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Agricultural Economics

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Agricultural Economics applies economic principles to solve agricultural and agribusiness problems. Our degrees equip graduates for professional and senior management positions, and are highly valued by employers. They give our graduates the flexibility to pursue a wide range of career opportunities. The Agricultural Economics major can be taken as part of a BScAgric (4 year) degree. Students taking the BScAgric option must major in Economics and Agricultural Economics, and take subjects such as Biometry and Statistics, Animal Science, Crop Science, and Horticultural Science.

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Browsing Agricultural Economics by Subject "Agricultural labourers--South Africa."

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    A demand analysis of labour in South African agriculture : the effects of labour legislation.
    (2006) Sparrow, Gregory Neal.; Ortmann, Gerald Friedel.
    Labour legislation was introduced into agriculture in the early 1990s with the Basic Conditions of Employment Act (BCEA) being gazetted in 1992. Since the mid-1990s "new" labour legislation pertaining to agriculture has been implemented in South Africa, and includes the Basic Conditions of Employment Act 75 of 1997 (amended), the Unemployment Insurance Act 63 of 2001 (amended), the Labour Relations Act (LRA) 66 of 1995, the Land Reform (Labour Tenants) Act 3 of 1996, the Extension of Security of Tenure Act 62 of 1997, the Employment Equity Act 55 of 1998, the Skills Development Levies Act 9 of 1999, and the Sectoral Determination (an amendment of the BCEA 75 of 1997) which includes the imposition of minimum wages. This study examines the legislation in detail as well as the implications of this legislation for agricultural labour employment in South Africa. A relative increase in the cost (transaction and wage) and risk associated with labour motivates farmers to replace labour with machinery, machinery contractors, labour contractors or new technologies that are labour-saving. This results in a decrease in the demand for unskilled workers and higher levels of poverty and unemployment in South Africa. This study estimates long-run price elasticities of demand for regular labour in South African (SA) agriculture using both Ordinary Least Squares (OLS) regression and a Two-stage Least Squares (2SLS) simultaneous equations model. The 2SLS model includes a labour supply equation. Secondary data obtained over a 43 year period (1960-2002) from Statistics South Africa and the Abstract of Agricultural Statistics were used in this study. Both models were estimated for the period 1960-2002, and included a piecewise slope dummy variable for wages with the threshold year taken as 1991 to reflect expected changes in farm labour legislation. Study results show that the estimated long-run price elasticity of demand for labour for the pre-1991 (i.e., 1960-1990) period was -0,25 for the OLS model and -0,23 for the 2SLS model suggesting that the demand for regular labour was jnelastic during this period. For the post-1991 period (1991-2002), the long-run elasticity was estimated as -1,32 for the OLS model and -1,34 for the 2SLS model. This shows a structural change in demand that questions the appropriateness of minimum wage and other labour legislation that has raised the cost of regular farm labour in South Africa. Labour legislation introduced in the early 1990s encouraged farmers to substitute casual workers for regular workers. However, the inclusion of all casual workers in minimum wage legislation from 2006 is expected to slow the casualisation of agricultural labour as farmers turn to labour contractors, chemicals and machinery as the next best substitutes. The study found that an increase (decrease) in the price of chemicals (pesticides and herbicides for crops, and labour saving dips and sprays for animals) result in an increase (decrease) in the demand for regular labour. The demand for labour is also sensitive to changes in real interest rates (used as a proxy for machinery costs). The cost of capital would decrease (increase) as interest rates fall (rise), resulting in farmers adopting more (less) machinery and equipment, causing a decrease (increase) in the demand for regular labour, ceteris paribus. In order to reverse the regular labour unemployment trend in SA agriculture, government could choose to adopt more flexible labour market regulations (i.e., legislation regarding the hiring and dismissing of farm workers, and increases in wages and benefits for the farm worker could be based on the individual performance of each worker as opposed to increasing the wages of the entire workforce through minimum wages) which would reduce labour costs and encourage farmers to employ more labour.
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    Labelling to promote broad-based Black economic empowerment in South Africa : a case study of the Thandi empowerment label.
    (2007) Skinner, Cliff.; Lyne, Michael Charles.; Ferrer, Stuart Richard Douglas.
    Broad-based black economic empowerment (BBEE) is a policy objective in South Africa. Farmworker equity-share schemes (FWES) satisfy several of the empowerment goals specified by the proposed AgriBEE Scorecard. Information about the costs and benefits of subscribing to an empowerment label will help managers to make more informed decisions about empowerment and could therefore promote BBEE. The Thandi label is an initiative to market fruit and wines originating from FWES and farms operated by previously disadvantaged farmers. A case study of the Thandi label was undertaken to determine whether or not the accredited empowerment attribute adds value to Thandi products. An exploratory-explanatory case study was adopted basing questions largely on the theoretical propositions of asymmetric information, the benefits of product labelling and the preconditions for a successful label. Primary data were collected via in-depth interviews with managers of Capespan, The Company of Wine People and empowerment farms participating in the Thandi label. The study made use of in-depth interviews with key informants to investigate issues considered (on theoretical grounds) to be critical in establishing a successful label. Responses were subsequently tabulated and compared, where relevant, across respondents in order to check for consensus views. Results indicate that the Thandi label had not succeeded in differentiating fruit, whereas the Thandi wine label had increased sales revenue and was covering accreditation costs incurred by farms as well as the recurring costs of maintaining and marketing the label. Thandi fruit had not grown its share of the domestic or export markets and did not command a price premium, Capespan subsequently discontinued the Thandi fruit label. Thandi wine, on the other hand, had grown its export market and consumers were prepared to pay a premium for Thandi wine products. The data indicate that empowerment attributes were useful in finding shelf space for products, but that quality is essential to grow market share and to earn price premiums. In short, accredited empowerment attributes can add value to quality products sold to discerning consumers who lack information about empowerment and quality attributes at the point of sale. Empowerment labels must include quality attributes. Government should at least absorb some of the transaction costs confronting producers and marketing agencies in negotiating standards for farms and firms participating in generic empowerment labels. It could also offer auditing services to local accreditation agencies to improve their credibility. Further research estimating consumers' willingness-to-pay for products branded with empowerment labels is necessary to estimate the size of premiums that different products may command.