IDEAS home Printed from https://ideas.repec.org/a/ags/agreko/54194.html
   My bibliography  Save this article

Implications of deregulated wheat market for the Western Cape Province: Evaluation with the aid of a spatial model

Author

Listed:
  • Troskie, Dirk P.
  • Vink, Nick
  • Wallace, M.

Abstract

The deregulation of the single channel marketing system for wheat poses new challenges to producers and advisors in the Western Cape Province. This deregulation is simultaneous with a number of other changes in the socio-political, economic, marketing and technological environments. In facing these challenges it is necessary to incorporate such diverse trends as globalisation and individualisation within a single framework. In the first part of this paper the development of a model, combining spatial data, resource attributes, crop characteristics and financial/economic data in an interactive model is described. This is followed in the second part by the evaluation of the impact of certain macro-economic variables on farm-level enterprises. This is done with the aid of six scenarios. It was found that, under certain specific conditions (i.e. low international wheat price, zero tariff protection and 40 percent of production being exported), wheat production in the Western Cape is unprofitable. However, if an import tariff on wheat of 30 percent (fob, ad valorem) is introduced and the marketing mix is changed to only 20 percent of local production being exported, then ceteris paribus, wheat can be profitably produced on 68 percent of the area. This allows the opportunity for structural adjustments and cost reducing practices. If the cost of production is lowered by 20 percent and the import tariff removed, then, ceteris paribus, wheat can be profitably produced on 59 percent of the area. Even more important than the results from the scenarios is the fact that a methodology was developed through which the impact of macro-economic variables on farm level profitability can be investigated. As this methodology allows for the identification of specific areas or farms that will be adversely affected, specific remedial measures can be implemented. This methodology will be an important tool in the hands of decision-makers.

Suggested Citation

  • Troskie, Dirk P. & Vink, Nick & Wallace, M., 2000. "Implications of deregulated wheat market for the Western Cape Province: Evaluation with the aid of a spatial model," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 39(1), pages 1-16, March.
  • Handle: RePEc:ags:agreko:54194
    as

    Download full text from publisher

    File URL: http://ageconsearch.umn.edu/record/54194/files/02%20Troskie_%20Vink%20_%20Wallace%20March%202000.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. repec:ags:agreko:267849 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Crop Production/Industries; Marketing;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:agreko:54194. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/aeasaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.