Doctoral Degrees (Agricultural Economics)
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Item Open Access Die gebruikswaarde van besluitnemingsondersteuningsmodelle vir trekkervervanging in die Vrystaat(University of the Free State, 2000-11) Coetzee, Koos; Viljoen, M. F.; Heyns, A.English: The replacement of farm tractors and availability of decision support models for assisting farmers in taking replacement decisions were studied. A literature survey, postal survey of farmers and interviews with various persons were used to gain information on the available replacement models, replacement policies, information availability and farmers' decision making processes. This information was used to model the replacement decision and develop different decision support systems. Different replacement optimising techniques were studied. Minimum-cost models are unpractical for modelling replacement decisions. An extended version of the minimum discounted cost model can be used as a decision support model for advising farmers. A simulation model for establishing replacement strategies was also developed and used to determine optimal replacement strategies. Both models indicate an economic life for tractors in excess of 10 years. An increase in the tax rate results in replacement at an earlier life than with lower tax rates.Item Open Access A quantitative and qualitative analysis of the South African broiler industry(University of the Free State, 2017-06) Joubert, Jan Christoffel Nel; Willemse, Johan; Strydom, DirkThe South African broiler sector is the largest agricultural sub-sector. It contributed R37.2 billion or 16.5 % to the total agricultural sector in the 2014/15 season (DAFF, 2016:76). The industry produced ± 962 million broilers in 2014 and ± 1 003 million in 2015 (SAPA, 2016b). The Department of Agricultural Forestry and Fisheries (2015:69) reported per capita consumption of 16,11 kg in 1993/94 and 38,5 kg in 2013/14 season, which constitutes a growth of 140 % over the past 20 years. The Bureau for Food and Agricultural Policy (BFAP) estimated that consumption would increase by a further 38 % from 2014 to 2024 (BFAP, 2015:74). Chicken meat remains an affordable protein, as against pork and beef (Lovell, 2014a:12). The industry employs ± 10% of the total agricultural workforce (IDC, 2016:66). From a supply and demand perspective, South Africa consumed 2 127 389 tonnes of broiler meat in 2015 (South African Poultry Association (SAPA), 2016a: 1). The local production by commercial and subsistence farmers, together with imports are as follows. Commercial farmers produced 1 720 155 tonnes in 2015. Importers, retailers, and wholesalers imported 457 374 tonnes. Subsistence producers produced 69 334 tonnes. Live sales from depleted stock comprised 71 885 tonnes, and exports formed 65 815 tonnes (SAPA, 2016a: 5). The trade in broiler meat of certain cuts and mechanically deboned meat (MDM) is a vibrant and active market. The value of imports increased by 139 % from R1,5 billion in 2010 to R3,6 billion in 2015 (SARS, 2016). World broiler meat prices decreased between 30 % and 40 % from 2014 to 2016 (Unnerbary, 2016). The northern hemisphere prefers ‘white’ chicken meat (mostly breast meat). Because of this preference, research and development in the USA and EU poultry industries have resulted in larger chickens produced. This phenomenon results in surplus production in the specific markets of brown meat (drumsticks and thighs), which needs to be sold in other global markets. Increased imports into the South African market were a result of this trend, while trade agreements with the EU and the USA aggravated the position in South Africa for the local producers (by allowing increased import volumes into the domestic market). The trading environment also changed for the USA when Russia closed its borders to imports from the USA. Brazil is the biggest trader of broiler meat in the world, with the USA as the biggest producer of chicken meat in the world. Both these countries have competitive supporting industries regarding maize and soybeans with much higher yields than South African. The local poultry industry contributes significantly towards the agricultural sector and food security in South Africa. Government strives to utilise the broiler industry as a start-up business for small-scale farmers entering farming. However, producing broiler meat for international markets, and on a competitive basis, requires high managerial and technical skills. In the South African case, the producer also must need to manage relative volatile feed prices, compared with international competitors. The two major ingredients for feed in the South African poultry industry are maize and soybeans, and both the prices of these commodities are relatively more volatile in South Africa, compared with international competitors. The movement of feed prices in the industry creates much uncertainty, which can be attributed to a few factors. South Africa experiences a very highly volatile maize market. The price of maize can swing from import parity (in a drought situation) to export parity, in one season. This swing can easily be more than R1 000/ton within one production season. A volatile South African exchange rate also adds to the total feed price volatility. South Africa does not produce enough soybeans or soybean meal and need to import the shortage. Local soybean production constitutes to about 30 to 40 % of total meal usage, although the local production varies, depending on weather patterns. This research did not focus on the production and the substitution effect of maize and soybeans. However, the comparative advantage of the broiler industry could improve if South Africa can produce enough soybean meal for its demand. It can also stabilise the feed price. The goal of this study is to analyse the South African chicken meat market to determine if production can be justified regarding competitive and comparative advantage. It is important to note that the comparative advantage is measured regarding the total international market. The researcher used various methods to analyse the industry and to identify the constraining and enhancing factors in the South African broiler value chain, amongst other things. The study also evaluates the advantage and benefit of protecting the sector against large and relatively cheap imports. The local constraining factors were identified to make the industry internationally competitive. The researcher employed various methodologies to quantify and understand the relationships of the broilers industry in the wider South African economic context. The results of this research will assist policy makers to formulate a more balanced policy whilst considering both the consumer and the producers in finding an acceptable balance in the interest of the broader South African economy.Item Open Access The profitability of precision agriculture in the Bothaville district(University of the Free State, 2006-11) Maine, Ntsikane; Nell, W. T.; Lowenbert-DeBoer, J.; Gudeta, Z.English: Variable-rate application technology based on soil potential and other field attributes is gradually replacing the standard rates of fertilizer application for individual cropping systems. In South Africa, differential application of inputs in cash crop production is mainly concerned with fertilizer and lime, and this indicates the importance of these inputs. This study evaluates the maize yield response to variable-rate (VR) application of nitrogen (N), and estimates the profitability of VR application of N relative to single-rate (SR) application under South African conditions. Data was collected from an experimental field of 104 ha on a farm in the Bothaville district. A strip-plot design consisting of 180 strips was used for this on-farm research experiment. This design involved treatments that ran in the same direction across the field as planting and harvesting. The objectives were to determine the maize crop response functions under different N rates, to estimate optimal N rates for different management zones in different years, and to assess profit estimates using ordinary least squares (OLS) and spatial error (SER) models. The methodology involves modelling maize yield response functions for N. A Baseline regression model that analyses variable-rate technology as a package was used, while three sensitivity tests were used to determine the consistency of the estimates. The results of this study indicate that there is a significant variation in maize yield response to the applied N on the basis of the application method used. Profit analysis resulting from the application strategies indicates that, in general, VR results in higher farming profits than SR. The analysis indicates that yield obtained from VR strategy can compensate additional costs incurred with the investment in VR technology. This finding is consistent in all the models. It has been established that yield response to fertilizer depends on soil conditions such as the effective soil depth, which has a positive effect on yield. Yield response also differs among management zones. Differences were observed between the results obtained from the OLS models and the results obtained with the SER models, and this has an impact on decision-making. The importance of taking spatial effects into account came to the fore, as inaccurate results can be obtained with methodologies that ignore the spatial dependencies in the analysis of yield monitor data.Item Open Access Transfer and adoption of