An Economic Analysis Of The South African Maize Market

Author : Cleopatra Sikhangezile Siphiweni Ngulube
Publisher :
ISBN 13 :
Total Pages : 336 pages
Book Rating : 4.:/5 (17 download)

DOWNLOAD NOW!

Download or read book An Analysis of the Socio-economic Consequences of Biosafety Regulation written by Cleopatra Sikhangezile Siphiweni Ngulube and published by . This book was released on 2015 with total page 336 pages. Available in PDF, EPUB and Kindle. Book excerpt: The levying of strict biosafety regulations for GM imports intended for food, feed and processing by importing countries is expected to have socio-economic consequences. For countries like Zimbabwe the significance of the impact of the regulations lies in the context of the role of regional agricultural trade in enhancing national food security. Accordingly, this study analyses the effects of complying with the regulatory requirements on Zimbabwe s maize grain-to-maize meal import supply chain from South Africa. The study uses a combination of quantitative and qualitative measures to determine the costs and benefits of the regulation. Focusing principally on the Zimbabwean consumers at the end of the supply chain, the price effect of the added costs of complying with the regulation are considered to represent the costs of the regulation; while the concerns of the consumers regarding GMOs based on the government s concerns as implied by the regulation, are assumed to be indicative of the benefits realised as a result of the regulation. The Total Landed Cost analysis is used to estimate price effect while the Consumer Risk and Benefit Perception analysis is used to determine the consumer perception. The study reveals that Zimbabwe s strict domestic GM policy influences the regulation of trade in commodities with GM equivalents such as maize. The regulation has resulted in a dual maize grain import channel by stipulating import requirements that differentiate between GM and non-GM maize grain imports. As the only commercial producer of GM crops in southern Africa, South Africa supplies both channels. However, in the non-GM channel South Africa competes with Zambia, who only produces non-GM crops and has managed to produce substantial surpluses in recent years. Taking this into consideration, the study conducts the cost analysis by comparing the GM and the non-GM channels and, the cost of maize sourced from South Africa and Zambia. The evidence from the study suggests that the GM grain import channel is only known to be functional during times of severe food shortages, as in line with their strict GM policy the government of Zimbabwe tends to have a primary preference for non-GM maize. Nonetheless, the GM channel is characterised by a precise and elaborate compliance process aimed at preventing the grain from being used as seed. As such, the results of the cost analysis show that despite the purchase price of GM grain being significantly lower than non- GM grain the compliance procedures in the GM maize grain-to-maize meal channel makes it the most costly channel and consequently the market price of the maize meal is comparatively high. The non-GM channel features as the customary channel with the comparison between South Africa and Zambia being highly emphasized. The most important finding is that despite the premium added on non-GM maize in the South African market, the price of the grain remains comparatively competitive. However, the relatively higher transport and logistics costs in the South African channel seem to be the major contributor of higher total landed cost of non- GM maize. In addition the study finds that while the price effect of the regulation on maize meal is unclear, the cost effects have acted as a protectionist measure for local producers who sell at government gazetted prices that are well above prices in the regional market. From these findings the study concludes that although the cost effect of the regulation has a distortionary effect on trade between South Africa and Zimbabwe, it cannot be considered in isolation of other economic factors such as transport costs as well as domestic distorted markets. Therefore the recommendation is that for the regional market to realise the potential of GM grain imports in providing affordable food imports, countries do not only have to accept GM imports but they have to address other challenges to regional trade such as high transport costs. The analysis of the risk and benefit perceptions of the Zimbabwean consumers reveals that consumers are undecided about GMOs, as they perceive both high benefits and high risks. The most perceived benefit is that GM crops increase food production and supply while the major perceived risk is the negative effect on human health and the development of allergic reactions. To this end the study concludes that the concerns of governments as outlined in the National Biotechnology Act (the primary law governing GMOs) and pronounced by the Minister of Agriculture are aligned with the concerns of the consumers. However, in contradiction, the occasional exceptional acceptance of GM grain or food in times of severe food shortages has resulted in the confusion among consumers. A further examination of the perceptions shows a limited knowledge about GM technologies. The recommendation is that perhaps increased public knowledge and awareness on GMOs may demystify GMOs thus reduce the confusion among consumers. Overall, the study finds that the costs and benefits of the regulation are indistinct, as there are other socio- political and economic factors that come into play; with the findings suggesting that the perceived benefits for the consumers roughly outweigh the cost of the regulation.