Agricultural supply response for sunflower in South Africa (1947–2016): The partial Nerlovian framework approach

Abstract

The study estimates sunflower supply response in South Africa using time series data from 1947 to 2016, and modelled through the Nerlovian Partial Adjustment approach. The shortand long-run price elasticities of 0.238 and 0.313 respectively, suggest that farmers do not easily adjust acreage devoted to sunflower given price changes, which is an indicator of the influence of other non-price factors. An adjustment coefficient of 0.272 estimates that the time taken to adjust from the actual acreage level to the desired acreage level is slow, at 27% per year. The estimated elasticities, though inelastic, provide some scope for using a pricing policy, as well as integrating non-market factors, to influence supply of sunflower that can reduce the country's dependence on imports, as well as sustain the industry. This would facilitate decisionmaking of sunflower producers to spearhead internal and external adjustment processes. The study contributes to a growing body of literature on agricultural supply response due to economic and non-economic supply determinants, thus providing evidence-based macroeconomic tools towards agricultural policy-making and reform process.

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