Doctoral Degrees (Agricultural Economics)
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Browsing Doctoral Degrees (Agricultural Economics) by Author "Groenewald, J. A."
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Item Open Access Capacity building strategies for sustainability farming SMMEs in South Africa(University of the Free State, 2009-11) Mmbengwa, Victor Mbulaheni; Groenewald, J. A.; Van Schalkwyk, H. D.English: South Africa’s land reform programme is faced with many challenges associated with its sustainability. It is widely believed that one of the major causes of the collapse/failure of farming SMMEs is lack of capacity in many aspects of running farming as a business. Critical success factors for these SMMEs are capacity, market accessibility, business management skills, effective extension services, adequate support programmes as well as adequate financial injection. Therefore, any entrepreneur in this business must have skills in both marketing and management, coupled with adequate support systems. To address the above-mentioned problems, a comprehensive study of farming small, micro, medium enterprises (SMMEs), pre- and post-settlement support, the involvement of youth and women, accessibility of markets, linkages, small, micro, medium enterprises (SMMEs’) institutional structures and other support services, was carried out. An intensive desktop study which included amongst others reports from government, consulting agencies, development and training institutions was used. Workshops with experts, farming stakeholders, agricultural economics departments from universities, government officials and farming small, micro, medium enterprises (SMMEs) were conducted. Participatory action research methodologies were employed during workshop sessions. Empirical evidences were drawn from eighteen case studies and surveys conducted by both Land Bank and National Department of Agriculture. Various tools of analysis were used to analyse different data sets used in this study. For instance, case studies used narrative coupled with strength, success, weakness, failure, opportunities and threats (SSWFOT) and ridge regression (RR). The data set from the Land Bank survey was analysed using GENMOD, MEAN, frequency (FREQ) and multiple logistic regression models. The data set from National Department of agriculture was analysed using frequency (FREQ) and multiple regression analysis. Case studies revealed that micro and small scale farming enterprise severely lack important key success indicators such as sustainable markets, input supply; increased income, sustainable production, skills development and professional business operation. On the contrary, it was found that medium sized enterprises have adequate levels of important key success factors that are lacking in micro and small scale farming enterprise, but also shows a need to improve on sustainable markets and input supply. These cases also revealed that financial capacity depends on marketing capacity. Consequently unit increases in marketing capacity have a corresponding increase in financial returns. The Land Bank survey revealed that perceptions of emerging farmers portray a lack of capacity and exposure. It also showed that skills, financial support, and infrastructure are important requisites for sustainable farming small, micro, medium enterprises (SMMEs). Extension support and sustainable production were found to be crucial for farming success in the emerging farming sector. It was also found that lack of understanding of the importance of formal markets; benefit of training and extension support may be the main contributors to the unsustainable nature of the emerging farming sector in South Africa. Therefore, this sector requires access to formal markets, extension support services and training in order to be profitable. The National Department of Agriculture data set revealed that there are many more micro enterprises compared to their small and medium counterparts. In addition, women are most beneficiaries for agrarian development; their involvement surpasses that of men, youths and disabled people. The results also indicate the training received to be insufficient, with much of the training being inappropriate for farming. There is a need to devise strategies to convert micro enterprises into small and medium enterprises with since a high conversion rate to small and medium levels can help to reduce poverty, unemployment and above all increase women’s empowerment and thereby improving the socio-economic impact of these farming enterprises. The results have good implications for the present and future owners of small, micro, medium farming enterprises. The study has formulated comprehensive and sustainable strategies as a guideline for agribusiness entrepreneurs, with the overall objective of eradicating poverty in rural areas and commonages through increased agricultural production.Item Open Access Economic analysis of land use: the case of East Hararghe administrative zone in Ethiopia(University of the Free State, 2004-02) Worseme, Hassen Ibrahim; Viljoen, M. F.; Groenewald, J. A.This study aimed at developing and applying a methodology for land use analysis through looking for a form of land use that provides sufficient and rising incomes to the agricultural population of East Hararghe Administrative Zone, and at the same time maintains the productive capacity as well as other environmental services of the land