ESTIMATION OF SORGHUM SUPPLY ELASTICITY IN SOUTH AFRICA
Abstract
This study aims to estimate sorghum supply elasticity in South Africa. The study used time series data spanning from 1998 to 2016, obtained from the abstracts of agricultural statistics. The Variance Error Correction Model was employed; the study used two dependent variables, these being area and yield response functions. The results have shown that the area response function was found to be a robust model as most of the variables were significant, responsive and elastic. Maize price, as a competing crop for sorghum, negatively influenced the area allocation; however, the remaining variables
had a positive impact on area allocation in the long-run. The yield response function was found not to be robust and hence not adopted. It was therefore concluded that the area response function is more robust than the yield response function, hence sorghum production has shown more response to area
allocation than yield. The findings further indicated that the error correction term for area and for the yield response function was –1.55 and –1.30, respectively. This indicated that the two models were able to revert to equilibrium. Based on the findings, the study recommends that amongst other methods to enhance sorghum output, producers could use improved varieties or hybrids, as this action would result in allocation of more land to sorghum production, following price change.
Keywords
sorghum; supply; elasticity; error correction model; South Africa
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Agricultural Economics Programme, University of Limpopo, Polokwane, 0727 South Africa
https://orcid.org/0000-0003-2962-1081
University of Limpopo South Africa
University of Limpopo South Africa
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