technology: the case of sheep and goat farmers in Qwaqwa(University of the Free State, 1998-12) Nell, Wilhelm Thomas; Van Schalkwyk, H. D.; Sanders, J. H.; Schwalbach, L.English: It is evident from the literature studied that very little is known about the characteristics and farm level factors (predictors) contributing to or affecting the adoption of livestock veterinary technologies of small ruminant (sheep and goat) farmers in former homelands and rural areas of South Africa. This study contributes by identifying and evaluating critical factors (variables) that predict the transfer, adoption and utilisation of livestock veterinary technologies by small ruminant farmers in Qwaqwa, a former homeland of South Africa. A wide selection of variables had to be tested in this study due to the absence of previous studies. Logit and multinomial logit models are used to select predictors of adoption of five different livestock veterinary technologies. Of the 34 possible predictors, 20 were selected in one or more of the seven different logit models. The suspension of veterinary surgeon services provided by the government at sheering sheds and farmer days before 1994, contributed to an increase in the costs of services, inputs and information. Together with the deterioration of infrastructure and institutions, this caused a collapse of the livestock veterinary technology transfer process in Qwaqwa. Farmers who want to adopt this technology (potential adopters), cannot do so because it became too expensive (increased transaction costs). When the assumption of elastic supply of services or inputs, and increased transport costs due to the farm's location is violated (traditional definition of adoption - potential adopters grouped with non-adopters), potentially misleading conclusions can be made regarding the significance of variables (predictors) which contribute to technology adoption. It is for this reason that an adapted definition of adoption (potential adopters grouped with adopters) should be used in future research. The results of medication technology indicate that grouping of livestock medication is essential if research on the characteristics of farmers using these technologies have to be estimated. The fact that former homeland farmers react on what they see when it comes to usage of veterinary medication technologies, making it more likely for them to adopt therapeutic medication for treatment (external, internal remedies and antibiotics) rather than prophylactic medication for prevention (vaccines), is evident throughout this study. Vaccine technology showed the lowest adoption level of the four medication groups studied. The high adoption rates of external parasite remedies (no non-adopters) and internal parasite remedies (two non-adopters) confirm this conclusion. However, there is a severe lack of basic knowledge amongst farmers on the correct application of these remedies as the majority (86%) of the farmers applied these remedies incorrectly. The most important predictors of the adoption of antibiotics is access to roads. This medication technology is urgently needed when an animal is sick and access to roads decreases the cost of obtaining the drug. Small ruminant farmers in this study tend not to be full adopters of all the different livestock veterinary technologies simultaneously. The fact that only 20 per cent of the farmers were adopters of veterinary surgeon services as well as full adopters of external parasite remedies and partial adopters of internal parasite remedies, antibiotics and vaccines, confirms this conclusion. The efficiency of the present extension services in Qwaqwa on veterinary livestock technologies is very poor. Extension visits did not emerge as a significant predictor of adoption of any of the livestock veterinary technologies. The reappointment of a state veterinary surgeon, the retraining of inexperienced extension officers, the improvement of infrastructure and the development of farmer-to-farmer extension programmes, using the sheering association chair persons and young, educated and progressive farmers, must receive the highest priority in agricultural policymaking. The implementation of an affordable minimum herd health prophylactic package can contribute to the correct adoption of medication technologies resulting in higher farming efficiency, better profits and contribute to the alleviation of poverty of former homelands and rural areas of South Africa.Item Open Access An economic analysis of salinity management with evolutionary algorithms in Vaalharts(University of the Free State, 2017-01) Haile, Berhane Okubay; Grové, Bennie; Barnard, Johan; Matthews, NicoletteThe main objective of this research was to develop a bio-economic salinity management model to evaluate the stochastic efficiency, water-use efficiencies and environmental impact of optimal irrigation-scheduling practices while taking cognisance of irrigation-water quality, soil conditions, irrigation-technology constraints, crops and stochastic weather. A bio-economic salinity management simulation model was developed in MATLAB through the integration of the Soil WAter Management Program (SWAMP), by combining electricity-cost calculations with enterprise budgets to evaluate the impact of current irrigation schedules used by irrigators. The resulting SWAMP-ECON model was linked to an evolutionary algorithm to determine the benefits of following an optimised irrigation-scheduling strategy for each field crop. The model was also extended to model inter-seasonal allocation of water between two consecutive crops grown on the same field, to evaluate changes in the irrigation schedule of the first crop to manage the impact of soil salinity on the second crop. Risk was included in the analyses through the use of a state-general characterisation, where decisions are made without any knowledge of which state will occur. The models were applied to a case study farm in Vaalharts Irrigation Scheme with a 30.1 ha centre-pivot irrigation-system. The farm is characterised by Bainsvlei soil type and a shallow water table close to or below the root zone. The scenarios considered to run the model were two water qualities (low and high), two irrigation-system delivery capacities (10 mm day-1 and 12 mm day-1), and three field crops (maize, wheat, and peas) with different salinity-tolerance levels. The field crops constitute the crops grown for intra-seasonal and one-year inter-seasonal applications. Stochastic efficiency, low water-use efficiencies and environmental-impact indicators were calculated to interpret results of irrigation-management options for achieving economic and environmental sustainability. The results show that the farmer's existing irrigation schedules for the field crops in the study were over-irrigation strategies characterised by low water-use efficiencies, which are the direct result of farmers ignoring the contribution of the shallow water table to crop water-use. Over-irrigation resulted in large amounts of drainage water releasing between 11 000 and 26 600 kg ha-1 of salt into the environment. Decreasing water quality increases the risk of failing to reach potential production levels of the more salt-sensitive crops (maize and peas), however, the impact on expected margin above specified costs was low. Peas is the most profitable enterprise, followed by maize, and then wheat. On average, the expected margin above specified costs for peas, maize, and wheat, respectively, is ZAR 448 370, ZAR 321 909 and ZAR 245 885. The conclusion is that the current irrigation strategy is inefficient, has a large impact on the environment and presents the opportunity to improve profitability through better irrigation-scheduling practices that acknowledge the contribution of the shallow water table. Results of the optimised irrigation schedules show significant increases in expected margin above specified costs, associated risk exposure, water-use efficiencies and water productivity, as well as decreases in environmental impact due to a reduction in the amount of salt leached (SL). The main contributing factor to the results is the fact that the amount of irrigation water could be reduced because the shallow water table contributed 40% to 62% to crop water-use evapotranspiration, depending on crop type, water quality, and irrigation-system delivery capacity scenario selected. The largest benefits were observed for the highly salt-tolerant crop (wheat), because no leaching was necessary to manage salt levels. Consequently, a large salt build-up in the soil was observed. Decreasing water quality, compared to good quality water, impacted more negatively on MAS, risk exposure and the extent of drainage losses by the more salt-sensitive crops. Irrigation-system delivery capacity did not affect water-application rates significantly, but the results show that it is easier to manage electricity costs with the larger capacity by using a time-of-use electricity tariff. The conclusion is that the benefit of an optimised irrigation strategy is considerable, though careful consideration should be given to the trade-off between decreasing water applications and increasing salinity levels in the soil. Results of the inter-seasonal optimised irrigation-scheduling strategy water-use show that the leaching needs to increase during the production of the first crop to reduce the starting soil-salinity level when the follow-up crop is planted, especially when the second crop is sensitive to high salinity levels. Low WUE, WP and profitability