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The Effects of Market Reform on Maize Marketing Margins in South Africa: An Empirical Study

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  • Traub, Lulama Ndibongo
  • Jayne, Thomas S.

Abstract

This paper determines the effect of market reform and price decontrol on the size of maize milling/retail margins in South Africa. Regression models of monthly milling/retail margins are run over the period May 1976 to September 2003. To assess the robustness of our findings, we estimate several different model specifications for representing structural change, vary the sample period to examine the sensitivity of findings to unusual weather and market conditions in the region during the 2001-2003 period, and use different estimation techniques, OLS with Newey-West robust estimators and Feasible General Least Squares. In virtually all models, the results indicate that real maize milling/retailing margins in South Africa have increased since the market deregulation in 1997. Controlling for disturbances in weather, wages, exchange rate levels and volatility, inflation-adjusted margins accruing to millers and retailers have risen 29 to 42 percent between 1997 and 2003. Unlike experiences elsewhere in the region, maize market reform in South Africa has not benefited consumers.

Suggested Citation

  • Traub, Lulama Ndibongo & Jayne, Thomas S., 2006. "The Effects of Market Reform on Maize Marketing Margins in South Africa: An Empirical Study," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25635, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae06:25635
    DOI: 10.22004/ag.econ.25635
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    References listed on IDEAS

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    1. Bruce L. Gardner, 1975. "The Farm-Retail Price Spread in a Competitive Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(3), pages 399-409.
    2. Waugh, Frederick V., 1964. "Demand and Price Analysis: Some Examples from Agriculture," Technical Bulletins 171213, United States Department of Agriculture, Economic Research Service.
    3. William G. Tomek & Robert J. Myers, 1993. "Empirical Analysis of Agricultural Commodity Prices: A Viewpoint," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(1), pages 181-202.
    4. Jayne, T. S. & Takavarasha, T. & van Zyl, Johan, 1994. "Interactions Between Food Market Reform And Regional Trade In Zimbabwe And South Africa: Implications For Food Security," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 33(4), December.
    5. Jayne, Thomas S. & Mukumbu, Mulinge & Chisvo, Munhamo & Tschirley, David L. & Weber, Michael T. & Zulu, Ballard & Johansson, Robert C. & Santos, Paula Mota & Soroko, David, 1999. "Successes and Challenges of Food Market Reform: Experiences from Kenya, Mozambique, Zambia, and Zimbabwe," Food Security International Development Working Papers 54672, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    6. Tomek, William G. & Myers, Robert J., 1993. "Empirical Analysis Of Agricultural Commodity Prices: A Viewpoint," Working Papers 6847, Cornell University, Department of Applied Economics and Management.
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    Cited by:

    1. Abu, Orefi & Kirsten, Johann F., 2009. "The South African Maize Milling Industry: Can Small and Medium-scale Maize Milling Enterprise Survive and Thrive?," 2009 Conference, August 16-22, 2009, Beijing, China 51304, International Association of Agricultural Economists.
    2. Mutambatsere, Emelly & Christy, Ralph D., 2008. "Market Integration and Efficiency in the Presence of Cross-border Trade Restrictions: Evidence from selected Maize Markets in Southern Africa," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6304, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Pedro M. Nogueira Reis, 2022. "Determinants of Qualified Investor Sentiment during the COVID-19 Pandemic in North America, Asia, and Europe," Economies, MDPI, vol. 10(6), pages 1-20, June.

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    Keywords

    Crop Production/Industries; Marketing;

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