The deregulation of agricultural markets in South Africa and New Zealand: a comparison

Reforms of agricultural marketing structures have been a major feature of agriculture in New Zealand and South Africa over the past two decades. The reforms in New Zealand varied, and were often measured and considered, with export control either officially or de facto existing in some sectors while others were cut adrift very quickly. Not surprisingly, the results have been mixed. In South Africa all controls were effectively cut adrift, and the jury is still out on the results. A feature of the New Zealand experience has been the adoption of new technologies and even new farming sectors. Productivity showed a distinctive break at 1984, the year of the reforms; up to that date an average of 1.5 percent, past that date an average of 2.5 percent. A similar analysis of productivity in South Africa shows that increases seem to be the result of labour shedding only. The results do not bode well for South African agriculture. The sector is hamstrung by poor physical resources; hardly benefited from the Agreement on Agriculture; seems to be hampered by a lack of innovativeness; and has to contend with the transformation of the sector. Reasons for optimism include the fact that the sector as a whole has benefited from deregulation of agricultural markets, and the prospect that new entrants will bring a new sense of innovation into the industry.