Browsing by Author "Ortmann, Gerald Friedel."

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Adoption and economic assessment of Integrated Striga Management (ISM) technologies for smallholder maize farmers in Northern Nigeria.
(2017) Hassan, Muhammad Bello.; Baiyegunhi, Lloyd James Segun.; Ortmann, Gerald Friedel.
The agricultural sector plays a crucial role in Nigeria. According to a recent report released by the Food and Agriculture organisation and the National Bureau of Statistics (NBS), the agriculture sector contributed only 20% to Nigeria’s gross domestic product (GDP) in the year 2014. The sector remains critical to national food security, wealth creation, employment generation and above all poverty reduction, as over 70% of the workforce is engaged in the sector either directly or indirectly. However, the sector is being constrained by many factors. Significant among them are the infestation of the parasitic weed, Striga, drought, low soil nitrogen and climate change. Globally, the estimate of the land area affected and under threat by Striga spp. is about 44 million hectares (ha) of cultivable land. This weed impinges on the livelihoods of more than 100 million smallholder farmers. Striga mostly affects land planted with cereals, which lead to a substantial loss of cereal yield ranging between 10% and 100%, depending on crop and variety. Host plants severely affected are cowpea and cereals like rice and sugarcane. Cereal is usually the most severely damaged crops, followed by cowpea. The African Agricultural Technology Foundation (AATF) estimated that over 822,000 ha of maize farms in Nigeria is infested by Striga, which represents about 34% of the total farmland in Africa. Striga decreases maize productivity by 20% to 100%, sometimes leaving farmers with no harvest and little or no food. Based on the initial study output obtained in the Bauchi and Kano states, the major constraints plaguing maize and cowpea growing areas in the study region were identified to be Striga, stem borers, termites, storage insects, low and erratic rainfall, water logging, and low input. The majority of farmers (over 80%) in the surveyed states reported Striga as the most important constraint upon maize production. As a result of the intensity of Striga’s occurrence in northern Nigeria and its damaging effect on cereal and legume crops, the International Institute of Tropical Agriculture (IITA) commissioned and initiated an Integrated Striga Management in Africa (ISMA) project in collaboration with the Ahmadu Bello University (ABU), the Bayero University Kano (BUK), the Institute for Agricultural Research (IAR), the Kano State Agricultural and Rural Development Authority (KNARDA) and the Bauchi State Agricultural Development Programme (BSADP). The ISMA is an extension project being implemented in two states, Kano and Bauchi, with a lag period of four years, starting from 2011-2014. Specifically STR varieties and other Striga management technologies needed to be developed in order to curb with Striga problems. This action was essential considering the economic importance of cereal production, particularly maize, and the magnitude of investment made towards improving maize production such as doubling the maize project via the Federal Government and donor agencies in northern Nigeria. There is a need to understand why many farmers are not adopting the ISM technologies despite its suitability and ease of application. At this stage, there is also a lack of research on the prospect of adoption and the economic benefits of using ISM technologies in northern Nigeria. This study was, therefore, an attempt to address these knowledge gaps. Furthermore, it provided an opportunity to draft relevant policy and management implications to inform future strategies in the agricultural sector, particularly in maize production. The specific objectives of the study were (i) to identify the socioeconomic characteristics of maize-producing households and their perceptions of ISM technology attributes in the study area; (ii) to determine factors influencing farming households’ potential adoption and intensity of adoption of ISM technologies in the study area; (iii) to estimate the potential impact of ISM technology adoption on livelihood improvement, income and food security of maize-farming households in the study area; and (iv) to assess the financial and economic profitability, and identify the constraints upon the adoption of ISM technologies at smallholder farm level in the study area. The data used for this study were collected by means of a multi-stage sampling procedure from a cross-section of 643 respondents selected from 80 communities (353 adopters and 290 non-adopters from both project intervention areas (PIAs) and non-project intervention areas (NPIAs). The results revealed a significant overall adoption rate of 55% of the targeted population in the study area. The difference in performance in terms of adoption between PIAs and NPIAs was 11%. The results demonstrated the effectiveness of on-farm trial evaluations with farmers through organized field days. Thus, the scaling out of the technologies to NPIAs will help potential adopters to make more informed decisions in eliminating Striga. In addition to on-farm trials and field days, the improvement of public knowledge about ISM technologies can be achieved through mass public education and awareness programmes. Results from the double hurdle regressions showed that the estimated coefficients of exogenous income and distance to extension office had a negative impact on adoption. Higher total farm income, polygamous households, past participation in on-farm trials, awareness of the technology, contact with extension agents and access to cash remittances had a positive impact and are the most significant factors likely to influence ISM technology adoption. Marital status, household size, farm size and access to cash remittances are the most significant factors influencing adoption intensity. Maize farmers in the study area, who adopted ISM technologies, were found to have obtained higher output than non-adopters, resulting in a positive and significant effect on their total farm income. Hence, policies targeted at increasing maize productivity through Striga management need to include ISM technologies as a potentially feasible option. This study recommends actions to improve farmers’ access to financial services in order to increase their liquidity. Nevertheless, immediate action will be an improvement in farmers’ access to extension services, as they have demonstrated to be a reliable source of information in rural areas. Results from the TE regression model indicated that adoption of ISM technologies played a positive role in enhancing farm productivity of rural households, with adopters producing about 47% higher maize output than that of non-adopters (p<0.001) after controlling for selection bias and endogeneity. Also, the result from the Foster-Greer-Thorbecke (FGT) index showed that adopters are not as poor in terms of household income per adult equivalent when compared to non-adopters. The result from the endogenous switching regression (ESR), which accounts for heterogeneity in the decision to adopt or not, indicated that ISM technologies have a positive effect on farmers’ income, as measured by farm income levels per adult equivalent. It was also found that ISM adoption increased farming income by 66%, although the impact of technology on farming income was smaller for farm households who did adopt the technology than for those who did not adopt it. In the counterfactual situation, however, if non-adopters had adopted the technology, they would have gotten more benefit than adopters. It implies that the integrated approach to Striga management is beneficial to smallholder farmers and need to be scaled out to other areas prone to Striga. Results from the economic impact analysis also indicated that gross margins (GM), benefit-cost ratio (BCR), and net benefit per capita for the ISM technologies are all positive across all locations. Therefore, farmers can recover their costs and maintain a positive balance. The highest GMs made ISM technologies a viable, profitable, bankable and potential option for northern Nigeria which is prone to Striga. ISM technologies guarantee significantly higher yields than local practices. Thus, the long-term economic worth indicators showed that ISM technologies could lead to increased income and poverty reduction. Also, its net present value (NPV), BCR and net benefits per capita are attractive. ISM technologies, especially maize-legume rotation with STR maize and Imazapyr-resistant maize (IRM), should occupy a central role in the design of Striga eradication campaign initiatives and sustainable management in maize fields. ISM technologies should therefore be prioritised, particularly in the Striga-infested areas of northern Nigeria. In general, findings from the study proved the need to support the provision of extension services, on-farm trials and field demonstration to remote areas, as the results suggest that distance to the extension office do influence adoption of ISM technologies. In an effort to enhance farmers’ access to ISM technologies, the public sector needs to take the lead in technology promotion and dissemination at the initial stages and create an enabling environment for effective participation of the private sector. Awareness campaigns for ISM technologies, combined with the improvement of appropriate access to these technologies and corresponding inputs, and accessible rural micro-finances at reasonable costs will offer the most likely policy mix to accelerate and expand the adoption of ISM technologies. While awareness of ISM technology is a major problem, it is clear that the availability of seed (for seed-based technologies) is a serious issue. Therefore, improvement in the Nigerian seed sector is required to boost adoption. High risk and fear of failure are related to farmers’ risk aversion. All technologies requiring cash investment reflect a face of fear and risk constraint for most farmers.
The bioeconomic implications of various stocking strategies in the semi- arid savanna of Natal.
(1994) Hatch, Grant Peter.; Tainton, Neil M.; Ortmann, Gerald Friedel.
