Agricultural Economics

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Agricultural Economics applies economic principles to solve agricultural and agribusiness problems. Our degrees equip graduates for professional and senior management positions, and are highly valued by employers. They give our graduates the flexibility to pursue a wide range of career opportunities. The Agricultural Economics major can be taken as part of a BScAgric (4 year) degree. Students taking the BScAgric option must major in Economics and Agricultural Economics, and take subjects such as Biometry and Statistics, Animal Science, Crop Science, and Horticultural Science.

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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.
Adoption and impact of climate-smart agriculture technologies in integrated crop-livestock farming systems.
Mujeyi, Angeline.; Mudhara, Maxwell.
In Zimbabwe, smallholder farmers who rely on rain-fed crop-livestock systems for their livelihoods face multiple constraints which include a shortage of labour, inadequate capital to purchase inputs, low soil fertility, pests, disease outbreak, and low productivity as a result of climate change and variability. Climate change has caused prolonged droughts, reduced rainfall amounts and changing rainfall patterns, threatening the welfare of agriculture-based households. Climate-smart agriculture (CSA) technologies have been promoted as a panacea to address the negative effects of climate change. To date, the adoption of CSA has been low and on small land sizes. However, to ensure maximum benefits from CSA and scale up adoption, a better understanding is required regarding smallholder farmer adoption patterns. This study mapped adoption patterns, analysed common CSA technology bundles, measured the impact of CSA on household welfare and modelled optimal enterprise mix for farmers adopting CSA. Data was collected through a cross-sectional household survey of 386 multistage randomly selected respondents from four districts in Zimbabwe. Analysis was done using multivariate statistical techniques of principal component analysis and cluster analysis as well as the Cragg double hurdle model, multinomial logistic regression model, endogenous Switching Regression model, Cost-Benefit Analysis, stochastic profit frontier model and multiobjective goal programming. The findings based on the PCA-Clustering analysis showed that patterns of CSA varied across the household typologies. Resource endowed and experienced farmers have a high use of technologies such as crop rotation and minimum tillage that require more resources while resource-constrained clusters avoided resource-intensive CSA technologies. The Cragg double hurdle model results showed that the adoption of CSA is significantly affected by distance to the tarred road, access to weather information, livestock income share, and ownership of transport assets. Adoption intensity is significantly affected by factors such as sex of household head, labour size, frequency of extension contact, access to credit, access to weather forecasts, off-farm income, distance to input and output markets, number of traders and asset ownership. In light of these findings, policies that ensure access to weather forecasts information, coupled with frequent access to extension officers by farmers and access to credit will go a long way in encouraging farmers to scale up the use of CSA. Additionally, government efforts should be directed towards input markets decentralization which can be done through policy incentives to the private sector which brings markets closer to farmers. Also, the establishment of tarred roads in rural areas will incentivise farmers to increase the adoption intensity of CSA while on the other hand attracting more traders to the rural areas. The multinomial logistic selection model results reveal that observable household and market access characteristics influence the likelihood of a farming household adopting three identified prominent technology bundles/combinations. The results highlight that household characteristics (gender of household head, labour size), farm characteristics (soil type), and institutional factors (market access, information access and access to credit) are the main factors that determine the adoption of various CSA technology combinations. The results encourage the government to design policies aimed at improving farmers’ knowledge with regards to CSA. These should include early warning systems and programs that enhance access to information, markets and credit. The econometric results of the Endogenous Switching Regression model showed that the soil fertility status of the fields and access to weather forecasts had a significant impact on the farmer’s decision to adopt CSA. The Average Treatment effect of the Treated and Average Treatment effect of the Untreated was positive and significant for adopters and non-adopters indicating that CSA adoption had resulted in a significant positive impact on the welfare of the farmers. Analysis of outcomes revealed that farmer and farm characteristics as well as market factors significantly affected household welfare. Household income with reference to adoption was significantly affected by factors such as education of household head, labour size, TLU, off-farm income and asset index. Food security was influenced by factors such as education of household head, TLU, access to safe water, access to sanitation, access to inputs and output markets. Results from the cost-benefit analysis revealed that maize performs best under CSA technologies. The cost-benefit analysis results point to the potential of CSA in positively influencing profitability as a result of reduced costs and improved productivity. The profit inefficiency model showed that extension contact, number of traders locally and adoption of CSA had significant negative coefficients implying that as these variables increase, profit inefficiency among maize growing farmers then decreases. The findings call for development practitioners to incorporate market linkages that bring buyers closer to the farmers and support for extension staff to be able to have frequent contacts with farmers. Results of the multi-objective goal programming model suggest a reduction in the area committed to field crops and point towards concentrating on high-value crops such as horticulture and larger ruminants such as cattle.
Adoption and willingness to pay for organic fertiliser: a case of smallholder potato (solanum tuberosum L.) farmers in KwaZulu-Natal, South Africa.
(2020-03-12) Bhekani, Sandile Zondo.; Baiyegunhi, Lloyd James Segun.
Potato cultivation involves intensive soil tillage throughout the cropping season, which often results in soil degradation, erosion, and leaching of nitrates. Literature suggest that efforts to produce sufficient food necessitate an increase in agricultural production per unit of inputs by adopting fertility-enhancing techniques (both organic and inorganic fertilisers) to replenish soil nutrients required by crops. However, inorganic fertiliser as a soil ameliorant is known for causing soil degradation, environmental pollution, and it is associated with escalating costs. As a result, smallholder farmers are constrained in realizing their maximum yield potential. One of the ways to boost productivity without degrading the environment is to adopt a more sustainable, low-cost, and efficient integrated nutrient management system, which also suit their socioeconomic status. Although there is sufficient advocacy in the adoption of sustainable agricultural inputs such as organic fertiliser, the economic linkage between farmers' socioeconomic factors and adoption has not been adequately explored. Moreover, there is a dearth of empirical evidence regarding the willingness of farmers to pay a price premium for organic fertilisation of their soil. The aim of this study was to evaluate socioeconomic factors influencing the adoption and use intensity of organic fertiliser among smallholder potato farmers’ as well as to estimate their willingness to pay (WTP) a price premium for organic fertiliser. Primary data was collected from 189 smallholder farmers in three municipal areas in KwaZulu-Natal Province, South Africa, through a multi-stage sampling technique. The analytical framework incorporated descriptive statistics, double-hurdle, and ordered probit models. The double-hurdle model was used to identify the factors influencing the adoption and use intensity of organic fertiliser, under the assumption that the decision to adopt and the intensity of adoption are separate. The contingent valuation method (CVM) was used to elicit information for the WTP, and after that, the ordered probit model was employed to estimate the determinants of farmers' WTP for organic fertiliser. Empirical results indicate that factors such as household head gender, household size, access to credit, access to extension, knowledge of organic fertiliser usage, land ownership, livestock size and access to social grants significantly influenced the decision of organic fertiliser adoption. In contrast, factors such as the age of farmer, knowledge of organic fertiliser usage, farm size and livestock size significantly influenced the use intensity of organic fertiliser. In addition, results revealed that factors such as marital status, access to extension services, and knowledge of organic fertiliser usage, land ownership, livestock size and distance to the source of organic fertiliser were also statistically significant in determining the farmers’ WTP a price premium for organic fertiliser. The study found that the rate of organic fertiliser adoption is very high among the sampled potato smallholder farmers even though there is still a notably large number of farmers who are not using organic fertiliser. This result leads to the conclusion that organic fertiliser is the most popular soil nutrient ameliorant among smallholder potato farmers in KwaZulu-Natal Province, South Africa. This study also found that WTP a price premium for organic fertiliser was very high and this lead to a conclusion which justify the prospect of commercialization of organic fertiliser to facilitate the availability of organic fertiliser to those that are willing to pay for it. This study recommends improved access to extension services to improve technical information dissemination and knowledge of organic fertiliser usage among smallholder farmers. There is also a need to develop policies that strive to institute security of land tenure among smallholder farmers, which will encourage smallholder farmers WTP and also adopt and intensify organic fertiliser. Keywords: Organic fertiliser, smallholder farmers, adoption, use intensity, willingness to pay, Contingent valuation, Craggs’ Double Hurdle model, Ordered logit model.