are the consequences, taking the follow-up crop into account. In conclusion, a risk-neutral farmer should only consider increasing the water applied to the first crop (e.g. maize) if the plan is to plant a salt-sensitive crop (e.g. peas) in the second season. In both the intra-seasonal and the inter-seasonal applications, a risk-averse decision-maker will use more irrigation water to reduce the variability of outcome. The main recommendation from this research is that alternative institutional arrangements should be considered to ensure that irrigators do not lose their water-use entitlements if the water that is not used is deemed a non-productive use. A scheme-level hydrology analysis is necessary to determine the impact on the water table if all water-users start mining the water table. Future research should focus on extending the model to include the long-term problem of salinity and enhancing the model to deal with state-specific applications of water to crops as new information becomes available to farmers about a state of nature.Item Open Access Investigation of key aspects for the successful marketing of cowpeas in Senegal(University of the Free State, 2005-04) Faye, Mbene Dieye; Jooste, André; Fulton, JoanDue to the lack of information on the factors that affect the marketing of cowpeas in Senegal, this study investigates key aspects for the successful marketing of cowpeas in Senegal. The contribution this study makes lies in the information it generates to empower role-players in the cowpea value chain to better understand (i) the demand relations of cowpeas in Senegal, (ii) the information needs of role-players and the extent to which markets are integrated, and (iii) for which characteristics of cowpea consumers are willing to pay premiums. An Almost Ideal Demand System (AIDS) model is applied to one period cross sectional data to estimate demand relations of cowpea's in Senegal. The own price elasticity of cowpea is -1.23 while its expenditure elasticity is 0.97 showing that cowpea is a normal necessity. A sample of 443 respondents was taken to determine the information needs of different role-players in the cowpea supply chain. Availability of price information on local and export markets are deemed vitally important by all role players. Information pertaining to quantities supplied and demanded, and buyers' preferences are not regarded by all role-players as equally important. The most appropriate mode to dissemination cowpea related information should depend on the accessibility of a particular mode by role-players. Bivariate correlation coefficients, co-integration tests, Granger Causality tests and Ravallion's model are used to investigate level of market integration. The results show that cowpea markets as a whole are not integrated. This is not a surprising result since it can be linked to the general lack of market information. The influence of cowpea characteristics on cowpea prices is analyzed with a hedonic pricing model. The results show that large grain size and sugar contents are characteristics for which consumers are willing to pay premiums in all markets. The implication of the results of this study has several dimensions, i.e. (i) roleplayers in the cowpea supply chain now has information to guide pricing strategies, (ii) changes in expenditures on cowpeas can be properly discounted in marketing strategies, (iii) interventions can be designed to address the needs of information users and to address the non-integrated nature of cowpeas markets, and (iv) research programs and role-players should focus their research and marketing activities on those characteristics for which consumers are willing to pay premiums.Item Open Access Economic implications of trade liberalisation on the South African red meat industry(University of the Free State, 2001-05) Jooste, André; Van Schalkwyk, Herman; Von Lampe, MartinEnglish: Successful agricultural trade relations have to a large extent become a function of how well countries are able to measure the possible impact of increased trade liberalisation. Many studies worldwide have attempted to gauge the impact of agricultural trade liberalisation on world production, consumption, trade and prices by means of mathematical programming models. Given the importance of the red meat sector in South Africa's agricultural economy, it is of the utmost importance that the red meat industry understands the implications and consequences of trade liberalisation. Such knowledge would enable this industry to pro-actively provide input to Government on the possible 'effects of trade liberalisation on the domestic red meat industry, that could be used in multi- or bilateral trade agreements. Furthermore, the industry would be in a position to identify threats and opportunities and make the necessary strategic decisions. In South Africa many studies have investigated various different issues of economic importance pertaining to the red meat industry. None of them have attempted to investigate the impact of trade liberalisation within the mathematical programming framework. This study employs a spatial partial equilibrium model embedded in the mathematical programming framework to analyse the possible effects of a reduction of tariffs, increases in world prices of red meat, changes in the exchange rate, the abolishment of the Lomé Convention and changes in population size. The model includes two-stage spatially separated markets for red meat products in South Africa that encompass behavioural parameters to gauge the impact of exogenous changes related to trade liberalisation. In the case where all tariffs on red meat imports are abolished, changes in prices of red meat products will be substantial. Producer prices for cattle, sheep and pigs will decline by 21.11 per cent, 13.90 per cent and 11.99 per cent, respectively. Beef, sheep meat and pork prices will, on average, decline by 27.88 per cent, 28.56 per cent and 13.16 per cent, respectively. Demand will increase substantially for all three meat types. From a welfare point of view consumers will experience welfare increases. Producers, on the other hand, will experience a drop in welfare. In monetary terms the welfare gains by consumers are greater than the welfare losses by producers, which constitutes a net welfare gain to society. Furthermore, the red meat industry in South Africa should carefully consider preferential access granted to third countries under FTA's. Preferential access could easily lead to a reduction in the marginal tariff rate which, in turn, would result in lower domestic prices of red meat. In the case where the world price increases more than 10 per cent for beef, 18 per cent for mutton and 6 per cent for pork, zero imports would result. The losses in welfare to consumers are greater than the gains in welfare by producers. The impact of a 40 per cent depreciation in the exchange rate is very similar to the situation when world prices are assumed to increase, whilst the effect of a possible abolishment of Lomé on the South African beef market would be minimal. Finally, an increase in the population size combined with an increase in world prices will only partly offset the impact of a total reduction in tariffs. Also, increases in demand due to lower prices will largely be met by higher imports.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 Modelling the potential impact of a water market in the Berg River Basin(University of the Free State, 2001-01) Louw, Daniël Barend; Van Schalkwyk, H. D.; Backeberg, G. R.English: An increasing number of economists believe that market mechanisms should be incorporated in water allocation policies. It is widely recognised that central planning as an economic system has been inefficient. In fact, it is impossible to plan efficiently from the centre, and the bigger and more open the economy is, the more impossible it becomes. The literature abounds with models for analysing alternative water allocation mechanisms. However, the positive mathematical programming (PMP) technique, which was introduced in this study, to calibrate the regional water market, is a relatively new approach. Modelling of water markets in South Africa has received very little interest in the past. This is probably because formal water markets were not permitted in the old Water Act (1956). The new National Water Act (1998) makes explicit provision for the transfer of water rights. However, the rules and procedures for introducing water markets have not been stipulated. To date no attempt has been made in South Africa to develop methodologies to simulate water markets. According to the new National Water Act one of the most important tasks of Catchment Management Agencies (CMA's) will be to design water allocation strategies for each of the major catchments in South Africa. This study contributes to enhance the capacity of water authorities to make economically sensible water allocation decisions. Without a market price, there is little or no incentive to use water efficiently. True pricing will lead to highest-value uses (e.g. drinking water and the production of high value products). Creating incentives for the most-valuable economic use of water will provide certainty; increase supply for more efficient uses, and create an even playing field for all water users including natural systems. There are legitimate concerns that the market mechanism per se will not guarantee equity. Government therefore has an important role to play in ensuring that the rules and procedures exist to deal