Climatic and market uncertainty present major challenges to livestock producers in arid and semi-arid environments. Range managers require detailed information on biological and economic components of the system in order to formulate stocking strategies which maximise short-term financial risk and minimise long-term ecological risk. Computer-based simulation models may provide useful tools to assist in this decision process. This thesis outlines the development of a bioeconomic stocking model for the semi-arid savanna of Natal. Grazing trials were established at two sites (Llanwarne and Dordrecht) on Llanwarne Estates in the Magudu area of the semi-arid savanna or Lowveld of Natal. The Lowveld comprises a herbaceous layer dominated by Themeda triandra, Panicum maximum and P. coloratum and a woody layer characterised by Acacia species. The sites differed initially in range composition. Llanwarne was dominated by Themeda triandra, Panicum maximum and P. coloratum, while Dordrecht with a history of heavy stocking was dominated by Urochloa mosambicensis, Sporobolus nitens and S. iocladus. Three treatments were stocked with Brahman-cross cattle at each site to initially represent 'light'(0.17 LSU ha-'), 'intermediate' (0.23 LSU ha-') and 'heavy' (0.30 LSU ha-') stocking. Data collected at three-week intervals over seven seasons (November 1986 to June 1993 or 120 measuring periods) provided the basis for the development of a stocking model LOWBEEF - OWveid BioEconomic Efficiency Forecasting) which comprised two biological sub-models (GRASS and BEEF), based on step-wise multiple linear regression models, and an integrated economic component (ECON). The GRASS model predicted the amount of residual herbage at the end of summer (kg ha-') and the forage deficit period (days) over which forage supplementation would be required to maintain animal mass. Residual herbage mass at the end of summer (kg ha-') was significantly related (P < 0.01) to cumulative summer grazing days (LSU gd ha-'), rainfall (mm) (measured 1 July to 30 June) and range condition (indexed as the sum of the proportions of T. triandra, P. maximum and P. coloratum). The forage deficit period (days) over which herbage mass declined below a grazing cut-off of 1695 kg ha-' was significantly related (P < 0.01) to residual herbage mass at the end of summer. The BEEF model predicted the livemass gain over summer (kg ha¯¹) which was significantly related (P< 0.01) to rainfall (mm) stocking rate (LSU ha¯¹) but interestingly not to condition. The economic component (ECON) reflected the difference between gross income (R ha¯¹) and total costs, which were based on fixed and variable cost structures (using 1993 Rands), including demand-related winter costs, to reflect net returns to land management (R ha¯¹). A conceptual model of range dynamics based on three discrete states, was to developed to summarise the effects of rainfall and stocking rate in semi-arid savanna. State 1, characterised by iocladus and S. nitens, was associated with heavy stocking. Movement towards State 2, characterised by T. triandra and P. maximum, was associated with periods of above-average rainfall. Drought conditions, which comprised a major system disturbance led to stability at State 3, dominated by U. mosambicensis. Post-drought recovery was influenced by predrought composition and stocking levels where tuft numbers, basal cover and seedbank were significantly reduced by increased stocking within a sward dominated by species of low stature such as Aristida congesta subsp Urochloa mosambicensis, Sporobolus nitens, Sporobolus iocladus and Tragus racemosa. It was suggested that extensive soil loss may lead to stabilisation across an irreversible threshold at a forth state characterised by shallow species such as Tragus racemosa Aristida congesta subsp. congesta. Sensitivity of optimum economic stocking rate net return to price and interest rate fluctuations, and wage and feed cost increases were examined for various rainfall and range condition scenarios. Net return and optimum economic stocking rate increased as rainfall and range condition increased through the effect of increased residual herbage mass at the end summer, decreased forage deficit periods and reduced supplementary feed costs. Net return was highly responsive to changes beef price where an increase in beef price led to an increase in optimum economic stocking rate and net return. The effect of reduced prices may be compounded by dry where supply-driven decreases in price may occur. This suggested that for dry seasons the optimum stocking rate was the lightest within the range of economic stocking rates. Although an increase in interest rates would increase variable costs and lead to reduced returns, the influence of interest rates on enterprises will vary in relation to farm debt loads. Increased labour costs would result in a corresponding decline in net return although optimum economic stocking rate would remain unaffected. Increased supplementary feed cost had little influence on net return relative to the effect of demand-driven increases in feed costs as rainfall decreased. The distribution of net returns for stocking strategies of 0.20, 0.30 and 0.40 LSU ha¯¹ and climate-dependent stocking (where stocking levels were varied in relation to rainfall and hence forage availability) and range condition scores of 10, 50, 80 and a dynamic range model were examined for a 60 year rainfall sequence (1931-1991). While a range score of 10 would see residual herbage mass decline to below a grazing cut-off of 1695 kg ha¯¹ before the end of summer, a range score of 80 suggested that, irrespective of stocking strategy within the range investigated, herbage would not become limiting. This suggested that irrespective of stocking strategy a range score of 10, established across an irreversible soil loss threshold, would reflect accumulated losses over the 60 year period. In contrast, a range score of 80 would lead to positive accumulated returns. A dynamic range model (where range composition was related to previous seasons rainfall) and a climate-dependent stocking strategy, suggested that herbage would not become limiting by the end of summer and forage deficit periods would be restricted to an average of 88 days per year. Such an approach would yield a higher accumulated cash surplus than fixed stocking strategies. Incorporation of stochastic rainfall effects allowed the development of cumulative probability distributions based on 800-year simulations to evaluate the risk associated with various stocking strategies. Range condition played a major role in determining the risk of financial loss where decreased range condition was associated with enhanced risk. An increase in stocking rate resulted in increased variability in returns. Although the risk of forage deficits and financial losses may be reduced with lighter stocking, this may be at the cost of reduced returns during wetter seasons. Increased stocking may increase the probability of higher returns during wetter seasons although this may at the cost of increased risk of forage deficits and highly negative returns during dry seasons. Importantly, ecological risk may increase as stocking is increased. A flexible or climate-dependent strategy, where stock numbers are adjusted according to previous seasons rainfall, combine financial benefits of each approach and reduce financial risk. Although errors may carry high ecological costs where, for example, the effect of an above-average rainfall season would be to increase stock numbers into a subsequent dry season, the probability of incurring such error was low. Current livestock production systems in the semi-arid savanna of Natal based on breeding stock may not be appropriate in a highly variable environment where low rainfall may require extended periods of upplementary feeding or force the sale of breeding stock. A change in emphasis from current systems to a mixed breeding system, where the level of breeding stock would be set at the optimum economic stocking rate for drier seasons, may decrease both financial and ecological risk. Growing stock may either be retained or purchased during wetter seasons to reach the optimum economic stocking rate for such seasons. although growing stock may display a greater tolerance to restricted intake (during dry seasons) than would breeding stock, additional growing may be rapidly sold in response to declining rainfall with no influence on the breeding system. Integration of wildlife into current cattle systems may be an important means of reducing financial risk associated with variable rainfall and profitability and ecological risk associated with woody plant encroachment.
Can livelihood approaches adequately evaluate the determinants of food insecurity to inform interventions in Kenya?
(2012) Mutunga, Nancy Muthoni.; Hendriks, Sheryl Lee.; Ortmann, Gerald Friedel.
Food insecurity has remained pervasive for most Kenyan livelihoods despite the implementation of substantive interventions by the government and its development partners, since it gained independence in 1963. The inability to isolate distinct determinants of food insecurity for each livelihood group has led to interventions and solutions that have entrenched food insecurity rather than mitigate it. The key impediment to a livelihood-level analysis of food insecurity is the use of data and information collected at district-level administrative units, coupled with the absence of a robust analytical methodology. This study set out to identify determinants of food insecurity for three distinct livelihood groups in Kenya, namely the pastoral, agro-pastoral and marginal agricultural groups. The study also sought to empirically evaluate incremental impacts of identified determinants of food insecurity for each group. The outcomes were intended to inform the selection of particular indicators in order to target, monitor and identify important inter-relationships between variables for each livelihood group. Few studies have applied heterogeneous ordered logit regressions to livelihood-level data to evaluate food security determinants among livelihood groups and a comprehensive livelihood analysis of the determinants of food insecurity has not yet been undertaken in Kenya. Yet, Kenyan livelihoods are highly diverse, and livelihood characteristics transcend administrative boundaries. This study used a heterogeneous ordered logit to model determinants of food security in Kenya. The variables were: conflict, HIV/AIDS, rainfall, flooding, proximity to markets, migration patterns, food consumption sources, income contribution sources and own farm production. Results of significance tests and residual variability from the ordered logistic regression led to the identification of important determinants of food insecurity in each of the three livelihoods. The degree to which each of the variables was influential in accentuating food insecurity in each livelihood, was also evaluated. Determinants of food insecurity and their inter-relationships informed the selection of indicators for monitoring. Proximity to markets seemed to have a marked impact on food security in the pastoral, agropastoral and marginal agricultural livelihood groups. Conflict was influential in determining food insecurity, particularly for the pastoral and agro-pastoral livelihood groups. HIV/AIDS prevalence in the community was critical in determining food security status for the marginal agricultural and agro-pastoral livelihood groups. Rainfall was an important determinant of food insecurity in all the groups. Flooding had no significant impact on food insecurity. The results showed that an increase in the number of food sources improved food security in the pastoral, agro-pastoral and marginal agricultural livelihood groups. A diversity of income sources improved food security in the pastoral and agro-pastoral livelihood groups. The pastoral migration pattern seemed to have a substantial impact on food security especially in the pastoral and agro-pastoral livelihood groups. Own farm production was also influential in determining food security in both groups. The study outcome provides a basis for identification of important monitoring indicators including agro-climatic, trade and market processes, migration dynamics, income and food sources and the stability, settlement patterns, key livelihood and coping strategies in the three livelihood groups. The strong inter-relationships between variables suggest that multiple variables need to be monitored concurrently to address livelihood food insecurity in Kenya. The findings suggest that livelihood approaches are central to identifying determinants of food insecurity in Kenya. The outcomes of the study provide a basis for informing interventions intended to reverse food insecurity in Kenya for each distinct livelihood group. Further research could include an analysis of the impacts of seasonality, an in-depth analysis of the markets and their marked influence in affecting food security, and applications of similar methodologies to evaluate of the food insecurity of livelihood groups that were not covered in this study. Outcomes of this work are expected to provide a basis for formulating livelihood-specific interventions in Kenya. The results will provide a platform for further interrogation of important determinants of livelihood food insecurity by governments, researchers, and development partners. Aspects of the methodologies applied in this study can be replicated in adjacent countries with food security and livelihood characteristics similar to Kenya, such as Ethiopia and Somalia.
Causes of bankruptcy amongst commercial farmers in South Africa : management and policy implications.
(1997) Swanepoel, Deon Smartenryk.; Ortmann, Gerald Friedel.; Darroch, Mark Andrew Gower.
The number of commercial farms declared bankrupt in South Africa rose sharply over the period 1948 to 1994. Aggregate farm bankruptcies rose from 18 farms (0,016 percent of all farms) in 1948 to 389 farms in 1994 (0,632 percent of all farms). The number of bankrupt maize farms increased from 16 to around 150 farms per year over the period 1970 to 1994, while the number of bankrupt extensive beef farms increased from 12 to about 50 per year over the same period. The objective of this study is to analyse factors affecting bankruptcies of aggregate farm bankruptcy during 1948 to 1994 maize and extensive beef farm bankruptcy from 1970 to 1994. Possible causes of farm bankruptcy include both business and financial risk factors. Business risk factors (inherent in a business and its operating environment, regardless of the way the business is financed) include drought, fluctuations in producer prices and changes in real government subsidies to agriculture. Financial risk factors (associated with debt financing) are reflected by variable real interest rates and the level of the aggregate farm debt/asset ratio. Principal components regression confirmed a priori theoretical expectations of farm bankruptcy determinants. The aggregate farm bankruptcy rate was positively related to the lagged aggregate farm debt/asset ratio and lagged real interest rates (financial risk factors), but negatively related to a lagged drought index (lower index values reflected drought) and lagged real government subsidies to agriculture (business risk factors). Maize and extensive beef farm bankruptcies were negatively related to lagged annual rainfall (business risk factor), but positively related to the lagged aggregate farm debt/asset ratio and lagged real interest rates (financial risk factors). Lagged real maize and beef producer prices (business risk factors) were negatively related to bankruptcy among maize farmers. Beef farm bankruptcies rose with lower lagged real beef producer prices and higher lagged real stockfeed subsidies and transport rebates (business risk factors). These results show that farm bankruptcy in South Africa is a dynamic process, with time lags between business and financial risk factors and ultimate farm bankruptcy. The aggregate, maize and extensive beef farm bankruptcy models also suggest that the rise in farm bankruptcies over time can partly be attributed to changes in agricultural price and macroeconomic policies.
Climate change perception, crop diversification and land use change among small-scale farmers in the Midlands region of KwaZulu-Natal, South Africa : behavioural and microeconomic analyses.
