Reform of one‐channel marketing systems: Expanding the debate and agenda for research

Abstract

The recent exchange between Groenewald and Brand on the report tabled by the Committee of Inquiry into maize marketing arrangements makes for interesting reading. Professor Groenewald raises a wide range of important conceptual and pragmatic concerns, with the stinging conclusion that the Commission did not achieve its primary mission and an opportunity for substantive reforms was lost. Dr Brand countered by pointing out that the Commission focused on changes that were politically acceptable and would ‘set in motion a movement towards a more market‐oriented situation’. There is wisdom in the comments of both authors and the time is ripe for agricultural economists in South Africa to address an expanded research agenda on these issues.

At the outset, it should be made clear that no special knowledge of the maize marketing system in South Africa is claimed. However, the current debate bears many similarities to that which is currently engulfing agricultural policy observers in Canada and the United States. Agricultural reform and the need to remain competitive in an increasingly open world market is a theme that has thrust itself on policy analysts. In Canada, agricultural economists have engaged in an active professional debate on the merits of supply management and one‐channel marketing systems over the past ten years. Although the strengths and weaknesses of these systems have been well documented from theoretical and conceptual bases, the major impetus for change has come from empirical analysis and the realization that Canada had created an environment which fosters unproductive agricultural sectors, International uncompetitiveness, and food prices that penalize consumers, expecially those in low-income categories. In some cases, prices are so far out of line with the United States that border crossings are deluged on weekends with Canadian shoppers returning home with goods purchased. Food items, expecially those under one-channel supply management marketing systems, figure prominently in the goods brought back to Canada. The system of supply management is in crisis and even the marketing boards have acknowledged that significantly more market orientation is necessary.

Agricultural economists can make a significant contribution to the policy debate in South Africa. Brand is quite right in pointing out that the process will be evolutionary — what is politically unacceptable today may become the policy of tomorrow. The time frame of policy reform fits well into that which is needed to conduct empirical research. But this research must focus on the important issues, even though they may be unpopular. Groenewald makes an important first step in this direction by drawing attention to the issues of productivity and pricing. However, more steps are needed. A critical issue, from my perspective, is the capitalization of benefits from protective agricultural policies.

Notes

Associate Professor of Agricultural Economics and Farm Management, the University of Manitoba.