with externalities. The secret is to achieve a balance that involves interfering in the market mechanism without jeopardising the proper functioning of water markets. The functional organisation for policy-making, water allocation, water management, and monitoring of users, plays an important role in the implementation of a sustainable water development system.Item Open Access Effect of farm size on technical efficiency: a case study of the Moretna-Jirru district in Central Ethiopia(University of the Free State, 2003-05) Bekele, Abate; Viljoen, M. F.; Ayele, GezahegnEnglish: The main objective of the study is to analyze the effect of farm size on farm efficiency at household level in cereal based farming systems and to suggest policy recommendations. The survey was conducted in the Moretna-Jirru district of Ethiopia during the 2000/2001 cropping season. The district was selected for this study on the basis of the relatively longer experience of farmers to use new technology, the number of crop growers and the high potential for crop production. As part of the methodology, a structured questionnaire was developed and used during personal interviews with farmers. The collected data was analyzed using statistical package SPSS Version 10.1. The empirical model used for the estimation of technical efficiency of smallholders in this study was the stochastic production function. The stochastic frontier model results revealed that land area and seed application rate contributed the most to growth in wheat yield whereas increase in land size and application of urea led to statistically significant increases in tef yield. In view of the research objectives the major results/findings of the study were: • The stochastic frontier model analysis revealed that large farms were technically more efficient than small farms regarding both wheat and tef production; • The mean technical efficiency of wheat was calculated to be 0.83 for large farms and 0.79 for small farms (P= .001). The mean technical efficiency of tef for large and small farms was calculated to be 0.74 and 0.68, respectively (P= .001); • The average technical efficiencies of wheat and tef were calculated to be 80.85 % and 70.72 %, respectively. Under the current technology, farmers can thus increase the actual output levels of wheat and tef by about 19.1% and 29.3%, respectively, to become 100% efficient. The challenge remains to decrease technical inefficiency factors and to raise the production level towards the frontier production level. According to the model analysis, land size remains a key variable explaining differentiation in output, especially in keeping farmers near to or on the production frontier. Reduction in farm size and land fragmentation have contributed to technical inefficiencies. From the disaggregated data by size of holding, the conclusion is that larger size holdings perform better with regard to technical efficiency, food production and income generation than smaller size holdings, irrespective of the extension program. The results that emerged from the technical efficiency differentials between small and large farm groups in the Moretna-Jirru district of central Ethiopia have policy implications. A number of policy interventions need to be made by government if smallscale farmers are to improve technical efficiency. These include, among others, that policies on land size and land distribution must be revisited and that further studies are needed to determine the minimum farm size to support farm households. Frequent redistribution and allocation of land has resulted in fragmentation, tenure insecurity, and in too small farms to support livelihood. This in turn contributed to decrease in farm productivity and efficiency. It is important to note that small farms can make a difference in food self-sufficiency schemes, but they will never be big providers of food and fiber for the fast growing population. Small farm producers will fill niche consumer markets. Providing solutions for the root causes of rural poverty and changing the gloomy situation of Ethiopian farmers requires multiple strategies. Therefore, future work in this area should begin by posing questions differently. For example, What is the best path to sustainable agricultural development? What characteristics must a farm possess for it to be sustainable, socially responsible, environmentally sound and economically viable? What is the optimal farm size and how could size be measured in the sustainable era? Such questions do not have easy answers. They do, however, reveal some of the shortcomings of this analysis and can guide further work in this area.Item Open Access Profitability of precision phosphorus application on a commercial farm in the Heidelberg district, Western Cape(University of the Free State, 2010-05) Hough, Ella Christina; Nell, W. T.; Maine, N.English: Phosphorus (P) is an important nutrient required by every living plant and animal cell, and deficiencies in soils could cause a restriction on crop production. P is also a primary nutrient essential for root development and crop production, and are needed in the tissues of a plant where cells rapidly divide and enlarge. Precision agriculture (PA) could assist the farmer in applying the prescribed amount of P to the part of the field where it is required. Variable rate technology (VRT) is therefore a tool that can help with the development of strategies for phosphate fertiliser management. The main objective of this research is to determine the effect of precision P application on the profitability of PA on a commercial farm in the Heidelberg district in the Western Cape Province in South Africa. The study was conducted in collaboration with Mr Gildenhuys (on-farm trials) in the Heidelberg district in the Western Cape, South Africa. Four fields, totalling 106 ha, were identified as research fields for the study. The main crops included in the study were wheat, canola and barley (third year). As many as five soil types were found in each field, which was divided into two halves. One half was planted by making use of VRT, and the other half was planted by conforming to the traditional farm management system or single rate (SR). The same crop was planted on both halves. Wheat, canola and barley were used in a crop rotation system. The specific objectives were to determine the winter grain response to P on different soil types, the relationship with and effect of previous and current years’ yields on the following year’s P application and whether spatial econometric models are more accurate than traditional ordinary least squares (OLS) models in predicting the profitability impact of P on PA. The results obtained show significant differences between OLS, spatial error (SER) and restricted maximum-likelihood (REML) models. All the measures of goodness of fit indicated an increase in fit from the OLS to the SER model, with the best fit being achieved with the REML model, implying that the use of this model resulted in more accurate estimates. Profit analysis based on the application of statistical models indicates that, on average, the VRT treatment resulted in higher profits than the SR treatment. It could not be established, based on this study, that yield response to fertiliser depends on a specific soil type, because some soil types delivered higher yields and profits during certain years and during others they performed considerably weaker. It can thus be concluded that yield responses and profits differ from year to year and also within the crop rotation system (wheat, canola and barley). From the conclusions generated in hypothesis testing it is evident that the wheat crop yield response to P varied according to soil type. Over a three-year period, the VRT application of P lead to higher profitability compared to the SR application of P.Item Open Access The impacts of multilateral and bilateral trade agreements on agriculture trade in SACU(University of the Free State, 2011-12) Mokoena, Madime Reuben; Jooste, A.; Alemu, Z. G.International markets for agricultural products were characterised by,. amongst others, quantitative restrictions, tariff-based protection, border protection, non-tariff barriers, ete before 1995. Likewise, agricultural sector in South Africa (SA) was also faced by similar trade distorting measures during the post-apartheid era. In response to globalisation challenges, SA committed to move from protective to liberal trade regime in the agricultural sector, as witnessed by its trade diplomacy engagements with the international community in the context of multilateral, bilateral and/or regional approaches. At the multilateral level, SA has successfully implemented its commitments as negotiated in terms of the Agreement on Agriculture (AoA) during the Uruguay Round (UR) of General Agreement on Tariffs and Trade (GATT) negotiations that gave birth to the World Trade Organization (WTO). At the bilateral level SA 'has signed a Preferential Trade Agreement (PTA) with the European Union (EU) called the Trade, Development and Co-operation Agreement (TDCA) (better known as the EU-SA TDCA and includes a Free Trade Agreement). At the regional level, the Southern African Customs Union (SACU) member states including SA have signed a Protocol on Trade or a Regional Trade Agreement (RTA) with the non-SACU countries of the Southern African Development Community (SADC). The main objective of the study was to measure the impact of trade agreements on the agricultural trade between SA and its trading partners. A gravity model using panel data was employed to analyze the ex-post impacts of the implementation of the trade treatments, i.e. WTO AaA, EU-SA TDCA and SADC Trade Protocol on agricultural trade flows between SA and its agricultural trading partners. Various statistical tests were undertaken to select the suitable models for the datasets of total agricultural and selected agricultural products trade flows between SA and its agricultural trading partners. After the statistical tests were undertaken, 189 feasible models in total were selected, of which . 