's true contribution to the economy in general and poverty reduction in particular. However, to make a more detailed analysis, the other sectors are also included in the analytical framework. The study uses the traditional impact analyses to measure the incidence of a sector specific policy on the economy. The results provide evidence that investment in small-holder agriculture should be seen as investment in the entire economy. The study clearly shows that small-holder agriculture promotes sustainable development and the inclusion of rural communities especially the poorest in economic activities. http://ageconsearch.umn.edu/handle/31726 Title: Water markets in the Lower Orange River catchment of South Africa <br/> <br/>Authors: Gillitt, C.G.; Nieuwoudt, W.L.; Backeberg, G.R. <br/> <br/>Abstract: Irrigation farmers in the Lower Orange River were surveyed during October 2003 in order to study whether water marketing has promoted efficiency and to identify factors that affect future investment in irrigation farming. Econometric procedures (principal component and logit model) indicate that purchasers of water rights produce lucrative export grapes and horticultural crops with relatively less raisin, wine or juice grapes and less field crops; are more specialised in production; have more livestock (probably liquidity factor) and have a less negative view of the five-year review period. The water market has facilitated a transfer of water use from relatively lower value crops to relatively higher value crops, and also promoted the use of more advanced irrigation. An investment model using Ridge Regression indicates that the following variables are associated with future investment in irrigation farming; expected profitability, risk perception and risk aversion (Arrow/Pratt). Results confirm that farmers who are more risk averse invest less in the future as can be expected from theory. Policies that increase risk in agriculture will have a significant negative effect on future investment in irrigation. What is significant from the results is that irrigation farmers are highly risk averse (down side). Results also show that farmers who feel that water licenses are not secure expect to invest less in the future. The latter effect is thus amplified as farmers appear to be highly risk averse. This has important policy implications, and measures should be taken to improve the perceived security of water licenses. This could be achieved by keeping farmers more informed about the practical implications of the National Water Act (NWA) and specifically water licenses. http://ageconsearch.umn.edu/handle/31728 Title: Promoting the competitiveness of South African agriculture in a dynamic economic and political environment <br/> <br/>Authors: Ortmann, G.F. <br/> <br/>Abstract: South African (SA) farmers are faced with a dynamic global economic and trade environment caused by the liberalisation of international markets and rapid advances in information and communication technologies In addition to dealing with the deregulation of domestic agricultural markets in the 1990s, SA farmers also have to adapt to a dynamic political environment and other challenges, including land reform, AgriBEE, new labour legislation and minimum wages, property taxes, skills levies, uncertain water rights, HIV/Aids, a volatile exchange rate, and high transport and communication costs. The main factors that will help promote the competitiveness of SA farmers, and the agricultural sector in general, include good governance at all levels of government and industry, institutional innovations for commercial and small-scale farmers, improving the quality of (school) education (particularly in mathematics and science) and skills training, promoting research in agriculture, and farmers adopting new technologies. Government should focus its relatively scarce resources on providing physical infrastructure (especially improved transport and communication infrastructure) and legal infrastructure (secure property rights and contract enforcement) to reduce transaction costs, including risk, so that markets for products and resources work more efficiently; relax restrictive labour laws; reduce uncertainty regarding land claims, AgriBEE and the rural land tax; improve efficiency in disbursing LRAD grants to approved projects; reduce crime rates; and promote education, agricultural R&D and skills training. http://ageconsearch.umn.edu/handle/31727 Title: Water marketing in the Crocodile River, South Africa <br/> <br/>Authors: Nieuwoudt, W.L.; Gillitt, C.G.; Backeberg, G.R. <br/> <br/>Abstract: Transfers of water in the Crocodile River above and below the gorge (near Nelspruit and Malelane) were studied based on a survey in the area during November 2003, followed up by telephonic interviewing during March 2004. Almost all the water trades (permanent and rentals) observed in this study were from farmers above the gorge to farmers below the gorge. In order to study whether the water market promotes efficiency the data were subjected to several statistical analyses (Principal Components, Ridge Regression, Logit). It is concluded that in the transfer of water some attributes in the purchasing area such as lower production risk (sugar cane) and lower financial risk and better cash flow (bananas and sugar cane) were more important than the income per cubic meter of water. Water supply in this area is highly irregular while farmers were found to be extremely risk averse especially as far as down-side risk is concerned. The average water price in this area in recent years (2002 to 2003) was between R2,000 and R3,000 per ha (1ha = 8,000 cubic meter). Buyers are large progressive farmers that purchase (and rent) from many sellers (or lessees). It is concluded that information (sale prices and rents) is asymmetrical. Few permanent transfers have taken place in the Crocodile River in recent years. It is concluded that there are reasons why transfers at present are not processed and role players should discuss these reasons and possible solutions before further action is taken. http://ageconsearch.umn.edu/handle/31723 Title: The effects of entrepreneurial quality on the success of small, medium and micro agri-businesses in KwaZulu-Natal, South Africa <br/> <br/>Authors: Darroch, M.A.G.; Clover, T.A. <br/> <br/>Abstract: This paper estimates a logit model of the effects of entrepreneurial quality on business success in a stratified random sample of 44 small, medium and micro enterprise (SMME) agribusiness owners financed by Ithala Development Finance Corporation, using loan repayment as a proxy for success. These owners were surveyed during October 2003-February 2004 and asked to score four components of entrepreneurial quality identified by Guzman and Santos (2001): preference for working as self-employed, motivation type, energizer behaviours, and personal and external factors. The results show that strong energizer behaviours (such as current and planned business expansion and staff training), more business experience, and family assistance to become an entrepreneur, promote loan repayment, while lack of access to electricity (proxy for lack of access to services) negatively affects loan repayment. Policymakers and public and private financial institutions could give more attention to these factors when implementing policies to promote access to finance by, and the growth of, agribusiness SMMEs. http://ageconsearch.umn.edu/handle/31725 Title: Attributes of small-scale sugarcane contractors that influence their service quality in KwaZulu-Natal <br/> <br/>Authors: Ortmann, G.F.; Nothard, B.W.; Meyer, E. <br/> <br/>Abstract: The productivity of small-scale sugarcane contractors affects not only their own profitability and sustainability, but that of other stakeholders as well, such as the small-scale sugarcane farmers they contract to and the sugar mills they supply with sugarcane. This study examines the attributes of small-scale sugarcane contractors that affect their quality of service as perceived by small-scale sugarcane growers (SSGs). Information was obtained through interviews conducted with 114 contractors sampled in ten mill group areas in KwaZulu-Natal between September 2002 and July 2003. Further interviews were conducted in the same time period with SSGs for information on contractor service quality (transport and general service timeliness, meeting of daily rateable delivery requirements, low downtimes, good staff management, and minimal disagreements on service terms). Results show that factors affecting a contractor's perceived service quality include gender, training, the quality of information used (industry focused information sources such as the South African Sugar Association Experiment Station (SASEX) and the Ingede magazine, or general sources such as the radio), and sugarcane tonnage transported (size of business). Being a male contractor and having a larger business positively influence service rating as perceived by SSGs. The importance of the quality of information used and increased training levels highlights the need for the continual provision of relevant information and training for sugarcane contractors by extension services (government, SASEX and milling companies).