Effects of weather on productivity growth of South African table grape industry: a comparison between index approaches

Abstract

AbstractThe current literature on productivity growth analysis in South Africa often overlooks two key factors, namely the weather effects and pollution-related issues. This study aims to address the first of these gaps by utilising a decade’s worth of panel data from the Table grape industry in the country. We conduct a comparison between Färe-Primont Index that ignores environmental change and statistical noise, and; Proper Index. The latter offers a measure of sustainable productivity, decomposing into technical change, technical efficiency, scale efficiency, mix efficiency, environmental change (weather effects), and statistical noise. In simpler terms, the Färe-Primont Index results in conventional growth (TFP), while the Proper Index leads to sustainable TFPI growth (TFPI). Our findings reveal that ignoring weather effects and statistical noise leads to an increase in TFP. However, accounting for these factors results in a decline in TFPI. Despite this decline, weather effects had an average 0.11% positive impact on TFPI growth. We conclude that weather effects posed a lesser challenge to TFPI growth during the observed period compared to technical change (−4.80%) and scale-mix inefficiency (−0.76%). Therefore, we recommend that the table grape industry prioritise investment in research and innovation as a strategy to improve technical change and improve infrastructure such as irrigation systems, roads, and storage facilities to reduce costs, increase the scale of production, and thus improve scale efficiency. Government policies, such as funding for technology adoption and encouraging diversification, can improve mix efficiency. Future studies should strive to address the second gap in the literature by focusing on pollution-related issues.