Adoption of hybrid maize seed, fertilizer and machinery technologies by communal farmers in KwaZulu-Natal.
(2001) Essa, John Abdu.; Nieuwoudt, Wilhelmus Liberté.
This study investigates the characteristics of technology adoption by small-scale farmers, notably the factors influencing the adoption of hybrid maize seed, inorganic fertilizer and machinery technologies. The study also on the basis of socio-economic and institutional factors, identifies the dimensions of small-scale farmers. Data for the study were obtained from a sample survey of 160 households in the Amangwane and Amazizi wards, located in the Okhahlamba magisterial district of KwaZulu-Natal during August 2000. The chief aim of this study is to generate empirical information that can be used to devise programs to encourage small-scale farmers to adopt agricultural technologies. The motivation of the research emanates from the fact that there is limited empirical information as to the actual adoption patterns of agricultural technologies by small-scale farmers. The nature and relative importance of factors associated with technology adoption is time and location specific. The study by using more recent and broader information builds on previous studies in order to complement technology adoption research on small-scale farmers. Understanding what factors influence the adoption of farm technologies and categories or dimensions of small-scale agriculture should provide information on policy options to stimulate technology adoption and improve growth in agricultural productivity. A categorical dependent variable was specified to identify farmers' adoption pattern of hybrid maize seed and fertilizer. Seventy-two farmers were adopters of both hybrid seed and fertilizer, 56 were adopters of either hybrid seed or fertilizer while 32 farmers were non-adopters. The results of binary logistic regression analysis indicate the adoption of hybrid maize seed and fertilizer is positively associated with, in order of importance, larger farms, older household heads, more value of livestock and better access to information sources. An index that indicates farmers' status of adoption of machinery technologies was constructed using a principal component analysis technique. The analysis showed that the adoption of machinery technologies can be represented by the single index which could be used as a dependent variable. A principal component regression analysis was subsequently used to determine factors contributing to the adoption of the machinery technology index. The results indicate that adoption was higher for (1) older and male headed households in general and residents of the Amangwane ward in particular; (2) operators of more arable land, owners of more livestock and earners of more non-farm income; and (3) households with large family labour, and households that made use of extension services and information sources. These results are consistent with hypothesised relationship between technology adoption and the predictors and are supported by previous empirical findings. Priority should be given to policies that alleviate the tenure insecurity problem on arable land and this in turn promotes a land rental market. This would involve an institutional change and legal infrastructural support services. Arable land holding is highly skewed within the communal setting and the state needs to address this equity issue on arable land through redistribution or reform policies. The state needs also to invest in public goods that alleviate the problems of private investors for example by encouraging credit providers or promoting rural financial markets to alleviate liquidity constraints and enhance adoption. Investment in farmer training and education should therefore, be seen as priority if higher adoption rates and an improvement in income are to be achieved. Inadequate and poor extension and information services imply an urgent need for the formation of community and farming associations and for the provision of extension services to groups of farmers. Investment in these areas may reduce the cost of technology transfer programmes. The results of a principal component analysis to identify the dimensions of small-scale farmers in communal areas of KwaZulu indicate that farmers fall into distinct categories. Component 1 is an emerging commercial and a more mechanised household while component 2 is a land-less farm household that is more educated and earns more non-farm income largely from contractor services. Component 3 is a non-farm female headed household that depends on income from land renting and non-farm jobs. Component 4 is a small intensive garden farmer, headed by a relatively educated female who has access to institutional services. Component 5 is relatively less educated, a female-headed and land-poor household that rents land and produces intensively. It is concluded that a single policy measure cannot do justice to the needs of all of the farmers since it would affect different households differently. An integrated and a comprehensive programme is needed that would promote agriculture; facilitate income transfer or safety nets to alleviate poverty and the relief of short-term stress; address the problems of tenure insecurity; overcome the gender inequalities in accessing resources; and restructure institutional supports by providing rural finance, and an extension and legal infrastructure.
Agricultural bilateral trade agreements between South Africa and the European Union : implications for the South African fresh orange industry.
(2000) Gay, Stephan Hubertus.; Nieuwoudt, Wilhelmus Liberté.
