Trends in and determinants of South African maize exports in the post-deregulation era

Abstract

ORIENTATION : Agricultural plays a key role in South Africa’s economy, but its exports are constrained by inadequate transport infrastructure, logistical bottlenecks and high production costs. Therefore, most agricultural products are transported to ports by road instead of the more economical rail. Product prices fluctuate with erratic domestic and international supply and demand, which affects competitiveness. RESEARCH PURPOSE : The study investigates how transport cost and logistical shortcomings have impacted South African maize exports and competitiveness. MOTIVATION FOR THE STUDY : Little prior research focused on the impact of transport and logistics on the competitiveness of agricultural exports in Africa. Maize, one of South Africa’s leading agricultural products with still-to-be-tapped export potential, was used as an example. RESEARCH APPROACH/DESIGN AND METHOD : Trends in global maize exports and logistics performance are described, as well as South Africa’s share and rankings. Domestic trends in rail and road transport are investigated together with historic costs. Regression analysis investigates determinants of South African maize export volumes. MAIN FINDINGS : South Africa’s logistics-related competitiveness is declining. Rising domestic transport cost has a statistically significant negative effect on maize export volumes while international prices show the expected positive effect. Separate equations for exports through harbours and border posts rendered different results. PRACTICAL/MANAGERIAL IMPLICATIONS : Valuable insights are provided into the critical role of logistics efficiency in maize export competitiveness. CONTRIBUTION/VALUE-ADD : Empirical findings provide a starting point for more in-depth studies in this area and more informed policy discussions on how the competitiveness of South Africa’s agricultural exports can be enhanced.