Impact of alternative economic policies on crop production in Lesotho

The effects of economic policies on crop production are simulated using a mathematical programming model of rural households in the Lowlands and Foothills of Lesotho. The model simulates rural households’ responses to scenarios such as lower maize import prices, reduced off‐farm employment, higher maize producer and consumer prices, higher maize producer prices and lower interest rates. In addition, the model estimates land rental costs. Lower maize import prices lead to a reduction in maize production and consequently to increases in maize imports. Wheat production and fallow land also Increase. The impact of reduced off‐farm employment on crop production is estimated to be minimal but households’ welfare is adversely affected. Decrease in off‐farm employment leads to worsening food security. Results indicate that the supply response for maize is inelastic with respect to product prices. Increased maize prices harm a large proportion of rural households, as the majority are deficit maize producers. Indications are that estimated land rental costs are high.

Notes

Respectively graduate student and Professor of Agricultural Economics, University of Natal, Pietermaritzburg. Financial assistance from the Deutscher Akademischer Austauschdienst and the National University of Lesotho is gratefully acknowledged. Views expressed are those of the authors and do not necessarily reflect the views of the sponsors or the University of Natal. Comments by anonymous reviewers are gratefully acknowledged.