During October 1999 South Africa and the European Union (EU) signed the "Agreement on Trade, Development and Co-operation". This agreement includes a Free Trade Agreement (FTA) which will lead to a free trade area between both partners. The framework for a FTA is set by the World Trade Organization (WTO). This study focuses on the effects of the FTA on the South African fresh orange industry. Fresh oranges account for approximately ten percent of South African agricultural exports. On the other hand, South Africa is the second largest external supplier to the EU and dominates the EU off-season. Fresh oranges are only included in the FTA from June until September and tariffs are reduced by approximately three percent in this time which is the peak South African export season. A trade simulation model was developed using the programme STELLA to analyse the effects of the FTA on the South African fresh orange industry. The trade simulation model consists of seven sub-models for production according to region and cultivar; a local market model, an export market model and an exchange rate model. The production models run on an annual basis whereas the other sub-models run on a monthly basis to capture the seasonality in fresh orange trade. The simulation period lasts from 1997 until 2011, hence fifteen years. The production models use gross margins according to the age of the orchard. The annual production is divided into monthly production on the basis of industry information. The South African demand function in the local market model uses the consumption per person, the export price and trend as independent variables. A trend variable is included to cater for the change in consumer preferences, especially, the move from oranges towards easy-peelers. On the EU market, prices are seen as external variables, except for the months July until October when the South African market share exceeds 50 percent. During these months an import demand flexibility is derived on the basis of the South African market share. The exchange rate model derives from the purchasing power parity between the South African Rand and the Euro. Simulation model results indicate that the FTA is beneficial for South African producers while South African consumers may also benefit. Further producers are expected to benefit from a slight increase in real free-on-board prices and a slight increase in total production. South African consumers are expected to benefit from a simulated decrease in real local prices due to the predicted increase in production. The effects on the EU market are simulated to be even smaller. A slight increase in EU prices is simulated during South Africa's peak export season which is the EU off-season. Results for regional production areas in South Africa show that during the simulation period the area under Valencias increases strongly whereas the area under Navels decreases. A comparison with a scenario without any EU tariffs was carried out to estimate the total distortion effect of EU protection on the South African market. Both South African consumers and producers benefit in the scenario without EU tariffs. The results of the simulation indicate that the total effect of EU tariffs is relatively small. Predicted total South African orange production increases by 14.8 percent over the simulation period compared to 9.1 percent in the scenario without any preferential treatment. The difference in other results is even smaller. The FTA reverts only parts of the distortion effect of EU protection. There are still some further possibilities to reduce the effects of EU protection on the South African fresh orange industry.
Analysing the causes and symptoms of poverty in a land reform community in the midlands of KwaZulu-Natal.
(2004) Shinns, Lauren Hazel.; Lyne, Michael Charles.
The objectives of this thesis were firstly, to review existing literature in order to identify broadly accepted and measurable indicators of the possible causes of poverty and the resulting symptoms. Secondly, to gather baseline information from a group of land reform beneficiaries in order to identify the different dimensions of poverty affecting the current and future well-being of these households. Thirdly, to undertake empirical analysis to assign these households to a small number of groups exhibiting different symptoms of poverty and then explain these differences in terms of their possible causes. A census survey of 38 land reform beneficiary households - members of a Communal Property Association (CPA) established to purchase Clipstone, a 630 hectare subdivision of the farm Sherwood in the midlands of KwaZulu-Natal - was conducted in May 2002 to gather data on poverty indicators. Principal Component Analysis was used to construct an index of the standard of housing, which was then combined with variables measuring other symptoms of poverty (income, wealth and health) in a Cluster Analysis of the households. This revealed five clusters representing four distinct groups of poverty; households relatively income and asset rich, income rich but asset poor, asset rich but income poor and households with the lowest incomes and assets. Linear Discriminant Analysis was then used to distinguish the households that were relatively income and asset "rich" from those that were relatively income and asset poor, and those that were relatively income poor but "asset rich" from those relatively asset poor but "income rich". The main distinguishing indicators were found to be gender of the household head, family size, dependency ratio, education and access to markets. These findings show that there is a need to increase child welfare grants as pension earnings become less effective (due to decreasing life expectancy and high levels of dependence on pensions as a source of income) in the short run. In the long run, there is a need for increased education and vocational training - especially for women along with better access to transport, jobs and banking facilities (to mobilise savings).
Analysis and prediction of chemical treatment cost of potable water in the Upper and Middle Vaal water management areas.
(2009) Gebremedhin, Samuel Kahsai.; Ferrer, Stuart Richard Douglas.; Graham, Mark.
This study is a component of a research project on the economic costs of eutrophication in the Vaal River system. Its objective is to investigate the relationship between raw water quality and the chemical costs of producing potable water at two water treatment plants: Zuikerbosch Station #2 (owned by Rand Water) in the Upper Vaal Water Management Area (UVWMA), and Balkfontein (owned by Sedibeng Water) in the Middle Vaal Water Management Area (MVWMA). Time series data on raw water quality and chemical dosages used to treat raw water were obtained for Zuikerbosch Station #2 (hereafter referred to as Zuikerbosch) for the period November 2004 – October 2006 and for Balkfontein for the period January 2004 to December 2006. Descriptive statistics reveal that raw water in the Vaal River is of a poorer quality at Balkfontein compared to that at Zuikerbosch. Furthermore, the actual real chemical water treatment costs (measured in 2006 ZAR) averaged R89.90 per megalitre at Zuikerbosch and R126.31 at Balkfontein, indicating that the chemical water treatment costs of producing potable water tend to increase as raw water quality declines. Collinearity among water quality (WQ) variables at both water treatment plants was analysed using Principal Component Analysis (PCA). The dimensions of water quality identified in the analysis are similar to those reported in Pieterse and van Vuuren’s (1997) study of the Vaal River. For both water treatment plants, Ordinary Least Squares (OLS) regression was used to identify the relationship between real chemical costs of water treatment and the dimensions of water quality identified through the respective Principal Components Analyses. The estimated regression models account for over 50.2% and 34.7% of variation in real chemical water treatment costs at Zuikerbosch and Balkfontein, respectively. The coefficient estimated for PC1 at Zuikerbosch is statistically significant at the 1% level of probability with high negative loadings of total alkalinity and turbidity. Increases in the levels of total alkalinity and turbidity in raw water treated at Zuikerbosch is negatively related to the chemical costs of water treatment. An increased total alkalinity level was found to reduce the chemical costs of treating potable water. PC2 is statistically the most important variable in the estimated explanatory model for Balkfontein. The estimated regression coefficient for PC2 is statistically significant at the 5% level of probability. The estimated relationship between chemical water treatment costs and PC2 shows that there is a positive relationship between the raw water temperature and chemical water treatment costs. However, increases in the levels of chlorophyll and pH in raw water treated at Balkfontein is negatively related to the chemical costs of water treatment. Total hardness, magnesium, calcium, sulphate, conductivity, and chloride, being the highest positive loadings in PC1, relate negatively to the chemical cost of treating water. For predictive rather than explanatory purposes, a partial adjustment regression model was estimated for each of the two water treatment plants. Using this model, real chemical water treatment costs were specified as a function of real chemical water treatment costs in the previous time period, and of raw water quality variables in the current period. The R2 statistics for the two regression models were 61.4% using the data for Zuikerbosch and 59.9% using the data for Balkfontein, suggesting that both models have reasonable levels of predictive power. The chemical cost of water treatment for Zuikerbosch and Balkfontein are predicted at R96.25 and R90.74 per megalitre per day respectively. If raw water nitrate in the UVWMA increases by 1% per megalitre a day while other factors remain constant, chemical water treatment costs at Zuikerbosch can be expected to increase by 0.297% per megalitre and the cost accompanied this change is (R0.285*1998ML*365days) R207,841.95 provided that Zuikerbosch treats an average of 1998 megalitres per day. Likewise, if Zuikerbosch maintains its daily average operating capacity and is able to maintain an optimal level of total alkalinity in UVWMA, the estimated saving on chemical water treatment cost will be R150.063.78 per annum. At Balkfontein, chemical water treatment cost is expected to increase on average by 0.346% per megalitre per day for a 1% per megalitre per day increase in the level of chlorophyll-a, and the cost accompanied this change is R41,128.20 per annum. The prediction also shows a 2.077% per megalitre per day increase chemical water treatment cost for a 1% increase in turbidity and this accompanied with a chemical water treatment cost of R 249,003 per annum, provided that Balkfontein operates at its full capacity (i.e., 360 megalitres per day).
