Abstract
This paper evaluates the effects of the Free Trade Agreement (FTA) between South Africa and the European Union (EU) on the South African orange industry. Oranges account for ten percent of South African agricultural exports. The aggregate trade simulation model used here is designed on the programme STELLA, and consists of regional production models, a local market model, an export model and an exchange rate model. Results indicate that the FTA is expected to have small positive effects on both South African producers and consumers. This is caused by increasing real free-on-board prices and decreasing real local prices of oranges. Total area under oranges will increase more with the FT A, which thus results in a larger orange production too.
Highlights
In October 1999 South Africa and the European Union (EU) signed the Trade, Development and Co-operation Agreement
This paper evaluates the effects of the Free Trade Agreement (FTA) with the EU on the South African fresh orange industry
Macro-economic indicators included in the model are Consumer Price Index (CPI) on both sides, and Producer Price Index (PPI) and population only on the South African side
Summary
In October 1999 South Africa and the European Union (EU) signed the Trade, Development and Co-operation Agreement. As the EU is the major trading partner of South Africa, this will have an important impact on the South African fruit sector which is the major export in the field of agriculture. Within this sector oranges playa vital role. After a small dip in importance in the early and mid nineties the EU presently accounts for the destination of almost two thirds of all exported oranges. This paper evaluates the effects of the FTA with the EU on the South African fresh orange industry. A trade simulation model is constructed to simulate future developments
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