Deregulation in the marketing of agricultural products

In the past, the state-controlled prices, and marketing channels and processes via the Marketing Act Marketing channels have been liberalised recently and are now left to the initiative and entrepreneurship of the farmers, producer organisations and cooperatives. As a result, there is a much greater demand for agricultural economists to take part in the marketing decisions of the farmers' products. Decisions must be made as to which products to produce, where to produce them when to produce them, how and in what form to produce them, through whom to market them and at which price they should be sold.

The importance of the agricultural economist's expertise is not only becoming apparent to farmers, but numerous businesses that process agricultural products and do their own marketing for their products have also discovered the value of agricultural economists in managing the purchase of agricultural commodities and promoting the marketing of their own processed products. The abolition of marketing boards has led to unpredictability in the supply and prices of agricultural products, and this means that various new aspects have to be considered when purchasing or planning to purchase unprocessed products.

The deregulation has also made South Africa part of the international agricultural world with its complex trading systems. One exciting development is the futures market, where commodity futures are traded. These contracts can be bought and sold in a manner similar to trading shares on the Stock Exchange. Farmers, processors, importers and exporters can hedge themselves against any unfavourable changes in prices and exchange rates. Other forms of market development have given rise to similar opportunities and challenges. An increasing number of agricultural economists are becoming involved in these kinds of activities in South Africa. In this regard, we are quickly catching up with the advanced East, Australia, North America and Western Europe.

Internationalisation

Farmers, agribusinesses and financiers cannot achieve success without keeping up with international agricultural trends. It is also essential to stay informed of the developing markets, to identify their potential and make use of them. For example, the Indian market is growing quickly and is already as big as those in Western Europe. What opportunities, problems and challenges do this pose for the South African food and fibre industry? In the future, local prices, production and cultivation patterns are going to be determined, to a large extent, by international trends. The greater freedom of world trade will mean that it is important to stay competitive. Efficiency and productivity will be of utmost importance. The agricultural economist must, therefore, train people in the most economical use of production factors. Producer organisations, co-operatives, and agri-businesses are depending more and more on their agricultural economists to ensure that they are favourably placed with regards to the changing international trends. Needless to say, this is a vital role.

New markets

The South African market is changing rapidly as a result of a number of reasons, for example, urbanisation, changes in employment, incomes, communication. The market is not homogeneous but comprises a variety of market segments that require different approaches if the producer, processor and marketer want to achieve the best results. Such investigations and the compilations of marketing plans are important tasks, where agricultural economists are once again involved.

The international markets are always changing, and only those that can forecast problems, identify opportunities and act accordingly, will come out on top. Agricultural economists are being used increasingly in this role.

New technology

The researchers of the world, including those working in South Africa, are constantly opening the doors to new opportunities. There are new crop varieties that are higher yielding, but perhaps taste slightly different. Some are more stable than others. There are new options in processing, new methods, and different end results. Trade methods are constantly changing; electronic trading is becoming more popular.

No farming operation, processor or trader can simply ignore such developments, nor can they rush in and take chances in implementing new, unproved formulas. The applicability of breakthroughs must be tested under the relevant circumstances, and sometimes the new technology needs adaptation. One has to consider the costs, the financing and the effects on income. The determination of the expected economic returns of new technology and its feasibility within the particular operation is an exciting and challenging task for agricultural economists.

Large number of emerging farmers

A major challenge confronting the agricultural community is how to develop policies and strategies that will help previously disadvantaged farmers to benefit from the more liberalised, deregulated market for agricultural products. Much of the research effort on the part of agricultural economists working in South African universities is focused on identifying the needs of this new, emerging group of farmers and developing support programmes for credit, production inputs and marketing processes for these farmers.One of the traditional tasks of the agricultural economist is to provide farmers with economic and financial advice. Furthermore, agricultural economists guide the farmer as to which would be the most advantageous combination of the different production factors in his operation, so as to be able to produce at the lowest possible costs. This will and should always be one of the most important tasks of agricultural economists. They must also be aware of which product might hold the best advantages, and where and how it should be marketed. The expertise of the agricultural economist will become more and more important to assist emerging farmers to become successful, given a large number of new entrants into the commercial agricultural sector as a result of the land reform processes. They will play a major role in feasibility studies of projects and programmes of developing farmers, and this area poses significant challenges to the agricultural economist.

Changing workers' environment

In the farming sector as well as the industries related to farming, the arrangements and conditions between employers and employees are changing rapidly. Production and management methods will have to be adjusted accordingly, within this new framework. Once again the agricultural economist plays an important role under these circumstances, as his/her advice and management knowledge can assist both parties throughout this transition.

Increasing importance of environmental aspects in economic planning

The agricultural economist is traditionally concerned with the economic application of our scarce resources, such as land and water. With the stronger emphasis on sustainable development and the determination of development projects' effects on the environment, we are relying more on the expertise of the agricultural economist. The study field of agricultural economics has developed to include relevant courses on resource and environmental economics, given the need for specialised knowledge about the impact of economic aspects on the environment.