An Analysis of Alternative Maize Marketing Policies in South Africa

The maize-oriented agricultural economies throughout Southern Africa are in fundamental transition. Increased recognition of the costs of historical controls on pricing and marketing already has led to partial maize market liberalization in several countries in the region. However, there is still intense debate over the appropriate scope and implementation of future food market reform. Much of the debate derives from uncertainty over the consequences of comprehensive and politically risky changes to domestic markets, especially at a time when regional market conditions are also in flux due to agricultural restructuring in neighboring countries. There is currently little information on the direction and magnitude of grain trade between South Africa, Zimbabwe, and other countries in the region under a deregulated external trading environment. There is also a lack of information on the regional consequences of alternative domestic maize policy scenarios currently under deliberation in South Africa. The purpose of this research is fourfold. First, we consider the role of food market reform in affecting future economic growth and food security in South Africa, and discuss the congruence between the government's food policy objectives and the existing marketing and pricing system. Second, trends in maize production, trade, prices and marketing costs in South Africa and Zimbabwe, the two largest maize traders in the region, are presented. Third, we present four alternative maize policy scenarios in South Africa, and then estimate their effects on maize production, gross revenues, consumer prices, and trade flows under various weather and pricing scenarios in Zimbabwe. A comparison of results across four policy scenarios clarifies the gainers, losers, and extent of income transfers between various regions and socio-economic groups within each region. The final section identifies means by which national food policy objectives in South Africa may be more cost-effectively achieved through harmonization of policies between South Africa and its regional neighbors