Analysis of factors determining livelihood diversification among smallholder farmers in KwaZulu-Natal.
(2016) Yobe, Collin Lazuras.; Mudhara, Maxwell.
Abstract not available.
Analysis of rhino poaching incidences and management strategies in South Africa.
(2016) Moneron, Sade Leigh.; Ngetar, Silas Njoya.
ABSTRACT The illegal hunting and global trade in wildlife and wildlife products is a transnational, highly organised crime that threatens the survival of many endangered species. The rhinoceros is a well-known example of this trade as the demand for rhino horn for use in East Asia has resulted in the global decline of rhino populations, resulting in the Western Black rhino in Africa (Diceros bicornis longipes) officially being declared extinct in 2011. Although poaching has always existed, the number of African rhinos killed by poachers has escalated in the past eight years with at least 1 338 rhinos killed by poachers across Africa in 2015. This is the highest level since the rhino poaching crisis began in 2008, resulting in at least 5 940 African rhinos being killed. The majority of these incidences occurred within South Africa. South Africa plays a leading role in the conservation of the African rhino, currently conserving 83% of the African rhino population. However, it has been suggested that should poaching continue to increase as it has done over the past few years the rhino population in South Africa may begin to decline as early as 2016. South Africa’s upsurge in rhino poaching over the last few years has given rise to a kaleidoscope of debates on how to reduce poaching. An understanding of the different management strategies and their effectiveness would play a large role in identifying which method or combinations of methods work best to reduce poaching. The second chapter of this dissertation thus critically analyses the past, current and proposed strategies that are relevant to reducing incidences of rhino poaching using empirical literature from various scholars and stakeholders and attempts to provide insight into which strategy or combination of strategies is best suited to reduce poaching. As poaching involves a combination of aspects, it is clear that no one strategy or management tool will address all of these aspects on its own, and if implemented in isolation will not be successful. A combination of strategies that address all aspects of poaching needs to be working concurrently to decrease poaching levels. Law enforcement is one such management strategy crucial in the reduction of poaching and with increasing poaching incidents, law enforcement efforts in the form of deployment of anti-poaching unit, focused on high risk areas would provide for a more efficient and effective use of resources in reducing poaching incidences. The third chapter of this dissertation sought to investigate the spatial and temporal patterns of rhino poaching in the Hluhluwe-iMfolozi Park (HiP) between 1990 and 2013 and examine the relationships between observed patterns of poaching and biophysical and human variables using Geographic Information Systems (GIS). The results reveal poaching hot spots, and spatial and temporal variation in poaching incidences. Biophysical and human variables were also found to influence poaching densities differently depending on where they occurred spatially or temporally. The successful use of GIS in this analysis validates its potential as a geospatial tool for understanding the spatial and temporal distribution patterns of rhino poaching in the HiP. Understanding these patterns is crucial for future anti-poaching planning and mitigation of poaching activities with protected areas.
An analysis of the economic competitiveness of green maize production in smallholder irrigation schemes : a case of Makhathini flats irrigation scheme in KwaZulu-Natal, South Africa.
(2014) Chirigo, Kudakwashe Collen.; Mudhara, Maxwell.; Derera, John.
Recent assessments of smallholder irrigation schemes indicate that their success has been limited. Factors that contributed to their modest performance were poor infrastructure, limited knowledge of crop production among smallholders, lack of reliable markets and ineffective credit services. However, studies have not looked at the economic competitiveness of different crops grown under irrigation and efficiency in the allocation of farm resources. Different crops are grown in the irrigation schemes, but there is no economic criteria employed for analysing the economic competitiveness of the crops grown and on how choices are selected to maximise farmers’ profits. The aim of the study was to conduct an analysis of the household level characteristics on decisions to grow green maize and on the proportion of land allocated to it by smallholder farmers in Makhathini Flats irrigation scheme. A random sample of 150 farmers was drawn from a population of 314 irrigation farmers. The Heckman two-step regression model was used for assessing determinants of the decision to grow green maize. The results reveal that age, household size, plot size, extension and green maize gross margins significantly affect the decision to grow green maize, while gender, marital status, plot size, credit, gross margin of cabbages and green maize significantly affect the proportion of land allocated to green maize production. The study also sought to determine the economic competitiveness of green maize production as compared to alternative crops grown in the scheme using gross margin budget analysis and LP model. The gross margins analysis reveals that cabbage is the only crop with higher gross margins than green maize. The LP results also paint the same picture, indicating green maize competitiveness to other crops except cabbages. A factor contributing to the competitiveness of green maize is being an enterprise with low production costs compared to other enterprises. Farmers indicated that they lack capital to finance large pieces of land for crops with high production costs and the study concluded that availing credit to farmers could increase farm profits from enterprises with high production costs. Farmers indicated that they also produce for subsistence. This means that certain crops are not grown based on their economic viability, but rather on their contribution to household food security. More often than not, these goals are conflicting. The study recommends formulating a multi-criteria decision-making model that aims at allocating farm resources efficiently by optimising a set of important socio-economic objectives.
Appropriate institutional and contractual arrangements for the marketing of organic crops produced by members of the Ezemvelo Farmers' Organisation in KwaZulu-Natal.
(2010) Gadzikwa, Lawrence.; Lyne, Michael Charles.; Hendriks, Sheryl Lee.
