AN ECONOMIC ANALYSIS OF ALTERNATIVE MARKET SCENARIOS FOR WHEAT IN SOUTH AFRICA

Abstract

The marketing of wheat has been controlled by the Wheat Board since 1935 and wheat is currently marketed through a one channel fixed price scheme. In this paper various market scenarios for wheat in South Africa are simulated with the use of a regional linear programming model which incorporates negative-sloping demand functions, substitution in demand between wheat and maize, and income risk. The model is used to predict changes in product prices, production levels, location of production and welfare transfers under the different market scenarios.

A free market simulation showed a distortion in production patterns of the major crops caused by the price support policy. The domestic free market equilibrium price of wheat was predicted to be about 15 per cent lower than the mean fixed price. Owing to the strong price relationship between wheat and maize there is no significant decrease in the wheat price in a free market for winter cereals only and when maize is the only crop marketed under a fixed price system. The social cost analysis showed clearly that to reduce social costs a combined marketing policy for wheat and its related industries is required.

Uittreksel

Die bemarking van koring word sedert 1935 deur die Koringraad beheer en koring word tans deur middel van 'n eenkanaal-vasteprysstelsel bemark. In hierdie artikel word verskillende markscenarios vir koring in Suid-Afrika nageboots met behulp van 'n streek-liniêre-programmerings model wat negatief-hellende vraagfunksies, substitusie in vraag tussen koring en mielies, en inkomsterisiko behels. Die model word gebruik om veranderinge in produkpryse, produksiepeile, produksielokaliteit en welvaartsoordragte ingevolge die verskillende markscenarios te evalueer.

'n Vryemark-nabootsing dui op die verwringing in produksiepatrone van die hoofgewasse wat deur die vasteprysstelsel veroorsaak is. Daar word voorspel dat die binnelandse vryemark-ewewigsprys van koring ongeveer 15 persent laer as die gemiddelde vasteprys sal wees. As gevolg van die sterk prysverwantskap tussen koring en mielies is daar geen beduidende afname in die koringprys in 'n vrye mark vir uitsluitlik wintergraansoorte terwyl mielies ingevolge 'n vasteprysstelsel bemark word nie. Die sosiale koste-ontleding het duidelik getoon dat, ten einde sosiale koste te verminder, 'n gekombineerde bemarkingsbeleid vir koring en die verwante bedrywe daarvan benodig word.