This study quantifies the possible income and nutritional impact of the recent commitment by the South African Department of Agriculture to increase budgetary spending on agricultural development. Three levels of models are utilized. The first, a large-scale partial equilibrium model, generated an outlook for maize grain under two possible future scenarios; the first is the baseline scenario under which it is assumed no additional government investment in the agricultural sector takes place, the second allows for the impact of an investment within the maize subsector large enough to increase local maize production by 15% above the baseline. The second model, a rational distributed lag model, links the grain sector to the maize meal down-stream market. From this model, the long-run propensity (LRP) was used to determine the long-run change in retail prices given the projected wholesale maize grain prices. These retail price projections where then used to estimate the impact on household expenditure as well as nutritional in-take patterns by utilizing household-level survey data. This study has found if government investment in the maize sector is successful, and results in a 15% increase in production; it could potentially mean cost-savings of approximately R10 per month for the lowest income households.


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