The Ezemvelo Farmers’ Organisation (EFO) is a certified organic smallholder group in KwaZulu-Natal province (South Africa) that exists as an institution to improve smallholder access to niche markets by reducing unit production and transaction costs. The study is motivated by the need to understand drivers of collective action, prevalence of internal group free-riding, and the impact of contract terms on contract performance. These three theoretical concepts are pertinent in understanding organisational and institutional issues affecting the performance of smallholder organic farming groups and in formulating policies to promote the performance of such groups. The study relies on the theoretical foundations of collective action, free-riding and contracts found within the realm of New Institutional Economics (NIE). These theories, though separate, are in fact related in certain respects. Collective action in smallholder groups, apart from being a function of a plethora of socio-economic factors, including transaction costs, could be constrained by free-riding within the group, which in turn could be influenced by flawed contractual arrangements. This study of collective action focuses on 200 farmers drawn from a sample survey of 49 non-EFO members, and a census survey of 103 partially certified and 48 fully certified EFO members. A ‘collective action’ model investigates the impact of perceived benefits and savings on production and transaction costs attributed to collective action by drawing comparisons between EFO members and non-members using a multinomial logit model. The study of free-riding uses data from 151 members of the EFO to construct an index of free-riding within the group using principal components analysis (PCA). A ‘contract model’, which also focuses on EFO members only, attempts to measure the impact of verbal contract provisions on contract performance in addition to evaluating the determinants of preferred contract terms using a combination of PCA, Ordinary Least Squares (OLS) regression, and logit models. Results indicate that continued participation in EFO is not influenced by the age or gender of the farmer, but positively influenced by growth in the net benefits of participation, and negatively by an increase in the size of the household’s cropland or on-farm earnings. With respect to production and transaction costs, the results suggest that EFO has reduced fully certified members’ concerns that crops would be damaged by livestock or constrained by inadequate technical information. However, this is not the case for other problems such as price uncertainty in conventional markets, a lack of affordable operating inputs, a lack of affordable transport, and a lack of communications infrastructure. The index of free-riding behaviour constructed using principal components analysis suggests that free-riding poses a serious threat to EFO’s collective marketing efforts. Ordinary Least Squares regression analysis of the index scores shows that members who are male, poorly educated, partially certified, aware of loopholes in the grading system, and who do not trust the buyer are more likely to free-ride. Benefits accruing to EFO members are limited and there is substantial confusion among members about the terms of EFO’s verbal contract with the pack house that purchases their organic produce. Ordinary Least Squares regression analysis of the impact that perceived contractual terms have on quantities delivered to the pack house yielded interesting findings. Perceptions that delivery calls are made by the buyer, that grading procedures are flawed and that prices are not jointly established were found to reduce quantities delivered to the pack house, after controlling for differences in farm and farmer characteristics. Logit models estimated to identify the determinants of preferred contract clauses indicate that farmers with higher levels of formal education and farm income, and lower levels of experience, favour a written contract over a verbal contract. Similarly, farmers with higher levels of formal education and lower levels of family farm labour favour a contract denominated by area rather than weight. It is concluded that EFO should recruit households that rely on farming for income and which are land constrained. EFO is more likely to survive if it continues to secure fully subsidised information, transport, fencing, and certification services for its members, and if it improves the benefits of participating by synchronising harvest and delivery dates, negotiating price discounts for organic inputs, and by maintaining an office with telephone, fax and postal services. In the longer-term, EFO should address institutionalised free-riding by issuing tradable ownership rights. In the short-term, EFO must engage with the pack house (buyer) to remove flaws in the grading process that conceal the origin of low quality produce. Transparent and mediated negotiations leading to an incentive compliant contract with the buyer may also help to build trust and reduce free-riding within EFO. It is also recommended that the terms of EFO’s contract with the pack house should be revised so that; (a) delivery calls can be made by either the pack house or by EFO during specified periods and with reasonable notice, and (b) grading procedures are fully transparent and ensure traceability so that losses caused by poor quality can be internalised to members who deliver inferior produce. In addition, it is important that prices be negotiated at the beginning of each season and that the contractual parties have recourse to pre-agreed facilitators and an arbitrator to resolve disputes on price and quality. A written contract is recommended to support these more complex terms, with the proviso that the contract is explained to current and prospective members, and that growers are fully informed of their rights and obligations.
An assessment of the maize structure, channel choice and market participation by the smallholder maize farmers in Zimbabwe: a case of Mazowe district=Ukuhlolwa kwesakhiwo semakethe yommbila, ukukhethwa komgudu kanye nokubamba iqhaza emakethe ngabalimi abancane bommbila eZimbabwe: ucwaningo ngesifunda saseMazowe.
(2023) Munyati, Vincent Tinashe.; Mudhara, Maxwell.; Sinyolo, Sikhulumile.
Marketing plays a crucial role in alleviating poverty, as well as in achieving food security and sustainable development goals, especially among smallholder maize farmers. Maize marketing has the potential to improve the resilience of households against food insecurity, which is caused by multiple factors which may be natural factors, socio-economic and institutional factors. Smallholder maize farmers find it difficult to participate in the maize market because of a range of limitations, such as poor transport facilities, information asymmetry and the lack of a market infrastructure, which reduces their motivation to partake and which may be echoed in concealed expenses that make it challenging to enter the markets and productive resources. This study ascertained the factors that determine the likelihood and intensity of smallholder maize farmers participating in the maize markets, and it also assessed the market choices made by the smallholder farmers in the Mazowe District of Zimbabwe and analysed the maize marketing structure and its effects on the maize marketing performance. Questionnaires were used to collect data from 382 smallholder farmers and 27 agro-dealers in the Mazowe District. The study adopted a mixture of tools for data collection, including a questionnaire, observations and discussions. The Heckman Selection Model was used as the main analytical tool to estimate market participation and the intensity of this participation, while the Multinomial Logit Model was used to assess the market choices of the farmers and the Herfindalf-Hirschman Index and Gini coefficients were used to measure the concentration of maize traders in the Mazowe District. Due to the narrow index of the maize marketing options in the country, only three distinct alternatives were isolated, namely, the farm gate, the local market and the Grain Marketing Board (GMB), a government parastatal. The results indicated the significant factors that were associated with the likelihood and intensity of the farmers’ market