Hitayezu, Patrick.; Zegeye, Edilegnaw Wale.; Ortmann, Gerald Friedel.
The future of small-scale agriculture in South Africa is facing the challenges of high population growth, land degradation, and agro-biodiversity loss. In the Midlands region of KwaZulu-Natal (KZN), the challenges are exacerbated by climate change (CC). Agricultural land use change (ALUC) is among farm-level options to exploit the synergy between local adaptation and global mitigation of CC, whilst restoring degraded lands and agro-biodiversity reservoirs. The literature contends that the pathways to climate-resilient sustainable land use start with the farming sector’s vulnerability to CC, and translate into behavioural change through farmers’ perceptions about the climate risk. Two major steps characterize behavioural response to changing distributions of weather patterns. Behavioural responses to CC begin with reducing the vulnerability to climatic variability (e.g. by using tactical adjustments such as crop diversification), followed by forward-looking integration of adaptation and mitigation into farm planning (e.g. through ALUC). The purpose of this study was to provide a systematic and detailed understanding of climate-driven ALUC in the setting of small-scale farming in South Africa. Taking the Midlands region of KZN as an illustrative case, this study aimed (i) to explore some meso-level aspects of climate-related agricultural vulnerability; (ii) to investigate the perceptions of small-scale farmers about CC and their socio-psychological, institutional and cultural determinants; (iii) to analyse the farmland use systems and assess the microeconomic determinants of seasonal crop diversification; and (iv) to assess the attitudes of small-scale farmers towards land use and the constraints governing ALUC decision-making. To assess the meso-level vulnerability of farming sector to CC in the Midlands region of KZN, an indicator approach was adopted. Various aspects of exposure, sensitivity and adaptive capacity of the farming sector were explored using a systematic review of available empirical evidence. The review suggested that the farming sector is exposed to a warming and wetting climate. The reviewed evidence also suggested that the farming sector is highly sensitive to CC due to high population densities, high rates of small-scale farming, low irrigation rates and susceptibility to land degradation. Nevertheless, diversified crop portfolios remain a major aspect of resilience among small-scale farmers. The reviewed evidence further indicated that farmers’ adaptive capacity is confounded by inadequate access to infrastructure, rural exodus, skills shortages, poor health status, and low level of social capital. The remaining objectives were empirically investigated based on primary data from a household survey of 152 small-scale farmers in the uMshwati local municipality. With regard to the second objective, a principle component analysis (PCA) of eight variables of perceived seasonal climatic abnormality yielded two dominant perceptual shapes. CCP1 score captured the extent to which an individual farmer perceives the winter season as cooling and the summer season as warming and drying. CCP2 score captured the extent to which an individual farmer perceives the winter season as warming and wetting, and summer season as drying. The results of a Double-Hurdle (DH) model showed that the probability of perceiving abnormal trends in the local seasonal climate increases with holistic affect, egalitarian worldviews, age, female-headedness and hilly and wetter agro-ecological regions, and decreases with education. The model results also showed that the CCP1 score increases with holistic affect and other factors related to personal experience such as age and distance to the river, signifying experience-based learning. The results further showed that CCP2 score increases with cognitive ability (knowledge) and related socio-demographic factors such as education, extension and trust, indicating analytic processing of climate information. With regard to the third objective, a two-stage cluster analysis of land use data unveiled a diversified farmland use matrix characterised by a maize-beans inter-cropping system coexisting with of mixed crop-livestock, sugarcane and timber mono-cropping systems. After accounting for potential endogeneity biases, the results of a logit transformation model showed positive effects of labour and landholding on the intensity of multiple-cropping among poorer and richer households, suggesting that responding to technological constraints is an important driver of seasonal crop diversification. Furthermore, the results showed that the intensity of multiple-cropping among richer households decreases with education due to faster shadow wage rise at higher farm assets position. Among poorer households, the intensity of crop diversification decreases with off-farm occupation and increases with distance to water sources, suggesting that mitigating income and production risks are key motivations for crop diversification. Regarding the fourth objective, the results of a Mixed-multinomial Logit model that accounts for potential endogeneity biases showed that the decisions about ALUC from seasonal crops towards forestry or sugarcane cultivation are rationally derived and driven by clear but heterogeneous preferences and trade-offs between crop productivity, food security, and labour requirements. These motivations override income generation and ecological sustainability incentives, the common policy foci in South Africa. The model results also indicated that the utility of planting sugarcane increases with size of landholding, suggesting economies of size. The preference for forest plantation decreases with household size, a Chayanov-like afforestation pattern. Furthermore, the results indicated that the preference for ALUC increases with the proportion of ALUC in the community/ward (suggesting peer group influence) and hilly and wetter agro-ecological conditions (due to higher land conversion cost and acute soil erosion). The empirical findings of this study pointed to the need for designing a region-specific CC communication strategy that involves affected farmers and locally trusted agricultural extensions agents, and aligns the information content to local beliefs, values and norms. The findings also inferred that reduced agro-biodiversity loss and enhanced resilience in the face of the increasing climatic variability through crop diversification could be major co-benefits of the ongoing land reform, and explicit strategies should focus on regions with widespread poverty and dryland farming. For supporting ALUC towards farmland afforestation, the findings advocated the promotion of timber-based agroforestry systems as an effective strategy to align public goals with private incentives. The findings further advocated incentive-based afforestation schemes (such as payment for ecosystem services) designed on a per-capita or equivalent-consumption basis and targeting farms located in regions with steeper slopes and higher climate variability.
A comprehensive qualitative and quantitative assessment of harvesting and other sugarcane supply chain disruptions within the Eston Mill supply area.
(2014) Kadwa, Muhammad.; Bezuidenhout, Carel Nicolaas.; Ortmann, Gerald Friedel.
The Eston Mill, which was established in 1994, is the newest in the KwaZulu-Natal sugar belt. Like for most other mills, it can be argued that there are inefficiencies in the supply chain due to systemic issues, which reduce optimum performance. The literature study involved a review of the factors which cause inconsistencies in sugarcane supply chains and the strategies implemented for improvement. This research study involved five main aims. First, a novice qualitative diagnostic analysis of the Eston sugarcane system, to identify a range of systemic issues and one pertinent problem, involving pay-weekends and subsequent labour absenteeism, was isolated for further investigation. This was conducted through explorative interviews and network analysis approaches. Secondly, based on the information from the diagnostic analysis, a model that predicts and quantifies the factors which influence daily crush rate disruptions at Eston, was developed, validated and verified. Thirdly, the extent of the pay-weekend problem area was systematically estimated in terms of frequency, variability and predictability. Fourthly, the cost of cutter absenteeism was conservatively quantified, based on two factors, namely, sugar recovery and mill operational costs. Lastly, a case study was carried out, which involved the feasibility of a mechanical harvesting system, to mitigate the impacts of labour absenteeism. The model involved the calibration of parameters for mill maintenance and operational stops, rainfall events and days in the week when slow crush rates occurred. The model captures approximately 64% of the variation observed in daily crush rates. Subsequent to the development of the model, additional cane supply disruptions, caused by cutter absenteeism, were also investigated. It was statistically verified that a significantly detectable degree of labour absenteeism occurs immediately after pay-weekends. There has been a general increased trend in cutter absenteeism from about 2007 until 2010. An economic analysis estimated the costs associated with cutter absenteeism to be approximately R1.3 million per season, for the Eston region. The alternative harvesting system case-study solution, was found to be risky. However, acquiring second-hand equipment, which was available on the market, is estimated to make the solution more feasible. Based on a literature search, this research is considered to be the most comprehensive analyses of sugarcane supply consistency at mill-scale worldwide. The model developed can be utilized to critically evaluate different sugarcane milling areas and could potentially make significant contributions to commercial sugarcane operations. The effectiveness of the model is dependent on usage in other milling areas, as well as other industries. In addition, the specific labour absenteeism coefficients for each season can possibly be investigated using other industries as well.
A demand analysis of labour in South African agriculture : the effects of labour legislation.
(2006) Sparrow, Gregory Neal.; Ortmann, Gerald Friedel.
Labour legislation was introduced into agriculture in the early 1990s with the Basic Conditions of Employment Act (BCEA) being gazetted in 1992. Since the mid-1990s "new" labour legislation pertaining to agriculture has been implemented in South Africa, and includes the Basic Conditions of Employment Act 75 of 1997 (amended), the Unemployment Insurance Act 63 of 2001 (amended), the Labour Relations Act (LRA) 66 of 1995, the Land Reform (Labour Tenants) Act 3 of 1996, the Extension of Security of Tenure Act 62 of 1997, the Employment Equity Act 55 of 1998, the Skills Development Levies Act 9 of 1999, and the Sectoral Determination (an amendment of the BCEA 75 of 1997) which includes the imposition of minimum wages. This study examines the legislation in detail as well as the implications of this legislation for agricultural labour employment in South Africa. A relative increase in the cost (transaction and wage) and risk associated with labour motivates farmers to replace labour with machinery, machinery contractors, labour contractors or new technologies that are labour-saving. This results in a decrease in the demand for unskilled workers and higher levels of poverty and unemployment in South Africa. This study estimates long-run price elasticities of demand for regular labour in South African (SA) agriculture using both Ordinary Least Squares (OLS) regression and a Two-stage Least Squares (2SLS) simultaneous equations model. The 2SLS model includes a labour supply equation. Secondary data obtained over a 43 year period (1960-2002) from Statistics South Africa and the Abstract of Agricultural Statistics were used in this study. Both models were estimated for the period 1960-2002, and included a piecewise slope dummy variable for wages with the threshold year taken as 1991 to reflect expected changes in farm labour legislation. Study results show that the estimated long-run price elasticity of demand for labour for the pre-1991 (i.e., 1960-1990) period was -0,25 for the OLS model and -0,23 for the 2SLS model suggesting that the demand for regular labour was jnelastic during this period. For the post-1991 period (1991-2002), the long-run elasticity was estimated as -1,32 for the OLS model and -1,34 for the 2SLS model. This shows a structural change in demand that questions the appropriateness of minimum wage and other labour legislation that has raised the cost of regular farm labour in South Africa. Labour legislation introduced in the early 1990s encouraged farmers to substitute casual workers for regular workers. However, the inclusion of all casual workers in minimum wage legislation from 2006 is expected to slow the casualisation of agricultural labour as farmers turn to labour contractors, chemicals and machinery as the next best substitutes. The study found that an increase (decrease) in the price of chemicals (pesticides and herbicides for crops, and labour saving dips and sprays for animals) result in an increase (decrease) in the demand for regular labour. The demand for labour is also sensitive to changes in real interest rates (used as a proxy for machinery costs). The cost of capital would decrease (increase) as interest rates fall (rise), resulting in farmers adopting more (less) machinery and equipment, causing a decrease (increase) in the demand for regular labour, ceteris paribus. In order to reverse the regular labour unemployment trend in SA agriculture, government could choose to adopt more flexible labour market regulations (i.e., legislation regarding the hiring and dismissing of farm workers, and increases in wages and benefits for the farm worker could be based on the individual performance of each worker as opposed to increasing the wages of the entire workforce through minimum wages) which would reduce labour costs and encourage farmers to employ more labour.