161 were dynamic models and 28 were static models. Furthermore, 152 Fixed Effects (FE), 2 Random Effects (RE) and 7 pooled Ordinary Least Squares (OLS) estimators were found to be efficient and suitable for the dynamic models; and 14 FE and 14 RE estimators were found to be efficient and suitable for the static models. The highest number of selected dynamic models suggested that passed trade is the predictor for current trade. The per capita ODPs of SA and of its trading partners, the real effective exchange rates and distance have also played a significant and expected role in influencing agricultural trade flows between SA and its agricultural trading partners. The results of the study have indicated that agricultural trade flows between SA and its agricultural trade partners have responded positively to the implementation of WTO AaA. The implementation of EU-SA TDCA and SADC Trade Protocol during the first five years (for the period 2000 - 2004) have not delivered the expected results, as the majority of agricultural trade flows between SA and EU countries as well as between SA and SADC countries were not affected and some of the agricultural trade flows between SA and EU countries as well as between SA and SADC countries were negatively affected. While the majority of agricultural trade flows between SA and EU countries as well as between SA and SADC countries were still not affected during the second five-year term (for the period 2005 - 2009), there were some improvements due to the significant positive effects of the EU-SA TDCA implementation on three agricultural trade flows (i.e. total agricultural trade, total cut flowers trade and total preserved fruits and nuts trade) as well as the significant positive effects of the SADC Trade Protocol implementation on four agricultural trade flows (i.e. total agricultural exports, total agricultural trade, total cut flowers trade and total fruits and vegetable juices trade). However, the number of agricultural trade flows between SA and ROW countries that have improved significantly for both periods were more than those of the EU and SADC countries, even though ROW countries did not have a trade agreement with SA. The implementation of the EU-SA TDCA and SADC Trade Protocol have created room for potential increases of all the agricultural trade flows between SA and EU countries as well as between SA and SADC countries for both periods. However, some of these potential increases for the period 2000 - 2004 were diverted to the other markets. On average, during the implementation of the EU-SA TDCA for the period 2000 - 2004, about 0.44% of agricultural exports, 0.96% of cut flowers exports and 0.77% of wine exports from SA destined for EU were diverted to other markets Furthermore, about 2.01% of SA's wine imports that were supposed to have been soureed from the EU countries came from SA's other wine trading partners; as well as the diversion of about 0.73% of total wine trade from the SA and EU market to either SA and other wine trading partner market or EU and other wine trading partner market. Similarly, the implementation of the SADC Trade Protocol led to diversion of agricultural exports (about 0.43%), cut flowers exports (about 0.93%), total cut flowers trade (about 0.92%), wine exports (about 0.73%), wine imports (about 1.45%) and total wine trade (about 0.35%) during the same period. \ With regard to the implementation of the EU-SA TDCA and SADC Trade Protocol during the period 2005 - 2009, there was no proof of trade diversion for all agricultural trade flows, except that the was a trade creation for some of the agricultural trade flows between SA and EU countries as well as between SA and SADC countries. In the case of the EU-SA TDCA, there was trade creation on total agricultural exports, total agricultural trade, total preserved fruits and nuts trade and total wine trade. In the case of the SADC Trade Protocol, there was trade creation on total agricultural trade, cut flowers exports and preserved fruits and nuts exports. In conclusion, these findings have clearly shown that tariff reductions alone are not panacea to improve agricultural trade between SA and its major trading partners given the fact that EU-SA TDCA and SADC Trade Protocol were mainly characterized by tariff phase down schedules.Item Open Access Credit scoring model: incorporating entrepreneurial characteristics(University of the Free State, 2016-01) Henning, J. I. F.; Jordaan, H.; Van Zyl, J. H.The main objective of the research was to develop a theoretical credit model that incorporates entrepreneurial competencies of farmers as variables in order to determine the repayment ability of the farmer. The research was conducted by using a financial organisation as case to test the application of a statistical credit-scoring model that incorporates entrepreneurial competencies. Entrepreneurial competencies have been found to have an influence on the competitiveness, and, by extension the financial performance of a business. Farms are no different from other businesses, where the aim of the farming business is to ensure profits, and decisions are made accordingly. Individuals that possess higher levels of entrepreneurial competencies are therefore expected to perform better in terms of management and coordination in the business environment, which improves financial performance and repayment ability. The theoretical credit model includes a neural network identified from literature and applied to accurately predict the high-risk loans which are liable to be rejected. The variables and characteristics used in the credit process were investigated from the credit provider’s viewpoint. Most research on credit tends to report on the variables and characteristics from the borrower’s side, which can result in variables that are important when the lender considers the loan applicant’s ability to repay being omitted. Results indicated that many of the variables used in the decision-making process are based on subjective measures, especially the variables that are associated with managerial and entrepreneurial abilities. The use of human judgement in the credit process is associated with several disadvantages that can influence the decision-making process, specifically consistency in the decision-making. Recommendations are therefore to investigate extending credit models by including entrepreneurial competencies that are measured with the use of an instrument that can provide a consistent reporting method for different applications. Further research is also needed to investigate the implementation of an objective, statistical credit-scoring model in determining the repayment ability of farmers. The entrepreneurial competencies of the farmers were measured and examined to gain a better understanding and insight into the specific competencies of farmers in South Africa. The entrepreneurial competencies of farmers can be measured with the use of an objective instrument that provides a score for each competency. The entrepreneurial competencies included the following: opportunity; relationship; conceptual; organising; strategic; commitment; learning; and personal strength competencies. Farmers were found to have higher scores in the commitment and relationship competencies, while opportunity competencies had the lowest score for the farmers included in the research. The scores determined for the farmers also provide a consistent measuring instrument that can be used to measure the entrepreneurial and managerial competencies as variables for inclusion in credit-granting decisions. The entrepreneurial scores were included with other decision-making variables in a statistical credit-scoring model. A back propagation neural network was trained with the use of known input–output combinations, tested and then applied to agricultural credit applications. The entrepreneurial competencies were found to contribute in the decision-making of the network, where the generalised weights compared with age and experience and other scale variables also included in the network. Entrepreneurial competencies can, therefore, also be included in determining the repayment abilities of credit applicants. The use of the studied neural networks in agricultural credit applications require further research, as neural networks are known for exhibiting difficulty in interpreting the results, indicating that providing reasons for a decision can be difficult. The method can, however, be used as a supplementary tool for current methods that may assist in assuring consistency in decision-making, as the neural networks are unable to accommodate additional variables that were not part of the training process. The main conclusion drawn from the research is that entrepreneurial competencies of farmers can be included with the use of a measuring instrument in a neural network credit model. The model can provide consistency in the decision-making procedure for agricultural loan applications; however, further