Determinants of Milk and Milk Products Import in Eswatini: Time Series Analysis (1980-2023)

Abstract

Eswatini faces persistent dairy import dependency despite high per capita consumption and policy commitments to self-sufficiency. This study examined the determinants of milk and milk products imports in Eswatini from 1980 to 2023 using annual time series data from Eswatini Dairy Board (EDB), the World Bank, and the International Monetary Fund (IMF). The data were analyzed using Augmented Dickey-Fuller stationarity (ADF) tests, Autoregressive Distributed Lag (ARDL), Error Correction Model (ECM) and the Dynamic Ordinary Least Squares Model (DOLS). ADF tests confirmed mixed integration orders (I(0) and I(1)), validating the ARDL framework. The Bounds test established a long-run relationship. DOLS findings revealed that a 1% increase in population (INPOP) elevated milk imports by 0.15%, and a 1% real effective exchange rate (INREER) appreciation increased imports by 0.64% in the long run. Conversely, a 1% increase in domestic milk production (INDM) was associated with a 0.48% increase, suggesting a complementary dynamic, while a 1% increase in real GDP (INRGDP) decreased imports by 0.19%. Short-run analysis showed lagged domestic production (ΔINDM (-1)) raised imports by 0.83%, and a 1% lagged exchange rate depreciation (ΔINREER(-1)) reduced imports by 1.26%. The error correction term (ECT = -0.1657) confirmed significant annual market adjustment (16.57% correction). Recommendations include strengthening domestic production, strategic import management, aligning population growth with dairy supply, mitigating exchange rate volatility and investing in value chain infrastructure.