participation, namely, the age of household head, the number of maize buyers at the district level, their extension contacts, membership of a marketing association and the distance to the output market. Contrary to the apriori expectations, the distance to the market had a positive and significant impact on their intensity to participate in the maize market. Other factors that significantly influenced the market choice selection of the smallholder farmers were the age of household head, the extension contacts, market information, the distance to the market and the price offered to maize producers at the market. The number of visits by extension workers significantly increased the likelihood that a maize producer would sell his produce at the local market, rather than at the farm gate. The distance to the market significantly influenced the probability of choosing the local market over the farm gate. As the distance to the local market increases, the smallholder farmers in the Mazowe District preferred the farm gate for selling their produce. In this study, the popular marketing channel for the smallholder farmers was the farm gate; although the prices offered here were often not competitive, the farmers opted for it because of the low transaction costs. The results also indicated that the number of buyers in the maize grain market is too small to make it competitive. The few traders exhibited collusive behaviour with regard to price-setting. The local market channel and G.M.B had a lower Shepherd Marketing Efficiency Index. While both indices were low, when they were compared to the standard in literature, the GMB channel was the least efficient. Most farmers indicated that selling their grain to the GMB involved bureaucracy and late payments, which have negatively affected the marketing efficiency. These late payments have short-circuited the ability of small-scale farmers to generate a cash-flow with which to fund their agriculture activities. The study recommends that there should be mechanisms for developing the capacity of farmers to access marketing information, in order for them to make an informed decision regarding which marketing channel to choose. Governments need to think about how to help smallholder maize farmers to engage better with the existing profitable market channels. Being a member of an association increases the probability of a farmer selling to more lucrative markets. Farmer groups have the advantage of bulking and hence increasing the economies of scale. There is need for farmers to invest more in collective action. It is also easier and cheaper for traders to enforce quality and grade requirements by reaching farmers groups, rather than individual farmers. Iqoqa Abalimi bommbila abancane bakuthola kunzima ukubamba iqhaza emakethe yommbila ngenxa yohlu lwemikhawulo, njengezindawo zokuthutha ezingezinhle, ulwazi olungaxhumani, kanye nokuntuleka kwengqalasizinda yemakethe, okunciphisa ugqozi lwabo lokuhlanganyela futhi okungase kuzwakaliswe ngezindleko ezifihliwe ezenza kube yinselela ukungena ezimakethe kanye nezinsiza ezikhiqizayo. Lolu cwaningo lwaqinisekisa izinto ezinquma amathuba nokujula kwabalimi bommbila abancane ababambe iqhaza ezimakethe zommbila, lwaphinde lwahlola ukhetho lwemakethe olwenziwe ngabalimi abancane eZimbabwe. IHeckman Selection Model yasetshenziswa njengethuluzi eliyinhloko lokuhlaziya ukulinganisa iqhaza lemakethe kanye nokujula kwalokhu kubamba iqhaza, kanti iMultinomial Logit Model yasetshenziselwa ukuhlola ukukhetha kwemakethe futhi iHerfindalf- Hirschman Index yasetshenziselwa ukulinganisa ukuhlanganiswa kommbila. Ngenxa yenkomba encane yezinketho zokumaketha ummbila, kwatholakala izindlela ezintathu kuphela ezihlukile, okungukuthi, isango lepulazi, imakethe yendawo kanye neBhodi Lokumaketha Okusanhlamvu. Imiphumela ikhombise izinto ezibalulekile ezihambisana namathuba nokujula kokubamba iqhaza kwemakethe yabalimi, okungukuthi, iminyaka yenhloko yasekhaya, inani labathengi bommbila ezingeni lesifunda, abaxhumana nabo ukwandisa, ubulungu benhlangano yokumaketha kanye nebanga eliya emakethe yokudayisa. Imiphumela ikhombise ukuthi inani labathengi emakethe yommbila lincane kakhulu ukuthi lingayenza ibe nokuncintisana. Ucwaningo luncoma ukuthi kufanele kube nezindlela zokuthuthukisa amandla abalimi okuthola ulwazi lokumaketha, ukuze benze isinqumo esinolwazi mayelana nokuthi yimuphi umgudu wokumaketha okufanele bawukhethe. Ukuba yilungu lenhlangano kwandisa amathuba okuthi umlimi athengisele izimakethe ezinenzuzo. Kunesidingo sokuthi abalimi batshale imali eningi esenzweni esihlangene. Kulula futhi kushibhile kubathengisi ukuphoqelela izidingo zekhwalithi nebanga ngokufinyelela emaqenjini abalimi, kunabalimi ngabanye.
Best institutional practices for farmworker and community equity-sharing schemes in South Africa.
(2003) Knight, Sharon L.; Lyne, Michael Charles.
Farmworker equity-share schemes were initiated by the private sector in the Western Cape region of South Africa in the early 1990's as a method of redistributing farm assets to land reform beneficiaries while maintaining the viability of commercial farming operations. This study set out to identify the institutional characteristics of successful farmworker equity-share schemes in South Africa, and to discern a set of best institutional practices that will likely promote the success of future equity-share schemes. A detailed study of nine commercial farming ventures involving partnerships with farmworkers was undertaken in the Western Cape during November 2001 to explore relationships between their institutional arrangements, worker empowerment, management quality and performance. Farmworker equity-share schemes (FWES) have received both positive and negative publicity. This thesis adds to the debate surrounding these land reform projects by comparing the results of case studies conducted by the Surplus People's Project in 1998 with more recent (2001) case studies. The latter suggest that many of the concerns raised by the Surplus People's Project, such as beneficiaries' participation and expectations, power relations between management and worker-shareholders, skills transfer and labour relations, have been addressed. The dissertation also highlights those issues that remain areas of concern, for example, beneficiaries' tenure security, literacy levels amongst worker shareholders, skill and wage differences between men and women, and exit procedures. A cluster analysis of variables measuring four constructs of a successful farmworker equity-share scheme, viz. sound institutional arrangements, effective worker empowerment, competent management and good performance, revealed positive relationships between these constructs. Best institutional practices identified by the analysis suggest that farmworker equity-share schemes should be operated as (or like) a company with voting and benefit rights proportional to individual shareholdings, but with restrictions on certain share transactions to prevent free-riding by non-workers and the loss of creditworthiness through sudden outflows of equity and managerial expertise. However, this positive relationship between best institutional practices and enterprise performance is dependent on effective worker empowerment (e.g. skills transfer and gender representation), good governance (e.g. external auditing) and competent management (e.g. schemes to reward worker performance and to resolve disputes). From a policy perspective it is recommended that public land reform grants should be awarded only to beneficiaries of FWES that have been co-financed by a bank or reputable investor as this ensures a thorough financial assessment of the project, and only to projects that can demonstrate a history of good labour relations. It is also recommended that the Department of Land Affairs should consider extending its grants to regular but seasonal farmworkers who wish to participate in an established project. While farmworker equity-share schemes may not provide all of the answers to land reform they have an important role to play in redistributing wealth and de-racialising commercial agriculture in South Africa.
Causality analysis and physio-economic impacts of climate change on maize production in South Africa.
(2019) Magodora, Tatenda Lysias.; Baiyegunhi, Lloyd James Segun.