resources of the zone. The study starts with the elaboration of the problem statement, objectives, hypothesis and significance of the study. This is followed by the explanation of the approaches pursued in conducting the present study. The study area is also thoroughly described. The problem statement and the objectives of the study indicate that there exists a huge gap between zonal crop production and the population growth despite a substantial expansion of eropland in the zone. This implies the existence of numerous set backs in the land use system of the zone and necessitated a close investigation of the land use systems of the farming community of the study area in order to come up with an improved and efficient land use pattern that will overcome the acute land shortages as compared to the everincreasing population of East Hararghe Administrative Zone. The most important findings and results of this study are based on the literature study; the development of the research methodology; the description of the surveyed data that is obtained through questionnaire survey; and the analysis of the land use model of the study area. Land resource and land use was assessed from a global point of view. The problems that are associated with the use of the land resource in the developing countries were investigated. An extensive study was also carried out to introduce the agricultural sector of Ethiopia. The agricultural sector in Ethiopia is almost entirely dominated by small-scale, resource-poor farmers who produce 90 to 95 percent of all agricultural outputs. The role of economics within land use analysis is also reviewed. This role is elaborated through the discussion of a skeletal model of the agricultural sector; the concepts of regional agricultural planning, land evaluation and farming system analysis; the concepts of resource economics and land economics; and the issues of property rights and sustainable development. A linear programming model for the economic appraisal of the land use in the study area was presented following the description of the conceptual framework of the model. The different parts of the zonal linear programming model were discussed under the headings of objectives, variables and constraints. This was followed by the general formulation of the land use model of the zone called EASTHAR. The matrix of the model includes three sub-matrices each representing a different farm type. The farm types are distinguished on the basis of agro-ecological classification of the surveyed districts and peasant associations. The EASTHAR model was analyzed by using the GAMS software after it was extensively written in the GAMS programming language. Three land use scenarios are analysed to assess the effects of changes in factors that influence land use decisions and whether incomes of farms (fan increase through an improved land use. The results of the base scenario indicated that the incomes of farms can increase with improved land use pattern as the value of the objective function, or the economic surplus, is positive for the entire zone and for the different farm types. The model showed, how land has to be assigned to the different crops at zonal level and at each farm types level for maximizing farm incomes under proper and improved resource use. The most important staple food crops of the population of the zone are all incorporated in the optimum land use and the potential for specialization that can exist among the different farm types of the zone has also been indicated. A comparison of the results of the base scenario with the results of an opportunity cost scenario represented an important outcome of the model. The zonal economic surplus in the opportunity cost scenario is 33% lower than the base scenario. The valuation of the on-farm household labour thus has a negative effect on the incomes of the farm households. However, land use as well as labour, current input and draft power uses did not change from that of the base scenario. This shows that the mere valuation of the onfarm household labour will not automatically disturb land use decisions. An interesting outcome was observed when comparing the results of the base scenario with the results of a scenario of an assumed drought condition. The drought case scenario analyzes the consequences for land use in case drought occurs in the study area. Drought is a recurring problem of Ethiopians especially the rural population. The results of the analysis indicated that almost every land use defining variable was subject to change when drought occurs. According to these results, in a subsistence agriculture which is solely rain fed, a decline in the annual rainfall will undoubtedly lead to large reductions in the income of the farming population. Based on the results of the study important policy recommendations were outlined. The implementation of the envisaged improved land use patterns can have important impact in altering the poor income earning capacity of the farm households in the zone and have a better environmental impact. For farmers to produce the amount of grains required for home consumption and ensure their food security, there is a need to subsidize them to the amount of their lost gross margins during drought periods. Farmers must also be encouraged to save and have financial reserves for unforeseen adverse production conditions through the establishment of appropriate saving institutions to limit the subsidy. It