Economic implications of trade liberalisation on the South African red meat industry

[摘要] English: Successful agricultural trade relations have to a large extent become a function of howwell countries are able to measure the possible impact of increased trade liberalisation.Many studies worldwide have attempted to gauge the impact of agricultural tradeliberalisation on world production, consumption, trade and prices by means ofmathematical programming models. Given the importance of the red meat sector inSouth Africa's agricultural economy, it is of the utmost importance that the red meatindustry understands the implications and consequences of trade liberalisation. Suchknowledge would enable this industry to pro-actively provide input to Government onthe possible 'effects of trade liberalisation on the domestic red meat industry, that couldbe used in multi- or bilateral trade agreements. Furthermore, the industry would be in aposition to identify threats and opportunities and make the necessary strategicdecisions.In South Africa many studies have investigated various different issues of economicimportance pertaining to the red meat industry. None of them have attempted toinvestigate the impact of trade liberalisation within the mathematical programmingframework. This study employs a spatial partial equilibrium model embedded in themathematical programming framework to analyse the possible effects of a reduction oftariffs, increases in world prices of red meat, changes in the exchange rate, theabolishment of the Lomé Convention and changes in population size. The modelincludes two-stage spatially separated markets for red meat products in South Africathat encompass behavioural parameters to gauge the impact of exogenous changesrelated to trade liberalisation.In the case where all tariffs on red meat imports are abolished, changes in prices of redmeat products will be substantial. Producer prices for cattle, sheep and pigs willdecline by 21.11 per cent, 13.90 per cent and 11.99 per cent, respectively. Beef, sheepmeat and pork prices will, on average, decline by 27.88 per cent, 28.56 per cent and13.16 per cent, respectively. Demand will increase substantially for all three meattypes. From a welfare point of view consumers will experience welfare increases.Producers, on the other hand, will experience a drop in welfare. In monetary terms thewelfare gains by consumers are greater than the welfare losses by producers, whichconstitutes a net welfare gain to society. Furthermore, the red meat industry in SouthAfrica should carefully consider preferential access granted to third countries underFTA's. Preferential access could easily lead to a reduction in the marginal tariff ratewhich, in turn, would result in lower domestic prices of red meat.In the case where the world price increases more than 10 per cent for beef, 18 per centfor mutton and 6 per cent for pork, zero imports would result. The losses in welfare toconsumers are greater than the gains in welfare by producers.The impact of a 40 per cent depreciation in the exchange rate is very similar to thesituation when world prices are assumed to increase, whilst the effect of a possibleabolishment of Lomé on the South African beef market would be minimal. Finally, anincrease in the population size combined with an increase in world prices will only partlyoffset the impact of a total reduction in tariffs. Also, increases in demand due to lowerprices will largely be met by higher imports.

[发布机构] University of the Free State