Trade Liberalization in the South African Livestock Industry: implications for rural development

Livestock farming is an important facet of agriculture and livelihood in South Africa. It forms the essence of rural agriculture contributing food, socio-economic stability, employment and income. After the liberalization of the agricultural sector and phasing out of past protection mechanisms South Africa introduced a process of tariff reform. Furthermore, a system of tariff rate quotas was introduced in compliance with WTO regulations. A partial equilibrium comparative static model was used to investigate the impact of further liberalization in the livestock industry of South Africa, particularly in meat products using four policy scenarios. Specific emphasis was given to the liberalization of the current TRQ regime. The implication of the results are that the development efforts by government aimed at commercializing emerging commercial stock farming in order to address equity and poverty may be slowed down considerably with further trade liberalization; especially since substitution with other agricultural enterprises are limited. The conclusion is that the expansion in current quotas might be a more proper policy directive than reducing applied tariffs over the short to medium run to comply with trade liberalization targets as well as WTO commitments. The reason for this is that quota expansion brings about moderate changes in domestic prices of livestock and meat products as compared to tariff reductions.