Influences of the free trade agreement between South Africa and the European Union on the South African fresh orange industry

Abstract

This paper evaluates the effects of the Free Trade Agreement (FTA) between South Africa and the European Union (EU) on the South African orange industry. Oranges account for ten percent of South African agricultural exports. The aggregate trade simulation model used here is designed on the programme STELLA, and consists of regional production models, a local market model, an export model and an exchange rate model. Results indicate that the FTA is expected to have small positive effects on both South African producers and consumers. This is caused by increasing real free-on-board prices and decreasing real local prices of oranges. Total area under oranges will increase more with the FT A, which thus results in a larger orange production too.