research is necessary to provide a method that can accommodate the dynamic nature of the agricultural sector where conditions may necessitate the inclusion of additional variables in the decision-making process.Item Open Access Price transmission in a deregulated Ethiopian coffee market(University of the Free State, 2008-05) Worako, Tadesse Kuma; Van Shcalkwyk, Herman D.; Alemu, Zerihun Gudeta; Goshu, Gezahegn AyeleEnglish: Ethiopia’s coffee industry has undergone numerous structural changes and deregulation measures as a result of changes in the political and economic landscape of the country since early 1992. The state-controlled marketing system has been replaced with markets run by the private sector. Such changes may have an influence on price transmission, the dynamics of shocks through marketing channels, and the performance of the industry. The principal questions addressed by the study are whether the deregulation of the Ethiopian coffee market has resulted in closer interrelationships among producer, auction and world or FOB prices in the vertically related coffee markets and whether it has improved dynamic interrelationship amongst spatially separated domestic coffee markets. Towards this end, the long-run and short-run dynamics between vertically and spatially related coffee markets were assessed employing the threshold vector error correction (TVEC) modelling approach extending the technique developed by Hansen (1999) to deal with inferential biases occurring as a result of specification errors that have been overlooked till to date by applied studies in the field. This study attempts to measure both vertical and spatial price transmission in two separate sections. In the first part, vertical price transmission is analysed by considering six separate markets, each of which has producer, auction, and world prices. This includes five major categories of Ethiopian coffee by origin of production (Sidama, Yirgachefe, Jimma, Wollega and Harar) and the national average price as representative of all coffee types in the country. The second part measures spatial price transmission between six selected pairs of spatially distinct local coffee markets. Monthly price data from the Central Statistical Agency and the Agricultural Market Promotion Department in the Ministry of Agriculture and Rural Development, as well as cross-sectional data from the 2006 coffee market survey, are used. The following salient results were obtained: Firstly, market deregulation in general has induced strong long-run interrelationship between vertically and spatially related markets. Secondly, of the six categories of vertically related market prices in the four groups (Sidama, Yirgachefe, Jimma and national average prices), auction prices are directly affected by world prices (exhibiting dynamic interrelationships) while producer prices are affected by world prices indirectly through auction prices (i.e. weak interrelationship with world prices). Hence the causality flows from world to auction price and then from auction to producer price. In general, producer prices lack direct interrelationship with world prices and are weakly responsive to shocks in world prices, whereas auction prices are highly interrelated with world prices and are responsive to shocks in world prices. Thirdly, in the case of Harar coffee, neither producer nor auction prices show interrelations with world (FOB) prices, which partly accounts for the high concentration of market power and malpractices in the Harar coffee auction and export markets. Fourthly, asymmetries were also found in price transmission where producer prices fell persistently within the equilibrium band from 1998 through 2006 despite unfavourable world prices. This may be partly ascribed to the high local coffee demand, which plays an important price stabilisation role. Fifthly, with regard to spatial price transmission, producer markets located adjacent to each other show clear short-run price dynamics and integration, while others show weak interrelation. As a result, of the six pairs of spatially separated markets, only three pairs show strong integration while the others do not. In general, evidence from vertically related market analysis reveals that coffee growers remain segmented from the world and benefit less compared to participants in the auction and export markets. Similarly, most spatially separated local markets either totally lack short-run dynamics or are weakly integrated. This segmentation and lack of short-run dynamics is partly explained by the current organisational structure of the Ethiopian coffee market system where coffee farmers lack strong producer cooperatives, which might enhance their capacity to bargain for a proper share of the market price. Hence, dismantling market parastatals and deregulation only is a necessary but not sufficient condition for efficient private markets to evolve. In the absence of appropriate infrastructure and institutions at grassroots level, smallholders remain at the mercy of traders. Thus it is important to shift from merely ‘getting prices right’ to ‘getting institutions right’ so as to address market failures arising from imperfect information, contract enforcement and property rights, as well as insufficient provision of public goods, in order to improve the lives of primary producers and thereby reduce poverty.Item Open Access Marketing tea for Uganda's smallholder sector(University of the Free State, 2001-05) Balyamujura, Hans Natson; Van Schalkwyk, H. D.English: Literature shows that consumers and processors demand a particular good or product based on the utility they are able to derive from it, or on its ability to meet processing requirements. A riumber of studies have been conducted to model the relationship between price and the various quality attributes for a number of products such as vegetables, pork, beef, pineapples, etc. However, no such studies have previously been conducted on a product like tea, whose price determination is greatly dependent on the physical appearance and savoury. The quality of the various tea grades implicitly determines the price received by the producer. It is widely recognised in the tea fraternity that a good tea fetches a higher price. It is therefore of utmost importance to fully understand the impact of change in various quality attributes on the price of a particular tea grade. The absence of the ability to estimate the impact of change in quality attributes causes tea producers to make decisions without all the necessary information, which could in turn lead to losses in terms of price. Market research has tended to concentrate on seller concentration and has paid little attention to buyer concentration. Literature shows that buyer concentration exists commonly in agricultural markets due to the nature of the products. This study has shown that the level of buyer concentration at the Mombasa auction market is high. Therefore, there are legitimate concerns that the market will not guarantee an efficient price to the producer. The East African Tea Trade Association has an important role to play in ensuring that these concerns are dealt with by seeing to it that the rules and regulations do not encourage this to happen. Producers, on the other hand, may find the balance through increased market access, which will entail exploring other market alternatives and not being too dependent on the Mombasa auction market. There are a number of export opportunities in already established tea markets, which can easily be explored by the tea producers through increased promotional activities and trade alliances. Growth prospects are still greatly limited by the infrastructure, provision of financial and extension services, research, etc. The feeder road networks still remain in a very poor state, at times necessitating repairs by the factories so as to be able to collect green leaf. The government is still unable to provide an adequate agricultural extension service and the smallholder factories have had to start their own extension services. The government has recently embarked on a programme for the modernisation of agriculture, but this will only show tangible results if a conducive environment for agricultural trade in the country is created.Item Open Access The macro economy and irrigation agriculture in the Northern Cape Province of South Africa(University of the Free State, 2007-12) Taljaard, Pieter R.; Van Schalkwyk, H. D.; Louw, D. B.English: The overall objective of this study was to develop a model capable of quantifying the economywide impacts of market risk and other exogenous factors, with specific reference to efficient irrigation water use along the banks of the middle and lower Orange River in the Northern Cape Province (NCP). The study is based on the second of two parts of a larger Water Research Commission (WRC) funded project, titled: “Market risk, water management and the multiplier effects of irrigation agriculture with reference to the NCP”. One of the sub-objectives was to simulate the effects of selected market change(s), i.e. a change in the world price of fruit, on the provincial economy as well as to quantify the economy-wide impact of selected regional shocks and structural changes. A second sub-objective includes recommendations on institutional responses that will increase effective water management for regions where irrigation agriculture makes a major contribution to the economy such as the NCP. The ability to quantify and/or simulate the economic-wide effects