Agriculture, as part of the human ecological footprint on climate change, has become a serious concern because climate change has an impact on agriculture. For instance, when crop production is considered, climatic elements are influenced by greenhouse gas emissions that come from agricultural activities such as the application of synthetic fertilizers, herbicides and pesticides, as well as the use of heavy machinery in modern crop production. This study analyzed the possible causalities between climatic variables and maize production in South Africa using time series data for the period 1924 to 2016. The analysis was done using VAR Granger causality analysis to ascertain if there are feedback loops between climatic elements and maize production in South Africa. The results from the Granger analysis suggest a bidirectional causality that runs between maize production and temperature. Rainfall alone was found not to be significant in influencing maize production but a combination of both temperature and rainfall affects maize production in South Africa. The results from variance decomposition of the future forecasts suggest a relatively large magnitude of impact (13.37%) of temperature on maize production in the 3rd year of the forecast with the highest effect of 27.43% in the 15th year of forecast. The forecasted impact of rainfall on the other hand remained relatively low (below 10%) throughout the forecast period. Continued current production activities (use of synthetic fertilizers and agricultural chemicals, for example) will affect climatic variables both in the short term and in the long term, and the effects of these changes in climatic elements on maize production will be realized in the long term as revealed by the variance decomposition result. The study further investigated the impacts of global warming on maize production in South Africa using meta-analysis (for physical impacts) and the Ricardian analysis (for economic impacts). The meta-analysis made use of studies that investigated and reported percentage changes in maize yield owing to climate change in South Africa. The average estimated percentage change in maize yield was calculated from 34 studies using the bootstrapping sampling technique. Results from the meta-analysis suggest that maize yield will drop by more than 15% owing to temperature increase of about 20C to be realized between 2081 and 2100. The Ricardian analysis made use of time series data for the period 1987 to the end of 2018. The results from the Ricardian analysis also show that climate change is a significant threat to the South African maize industry, as it is estimated to lose an average of 38% of revenue owing to plus 20C warming. Given these outcomes, the study suggested the adoption of sustainable farming activities such as minimum tillage, balanced fertilization and biochar amendments at a much faster rate in order to ensure a sustainable increase in maize production, while at the same time reducing the human ecological footprint on climate change. The study also recommends the recognition of the agricultural sector as one of the sectors that should be targeted by the carbon emission reduction systems.
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.
Comparative analysis of the impact of food prices on household food security : evidence from the North-West and KwaZulu-Natal Provinces, South Africa.
(2015) Phali, Lerato.; Mudhara, Maxwell.; Baiyegunhi, Lloyd James Segun.
The prevalence of household food insecurity in South Africa is not a result of a shortage of food but of a lack of access to food. Contributing to this are the rising food prices that adversely affect the rural poor, as most of them are net buyers of food. Due to the higher food prices, poor households are forced to spend a large proportion of their income on food. The objectives of this study are to determine socio-economic characteristics that influence household perceptions of food prices and to evaluate the impact of food prices on rural household food security in South Africa. The study considers two rural areas that have different food price regimes, namely, Jericho in the North-West Province and Swayimane in the KwaZulu-Natal Province. The results are based on household level data collected from a sample of 300 households using structured questionnaires. The Ordered Logit Regression (OLR) model was used to evaluate the impact of food prices on rural household food security status, using the Food Expenditure Income (FEI) ratio as a household food security indicator. The ratio indicates the proportion of household income spent on food. Its components are directly linked to two of the four aspects of food security, namely food stability and food accessibility. According to Engel’s Law, the proportion of income spent on food declines as income increases. This implies that low income households spend a large proportion of their income on food, resulting in a high FEI ratio. The findings of the study indicated that households in Swayimane are more likely to be “well-off”, compared to those in Jericho. Location, gender of household-head, number of permanently employed household members and total household income significantly influenced household food security. Food price perceptions influence buying and consumption patterns of households. Using the Tobit regression model, households’ socio-economic characteristics that determine household perceptions of food prices were identified. A Food Price Perception (FPP) index was generated using principal components analysis and was used to evaluate the relationship between food price perceptions and household food expenditure patterns. The results showed that households in Jericho had higher perceptions of food prices and that location, total household income and the number of permanently employed household members influence a household’s perception of food prices. Another finding was that households with a higher perception of food prices were low-income households that spend a large proportion of their incomes on food. The study recommends that policy priorities should be focused on the establishment of retail outlets in rural communities. Establishment of new employment opportunities and increased wages will also help improve household food security through increased food affordability.
Competitiveness analysis of the South African avocado value chain.
(2022) Zwane, Sibonelo.; Ferrer, Stuart Richard Douglas.
The economic sustainability of the South African avocado industry is highly dependent on its trading performance, with approximately 50-55% of its total production consistently being exported since the 1990s. About 95% of the avocados in South Africa are exported to the EU, the UK, and Russia markets. The South African avocado industry faces potential intense competition from Peru, Mexico Spain, Israel, and Kenya, in these markets. Due to the significant contributions in terms of economic returns the supplying of avocados to the export markets has on this industry and the GDP of the country, and also considering the higher levels of competition this industry has been experiencing from its global rivals, there is a greater need to transport this commodity with fewer rejections, and less inefficiencies and damages to the fruit quality. In 2018, the South African avocado export industry was ranked number nine worldwide, contributing to 1,7% of the total avocado exports in the global markets. By 2020, the industry experienced a major decline which resulted in it falling to number 12. It has been noted that South African exports are increasing, but its share of the world market is decreasing. This is because exports from other countries, primarily South and Central America, including Peru, Colombia, and Mexico, have grown at a greater rate. For example, between 2012 and 2017, South African avocado export volumes grew only by 3% per annum while major competitors such as Mexico and Peru grew by 8% and 15%, respectively. Many factors could be contributing to this phenomenon, and one of the most significant factors could be the competitiveness of the South African avocado value chain. A review of the literature identified a significant gap in the local research when it comes to the understanding of the structure, actors, processes and the flow of avocados in the South African avocado value chain, the competitiveness of the South African avocado value chain, and the factors which are influencing the competitiveness of the South African avocado value chain. Moreover, it also identified that competitive analyses of value chains can provide information and strategies for agribusiness managers to improve value chain competitiveness. This study will try to close this gap by providing a detailed competitiveness analysis of the South African avocado value chain in order to have a better understanding of the state of competitiveness of this value chain. The general objective of this study was to conduct a detailed competitiveness analysis of the South African avocado value chain in order to recommend strategic actions that the value chain participants could use to improve the competitiveness of this value chain, especially in relation to export markets. More specifically, the objectives are to identify the key players involved in the value chain, identify factors which are negatively affecting the competitiveness of this chain, and analyse this information to provide an improved understanding of the business trends, challenges, and transport and logistic processes of this industry. To achieve the main objective of this study, a 7-steps-6-analyses analytical framework was designed and used to provide a much-detailed competitiveness analysis of the South African avocado value chain. Analyses one and two served as an inquiry part of this study were knowledge regarding the structure of the South African avocado value chain, the number and the type of actors in this value chain, flow of avocados, processes within this value chain, relationships between actors in this value chain and how these relationships are developed and maintained, and the factors which are responsible for the inefficiencies within this value chain were identified by these analyses. Analysis two also had a quantitative part, were some of the relationships that actors have within and outside this value chain were quantified using the concept of Social Network Analysis in order to determine how these relationships influence the functioning as well as the competitiveness of some of the actors in the South African avocado value chain. Analyses three, four, five and six were analyses that analysed different components/parts of the South African avocado value chain in order to understand the competitiveness state of the overall value chain and recommend strategies to improve it. The final step (seventh step) involved a critical analysis of all the findings from the six analyses in order to provide the state of competitiveness for the South African avocado value chain. Moreover, during this step that is where the strategic actions to alleviate the constraints/factors negatively affecting the competitiveness of this value chain were developed. The overall findings of this study suggested that the South African avocado value chain is struggling to keep up with competition from its global competitors, mainly Peru, Mexico and Kenya. Moreover, this study was able to conclude that the cause of this was the overall continuous decline in the competitive advantage which is being experienced by this value chain. The overall finding also suggested that this decline in competitiveness is as a result of a number of factors. These factors include supply of nursery trees, relatively lower yields than other competing origins around the world, higher transportation costs, port inefficiencies, low supply of skilled labour, one major export destination, lack of value chain collaborations, higher input costs, increased plantation of avocados by global rivals, and government policies. This study gave rise to 13 strategic actions that could be used by the most important players in the South African avocado value chain, such as agribusiness managers, producers, exporters, seaports and SAAGA in order to improve the competitiveness of this value chain. Some of those strategies include collaborations between different types of value chain actors, understanding of the value chain relationships and systems, attracting and training of new skilled workforce, development of late varieties, economic research, and access to new markets. Keywords: Avocado, Competitiveness, Export markets, Global rivals, Strategic action, Value chain
A demand analysis of farm labour employment in the South Coast and Midlands commercial sugarcane farming by labour categories : implications of the sectoral determination.
