THE INFLUENCE OF DEMAND AND SUPPLY SHIFT FACTORS ON THE SOUTH AFRICAN RED MEAT INDUSTRY

Abstract

In this paper a spatial partial equilibrium (SPE) model is used to determine the impact of changes in population from a “with” and “without” HIV/AIDS point of view, as well as changes in per capita income. The possible impact of abolishing the Lomé Convention is also investigated. In a “Without HIV/AIDS” population growth scenario demand for beef, sheep meat and pork will increase by 12.01 per cent, 12.22 per cent, and 11.92 per cent, respectively. In a “With HIV/AIDS” population growth scenario demand will only increase by 7.19 per cent, 7.31 per cent and 7.28 per cent for beef, sheep meat and pork, respectively. Most of the increase in demand is met by overseas imports. When per capita income increases the increase in pork consumption is lower than the increases in demand for beef and sheep meat. This can be attributed mainly to the fact that the aggregated income elasticity is considerably lower for pork than it is for the other two red meats. The weifare analysis shows, firstly that HIV/AIDS will have a considerable impact on the general welfare of the country, and secondly the important role government has to play in setting the table for improved economic conditions that will result in increases in the per capita income of people. Finally, the study shows that the abolishment of the Lomé Convention will not have any severe repercussions for the beef sub-sector in South Africa.