The effect of selected macroeconomic policies on citrus price volatility in South Africa: a reflection on experiences of farmer support

Joseph Sello Kau, Victor Mmbengwa and Jan Swanepoel

Journal of Agribusiness and Rural Development, 2023, vol. 67, issue 1

Abstract: The macroeconomic policies enacted by the South African government after democracy and their effects on the welfare of resource-poor farmers remains a subject of scholarly interest. It is not known if farmers are cushioned against exogenous macroeconomic shocks. The aim of this study was to analyse citrus price volatility in National Fresh Produce Markets and to study the effects of macroeconomic policy shocks. Secondary data for prices was sourced from the Johannesburg National Market. GARCH was employed as an empirical model to estimate price volatility. According to the results, price volatility for lemon and soft citrus is statistically insignificant. Price volatility for oranges was statistically significant at a 99% persistence level (α = 0.39, p = 0.0030) and (β = 060, p = 0.0000). The exchange rate (α = 0.05, p = 0.0000), CPI (α = –0.26, p = 0.0035) and prime lending rates (α = 0.12, p = 0.0026) were significant in explaining price volatility in oranges. Added values of the coefficient of α and β for Grapefruit amounted to 1.1, which means the price volatility was explosive. High levels of price volatility mean farmers are faced with the difficulty of projecting expected levels for farm income and profitability. The results provide insights into farm planning and decision making. It is recommended that the government provide farmers with resources that can cushion against price instability and enable them to access export markets.

Keywords: Agricultural and Food Policy; Demand and Price Analysis (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pojard:356220

DOI: 10.22004/ag.econ.356220

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