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Stellenbosch University (2018)

Financial implications of converting from livestock to game farming in the Karoo region, South Africa

Chiyangwa, Tafadswa

Titre : Financial implications of converting from livestock to game farming in the Karoo region, South Africa

Auteur : Chiyangwa, Tafadswa

Université de soutenance : Stellenbosch University

Grade : Master (MCom) Agricultural Economics 2018

South Africa’s game farming industry is becoming more common and more popular in the country’s agricultural sector. It is one of the geographically growing agriculture subsectors, with an approximate growth rate of between 2 and 2.5% per year on average. Currently, game farming is widely adapted within traditionally extensive cattle and sheep producing areas, where current sheep producers are moving towards game farming practises. This type of farming, is regarded as a lifestyle investment and, because of this ; it is largely investors with a large capital who can afford this. Due to the complexity of this type of farming, influenced by the huge initial capital required, interrelationships of biological, physical and economic aspects, and exposure to high risk and uncertainties, game farming is not easy to tap into without a considerable degree of capital. There is a general lack of finance, knowledge and access to markets by South African farmers, hence switching from sheep to game farming can become even more costly. To mitigate this deficiency, use of efficient and effective decision making processes is useful in order to make informed decisions. The researcher employed whole farm budget modelling as a technique, which is useful for the decision making process, by adapting the use of a multi-period budget model. The proficiency of the systems thinking approach was used in order to deal with complexity in the whole farm system where physical and financial components of the farm were incorporated together as a single item. The main aim of this study is to analyse the financial and managerial implications of converting from sheep farming to game farming in Beaufort West, a town in the Karoo in the Western Cape of South Africa, with the objective of finding out if it is financially profitable for a current sheep farmer to move to a game farming system. To achieve this, a collaborative research method is used following a review of literature and then empirical investigation is used to analyse the results. The intention is to generate comprehensive and feasible insight for farmers to tap into, thus assisting them in making informed choices with improved knowledge in their daily operations. The findings of this work reveals that current sheep farming system over a period of 20 years is profitable, but converting to game farming is more profitable. This was revealed by an IRR of 4.02% in a sheep farming system compared to IRR of 5.85% in a game farming system. The IRR was described and analysed to show how it is used to measure profitability in a whole farm system situation. It was noted that there are external factors that also influence whole farm profitability. Scenarios were simulated to analyse the impact of specified factors on whole farm profitability. The factors were high game prices, drought and decrease in carrying capacity. The results are significant in all scenarios. The scenario with high game prices show increase in IRR from 5.85% to 7.45% and the scenario with a decrease in carrying capacity show decrease in IRR from 5.85% to 2.41%. Lastly, the scenario with drought shows decrease in IRR from 5.85% to 5.53%. This explains that the occurrence of drought and decrease in carrying capacity decreases whole farm profitability, whilst high game price increases whole farm profitability.


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