The economics of converting a sheep farm into a springbuck (Antidorcas marsupialis) ranch in Graaf-Reinet : a simulation analysis.

Dlamini, Thula Sizwe (2012) The economics of converting a sheep farm into a springbuck (Antidorcas marsupialis) ranch in Graaf-Reinet : a simulation analysis. PhD thesis, Rhodes University.

[img]
Preview
Text
DLAMINI-PhD-TR12-29.pdf

3779Kb

Abstract

In Graaff-Reinet, domestic livestock farming and springbuck ranching are similar in that they both rely on the rangeland for their sustainability. However, as a consequence of repeated monotonous domestic livestock farming, resulting in compromised biological productivity and diversity, the rangelands have disintegrated. This, unfortunately, has placed the future sustainability of these rangelands and the livelihoods of the local people in an indeterminate state. In recent years, there has been an increasing interest in springbuck ranching for meat production as an alternative to domestic livestock farming in the area following (a) fears of worsening environmental challenges; (b) declining profitability in commercial domestic livestock farming and; (c) growing calls for the sustainable use of these rangelands for the benefit of future generations. The springbuck has emerged as a credible alternative to utilising the rangelands - as opposed to sheep - because of its promise to addressing the above challenges. This is in an attempt to tap into the multitude of benefits that the springbuck possesses (by virtue of being part of the natural capital of the area) that have a potential towards restoring ecological integrity by extenuating some of the detrimental effects of sheep farming on the rangelands and presenting opportunities for diversifying incomes. Yet, despite the general increase in interest, a resistance towards the uptake of springbuck ranching for meat production exists. The main contention is that springbuck meat production cannot out-perform the economic returns of wool sheep farming. This study attempts to address these concerns by investigating the profitability and economic sustainability of converting a sheep farm into a springbuck ranch in Graaff-Reinet. The study uses stochastic simulation to estimate the probability distribution of some key output variables, namely: net cash income, ending cash balance, real net worth and the net present value (NPV) in evaluating the profitability of converting a 5 000ha sheep-dominated farm into a springbuck-dominated ranch under three alternative scenarios. The use of stochastic simulation allows for the incorporation of downside risk associated with the production and marketing of wool, mutton and springbuck meat. The study uses stochastic prices and yields to calculate net returns variability. Incorporating scenario analysis helped to evaluate how alternative wool sheep-dominated and springbuck-dominated combinations would perform based on the probable outcomes of different assumptions in the various scenarios. By applying stochastic efficiency with respect to a function (SERF) criterion to the simulated NPVs, this study compares the profitability of alternative scenarios based on various risk aversion coefficients. The study finds that converting a 5 000ha wool sheep dominated farm into a springbuck dominated ranch could potentially be a more profitable investment than wool sheep farming over a 15 year planning horizon, in Graaff-Reinet. The SERF results indicate that for all scenarios tested, the best strategy of converting a wool sheep dominated farm into a springbuck ranch would be one which comprise a combination of 70% springbuck, 20% mutton and 10% wool production as the likely profitable enterprise mix. Using economic sustainability analysis, the study reveals that because of low costs in springbuck ranching, springbuck meat production enterprises are most likely to be more financially sustainable than wool sheep-dominated enterprises. This suggests that rangeland owners may be better off converting their wool sheep-dominated farms into springbuck-dominated ranches. Thus, as the call for more environmentally benign rangeland utilising economic-ecological systems intensifies, rangeland owners in the Eastern Cape Karoo have a practicable option. At the very least, there exists an option to broaden their incomes whilst promoting ecological restoration with springbuck meat production.

Item Type:Thesis (PhD)
Uncontrolled Keywords:Farming, Livestock, Springbuck, Sheep, Domestic, Meat production, Wool production, Graaff-Reinet, Biological productivity, Ecology, Economic returns, Sustainability, Stochastic simulation Rangelands, Sustainability
Subjects:H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labour > HD101 Land use
S Agriculture > SF Animal culture
Divisions:Faculty > Faculty of Commerce > Economics and Economic History
Supervisors:Fraser, Gavin
ID Code:2899
Deposited By: Philip Clarke
Deposited On:30 May 2012 05:59
Last Modified:30 May 2012 05:59
0 full-text download(s) since 30 May 2012 05:59
0 full-text download(s) in the past 12 months
More statistics...

Repository Staff Only: item control page