of different exogenous shocks or risk factors influencing agriculture and specifically irrigation agriculture therefore contributes to the group of already existing decision support systems available to role-players and decision makers in South Africa. In order to reach the first specific sub-objective, two sets of economic linkages between the micro and macro economic models were applied, i.e. one bottom-up or micro-to-macro and the other a top-down or macro-to-micro. The top-down linkage, utilizes the simulated results from a static Computable General Equilibrium (CGE) model, calibrated to a Social Accounting Martix (SAM), as inputs into a Dynamic Linear Programming (DLP) model on farm and irrigation regional level. A 20% reduction in the world price of fruits was used as simulation in the CGE model, with the main linkage between the macro and micro economic models being the changes in the local prices of fruits. Some of the key results from the micro analysis include amongst others the level of structural adjustments and other influencing factors, including the impact on farm and regional level profitability for example. With the bottom-up linkages, simulated results (i.e. the changes in the objective function values) from the regional DLP model was multiplied by three sets of economic multipliers (production, value added and labour) in order to quantify the economy-wide impacts thereof. Despite numerous shortcomings of economic multipliers, this analysis was performed to quantify in broad terms the direct, indirect and induced economy-wide impacts resulting from amongst others a 20% decrease in the local price of table grapes under various water trade and crop deviation allowances specified in the DLP model. As hypothesised, the simulated results explained above proved that significant economy-wide impacts can result from market risks or other exogenous factors influencing local irrigation agriculture, especially in a region where irrigation agriculture plays such an important role as in the NCP. It is believed that the current South African water law is comprehensive and wellwritten compared to international standards and benchmarks. The implementation thereof, in many aspects however remains a challenge. Recommendations on required institutional responses to improve the effectiveness of irrigation water utilization were made to reach the second specific sub-objective. The main conclusion from this study is that South Africa is relatively under-developed in the management of water supply and demand. In this regard, innovative technological development combined with cutting edge research in this field, is the only way in which effective water use will ultimately advance and thereby optimise the net benefit of society as a whole. It therefore calls for an integrated water resource management approach, with commitment from all role players involved. Government should provide an enabling environment, within which all levels from the private sector and communities can participate in the form of Public-Private-Partnerships (PPP) to enhance prosperous economic growth and development.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 Die effek van verskillende graanopbergmetodes op die aanwending van kapitaal in 'n mielieboerdery in die Noordwes Provinsie(University of the Free State, 2014-07-18) Van der Merwe, Charl David; Willemse, Johan; Lubbe, AntonEnglish: According to Liversage (2003: 1) maize was marketed through the one channel marketing system between 1944 and 1994. According to this system the Maize Board and its agents (the former agriculture co-operatives) were responsible for the buying and storing of maize in South Africa (Maize Board 1987: 134-147). After the closing of the Maize Board, a free market system was implemented and currently any person or organization can store maize (Murray, 2011: personal communication) in South Africa. Due to the above mentioned changes, 1.85 million tons of storage capacity was erected on farms in South Africa since 1996 (SIQ, 2011). Apart from storing maize at the silos of commercial storage companies, maize can also be stored on the farm by using zinc silos, silo bags and grain dams according to Genis (2012). If storage takes place on the farm it will need the erection of storage structures. Dhyuvetter (2007: 4-6) showed that additional capital is needed to erect new storage structures on the farm. According to Steitz & Ehmke (2005) any capital expenditure, influences the farm over a long period and need careful planning (Boehlje & Ehmke (2005: 1). According to Louw (1996: 20) models for complete farm planning can be used to evaluate the effect of capital spending on the farm. According to Koch (1992: 20) these models take the soil, farm operations, market plans and capital resources into account when different options is evaluated by developing varies scenarios. There is currently no farm planing model available in South Africa witch can be used to evaluate the effect of different storage methods on the use of capital resources of the farm. In this study ‘n holistic farm planning model is developed to be use in evaluating the effect of different storage methods on the use of capital on a maize farm. The effect of the use of commercial silos and the use of zinc silos, silo bags, plastic dams and zinc dams is evaluated in the study. The effect of certain variables like the size of the farm, the distance of the farm from the commercial silo and the marketing strategy are evaluated in the model by using different scenarios. According to the results of the study, the highest margin after specified cost was realized by using zinc silos. The Net present value was used to evaluate the application of capital on the Farm. The use of commercial silos realized the highest Net Present Value. Based on the results of the study the size of the farm, the marketing strategy, the distance between the farm and the commercial silo and the method of transport between the farm and commercial silo, can influence the choice of storage method if the calculation of net present value is used as a tool of measurement. According to the results of the study it is important to take the effect of the fixed and variable costs into account when evaluating the different storage options on a Farm. It is even more important if the size of the harvest varies.Item Open Access Measuring asymmetric price and volatililty spillover in the South African poultry market(University of the Free State, 2010-09) Uchezuba, David Ifeanyi; Jooste, A.; Willemse, B. J.Over the last decade South Africa experienced two events during which food prices increased significantly. The periods of high food prices were also characterised by a high degree of volatility in prices. The result of the aforementioned events were that food security in South Africa was threatened, but at the same time evidence emerged that due to the current market structure in the agricultural industry certain role players used their market power to manipulate food prices. In an effort to better understand pricing behaviour in the food industry it is necessary to investigate the nature of price transmission in different agro-food chains. It is furthermore important to understand the nature of price volatility and the degree to which such volatility spillover from one level of a value chain to the next. The primary objective of this study is to measure asymmetric price and volatility spillover in the broiler value chain. The poultry (broiler) industry was chosen as a case study because there is an increasing demand for broiler meat in South Africa, culminating in increased per capita consumption compared to other meat categories such as the red meats. It is estimated that the per capita consumption of broiler meat increased steadily from 2001 to 2009. The sector is one of largest and fastest growing agricultural sectors in the country, contributing significantly to the total gross production value of agriculture. The specific issues addressed in measuring asymmetric price and volatility spillover in the broiler value chain includes: (i) the identification of the direction of flow of information (causality) between producers and retailers, (ii) examining the degree of asymmetric price transmission across the farm-retail value chain, (iii) quantifying volatility and volatility spillover across farm and retail prices, and (iv) investigating volatility spillover from feed materials to farm and retail market prices. The data used for this study include farm and retail poultry prices, as well as the daily nearmarket monthly spot prices for yellow maize, sunflower seed and soybeans. Two types of adjustment models, namely the threshold autoregressive (TAR) and momentum threshold autoregressive (M-TAR) models were used to investigate asymmetry in farm-retail market prices, whereas the exponential generalised autoregressive conditional heteroskedasticity (EGARCH) model was used to measure the price volatility and the volatility spillover effect between retail and farm prices and between these prices and poultry feed ingredients (yellow maize, soybean and sunflower oilseed). The result obtained with the M-TAR model shows that the relationship between farm and retail prices is asymmetric. The retail price was found to respond asymmetrically to both positive and negative shocks arising from changes in producer prices, but the response is greater when the shocks are negative, i.e. when the producer price rises to lower marketing margins in the value chain. The