ANALYSING THE EFFECT OF DROUGHT REGIME CHANGES ON THE NAMIBIAN LIVESTOCK OUTPUT SUPPLY GROWTH: A SWITCHING REGRESSION APPROACH
03 Sep 2021
Manager, Big Data Analytics ATPI, Dr David Uchezuba
The research characterises the nature of the long-term trend in livestock market supply growth and its relation to the evolution of a reoccurring drought. The assumption is that livestock market supply is highly dependent on the climatic state of drought resulting in two distinct growth rate phases. This implies that livestock supply tends to correspond to a state of high and low swings during drought episodes. Therefore, the evolution of the time path of market supply growth rate was analysed using regime-switching models to estimate the unconditional state-dependent mean of the livestock market supply growth.
The cattle, sheep and goat livestock industries were considered in the analysis. The result shows that the climatic drought state period corresponds to high market growth rates whereas, low market growth was associated with normal moderate rainfall periods. The process was found to be sticky around transitioning from high drought state to a low state. An average state duration of six years was found in the cattle industry. However, a different state duration was found for the sheep and goat industry. This is attributed to the policy-induced market restrictions in the small stock industry during the drought periods. The ability of the industry to restore equilibrium after an economic shock was found to be faster in the sheep and goat industry than in the cattle industry, signifying the ease to restock the small stock industry compared to the large stock industry.
The research shows that drought is a persistent phenomenon in Namibia, therefore, mitigation, adaptation and vulnerability strategies should have long time planning and implementation horizons. Drought policy and relief strategies should be guided by the
ex-ante sign and magnitude of the conditional mean of livestock market supplies, the transition probabilities, persistence, and the duration of drought as depicted in this article.
Author: Dr David Uchezuba (Agricultural Economist), Manager: Big Data Analytics, Agricultural Trade Policy Institute (ATPI), Department of Agriculture and Natural Resources Sciences, Namibia University of Science and Technology, Windhoek, Namibia.
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