Do African country investment plans mitigate high food prices through improved household risk management? : a five-country comparative analysis.
(2012) Ngidi, Mjabuliseni Simon C.; Hendriks, Sheryl Lee.; Ortmann, Gerald Friedel.
Staple food prices rose sharply in 2007/2008, dropped slightly after July 2008, and rose again in 2010/2011. Since 2008, food prices have remained high, indicating a structural upward adjustment in food prices amidst excessive price volatility. The 2008 food price increases led to considerable media coverage and alarm among governments who implemented a variety of responses to protect their populations from food insecurity. At the start of the high food price crisis in May 2008, the African Union and New Partnership for Africa’s Development (AU/NEPAD) invited 16 African countries to a workshop in South Africa. The aim of the workshop was to assist selected African countries identify and formulate appropriate plans to mitigate food insecurity and manage rising food prices. This study set out to investigate whether the strategies implemented by national governments at the start of the crisis mitigated high food prices through improved risk management strategies in five African countries (Ethiopia, Kenya, Malawi, Rwanda and Uganda) and evaluated these strategies to see if they were included in the national agriculture and food security investment plans. To achieve this, the study set out to explore four sub-problems, namely: What was the impact of high food prices on populations in the five selected countries (Ethiopia, Kenya, Malawi, Rwanda and Uganda)? How did the five countries respond to the 2008 food price crisis with regard to providing for immediate needs and protecting vulnerable groups from food insecurity? How many early actions were included in country compacts and agriculture and food investment programmes? Do country investment plans include household risk management programmes that will protect vulnerable groups against high food prices in future? The involvement of the researcher in the AU/NEPAD workshop and his subsequent engagement with national government representatives provided a unique opportunity to analyse the iterative process of Country Investment Plan (CIP) development. This innovative and largely qualitative study integrated comparative, content and thematic analysis approaches, using the four elements of the Comprehensive Africa Agricultural Development Programme’s (CAADP) Framework for African Food Security (FAFS) to analyse the national plans. The study drew on available data from a wide variety of national, regional and international documents. Additional data were collected through a survey questionnaire completed by CAADP country focal persons. Data sourced from documents included Food Price Indices, country policy responses to high food prices, poverty and malnutrition indicators and the types of risk management strategies designed under CAADP. The study found that food prices increased across all five countries between 2007 and 2008, although the effects of the increases varied, being influenced by, among other factors, the proportion of national stocks purchased on the international market (i.e. net importers of staple crops), the availability of substitute staples on the domestic market and the magnitude of the difference between international and domestic market prices. The 2008 food price increases forced populations to spend a higher proportion of their income on food and eroded their purchasing power, impacting on the food security of these populations. Poor people adopted eroding consumption strategies that increased food insecurity. The impact of the high food prices on populations was determined by whether they were net food buyers or producers, the mix of staple commodities in their food basket and the proportion of income spent on food. As poor net food importing countries, imported staple foods became too costly, except in Uganda - a net exporter of food staples consumed in the surrounding countries. High food prices also provoked social unrest in Ethiopia and exacerbated political and economic instability in Kenya. Countries’ early responses to the food price crisis were varied and included responses that can be classified into three main categories, namely: Trade-oriented responses protected domestic stocks, reduced tariffs, restricted exports to reduce prices for consumers or increased domestic supply Consumer-oriented responses provided direct support to consumers and vulnerable groups in the form of, among others, food subsidies, social safety nets, tax reductions and price controls Producer-oriented responses provided incentives for farmers to increase production - using measures such as input subsidies and producer price support. Most responses were aimed at managing prices, suggesting that governments tried to protect citizens from price increases and buffer consumption reduction. Safety net programmes mitigated risks through the provision of food for immediate consumption. As a result, malnutrition levels unexpectedly decreased or remained static in these five countries, despite expectations and media claims that the number of hungry people would increase significantly. The early actions from the food price workshop plans were generally systematically translated into long-term programmes in the Compacts and Country Investment Plans. In Ethiopia, seven of eight early action plans were translated into the CIP, Kenya included three of eight, Malawi’s CIP included four of ten, and Rwanda included six of its ten early actions in their CIP programme, while Uganda included only six of thirteen early actions in their CIP. The study found that CIPs included risk management strategies, but these focused predominantly on improving early warning systems and crisis prevention. The risk management options largely included options for improving crisis prevention, followed by improving emergency responses and strengthening risk management policies and institutions. Only Kenya’s CIP included more risk management options for improving emergency responses – four of six risk management programmes. Despite expectations that programmes developed under CAADP FAFS would include all FAFS elements, CIPs lacked programmes to improve dietary quality. Only Rwanda’s CIP included nutrition programmes - three of six programmes in their CIP. The study concluded that while the proposed risk management strategies could mitigate risks associated with high food prices and offer some buffer for populations from food insecurity, the programmes are not comprehensive. The plans were generally weak regarding improving dietary quality through diversification of food consumption and production. Although the CIPs included risk management strategies, these strategies would not address risks in a comprehensive manner. More effective and coherent actions are still required to help the most food insecure populations cope with increasing high food prices and future price shocks; help developing country farmers respond to the opportunities offered by the rising demand for their products; and bring more stability in prices. The early food price response workshop seems to have influenced the development of programmes in the CAADP compact and CIPs, despite the fact that the workshop did not intend to assist countries with the development of comprehensive national investment plans. The large funding gaps in the CIPs constrain implementation of essential mitigation and development strategies and could leave countries vulnerable to the negative impacts of higher prices for consumers and threaten future household food security. The study recommends that countries invest in agriculture-led growth to boost domestic production and strengthen institutional capacities regarding national food stock reserves to reduce their dependency on imports and ensure food insecurity. National monitoring and evaluation systems need to be strengthened to evaluate and monitor the implementation of CIPs and to warn about future high food prices. Empirical estimation of the impact of price increases on households across all CAADP countries is needed to understand and monitor the impact of price changes and interventions.
Economic analysis of supermarkets as a marketing channel choice for fresh produce smallholder farmers in Eswatini.
(2020) Dlamini-Mazibuko, Bongiwe Porrie.; Ferrer, Stuart Richard Douglas.; Ortmann, Gerald Friedel.
The growth of supermarkets in Eswatini has been dominated by South African supermarket chains that typically have access to established procurement channels from South Africa. Whilst some supermarkets do procure some fresh produce from local farmers, others exclusively procure from South Africa. This facilitation of market access for imported fresh produce in Eswatini – a threat for local farmers - differentiates this study from previous research on the impacts of supermarkets on farmers in developing countries. In particular, supermarket requirements imposed on producers in conjunction with competition from imports has important implications for local farmers’ direct access to these markets, the types of fresh produce procured, and the relationships formed, which therefore, impact on farm incomes of smallholder farmers in Eswatini. Therefore, the primary objectives of the study are to show the procurement system of vegetables in Eswatini as a complex system; analyse the nature of the farmer-buyer relationships; determine the factors affecting the choice of marketing outlets; and estimate the impact of supermarket participation on income of smallholders in Eswatini. The study focused on the procurement of fresh produce, namely cabbages, spinach and lettuce from Hhohho and Manzini, where the majority of supermarkets in Eswatini are located. A combination of sampling methods has been used in the study. A random sampling method was used to select a sample of 110 smallholder farmers supplying vegetables to traditional markets and NAMBoard, (a parastatal that, amongst other functions, assists farmers with production, processing, storage, transportation, distribution of their produce and the sale of scheduled products) and about 60 smallholders were supplying supermarkets. Informants from the vegetable supply chain were purposely selected with the view of being directly and indirectly, involved in the chain. The thesis is structured as four research papers that address the above-stated objectives. The first research paper examines the procurement system of vegetables in Eswatini as a complex system using the Theme Network Analysis (TNA). TNA allows for the identification of linkages of key themes associated with the procurement of vegetables by formal markets and other pertinent themes that can be further investigated for solutions to the system. In the second paper, factor analysis and discriminant analysis were used to determine farmer-buyer relationships between informal and formal marketing channels based on relationship satisfaction, trust and commitment. Results from the discriminant analysis revealed that there is a statistical significant difference between formal and informal marketing channels, and those farmers supplying formal markets perceived levels of satisfaction, trust, and commitment better than for informal markets. The third research paper involved the application of the Multivariate Probit (MVP) model to estimate the factors influencing the choice of marketing outlet selection strategies. The marketing outlets observed were supermarkets, NAMBoard and traditional markets, and the results showed that these outlets were substitutes. This implies that when it comes to marketing outlet selection, farmers would select one outlet over the other based on economic and practical factors; if the conditions for supplying one market outlet are inaccessible for smallholders, another market will be selected. The selection decision is influenced by risk attitude, assets ownership, institutional variables, transaction costs and market attributes. Lastly, the fourth paper involved the application of the Endogenous Switching Regression model to determine the factors influencing participation in supermarkets and the effect participation has on income of suppliers. The results revealed structural differences between farmers supplying supermarkets and traditional markets, particularly with respect to the size of the farm and off-farm income. The result also revealed that smallholders supplying supermarkets earned a relatively higher income than those supplying traditional participants. The main conclusions of the study are as follows: the characteristics of supermarkets and farmers, as well as the nature of the product, add to the complexity of the procurement system. The TNA enhanced the understanding of the identified issues contributing to the complex procurement systems; hence, strategies for improvement can be investigated. The key challenges identified were inconsistent supply of produce, lack of finance, and transport, high procurement requirements and high transaction costs. The social responsibility approach that supermarkets use for smallholders is attributed to these procurement challenges, which means that buying from local smallholders is not one of the business strategies for retailers. Therefore, policy regulations set to limit imports and encourage domestic procurement while developing smallholders to be able meet procurement requirements are necessary. The introduction of such policies may reduce imports, which are regarded as a threat to local farmers. Secondly, the nature of the buyer-seller relationships between the marketing channels is discrete, which is characterised by flexibility and lack of commitment between farmers and the buyers. The factors affecting the choice of marketing outlets and the effect on supermarket participation are crucial for the sustainable growth of smallholder vegetable farmers in Eswatini. The farmers’ risk preference, different assets owned, institutional factors, and the duration the marketing outlet takes to make payment for produce influence supermarket channel selection decisions. The implications of these results (factors) provide empirical guidelines necessary for farmers when selecting marketing channels. Policies aimed at the commercialization of smallholder farmers involving the establishment of institutions and the acquisitions of assets such as the provision of education (skills training), improved market information, extension services, mobile phone, transportation and farm size to produce marketable surplus are critical for the improvement of supermarket participation leading to improvement of farmers’ income. The study, therefore, recommends a coordinated and comprehensive supply chain approach, which will enhance a broader understanding of the vegetable marketing system and the achievement of a mutually beneficial relationship that will enhance smallholder farmers’ access to markets and further improve their household welfare from income earned from participating in these markets.