may also be necessary for the government to approach donors to contribute to the subsidy, as this contribution will hopefully be lower than the cost of food aid in monetary terms. However, the dependence on food aid cannot be a preferable alternative and to supply enough food to the growing population of the region more food needs to be produced by the zone itself. This is because although other zones can produce food cheaply, for subsistence farmers who are producing crops mainly for home consumption (and not for the market) it is extremely hard (if not impossible) to engage in trade and rely on outputs produced in other zones.Item Open Access The economics of climate change adaptation strategies in the Ceres Region, Western Cape(University of the Free State, 2013-07) Ogundeji, Abiodun Akintunde; Groenewald, J. A.; Jordaan, H.The Western Cape (WC) region of South Africa, with its Mediterranean-type climate and predominantly winter rainfall, has been identified as highly vulnerable to projected climate change within both global and national contexts. The province will experience increasing temperatures and reductions in water supply in the future and these have to be adequately prepared for in order to mitigate these impacts. The aim of this study is to develop and apply an integrated approach to quantify the economic impact of climate change on the agriculture and water resource sectors of Ceres, in Western Cape, South Africa. Although researchers have been able, to model, to a certain extent, the impact of climate change on the farm sector using integrated methodology, they have not yet included the impact of future change in crop water requirements as well as the impact of accumulated chill units. So currently, we do not have empirical knowledge of how the current and future change in crop water requirements and accumulated chill units will affect the farm structure. Thus in order to accurately quantify the impacts of different adaptation strategies at farm level, the existing models need to be adjusted and methodology developed to incorporate the impact of temperature. SAPWAT was used to estimate crop water requirements for the base climate (1971-1990) and for the future climate (2046-2065). Results show that crop water requirements will increase as a result of projected climate change using the A2 climate change scenario. The water requirements for drip are less than that of Sprinkler, because of efficiency differences in the irrigation systems. The drip irrigation system is said to be a more efficient irrigation technology. It was also confirmed that future crop water requirements for drip irrigation system is still lower than the current water requirement under sprinkler. Accordingly, despite substantial increase in water requirements, under drip system, the total water requirement will be less under drip system compared to sprinkler system. The Utah model (Richardson) and Daily positive Utah (Infruitec) chill unit accumulation model are used to test the hypothesis that winter chill will in Ceres reduce with climate change. Results from both models confirmed that climate change will result in reduction of future accumulation of chill units. The impact of climate change (projected temperature increase) on chill unit accumulation is more pronounced using Richardson model compared to Infruitec model. The result shows that it might be difficult to produce some fruit crops in the future in the Ceres region owing to insufficient chill that would be accumulated in the future. This will likely require growers’ transition to different species or cultivars or develop management practices (planting density, pruning practices and irrigation regime) that can help overcome shortages in winter chill. Results from crop water and chill unit models were incorporated into other models to develop the Ceres Dynamic Integrated Model. The model was used to simulate various climate change scenarios, and the results correspond with what can be expected from the prediction of impact on agriculture. The impact of climate change has resulted in changes in area, water use and welfare of the farmers in the future climate. Three different sets of adaptation strategies were evaluated using the developed integrated model. These three adaptation strategies include; availability of farm dam and water right; improving water use efficiency; and increase in water tariffs. Farm dam capacity and winter water allocation seems to be the best adaptation strategy based on the results from this research. Giving farmers farm dam capacity alone, however will not improve the situation of the farmers, they also need water rights. Caution should be taken when considering such an adaptation option. Farm dam is a capital intensive infrastructure and if the farm dams don’t fill up, it may worsen the situation of farmers since the high capital cost and resulting high unit cost of farm dam water will increase their financial vulnerability. Thus, giving farmers farm dam capacity and winter water right could be a good adaptation strategy but other issues surrounding its suitability should be considered. Increasing water use efficiency as an adaptation option according to analysis done in this study is also a good adaptation option for the Ceres farmers. Improved water management practices that increase the efficiency of irrigation water use may provide a significant adaptation potential under future climate change. Using water more