THE COMPETITIVE POSITION OF SOUTH AFRICAN AGRICULTURE: AN ANALYSIS OF SUPPLY AND DEMAND

The competitive position of South African agriculture has been well researched in recent papers by the South African Agricultural Union "Die Mededingendheid van die Landbou .", in the paper "Ekonomiese Knelpunte in die Landbou . . ." and research by Groenewald, "Veranderings in die pariteitsposisie van die Suid-Afrikaanse Landbou". In these papers the worsening competitive position was discussed and it was shown that input prices have increased more than product prices, producer prices have increased more than export prices, interest on farm debt is choking farmers because of more market related interest rates and import tariff protection has escalated input costs. These factors, coupled with the crippling drought, have magnified the farmers financial and cash flow problems. This paper focuses on some possible short-term changes. It will be shown that the rand exchange rate has fallen more than can be explained by inflation rates, leading to a corresponding increase in export prices since 1983. The theme of this paper is also that food production in South Africa is profitable, that agriculture is basically efficient and that farmers should be allowed to feel market forces. South African farmers are also assured of a steady growth in local demand because the South African population growth rate is a high 2,9% compared to less than 1% in the USA. The income elasticity of demand for food is also much higher in South Africa than in the USA, indicating higher potential growth in local food demand.


Issue Date:
1986-10
Publication Type:
Journal Article
Record Identifier:
http://ageconsearch.umn.edu/record/267128
ISSN:
0303-1853
Language:
English
Published in:
Agrekon, Volume 25, Issue 3
Page range:
32-38




 Record created 2018-01-24, last modified 2018-04-02

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