An economic analysis of smallholders’ heterogeneity and the impact of Jatropha curcas cultivation on household welfare in the Mangochi district, Malawi.
(2021) Chamdimba, Owen Yoram.; Ortmann, Gerald Friedel.; Zegeye, Edilegnaw Wale.
The renewed interest in biofuels among many countries globally is on account of potential increased energy security, environmental and rural development benefits. Biofuels development in Malawi has the potential to achieve these objectives. The agricultural sector is the engine of the economy. Tobacco, the current primary foreign exchange earner, faces dwindling revenues from anti-smoking campaigns. Smallholders are also affected by various shocks, including weather variation, which increase vulnerability to food insecurity. There is no doubt that Malawi needs to diversify its economy to mitigate shocks and improve rural livelihoods. The Malawi government recognises, among other strategies, increased use of renewable energy sources, increased agricultural productivity, and diversification as its key priority areas. The smallholder out-grower biofuels production schemes deliver on two key government priority areas as renewable energy sources and crop diversification with the potential to open new markets, create rural jobs, and improve livelihoods. Generally, research on energy crops in Malawi is thin. The nexus of livelihood, food security, and biofuels production has not been examined in Malawi. Thus, this study aims to: (1) identify sources of smallholder heterogeneity and farmer typologies among energy crop producers, to inform livelihood improvement interventions in Southern Malawi; (2) analyse the determinants and the impact of Jatropha curcas cultivation on resilience to food insecurity shocks among smallholders, and (3) examine the welfare impacts of Jatropha curcas cultivation on smallholders in Southern Malawi. The study used cross-section data collected in 2014 using purposive and random sampling strategies from 298 smallholders in the Mangochi District of Southern Malawi. Mangochi District was chosen following reconnaissance survey results where Bioenergy Resources Limited (BERL), a consortium of Dutch Companies engaged in biofuels promotion in Malawi, was getting the bulk of Jatropha curcas seeds. The empirical research techniques employed include Principal Component Analysis (PCA), Cluster Analysis (CA), Endogenous Switching Regression model (ESR), Propensity Score Matching (PSM), and the Endogenous Treatment Effects (ETE) model. The multivariate analysis results identified five typologies that were generally distinguished by gender, asset holdings, labour endowments, level of agricultural input use, and output sales. The typologies exhibited various constraints and opportunities for livelihood improvement. Notably, more Jatropha curcas cultivating farmers, particularly female-headed households, belonged to typologies with low to medium resource endowments as compared to non-growers. There were variations in possible interventions across many of the typologies identified. Hence, interventions and strategies must target the identified typologies, where capacity is available to increase their impact and relevance. The portfolio of interventions identified range from human capital (extension), labour-intensive strategies such as work for inputs to social protection measures (safety-nets). The endogenous treatment effects model results showed that shocks, various capital assets, and institutional factors were significant determinants of resilience to food insecurity. Jatropha curcas cultivating farmers, particularly female-headed households, had significantly less resilience capacity to food insecurity compared to their counterparts. These results imply that policies and strategies that promote increased access to services and build people's capacity (such as institutional support to credit, quality education) should be given priority to increasing resilience to food insecurity. The findings of the propensity score matching and endogenous switching regression methods suggest that, when selection bias and endogeneity were accounted for, there were welfare benefits to smallholder Jatropha curcas feedstock producers. As such, there is a need for more empirical research on other potential biofuels to inform the Malawi biofuels policy in the future. In sum, the study has shown that biofuels are not a panacea that reduces rural poverty and improves the welfare of smallholders. Thus, future research must focus on developing and disseminating a portfolio of more profitable technology/practice packages for Jatropha curcas to contribute to rural household welfare. Furthermore, the study recommends policy efforts aimed at increasing resilience to food insecurity shocks. This could be achieved by increased access to credit, quality education, and strengthening climate forecasting capacity through research in climate models. Promotion of climate-smart agriculture practices is also recommended to reduce the impact of weather shocks. Where capacity is available, tailor-made interventions for livelihood improvement such as income or crop diversification, public works for inputs, and safety nets need to target specific groups based on smallholders' unique characteristics to account for heterogeneity.
The economic feasibility of non-farm biodiesel production in KwaZulu-Natal, South Africa.
(2010) Sparks, Garreth David.; Ortmann, Gerald Friedel.
Recent years have seen an unprecedented global increase in the production and use of biofuels. This has been driven primarily by government support for biofuel industries. Soybeans are the only field crop produced in sufficient quantities in the province of KwaZulu- Natal (KZN) that the South African (SA) industrial biofuel strategy identifies as a potential biodiesel feedstock. Thus, this study is an evaluation of the economic feasibility of producing biodiesel on farms from soybeans in the main soybean-producing regions of KZN, using batch processing biodiesel plants. A mixed integer linear programming model was developed to simulate observed agricultural land rental rates (estimated at 4.48% of the market value of land) and cropping behaviour of commercial crop farms in the study regions. The model incorporates various alternative crops, crop rotations, tillage techniques, arable land categories and variance-covariance matrices to account for risk in production. All data are on a real 2009/10 basis. The model is used to predict possible farmer investment behaviour and determine the minimum biodiesel subsidy required to stimulate soybean-based biodiesel production in the study areas. Results suggest that biodiesel production is currently not an economically viable alternative to fossil fuel, and that the incentives and commitments outlined by the current industrial biofuel strategy are inadequate to both establish and sustain a domestic biodiesel industry. Under baseline assumptions, a realistic minimum implicit subsidy of R4.37 per litre of biodiesel is required to draw soybean-based biodiesel production into the optimum solution for commercial farms. The economic feasibility of on-farm biodiesel production is highly dependent on the soybean price (i.e., the feedstock input cost) and the soybean oilcake price (i.e., the highest valued byproduct). Thus, future promotion of biodiesel ventures could primarily target a reduction of feedstock costs through the development of new technologies which increase yields of available feedstocks and/or permit the use of lower cost alternatives. Higher subsidy levels are anticipated for: (i) small-scale initiatives (particularly in the absence of a rental market for cropland); (ii) soybean-based biodiesel production in areas with less suitable growing conditions for cultivating soybeans; and (iii) using sunflower and/or canola as biodiesel feedstock. To the author’s knowledge no other previous studies have attempted to quantify the minimum level of support needed to stimulate biodiesel production in South Africa. The SA industrial biofuels strategy promotes a development-oriented strategy with feedstock produced by smallholders and processed by traditional producer-owned cooperatives. However, traditional cooperatives suffer from a myriad of institutional problems that are associated with ill-defined property rights. As such, it is argued that these initiatives will fail to attract the capital and expertise needed to process biodiesel. This research, therefore, highlights the need for South Africa’s current Cooperatives Act to be amended. Accordingly, this also infers a need to revise the proposed SA industrial biofuels strategy. It is concluded that smallholder participation in biodiesel ventures would require a rental market for cropland, co-ownership of the processing plant in a non-traditional cooperative or investor-owned firm, information and training, and a high level of government subsidy. This research advocates that government consider promoting soybean oil extrusion ventures as a means of stimulating rural development for small-scale farming initiatives rather than soybean-based biodiesel production, as they will likely require less government assistance, whilst potentially combating the food versus fuel debate against biofuels. This is compounded by the fact that South Africa has historically been a net importer of both soybean oilcake and soybean oil. Importantly, however, the proliferation of such initiatives should not be based on the current notion of traditional cooperatives. The need for government to play a proactive role in such ventures through facilitating the development of appropriate business models which stimulate private investment in feedstock and processing facilities is clearly evident.
The economic feasibility of producing ethanol from sugar-cane in South Africa.
(1985) Ortmann, Gerald Friedel.; Nieuwoudt, Wilhelmus Liberté.
The study is an evaluation of the economic feasibility of producing ethanol from sugar-cane in South Africa. With the depressed state of the sugar market and recent substantial increase (40% in January 1985) of liquid fuel prices linear patterns in South Africa, the study is of a topical nature. A regional linear programming model is used which simulates current production patterns in 22 areas of the South African Sugar Industry. The model incorporates demand functions for crops, substitution in demand between crops, supply functions for labour and variance-covariance matrices to account for risk in production. The model is used to evaluate the effects of alternative sugar policies, namely a pool scheme and a free market for sugar, with particular emphasis on ethanol production. Results show that the total ethanol cost (including opportunity cost) per litre in an industry producing one billion litres a year was over twice the refinery-gate or pre-tax petrol price around 1979/80 but similar to the pump price of petrol. More recently (1985) petrol prices have increased relative to ethanol costs due to the weakening of the rand against other major currencies. Ethanol costs are now (1985) about 25% above the refinery-gate petrol price and below the pump price of petrol. SASOL's petrol costs at present appear to be similar to fuel costs based on crude oil and below ethanol costs (from sugar). For new SASOLs the capital cost is expected to increase substantially due to the relatively weak rand. This may make ethanol production from sugar-cane more competitive. A strong positive correlation is evident between sugar-cane production and labour employment. With a subsidized billion-litre ethanol industry labour employment is estimated to increase by 45 000 (34%) under a pool scheme and by 25 000 (19%) under a free edible sugar market compared with current employment. Development costs per worker are estimated to be about R30 000 compared with over one million rand per worker for a new SASOL plant. In a free market the area under sugar-cane is estimated to decrease by about 50% and labour employment by 26%. Areas moving out of cane production include Pongola, Hluhluwe, Nkwaleni Valley, Tala Valley, Umfolozi Flats, Zululand hinterland, South Coast, Natal Midlands (North and South). No sugar would be exported. The local equilibrium sucrose price is estimated to be about 9% below the producers' price under the current policy (that is, up to and including the 1984/85 season) and 17% below the A - pool producers' price under the pool scheme. Social costs of the current policy are estimated as 6.8% of total sucrose value compared with 4.7% under a pool scheme with A - pool quotas transferable only within Mill Group areas and 2.3% where A - pool quotas are transferable between regions. Ethanol production would add to social costs.
