Comparative advantage of potato production in seven regions of South Africa

The focus of this research was to investigate the comparative advantage of the potato industry in seven potato production regions in South Africa. Potatoes are the most important vegetable crop produced in South Africa. In 2008 it contributed more than 40% to the total production of vegetables in South Africa and it accounted for more than 20% of the value of all fresh produce sold on all the major national fresh produce markets. This study uses the Resource Cost Ratio (RCR) methodology that provides an explicit indication of the efficiency with which production alternatives uses domestic resources to generate or save foreign exchange. The Nominal Protection Ratio (NPR) and Effective Protection Coefficient (EPC) were also calculated. The results show that current policies that affects the input market for potato production in South Africa is constraining the potato industry. This was confirmed by the results obtained from the NPR and EPC analysis, and the size of the policy distortions was shown through the calculation of market and economic profitability. If current policies prevail potato production in the Eastern Free State will not have a comparative advantage, but in the absence of such policies all production regions have a comparative advantage.