(2016) Pilusa, Tshepo R.; Ferrer, Stuart Richard Douglas.; Darroch, Mark Andrew Gower.
The objective of this study is to investigate the impact of changes to the regulatory environme nt governing farm labour employment since the mid-1990s on wages and employment of farm workers in the South African sugar industry. This study may be differentiated from previous research on the topic, e.g., Conradie (2005), Sparrow et al. (2008), Murray and van Walbeek (2008), Bhorat et al. (2012), and Stanwix (2013) in so far as the impacts on wages and employment are investigated for four categories of farm workers (namely, drivers, seasonal cane harvesting staff, permanently employed elementary farm workers, and casual labour); whereas previous studies have analysed the impacts on aggregate employment. The distinc t ion is important because not all categories of farm workers historically earned wages less than the real minimum wage rate and because the wage elasticities of demand for labour in sugarcane farming are expected to vary by labour category and by sugarcane producing region. Whilst it is well established that the wage elasticity of demand for farm labour in commercial farming in South Africa is relatively price elastic in the long run (Sparrow et al., 2008; Bhorat et al., 2012), no published research has determined the wage elasticities of demand for farm labour in sugarcane farming in South Africa, per se. The time series data on wages and employment of farm workers in sugarcane production by large scale growers (LSGs) from 1978 to 2012 based on Labour Utilisation and Cost Survey (LUCS) were obtained from the South African Cane Growers Association (SACGA). Analysis of the data verifies expectations that the introduction of regulations on wage structure and computation through the Sectoral Determination (SD) for the Farm Worker Sector in 2003 is associated with an increase in real average cash wages and a reduction in the average real absolute value of non-pecuniary benefits (e.g., on-farm accommodation and rations) received by workers in sugarcane farming. Furthermore, the increase in cash-wages outweighed the reduction of non-pecuniary benefits, on average composite wages. Implementation of the SD is also associated with an increase in standardisation of wages for relatively unskilled seasonal and permanent farm employees, which is in line with an intended objective of the SD to standardise the farm wage. Whilst real average wages of workers in sugarcane farming increased by about 70% from 1978 to 2012, employment in sugarcane farming, measured as Full-Time Equivalents (FTEs) Worker, declined by about 36% during the same period, which gives rise to a simple elastic ity computation of -0.51 (Δemployment/Δwage = -0.36/0.7), without accounting for changes in factors other than the wage. In order to account for other factors affecting the supply of and demand for the various categories of farm workers in sugarcane production, econometric techniques were used to estimate the relationships between real farm wages and employme nt in sugarcane farming, and in turn, the wage elasticity of the demand for each category of labour for the industry as a whole and for two particular sugarcane producing regions, the South Coast and Midlands of KwaZulu-Natal (due to the topography of the two regions, sugarcane production on the South Coast is relatively more labour intensive than in the Midlands). High levels of multicollinearity in the data precluded satisfactory estimation of supply and demand functions for farm labour using 2SLS regression techniques. Instead, the Principal Component Analysis (PCA) extraction procedure proposed by Chatterjee and Price (1977) was used to estimate the supply and demand functions separately. Whilst the statistical fit of the estimated farm labour supply (demand) functions was relatively poor and satisfied, respectively, the theoretical fit of the estimated supply of and demand for labour functions was satisfactory. After accounting for changes in the area under sugarcane, the price per ton of sugarcane, price index of chemicals and labour-related policy implications, estimates of the wage elasticities of demand for the various categories of farm labour, regions and aggregate sugarcane production by LSGs ranged between -0.028 and -0.488 in the short-run, and between -0.041 and -0.647 in the long-run. This finding that the demand for farm labour in sugarcane production is relatively inelastic is consistent with observations that, by and large, sugarcane production methods remained relatively unchanged in the industry and each of the two regions for the 1978-2012 period. The results further indicate that farmers adjust employment in response to a wage change within a period of three years. Over-and-above the impact of changes in the policy on wages, the changes in policy are associated with a further reduction in aggregate employme nt of an estimated 4119 FTEs and 5768 FTEs in sugarcane production by LSGs in the short- and long-run, respectively. Other things being equal, considering employment levels in 1978 and 1994, LSGs reduced employment in sugarcane farming by 6.82% and 17.1% in the short- and long-run, respectively. This impact may be ascribed to regulation induced changes in non-wage costs of employment, such as transactions costs and perceived risk. The results further verify that chemicals application is a strong substitute for labour in sugarcane production (especially in the Midlands region), and that employment of farm workers in sugarcane production is positively related to the price of sugarcane and the extent of area planted to sugarcane. Bearing in mind the increases in the real minimum wage of farm workers post 2012, a revision of the current labour legislation to reduce some of the non-wage costs of employing farm workers is recommended to help preserve employment, especially of relatively unskilled workers in sugarcane farming. Activities that increase (reduce) the price received by farmers for sugarcane will have a positive (negative) impact on farm labour employment, both through the price effect, as well as an increase in the area under sugarcane. Finally, considering the trend of declining farm employment, programmes to improve education and training of former farm workers and other people in rural areas are important to improve their prospects of finding employment in non-farm sectors. Furthermore, more research on compliance issues is recommended to improve the effectiveness of compliance on the labour markets that are covered by the SD.
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.

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