The economics of smallholder irrigation water management : institutions, water-use values and farmer participation in KwaZulu-Natal, South Africa.
(2014) Muchara, Binganidzo.; Ortmann, Gerald Friedel.; Wale, Edilegnaw Zegeye.; Mudhara, Maxwell.
In recognition of the role of smallholder irrigation farming in ensuring better rural livelihoods, the South African government has made substantial public investment in irrigation infrastructure. The most important perceived problems of communally-managed irrigation schemes in South Africa are the provision of an assured water supply and institutional support relating to water and land allocation, appropriate management, managing local conflicts and farmer participation and collective action in managing water resources. However, if one is to consider international standards as a yardstick, most communallymanaged irrigation schemes in South Africa are undergoing Irrigation Management Transfer (IMT), where the responsibility of managing, operating and maintaining irrigation schemes becomes that of the farmers instead of the state. The most critical issue, given the history of poor performance of smallholder farmers in South Africa, is the extent of users' involvement in irrigation water management. While user participation in water resource management is a South African and international principle, the question is whether smallholder farmers appreciate the importance of and possible benefits to be accrued from the participation. The objectives of the study were: to assess water governance and institutional arrangements and their effects on irrigation management in the Mooi River Irrigation Scheme (MRIS) in KwaZulu-Natal, South Africa; to assess the implication of institutional and management systems on water-use security; to assess the level of farmer participation in collective agricultural water management and the factors affecting users' willingness to do so; and, lastly, to estimate and explain the variation in average irrigation water values as a basis to understand the water management challenges at smallholder farm level. The study used a number of data collection and analytical techniques to achieve the specific objectives. Participatory rural appraisals, which included focus group discussions and key informant interviews, and three household surveys comprising of 60, 71 and 307 respondents were conducted to answer the specific questions. Water governance and institutional arrangements are critical in shaping the long-term sustainability of smallholder irrigation schemes. The Institutional Analysis and Development (IAD) framework and Ostrom's eight institutional design principles were applied for assessing the linkages and effectiveness of institutions governing the management and use of irrigation water resources in the Mooi River Irrigation Scheme. The study found that water user participation was hindered by farmers' lack of understanding of water policies that are driving the formalisation of local water management systems, which include the registration of water user associations and the requirement for farmers to contribute towards the sustainability of such associations. The role and relevance of water-user associations as formal local water governing institutions and their linkages to informal management structures like local irrigation committees and traditional leadership are weak and require farmer training to enhance coherent institutional linkages at local level. Weak regulatory instruments characterised by poor rule enforcement mechanisms, lack of secured property rights (especially for land) and lack of water security impact irrigation water management among smallholder farmers negatively. Irrigators in community-managed schemes have varying levels of water access. However, the greatest challenge in these schemes is lack of understanding of the level of water-use security and the influence of local management systems. As such, the study assessed the implications of institutional arrangements on agricultural water-use security. The study recognised the multifaceted nature of agricultural water-use security and therefore applied the Lancaster- Maler model in the conceptualisation of water use at farm level. After applying Principal Component Analysis (PCA) to construct water-use security indices based on the desired attributes of irrigation water, the Ordinary Least Square (OLS) regression technique was applied to identify factors affecting water use at farm level. The results show that agricultural water-use security can be grouped into three main dimensions, namely: physical on-farm availability of irrigation water, existence of effective enforcement mechanisms pertaining to water appropriation, and effective involvement of water users in decision-making processes. The study points to the fact that water-use security at farm level is relative and therefore no absolute measures can be applied. Furthermore, the three dimensions of agricultural water-use security are affected by, among other things, farmers' experience in irrigation, household income, effectiveness of irrigation committees to enforce appropriation rules, membership of an irrigation scheme, membership of a water user association, as well as resource and cost sharing. To ensure improvement in agricultural water-use security among small-scale irrigation farmers, institutional arrangements that promote the effective participation of farmers in decision-making and conflict management mechanisms are recommended. This can be augmented by creating mechanisms that ensure equitable sharing of resources and costs among common pool resource users. Improving the capacity of local institutions and management structures to minimise unsanctioned access to common pool resources (CPRs) may also improve water-use security. In line with current focus by most developing countries, including South Africa, to transfer management of communal irrigation schemes from state to farmers, an understanding of the determinants of farmer participation in collective activities forms the basis for improving the management of previously government-funded schemes. Empirical results of Tobit and the Ordered Probit models, estimated using cross-sectional data from 307 randomly selected smallholder irrigators, suggest that collective activities are negatively affected by low farmer-literacy levels. Furthermore, the number of consecutive days per week that farmers go without access to irrigation water was used as a proxy for water scarcity, and was a significant determinant of farmer participation. The existing incentives for water-users in the Mooi River Irrigation Scheme were weak and need to be improved to encourage farmer participation in collective water management. This calls for strengthening of local water management systems and institutional policies to ensure maximum benefits from participating in collective activities. In a bid to understand on-farm water utilisation and management processes, water valuation was performed using irrigation data collected from 60 farmers over a single production cycle spanning the time from planting to harvesting. Furthermore, the SAPWAT 3 model was used to generate secondary data on irrigation water requirements for selected crops predominantly grown by farmers in MRIS. The residual value method was applied to both primary and secondary data to estimate water values and understand the factors affecting the magnitude of the values across irrigation plots. The results indicated that most farmers in the Mooi River Irrigation Scheme applied less water (average of 61.4%) to their potato crop, ranging between 14% and 174%, when compared to the irrigation water requirements. Crops with relatively low gross margins like maize and dry beans yielded lower average water values of ZAR1.31/m3 and ZAR1.09/m3 respectively, while tomatoes yielded ZAR11.78/m3. Based on primary data gathered over the entire production cycle, the average water value for potatoes was ZAR0.50/m3, ranging from negative ZAR17.57/m3 to +ZAR12.66/m3, which were lower than that imputed from secondary provincial budget estimates, i.e. ZAR2.10/m3. This suggests poor performance by farmers in the study area. The variability of water value was significantly influenced by the location of the irrigated plot along the main canal, which accounted for 12.5% of the variation. The number of irrigation cycles and education level of the farmer explained 5.8% and 5.9%, respectively, of the variation in average water values. The study illustrates that where water is provided free of charge to a large group of users, unequal distribution, poor management and inefficient use are the challenges commonly encountered. Negative water values also revealed under-performance and the potential high level of indirect government subsidisation of smallholder farmers, mainly through provision of irrigation infrastructure. In sum, the study has shown the complexity of managing common pool resources at a localized level, and pointed to the need to further understand the institutional dynamics in which smallholder irrigation farmers operate. In view of the parallel arrangements between formal and informal water management structures in communally managed schemes, it is recommended that the traditional authorities be incorporated in the water-user associations as ex-officio members and be the custodians of rule enforcement at community level. This might improve compliance to appropriation rules, where the traditional courts can be used concurrently with water user associations to settle local water disputes at community level. Furthermore, communally-managed irrigation schemes still lack capacity for self-management and the negative water values signify poor performance. It is therefore recommended that both human and financial resources as well as technical backup still need to be provided through government support programmes to avoid the widespread collapse of communally-managed irrigation schemes in South Africa. However, such support should mainly be through capacity building, training and provision of expertise in irrigation management to enable the users to manage the scheme on their own, while putting mechanisms in place to ensure that irrigators pay for the maintenance of the infrastructure using returns from irrigation farming.
Evaluating farmers' and consumers' acceptance of new cooking banana hybrids in Uganda : micro-economic analysis and policy implications.
(2014) Akankwasa, Kenneth.; Ortmann, Gerald Friedel.; Wale, Edilegnaw Zegeye.
Banana is an important world food crop supporting the food security and livelihoods of millions of smallholders in tropical countries of Africa, including Uganda. Despite the crop‟s importance in Uganda, its productivity has been declining over time due to pests (banana weevils and nematodes), diseases (black Sigatoka, banana bacterial wilt), soil fertility decline, and socio-economic constraints (high costs of managing the crop, competition for labour with other enterprises, marketing difficulties and low genetic diversity, among others). The decline in banana yields has resulted in food shortages, thus putting consumers heavily dependent on banana at risk of food insecurity, particularly in most rural areas of Uganda where the crop is regarded a staple food. In response to this trend, the National Banana Research Programme (NBRP) in Uganda initiated a breeding programme in 1994 using a participatory plant breeding approach. The programme has so far developed four new banana 'matooke' hybrid varieties (M2, M9, M14, and M17). These varieties have been under evaluation in different agro-ecological regions of Uganda since 2008 with Mbwazirume (a traditional variety) as a local check. Despite the research and extension efforts to popularise these hybrids in Uganda, to date, no attempt had been made to document consumer acceptance and the likelihood of farmer adoption of these hybrid bananas. Little is known about the socioeconomic factors that influence farmers‟ early-stage adoption of the banana hybrids, farmers‟ preferences of the varieties, consumers‟ willingness to purchase the bananas of the hybrids when found on the market, and the likelihood of these hybrid varieties contributing to solving rural household food insecurity and low incomes. Given this context, the objectives of this study were to: (i) analyse farmers‟ preferences regarding varietal attributes and assess how these preferences, along with farm and farmer specific characteristics, determine the variations in the levels of early stage adoption of hybrid banana varieties in Uganda with the application of factor analysis and a Zero-Inflated Poisson (ZIP) regression model; (ii) analyse the effects of farmer characteristics, variety attributes and agro-ecological conditions on banana variety choice in Uganda, with the application of a multinomial logit model; and (iii) determine the consumption characteristics and sensory attributes that are most important in predicting the likelihood of consumers‟ iv purchase of hybrid banana varieties using binary logit models. The research focused on four regions of Uganda (namely, Mid-Western, Central, Western and Eastern) representing six major agro-ecological zones, including the Lake Albert crescent area, Lake Victoria crescent, Western highlands, Southern highlands, South-east and Eastern agro-ecologies where the National Banana Research Programme of the National Agricultural Research Organisation is evaluating the new hybrid banana varieties. The data were collected from 454 farmers that included participating (149) and non-participating (305) respondents, and 908 consumers that participated in farmer field days to evaluate various hybrid banana varieties from across the four regions of Uganda. The results show that, compared to Mbwazirume, four of the hybrids (M2,M9,M14 and M17) are preferred in terms of production characteristics (resistance to Sigatoka, weevils, nematodes, tolerance to poor soils, good bunch size, and sucker production) but are regarded as inferior in terms of consumption characteristics (taste, colour when cooked, and flavour). Field observations suggest that farmers‟ preferences for production attributes dominate in their variety choice decisions. The hybrid M9 is regarded as having a relatively good performance with respect to most of the production and consumption characteristics. The results suggest that land constraint, taste and regional location (central region compared with eastern region) were negatively associated with hybrid variety choice while perceptions that hybrid bananas could reduce food insecurity and enhance tolerance to pests and diseases were positively associated with probabilities of hybrid variety choice. Probabilities of choosing hybrids for food security increase in favour of M2 (by 0.06) and M9 (by 0.28), and decrease for M2 (by 0.23), M9 (by 0.07) and M14 (by 0.09) due to unfavourable taste relative to Mbwazirume. Among the consumers, the study suggests that hybrids M2 and M9 were not significantly (P>0.05) different in terms of taste, flavour, texture and colour, while differences were observed between M14 and M17 when introduced on the market. Hybrid M14 is regarded as better than M17 in terms of taste, flavour and texture. The results show that the Eastern region would pay significantly higher prices for the hybrid varieties compared to other regions of Uganda. This result could be attributed to the limited availability of cooking banana varieties in this region. The results suggest that age, education, good taste, flavour and texture were the most important factors that are likely to positively influence the purchase of most of the hybrid banana varieties.
