Agriculture Reference
In-Depth Information
food crisis in Southern Africa actually came to a head in 2002 when almost all the countries
in the region faced severe food shortages. This weather-related disaster actually exacerbated
a crisis that was already looming as a result of inappropriate policy. For instance, the results
show that the import tariff imposed in 1998/99 resulted in an observed producer efficiency
loss amounting to some SZL 15,586.13 (Swaziland Lilangani; SZL 1 = 1 South African
Rand). By 2001/2002, the efficiency loss (also defined as 'deadweight loss in production')
amounted to about SZL 4.2 million before it began to fall over the next two years of the
observation period. Without a doubt, this efficiency loss experienced by producers arose
from the tariff structure occasioned by government intervention.
The results also show that consumers experienced similar hardships during the period under
reference. For instance, as shown in Table 7.7, the deadweight loss in consumption rose
steadily from 1998 to 2001/2002, and far exceeded the deadweight losses in production.
Even though they have been lower since 2002, they are still substantial and far in excess of
the losses encountered by producers. It is safe to say therefore that consumers have been
hurt more than producers by the current marketing policy framework for maize. It is in
fact possible that the consumer efficiency losses would have been higher in the absence of
the subsidy to NMC.
In 1998/99 marketing season domestic maize producers gained an estimated amount
of SZL 3,922,865.06 for selling their produce to NMC at higher than the equilibrium
prices. In the same period, consumers lost SZL 4,666,676.38. In 2003/04 producers gained
SZL 17,986,413.94 while consumers lost an estimated amount of SZL 22,025,421.28 for
consuming at higher prices. On the other hand, government has benefited from the receipt
of import tariff which yielded a total of SZL 666,315.20 in 1998/99 and SZL 3,075,753.95
in 2003/04.
7.3.9 Incentive effects of the maize marketing policy
Given the foregoing, it was necessary to undertake a systematic assessment of the maize
marketing system to determine the incentive effects of the current policy regime for the
industry. For this purpose, a Policy Analysis Matrix (PAM) was constructed. The enterprise
budget for the production of a tonne of maize in Swaziland is presented in Table 7.8 while
the Policy Analysis Matrix framework and the effects of the divergences are shown in Table
7.9. The results are based on production and marketing data derived for a tonne of maize.
In line with the PAM methodology, the analysis examined the private profitability, social
profitability, and policy divergences associated with the production and marketing of maize
within the policy framework under investigation.
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