|Author:||Gillitt, C. G. ; Nieuwoudt, W. L. ; Backeberg, G. R.|
|Book Group Author:||NA|
Irrigation-using farmers (n=33) in the Lower Orange River (South Africa) were surveyed during October 2003 in order to study whether water marketing has promoted efficiency and to identify factors that affect future investment in irrigated farming. Econometric procedures (principal component and logit model) indicate that purchasers of water rights (1) produce lucrative export grapes and horticultural crops with relatively less raisin, wine or juice grapes and less field crops; (2) are more specialized in production; (3) have more livestock (probably a liquidity factor); and (4) have a less negative view of the five-year review period. The water market has facilitated a transfer of water use from relatively lower-value crops to relatively higher-value crops, and also promoted the use of more advanced irrigation. An investment model using ridge regression indicates that the following variables are associated with future investment in irrigated farming: expected profitability; risk perception; and risk aversion. Results confirm that farmers who are more risk averse invest less in the future as can be expected from theory. Policies that increase risk in agriculture will have a significant negative effect on future investment in irrigation. What is significant from the results is that irrigation-using farmers are highly risk averse (down side). Results also show that farmers who feel that water licences are not secure expect to invest less in the future. The latter effect is thus amplified as farmers appear to be highly risk averse. It argued that this has important policy implications, and measures should be taken to improve the perceived security of water licences. This could be achieved by keeping farmers more informed about the practical implications of the National Water Act (NWA) and specifically water licences.
|Pages:||363 - 382|
agricultural policy, crop production, efficiency, fieldcrops, grapes, horticultural crops, irrigated farming, irrigation,irrigation water, marketing, risk, specialized farming, surveys, waterallocation, water policy, South Africa, Vitis, Vitis vinifera, SouthernAfrica, Africa South of Sahara, Africa, Developing Countries, ThresholdCountries, Anglophone Africa, Commonwealth of Nations, Vitis,Vitidaceae, Rhamnales, dicotyledons, angiosperms, Spermatophyta, plants,Vitaceae, Agricultural Economics (EE110), Horticultural Economics(EE111) (New March 2000), Natural Resource Economics (EE115) (New March2000), Policy and Planning (EE120), Horticultural Crops (FF003) (NewMarch 2000), Field Crops (FF005) (New March 2000), Plant Production(FF100), Soil Water Management (Irrigation and Drainage) (JJ800)(Revised June 2002) [formerly Soil Water Management], Water Resources(PP200)