sizes of the adjustment parameters in the farm-retail combination reveal that retail prices do not respond to shocks completely and instantaneously, but respond within a distributed time lag. The results indicate that within one month, the retail prices adjust so as to eliminate approximate 2.8 % of a unit-negative change in the deviation from the equilibrium relationship caused by changes in producer prices. This implies that the retailers must increase their marketing margin by 2.8% in order to respond completely to a unit-negative change in farm prices. The results show that farm price granger cause retail price, implying that retailers depend on what happens at the farm level in order to form their market expectations. The results obtained with the M-TAR error correction model were to a great extent consistent with the results obtained with the EGARCH model. For instance, results from the volatility model show that the magnitude of volatility in the retail and farm prices for the periods 2000M1 to 2008M8 is 1.8% and 2.8%, respectively. The volatility in the farm price was found to approximate the volatility implied by the adjustment shocks in the farm-retail price relationship investigated with the M-TAR error correction model. The results of the asymmetric volatility measurement show that there is significant asymmetric volatility spillover from the farm to the retail market implying that the response to rising prices differs from the response to a price decline. This relationship was also observed with the asymmetric price transmission model. An investigation into the impact of the prices of the major broiler feed materials, namely yellow maize, sunflower and soybean, shows that there is a volatility spillover from the yellow maize price to farm and retail prices. This implies that any change in the price of yellow maize will have a significant impact on the retail and farm prices. Market influence also flows from the sunflower oilcake price to the retail market price. The presence of an asymmetric relationship between farm and retail prices signifies the existence of concentration and market power. In a situation like this, tighter anti-competition laws will discourage anti-competitive behaviours. It will be worthwhile to increase access to agricultural information systems amongst the role players in order to reduce information bottlenecks in the vertical market system.Item Open Access Analysis and quantification of the South African red meat value chain(University of the Free State, 2011-05) Spies, David Cornelius; Jooste, A.; Taljaard, P. R.Given the natural resource base of South Africa, livestock production is one of the most important farming practices in the country. Of the approximately 80 % of the land surface being utilised for agriculture, almost 70 % is mainly suitable for raising livestock. The South African red meat sector contributed 14.8 % to the total gross value of agricultural production during the 2008/2009 season with cattle being the main contributor at 10.1 % while sheep contributed 2.5 % during the same period (DAFF 2010). The long-term average contribution of the red meat industry to the total gross value of agriculture production (from 1996/1997 to 2008/2009) accounted for 13.2 % and that of beef 9.4 % and sheep 2.4 % during the same period (DAFF 2010). The South African primary red meat sub-sector is unique due to the dualistic nature of the country’s agricultural situation. There is a clear distinction between the commercial (formal) sector of the industry and the non-commercial (informal) sector. Within the ambit of the above the South African red meat sector also has to compete at a global level. For the South African red meat industry to be on par and potentially become a leader (at least in the Southern African region) it is necessary to understand the red meat value chain in detail in a holistic manner to (i) guide decision making in the public and private sector domains, (ii) identify challenges that the industry faces that impedes on its efficient functioning and (iii) create a foundation for the better understanding of the dynamic forces within the industry to allow stakeholders to internalise it in order for them to position themselves so that they can increase their performance at each segment of the industry to the benefit of the entire industry. Merely providing a descriptive profile of a particular industry is not sufficient any more within a deregulated and liberalised environment. In order to make any normative judgments regarding the performance of an industry, an in depth value chain analysis is needed. This is what this study is set out to achieve for the large (cattle/beef) and small stock (sheep/mutton-lamb) subsectors. The broader industry was investigated through interviews with different stakeholders in the red meat value chain. The analysis on the value chain in general shows that the South African cattle and sheep industries have been growing in nominal terms when considering their contribution towards the total gross value of agricultural production. However, the percentage contribution towards total gross value of agricultural production in South Africa of these two sectors has remained relatively constant during the short term (cattle at 10 % and sheep at 2 %). Critical variables that affect the performance in the feedlot industry are weaner and feed prices, as well as the price they receive in the market. The performance at primary processor level is directly linked to the price of offal, which is highly variable on a geographical level as well as seasonal. The performance of the retail sector is highly dependent on their ability to cater for specific consumers in specific geographical areas, while seasonal demand also determines purchasing and pricing patterns. This variability in prices as well as the transmission thereof through the red meat value chain is a big concern in the industry. Price transmission was therefore investigated using time series data on primary producer- and derived retailer prices data from September 1999 to December 2008. The following methodological approaches were applied, namely the Engle and Granger cointegration test as well as threshold autoregressive models. The Granger causality test was applied to analyse causality. Asymmetry in price transmission (APT) was found in both the beef and lamb value chains, indicating inefficiencies within the chain. Causality in the case of beef ran both ways i.e. from producer level to retail level and vice versa depending on supply conditions while in the case of lamb a change in price at producer level “causes” changes at retail level. APT is not uncommon, especially in agricultural markets and a number of reasons can cause APT in a value chain, however, in the case of the South African red meat industry a few contributors to APT was identified namely; asymmetry in information flow, menu cost and inventory cost. The red meat value chain in the Free State province was investigated by using a value chain methodology that was derived from different approaches to value chain analysis. Primary data was captured by means of personal interviews. A total of 143 commercial producers were surveyed (i.e. 19 % of the total of 745 producers that made up the original producer database used). The analysis revealed the following important aspects, namely (i) 60 % of total income generated by commercial farmers is from livestock activities, (ii) productivity is high in the commercial sector with calving- and lambing percentages averaging 80 % and 93 % for the cattle and sheep sub-sectors respectively, while the smallholder sector only averaged 30 % and 13 % for cattle and sheep respectively, (iii) older animals within the commercial beef sub-sector are mainly marketed to primary processors while younger animals are marketed to the feedlot industry while the majority of animals in the sheep sub-sector are marketed to the primary processing industry, (iv) market access in the smallholder sector is still limited to regional auctions, the informal market and to lesser extent direct sales to abattoirs, and (v) the main constraining factors in the smallholder sector is the lack of proper infrastructure which makes managing practices difficult. One major concern within the industry is animal losses, i.e. 44 % of sheep losses in the FS was due to predation. The processor industry in the FS province is highly integrated, especially in terms of primary processors/abattoirs and butcheries. Abattoirs are an important marketing alternative, especially in the rural parts of the FS province. All the role-players in the FS cattle and sheep value chains identified the variability in live animal/meat prices as their main constraint. Increasing the productivity of the producers in the smallholder sector should be a major industry objective. This objective should start with the improvement of infrastructure, education of extension officers and simplified and easier access to credit. Given the methodology developed, and the results of the study, it is strongly suggested that the methodology be applied to the value chains of the remaining red meat producing regions in South Africa. This will provide a benchmarking platform for the red meat value chain in the country. This methodology should also be re-applied regularly (every 2 to 3 years) to keep the information up to date and to provide the means by which the industry can measure change in the industry. This will be critical from a private and public sector point of view.