Factors affecting the demand for labour in large-scale sugarcane farming in three regions of KwaZulu-Natal, 1984-2008.
(2013) Goga, Adhil Mahmood.; Ortmann, Gerald Friedel.; Ferrer, Stuart Richard Douglas.; Darroch, Mark Andrew Gower.
Many authors have cited the relatively high unemployment rate as the most severe economic problem facing South Africa today. At the same time, government institutions claim that the agricultural sector can help solve the high unemployment rate, as this sector has the potential to create employment for a large number of unemployed South Africans. These institutions do not elaborate on how the sector will provide so many jobs. Published empirical studies on the South African (SA) agricultural sector have recommended ways in which policy-makers may achieve their goals of creating employment. However, most studies on labour considered the entire agricultural sector, whereas this study focuses on a sub-sector, namely the SA sugarcane sector. The study aims to analyse the potential of the sugarcane SA sector to create employment by estimating long- and short-run price (wage) elasticities of labour demand for large-scale sugarcane farms on the South Coast, in the Midlands and in Tugela/Zululand during 1984/1985-2008/2009. Using panel data, two models are estimated by Ordinary Least Squares (OLS), Model 1 capturing labour use intensity and using “labour units employed per 1000 tonnes of cane cut” as the dependent variable, while Model 2 captures the total labour units demanded by large-scale sugarcane farmers. Only Model 2 is estimated using simultaneous equations as past studies indicate that labour use intensity may be analysed using single-equation models. For Model 1, the estimates of the long-run wage elasticities compared to the short-run wage elasticities are similar and around -0.5, -0.17 and -0.33 for the South Coast, Midlands and Tugela/Zululand regions, respectively. The wage elasticity estimates for Model 2 in the short-run were -0.34, -0.24 and -0.17 and in the long run -0.61, -0.42 and -0.30 for the South Coast, Midlands and Tugela/Zululand, respectively. The two econometric techniques (OLS and 3SLS) yielded similar wage elasticities. Results suggest that all labour demand estimates were wage inelastic, with the South Coast having a relatively greater response of labour demand to wage rate changes than the other two regions. Inelastic demand estimates for labour in all three regions may be due to the perennial, long-term nature of sugarcane and farmers taking time to decide how to respond to changes (hikes) in the price of labour. The decline in the demand for labour by large-scale sugarcane farmers due to an increase in real wage rates raises questions about the appropriateness of labour laws and minimum wage iii legislation that have increased the real cost of farm labour in the large-scale sugarcane sector of KZN. In order to reverse the rising farm labour unemployment trend in South Africa, the study recommends that policy-makers could rather adopt more flexible labour market regulations (for example, those relating to the hiring and dismissal of workers) that would reduce real labour costs and encourage local farmers to employ more labour on sugarcane farms. Furthermore, the land under sugarcane proved to be an important determinant of the demand for labour by large-scale sugarcane farmers and hence policies regarding land reform need to be revised and implemented more proficiently. Future research could focus on the skill-level of those workers who are affected the most following an increase in minimum wages and possible reasons why the KZN sugar industry is losing land to other land uses.
Factors influencing farmers' choice amongst various marketing alternatives for maize in South Africa.
(1999) Bown, Anthony Norman.; Ortmann, Gerald Friedel.; Darroch, Mark Andrew Gower.
A postal survey was conducted in 1998 amongst a sample of 800 National Maize Producers' Organisation (NAMPO) members in the major maize producing regions of South Africa, namely the Northwest Province, Mpumalanga and the Free State. Study objectives were (1) to measure the extent to which large-scale commercial maize farmers were using, and intended to use, alternative maize marketing strategies which have evolved since the abolition of the Maize Board in 1996, and (2) to identify the business and personal factors influencing their use of price risk management tools (forward contracts, futures contracts, and options). The average age of respondents was 47 years. Respondents had a mean of 24 years farming experience and 14 years of formal education. They grew an average of 918 ha of maize annually, whilst mean annual turnover per farm was R 2.9 million, of which 68 percent was derived from maize. Seventy-two percent of respondents reported owning a personal computer for use in the farm business, and of these, 37 percent had Internet access. Farmers generally rated their skills in marketing management lowest relative to other aspects of management. Respondents had a better understanding of forward contracting than the more complex concepts of Futures contract and Options trading on the South African Futures Exchange (SAFEX). Most respondents used a portfolio of maize marketing channels in order to spread price risk in accordance with a sequential marketing strategy. Results indicate that sample maize farmers are making increased use of the forward contracting market relative to the spot market, while on-farm use of maize is also increasing. Both the percentage of respondents using SAFEX and the percentage of the value of the annual maize crop in the sample regions that was hedged on SAFEX increased markedly over the three-year study period. The hedging ratio - defined as the ratio of the crop hedged to that unhedged - rose from 27 percent in 1997/98 to 49 percent for 1998/99 and a projected 50 percent in 1999/2000. Amongst maize marketing intermediaries, elevators (eg. cooperatives and former cooperatives) handled approximately half the value of the annual maize crop in the study areas, and commercial users (eg. Millers) directly bought 15 percent of respondents' maize. Small traders/agents handled roughly 10 percent, and large traders (eg. Louis Dreyfus) another 10 percent of study farmers' annual maize crops. No users of currently operating Internet-based maize trading systems were identified. Survey respondents were classified as lower- and higher- level users of price risk management tools, based on their scores for an index of price risk management use. The index took into account three aspects of price risk management behaviour exhibited by sample respondents: the use of forward pricing mechanisms, the number of different marketing channels used, and the relative proportions of the producer's annual crop passing through these channels. Higher-level users of price risk management tools tended to operate larger farms, and be younger, less experienced, but more educated, computer adopters who were less likely to individually own their operations. Ordinary Least Squares (OLS) regression was used to estimate the effects of respondents' business and personal characteristics on their scores for the index of price risk management. The use of maize storage facilities, off-farm employment, use of formal crop insurance, operators' number of years of formal education and the proportion of farm turnover arising from maize all positively influence sample farmers' use of price risk management tools. Both the scale-dependent benefits and fixed transaction costs associated with using price risk management tools can be spread over a larger volume of output as the volume of maize marketed increases. The Operators' self-rated score of marketing management ability was negatively related to the use of price risk management tools, in contrast to the findings of previous studies in the USA. Many respondents indicated concern about a lack of competitiveness in the local spot market, and perceived that large maize buyers were manipulating maize prices. Farmers should use SAFEX Agricultural Marketing Division (AMD) Futures prices as guidelines in "discovering" prices when negotiating with maize handlers and millers about cash maize sales. Producers should also monitor their local basis (the difference between the local spot price and the nearby Futures price) to identify opportunities for the profitable transportation and/or storage of maize. A need was identified for further education of maize farmers regarding the use, costs and benefits of available maize marketing alternatives. Weekly agricultural magazines and maize marketing seminars may be the most effective mediums through which to inform maize farmers about prices and marketing services. Further research opportunities were identified in the monitoring of farmers' maize marketing activities as the South African maize market matures, and in establishing recommended hedging ratios for South African maize farmers.
Factors influencing the economic performance of a panel of commerical milk producers from East Griqualand, KwaZulu-Natal and Alexandria, Eastern Cape, South Africa: 2007-2014.
(2018) Ross, Jethro James.; Ortmann, Gerald Friedel.
The South African dairy industry has been characterized, in recent years, by an observed movement towards fewer, larger producers, implying a more competitive milk market in which efficiency measures are likely to become increasingly important determinants of farm financial success and survival. Due to the imperfect nature of efficiency estimates, a more integrated approach is adopted in this study in which economic performance is defined as an unobservable variable for which there exist many imperfect indicators, including various measures of efficiency. This study presents a two-stage approach to analyse economic performance, and its key determinants, for a panel of commercial milk producers in East Griqualand (EG) and Alexandria, South Africa, over the period 2007-2014. Stochastic frontier analysis was used to estimate technical efficiency (TE) from a translogarithmic production function, selected ex-post from several specified models with different functional forms and distribution assumptions. Parametric scale efficiency (SE) was then estimated from the resulting scale elasticities and parameter estimates. Results indicate that sampled producers are, on average, highly technically efficient, generally operating close to the efficient frontier, and are relatively homogenous in production. The general decline of mean TE scores over the study period indicates that farms on the best practice frontier became more efficient over time, while the average farm has become less efficient in relation to the advancing frontier. High mean SE scores confirm that most farms do not experience a substantial loss in output due to scale efficiency problems, but rather to inefficiencies in production (TE). Analysis of SE scores reveals that most farms operated at suboptimal scale, with increasing returns to scale, and could improve output by expanding towards the optimal scale. Latent economic performance was modelled in a Multiple-Indicators, Multiple-Causes (MIMIC) model framework, with estimated TE and SE serving as imperfect indicators. Three latent indices were constructed to represent managerial quality regarding the breeding, feeding and labour programme, and were included in the structural equation, in conjunction with traditional explanatory variables, as latent causes of economic performance. Evaluation of model fit for several specified models led to the selection of the most simplistic specification, in which the latent managerial constructs were not included. Results suggest efficiency, milk yield per cow, and level of specialization in dairying all have a significant effect on the economic performance of the sampled farms. It should be noted that the sign of latent economic performance was not in line with expectations, and requires further research.
