The comparative advantage of commercial wheat production in the Western Cape

[摘要] ENGLISH ABSTRACT:Agriculture is heavily subsidised and protected in most of the major industrialcountries. Some of the effects are obvious through the heavy costs imposed onnational budgets. Other effects, such as those on consumers or on overall economicefficiency, are less obvious but are nonetheless extremely important. In South Africathere has never been an attempt to calculate total government intervention inagriculture. However, this changed at the time of the negotiations for the UruguayRound of multilateral trade negotiations under the auspices of the GATT, and thegreater importance of the consumer in the designing of agricultural policies.The aim of this study is to determine whether the production of wheat in the WesternCape is economically optimal under the current policy environment. The studyinvestigates if there was a comparative advantage in the production of wheat as ofApril 1999. The technique used to calculate the various indicators of comparativeadvantage is the Policy Analysis Matrix. This technique is used to identify the effectsof policy measures on the social profitability of wheat production.The analysis used data from eight areas, and seventeen varying enterprise budgetswere constructed in order to compile a representative picture of the industry'scondition. The results of the analysis indicate that Western Cape wheat producers donot have a strong comparative advantage in the production of wheat for the selectedareas. The reasoning behind this is complex, but is primarily a result of high levels ofinput use. Input prices are inflated by policy distortions in input markets, partlybecause of tariffs on imported inputs. The net effect of the total policy environmentalso had a negative effect on producers, in the sense that sub-normal profits wereachieved.The future of the Western Cape and South African wheat farmer is uncertain. What iscertain is that, if the wheat farmer in South Africa does not take immediate and swiftaction, directed at improving efficiency in current management and productiontechniques, and implementing some form of crop diversification, farm debt willultimately be the demise of the farmer. As interest rates rapidly increase, and producer prices remain constant or decrease, the farmer begins to farm more for thebank than for private remuneration.

[发布机构] Stellenbosch University