efficiently improves the welfare of the farmers and also saves water for optimal irrigation usage. The model results indicate that increasing water tariffs as an adaptation strategy to climate change is less effective in the agricultural sector and can even result in a negative impact since farmers grow deciduous fruit crops which often use even more water irrespective of the tariff regime. Again, the price elasticity of demand for agricultural water is very inelastic since they cannot simply stop irrigating or change to deficit irrigation. Therefore, using water more efficiently will be the best adaptation option based on the analysis done in this thesis to help the Ceres farmers cope with the future projected impact of climate change. Overall, a change in the farm profile in Ceres can be expected as a result of climate change and adaptation thereto.Item Open Access The potential impact of trade on the economy of Lesotho(University of the Free State, 2007-05) Bahta, Yonas Tesfamariam; Groenewald, J. A.; van Schalkwyk, H. D.The potential impact of trade on the economy of Lesotho was assessed using the Lesotho Social Accounting Matrix (SAM) 2000 as a data base to construct a Computable General Equilibrium (CGE) model, to design trade policy scenarios, and to simulate the impact of trade policy scenarios on the Lesotho economy Since the Lesotho SAM was unbalanced, it was necessary to balance the initial matrix, using the cross-entropy optimization procedure with the aid of GAMS software. Four simulation sets were carried out. Results from two sets (duty-free access (DFA) and a +10% increase in world prices) indicate significantly increased textile exports and decreased prices for imported commodities. DFA will also be associated with increased textile imports, while a +10% increase in world prices will lead to increased crop imports. Demand and supply prices of textile commodities produced and sold domestically will decrease, as will composite goods prices in the textile sector. Average output price of textiles will decrease with DFA and with a 10% increase in world prices; the aggregated marketed commodity quantity for textiles will increase. Output prices of fruit and vegetable processing and intermediate aggregate inputs for the textile sector decrease with DFA. An increase of 10% in world prices will lead to increased water service prices. The textile sector will experience increased value added prices in both scenarios. Gross domestic product (GDP) for the textile sector will increase significantly. Lesotho will gain in welfare, measured in terms of equivalent variation (EV). Effects on labour categories depend on changes in productive activities. In the textile sector, labour demand, labour income, and capital income will increase significantly. Lesotho’s net commodity exports and gross government expenditure will also increase. Erosion of existing preferential access (EEP) and common external tariffs for non-SACU member states (CET) will reduce the quantity of textile products exported; with EEP, the price of imported textiles will increase and the quantity decrease. CET will have similar effects on the skins and hides sector. Demand and supply prices of textile commodities produced and sold domestically (with EEP) and pharmaceutical products (with CET) will increase. Prices of composite textile goods will increase slightly. Average output price for textiles at EEP and pharmaceutical products at CET will increase, and the aggregated marketed commodity quantity for the textile sector will decrease in both scenarios. With EEP, prices of output and intermediate aggregate outputs of textiles and micro industry outputs will increase. CET effects will be smaller. The textile sector at EEP and accommodation-catering services at CET will experience decreased prices of value added. Gross domestic product (GDP) of the textile sector will decrease. Welfare or equivalent variation (EV) will decline. Employment in the textile sector will decline with a concomitantly small decrease in labour and capital income. The EEP regime will lead to decreased total government consumption expenditure, while CET will cause a slight increase; this translates into decreased net commodity imports. Effects vary among economic sectors. Performance in U.S. markets indicates that Lesotho’s textile exporters have been competitive under MFA/ AGOA arrangements. This competitiveness can, however, be jeopardized by lower costs in some Asian countries. The policy makers should develop permanent comparative advantage to avoid the risk of losses when temporary tariff preferences are discontinued. Lesotho’s export trade is highly concentrated, both in terms of products (textiles) and markets. Diversification of products and markets is prerequisite for avoiding failure and for sustainable development of the country; considerable manufacturing potential for export diversification exists in furniture, bricks, sandstone and ceramics, wool and mohair products, pharmaceutical products, and the recently revitalised diamond industry. Export trade development and market penetration to non-US destinations should receive attention. In this process, the government should strengthen the capacity of the private sector to deal effectively with rapid change and growing competition by means of, for example, knowledge dissemination, technological transfers, and negotiations for improved market access for textile and other potential export products.