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Development Of A Regional Programming Model For Simulating The South African Wheat Industry, With Special Consideration To Risk

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Listed:
  • Howcroft, J.
  • Ortmann, G. F.

Abstract

Wheat is the second most important field crop grown in South Africa in terms of gross value. Most of the wheat produced is consu!11ed in the form of bread which is one of the main staple foods in South Africa. Wheat is currently marketed under a one channel fixed pnce system. However in recent years there has been a trend to a more free market approach to the marketing of agricultural produce. Therefore the consequences of alternative marketing policies for wheat warrant investigation. For this purpose a regional mathematical programming model was developed with the objective of simulating the wheat industry. The model includes negative-sloping demand functions for various crops, substitut ion in demand between wheat and maize and risk in terms of variance-covariance matrices. It was found that average yield data could be misrepresentative when used in risk analysis. Therefore, .where possible, a poole~ data _se~ was used. The results show that the model successfully simulates production in the main wheat growmg regions of South Africa. This ts shown by the estimated shadow price of land being similar to actual rents and by percentage absolute deviations of 12,2 per cent an_d 6,3 per cent between actual and predicted land use and production respectively. It is concluded that the model would be useful for policy research.

Suggested Citation

  • Howcroft, J. & Ortmann, G. F., 1990. "Development Of A Regional Programming Model For Simulating The South African Wheat Industry, With Special Consideration To Risk," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 29(4), December.
    • Handle: RePEc:ags:agreko:267337
    DOI: 10.22004/ag.econ.267337
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    References listed on IDEAS

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