Estimating the Supply Response of Maize in South Africa: A Nerlovian Partial Adjustment Model Approach

Abstract

ABSTRACTMaize is the most important crop in South Africa, being both the major feed grain for livestock and the primary staple food crop for the majority of the population. Farmers’ production decisions regarding maize and their response to policy incentives are critical for national food security and regional trade. The aim of the study was to estimate the supply response of the South African maize sector to price and non-price incentives. A Nerlovian partial adjustment model was applied to historical time series data of area under maize cultivation, measured in hectares spanning from 1980-2012 to determine the supply response. Results indicate a short-run price elasticity of 0.24 and a long-run price elasticity of 0.36, signifying that maize farmers are less sensitive to price changes than non-price incentives. The results confirm that non-price incentives such as rainfall and technology seem to have more effect on maize supply than price incentives in South Africa. Given the findings, the study recommends policies and programmes that focus more on non- price incentives, such as technology and infrastructure development, investment in irrigation and research services, as a means of stabilising maize production in South Africa.