Two Stage Least Squares and principal component analysis were used to estimate the export demand and supply of South African (SA) fresh oranges in the United Kingdom (UK) during 1976–1993. Export demand was negatively related to the SA fresh oranger price relative to the price of fresh oranges from Israel, and positively related to lagged orange exports (consumer brand loyalty proxy). Export supply was positively related to lagged net export realisation price relative to domestic orange price, the SA fresh orange price in the UK relative to the SA fresh orange price in France, lagged exports (export orientation), and supply shocks. The relative price elasticity of export demand was inelastic in both the short- and long-run, indicating that Capespan International and other future exporters may need to diversify fresh orange exports to alternative export markets to increase real revenue. Long-run export supply was inelastic with respect to relative price, implying that if SA fresh orange exports are included in a Free Trade Agreement with the EU, they are unlikely to have a marked adverse affect on EU fresh orange producers.
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Jul 27, 2005