Factors influencing the long-term competitiveness of selected commercial milk producers in east Griqualand, South Africa.
(2009) Du Toit, Justin Philip.; Ortmann, Gerald Friedel.
This study presents two separate competitiveness analyses to assess changes in, and factors influencing, the long-term competitiveness of a panel of commercial milk producers in East Griqualand (EG), South Africa. The Unit Cost Ratio (UCR) method was used to measure competitiveness of EG milk producers. It is defined as the ratio of dairy enterprise accounting costs plus an opportunity cost of management at 5% of milk revenue, to total dairy enterprise revenue. The initial UCR analysis was used to partly investigate the impact of dairy market deregulation on the relative competitiveness of EG milk producers over the period 1983 to 2006. The results of this UCR analysis found that the sample of EG milk producers were not competitive based on the net local price, PL, received for milk but were competitive when dairy cattle trading income was included. This suggests that dairy cattle trading income played an important role in enhancing the competitiveness of EG dairy enterprises in the study period. Further UCR analysis revealed that differences in the inherent ability of members of the EG group to manage market deregulation impacted on the relative competitiveness of EG milk producers. The top onethird of the sample of EG milk producers remained relatively competitive from 1983 to 2006 due to higher real milk prices and lower real unit costs than producers in the bottom one-third category. Differences in relative competitiveness between the top and bottom one-third categories of producers were statistically significant. Based on the findings of the UCR analysis, a Ridge regression analysis was then used to investigate other factors influencing the long-term competitiveness of selected milk producers from EG using unbalanced panel data for the period 1990 – 2006. Results of the regression analysis showed that dairy herd size, the level of farm debt, annual production per cow, technology and policy changes over time, and the ratio of trading income to total milk income influence the long-term competitiveness of these milk producers. To enhance their competitiveness in a deregulated dairy market, relatively small and profitable EG milk producers should consider increasing herd sizes as the importance of herd size in explaining competitiveness suggests that size economies exist. All EG milk producers should consider utilising more pasture and other forages to lower feed costs and select dairy cattle of superior genetic merit to improve milk yields.
Grain marketing policies and food aid in Lesotho : implications for food security.
(1996) Makenete, Andrew Lehlohonolo.; Ortmann, Gerald Friedel.
Food security is a necessary condition for the survival of every nation, household and individual. With the failure of the food self-sufficiency policy in Lesotho alternative food security objectives are suggested. Supply and demand factors need to be considered to develop a holistic and balanced view of food security. Maize marketing and pricing policies as well as food aid impact on food (in)security since they affect the movement and trade of maize grain and maize meal, the primary staple of Lesotho. A study was conducted amongst policy makers, government officials, retailers and millers in Lesotho to review the maize marketing system and procedures for setting maize prices at producer, mill-gate and consumer levels. Set prices distort price signals which influence decisions to allocate and distribute resources to provide goods and services for markets. Lesotho is a net importer of maize grain, the major staple, implying that maize pricing and marketing policy affect food security. Results indicate flexible informal marketing channels, fixed formal marketing channels and declining real producer, mill-gate and consumer prices in recent years. Falling real South African Maize Board export grain prices and evidence of subsidies to commercial Lesotho mills explain these price trends. Changes to the one channel formal marketing system and nationally administered price structure that would encourage an open market system with less restrictive interregional maize trade are recommended. The extent of food aid dependence in Lesotho and the possibility of reducing reliance on food aid are also analyzed. Primary data on food aid statistics were collected from various food aid agencies and institutions, supplemented with secondary data obtained from government documents. Results show that reducing food aid dependence is unlikely in the longer term, which has implications for the level of food (in)security in Lesotho. Food aid to Lesotho supplements commercial imports to meet the shortfall in local cereal production. It improves nutritional and consumption levels of vulnerable households, but shows no correlation with producer and consumer prices. Food aid reduces government budgetary expenditures on food, saves on foreign exchange to pay for food imports, and when used as 'food for work' to build infrastructure, has multiplier effects on agricultural growth, leading to expanded income and employment in other sectors of the economy. Poverty alleviation measures and income generating activities must be the primary focus if food aid dependence is to be reduced.
Groundnut variety replacement, market structure, marketed surplus and demand for improved varieties in Malawi: the case of smallholders and traders.
(2020) Katunga, Admire.; Ortmann, Gerald Friedel.; Zegeye, Edilegnaw Wale.
Groundnut is an important crop for the Malawian agricultural sector. It has the potential to increase agricultural farm incomes and contribute to improving food security for the predominantly maizebased food production system. The Government of Malawi also considers groundnut as one of the legume crops to complement dwindling export earnings from tobacco, which is the main export crop for the country. Despite its potential to contribute to the economic wellbeing of smallholders and the economy at large, the empirical literature has not adequately investigated how factors inherent in the production and marketing chain affect the performance of the groundnut subsector. Given this, the objectives of this study were to: investigate factors that determine smallholder' replacement decisions of conventional and modern varieties of groundnuts; assess effects of marketed surplus on demand for improved varieties by smallholders, and determine market competitiveness and entry barriers for groundnut markets among intermediary traders in central and northern Malawi. These objectives were achieved with survey data collected from groundnut smallholder producers and intermediary traders. Simple and systematic random sample sizes of 416 and 124 respectively were selected. The study focused on five potential groundnut producing districts, namely, Lilongwe, Mchinji, Kasungu and Salima in central Malawi, and Mzimba in northern Malawi. Several econometric techniques were applied to analyze the data, namely, Bivariate Probit (BVP), Endogenous Switching Probit (ESP), and the Multivariate Probit (MVP) regression models. The empirical results of the Bivariate Probit (BVP) model indicated that among the smallholders that replaced conventional with improved varieties, few reverted to the cultivation of the former. Other findings suggest that the probability that farmers would replace groundnut varieties, improved or conventional, was lower than the probability for not replacing them. Conversely, the probability of maintaining modern varieties was higher than that of maintaining conventional ones. Further results indicated that the production of groundnuts for food and income increased the probability of replacing both conventional and improved varieties. The statistical significance and the probability for this dual-purpose production were stronger and higher in the replacement of conventional varieties than for the modern ones. Factors related to the road infrastructure network decreased the likelihood of replacing conventional varieties, whereas institutional factors and smallholder' productive assets increased the likelihood of replacement of the same. Finally, farm household characteristics and related institutional factors positively influenced the probability of replacing modern groundnut varieties. These findings suggest that promoting dualpurpose production of groundnuts could increase the adoption of modern varieties while concurrently maintaining the diversity of the conventional ones. Farmers that belong to farmer organizations, those experienced in groundnut production and human capital development of the farmers, are also critical in contributing to the conservation of conventional varieties through strategies that mitigate their erosion. The results of the Endogenous Switching Probit (ESP) showed that marketed surplus had a positive effect on demand for improved varieties. The average treatment effect for smallholders with a marketed surplus (ATET) on the probability that they demanded improved varieties increased by 40%. Conversely, the average treatment effect for smallholders that did not have marketed surplus, the untreated (ATU), on the probability that they demanded improved varieties declined by 14%. Further, the marginal treatment effect (MTE) and average treatment effect (ATE) of marketed surplus on the probabilities to demand improved varieties increased by about 30% and 26%, respectively. Other results of this analysis revealed that despite groundnut productivity remaining constant for over a decade at smallholder level, marketed surplus, as indicated by the average commercialization index, was observed to be about twice the household's average consumption index. This finding suggests that farmers are orienting themselves towards the commercialized production of groundnuts. Access to market information, being involved in piece work jobs, yield per hectare and the proportion of total land allocated to the production of groundnuts had a positive and significant effect on marketed surplus. The positive average effects of marketed surplus on demand for improved varieties suggest that farmers that are inclined to intensify market participation value high yielding traits from improved varieties more than any other groundnut varietal attributes. The findings of the study suggest that demand for improved varieties among smallholders could increase if policy interventions could also focus on the challenges that smallholders encounter in the output market. In this case, increased crop productivity, engagement of smallholders in off-farm economic activities, and enhancing access to output market information are critical. In other results, an interval Herfindahl-Hirschman Index (HHI) revealed the existence of a competitive structure in the local, district, and city groundnut markets. However, the Multivariate Probit (MVP) regression model showed more entry barriers in the local and city markets than in the district market. Such findings suggest that the existence of competitive market structures does not imply the absence of trader entry barriers into the markets. Other results of the MVP showed that experience in business and sole ownership of business positively influenced entry into the district and local markets, respectively. Market transaction costs and storage infrastructure negatively and positively influenced entry into local and city markets, respectively, while the quantity of produce transacted positively and negatively influenced entry into both local and city markets, respectively. Access to credit and informal credit sources positively and negatively influenced entry into city markets, respectively. Membership in informal trader' associations positively influenced entry into city markets. The findings of the study suggest that policy facilitation for the formation of formal trader associations and access to credit from formal financial institutions could enhance trader' participation in the city groundnut markets. Further, public-private partnership investment in storage facilities and public investment in road infrastructure is critical in reducing market transaction costs, which could enhance the participation of intermediary traders in the local and city groundnut markets. The overall findings of the study attest to the need for policy support for an integrated smallholder groundnut seed system that would contribute to the growth and development of smallholder agriculture. Strategies that would enhance the adoption of improved varieties and minimize losses of indigenous germplasm are critical. In this vein, the marketed surplus has shown to be relevant to increase the demand for improved varieties among the smallholders. There is also a need for policy support in reducing constraints that prevent intermediary traders from enhancing their participation in the groundnut markets. In such a way, they would continue to render marketing services to smallholders, which otherwise could be costly if undertaken by themselves. One crosscutting issue that merits attention for policy support is infrastructural development in improved road networks from crop production centers to the distribution of produce along the marketing chain of groundnuts.