Agriculture Reference
In-Depth Information
by consumers. The first stage of the MMIP was implemented by an institutional reform of
NMC which entailed the revocation of its milling responsibilities through the SMC and
the restructuring of the organization to a neutral maize purchasing, handling and storage
company. The MOAC also transferred the ownership and responsibility for the operations
and maintenance of government silo to the NMC.
After the implementation of the MMIP reform, the government pricing policy changed
because from the 1994/95 marketing year NMC was no longer willing to purchase at prices
above the set floor price, thus changing the floor price to now represent the actual buying price
offered by NMC. To date, NMC prices are set from the trading prices and the prices are no
longer pan-seasonal as before, though they are still pan-territorial in nature (NMC, 1997).
7.3.6 Government support services affecting the industry
Ministry of Agriculture and Cooperatives, through the Rural Development Administrations
(RDAs) provides heavily subsidized tractor services to farmers all over the country. These
tractors are used for field preparation and planting. The Ministry of Agriculture and
Cooperatives has discontinued the subsidization of maize production inputs like seeds
and fertiliser. Since the withdrawal of this subsidy, maize production in the country
has declined (NMC, 1997). Today, there is Inhlanyelo Fund, a non-governmental,
microfinance institution that provides small low-interest loans on inputs to impoverished
Swazis to grow maize and other crops for business. Farmers are using this scheme to
finance their production. One of its key strengths is that it is working through existing
administrative and community leadership structures which provide the channels through
which it reaches individual beneficiaries at the grassroots level. Also, MOAC's Agricultural
Research Division (ARD) undertakes research and testing/screening of new crop varieties
to ascertain their suitability to local conditions. The ARD also carries out trials related
to pest and disease control across the country and makes the results available to farmers
through the extension services.
7.3.7 Theoretical framework and methodology
Governments have normally intervened in cross border trade through the use of tariffs, quotas
and non-tariff barriers. Reductions in these trade restrictions have been common practice in
recent years, and it is mostly achieved through international negotiations (Freenstra, 1995).
Today's most celebrated economic theory in worldwide trade negotiations is that free trade
is more beneficial than trade protection. It is now widely accepted that trade barriers distort
optimal allocation of production resources and ultimately result in reduced output. This
is the static argument. The dynamic argument in favour of dismantling trade restrictions is
that economic freedom stimulates competition and ensures an environment beneficial for
economic growth (Bale and Greeenshields, 1978). Despite widespread freer trade advocacy
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