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Abstract

This study is the second comprehensive analysis of the distortions to agricultural producers' incentives in South Africa. The core analysis of this study reapplies the Anderson et al. (2006) empirical framework for the time period 2005 to 2014, as applied by Kirsten et al. (2009), in order to estimate the distortions faced by agricultural producers. In addition to the aggregate application, the disaggregated approach to measuring distortions to individual agents' incentives in a vertical value chain is seminally applied in the South African context. The methodology developed by Briones, Alonso and Swinnen (2015) is applied to the South African wheat value chain for the marketing years starting in October 2000 and ending in September 2014. The results highlight the opposing incentives faced by primary agricultural producers depending on the trade status of their commodity. It is recommended that policy makers and market regulators thus consider the implicit impact of the long-term depreciation of the South African rand on agricultural producers' incentives, while also focusing on the phasing out of inter-industry distortion differences in order to realise potential efficiency gains. Keywords: Tariff Policy; Wheat; South Africa; Policy Distortions; Value Chain JEL Codes: Q17, Q18, F13, O13

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