THE DEMAND FOR AND SUPPLY OF SOUTH AFRICAN DECIDUOUS FRUIT EXPORTS: A DYNAMIC ANALYSIS

Abstract

Abstract This paper is the first empirical study of the factors affecting the demand for and supply of South African deciduous fruit exports. A simultaneous equations model of deciduous fruit export demand and supply was specified and estimated by Two Stage Least Squares using annual data for the period 1960—1990. Export demand was influenced by the world price (real) of deciduous fruit and real income of importing countries. Export supply was explained by the lagged relative price of deciduous fruit exports (ratio of net export realisation price to domestic price), lagged exports and random shocks in deciduous fruit supply (deviation of actual production from trend). Estimated price and income elasticities of export demand were high (-28.00 and 1.41 respectively). Export supply in the short run was price inelastic (0.07) and relatively less responsive to supply shocks. These results support a priori expectations that local deciduous fruit exporters are price takers and that export supply reacts sluggishl...