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Abstract
The deregulation of the single channel marketing system for wheat poses new challenges to
producers and advisors in the Western Cape Province. This deregulation is simultaneous
with a number of other changes in the socio-political, economic, marketing and technological
environments. In facing these challenges it is necessary to incorporate such diverse trends as
globalisation and individualisation within a single framework.
In the first part of this paper the development of a model, combining spatial data, resource
attributes, crop characteristics and financial/economic data in an interactive model is
described. This is followed in the second part by the evaluation of the impact of certain
macro-economic variables on farm-level enterprises. This is done with the aid of six
scenarios. It was found that, under certain specific conditions (i.e. low international wheat
price, zero tariff protection and 40 percent of production being exported), wheat production
in the Western Cape is unprofitable. However, if an import tariff on wheat of 30 percent (fob,
ad valorem) is introduced and the marketing mix is changed to only 20 percent of local
production being exported, then ceteris paribus, wheat can be profitably produced on 68
percent of the area. This allows the opportunity for structural adjustments and cost reducing
practices. If the cost of production is lowered by 20 percent and the import tariff removed,
then, ceteris paribus, wheat can be profitably produced on 59 percent of the area. Even more
important than the results from the scenarios is the fact that a methodology was developed
through which the impact of macro-economic variables on farm level profitability can be
investigated. As this methodology allows for the identification of specific areas or farms that
will be adversely affected, specific remedial measures can be implemented. This methodology
will be an important tool in the hands of decision-makers.