Masters Degrees (Agricultural Economics)

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The financial and managerial impact of including low-chill apples as an enterprise on a typical wine farm in selected areas
(Stellenbosch : Stellenbosch University, 2023-12) Du Toit, Jacobus Francois; Hoffmann, Willem; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
ENGLISH SUMMARY: The South African wine grape sector is significant to the country's economy. Many wine grape producers have expanded their operations to incorporate other long-term crops as an alternative source of revenue due to the difficulties that the industry has faced, particularly during the past 10 years. The wine grape farmers of the Robertson, Worcester, and Paarl regions have access to a wide range of crop options ideal for this diversification process. The main objective of this study is to test the inclusion of apples with a minimal cold unit demand (low-chill apples) as a diversification option for wine grape farmers. The lack of proof in the anticipated financial and management results of such a change as well as the potential cash flow impact are major stumbling blocks to implementation. Consequently, the study set out to determine the managerial and financial effects of incorporating low-chill apples into a typical wine grape farm. To address the primary research objective, three specific research goals were pursued: (i) determining the production needs for low-chill apples in the chosen areas; (ii) determining the financial effects of producing low-chill apples; and (iii) determining the financial implications of incorporating a low-chill apple enterprise at farm level for the chosen areas. Within the framework of the systems thinking methodology, a multi-year whole farm budget was developed. A farm system is complex and made up of many interconnected elements, making it challenging to understand the impact of changing any specific element. The systems thinking method can assist in the simplification of farm-level decision-making through the incorporation of the complexities involved in farming systems. Considering that farming systems are made up of interrelated components, a simulation model can include the interaction that occurs between different components. A model is a representation of a real system that models the socioeconomic, biological, and physical aspects of farming and examines the relationships between its various components. The main goal of this study's research is to determine the predicted managerial and financial effects of incorporating low-chill apples as an enterprise into a typical wine grape farm. For this goal, a budget model will be sufficient. The model predicts that the wine grape farms in the Robertson, Worcester, and Paarl districts stand to benefit financially from the diversification process. It is anticipated that infrastructure changes won't have a big cost impact. According to the findings, as the area planted with low-chill apples increases, the IRR rises. It also shows how the IRR is significantly improved by automating the harvesting process and reducing the cost of thinning for low-chill apples. This option was considered because low-chill apples would target the juice/cider market, where size and quality are less important. The IRR exhibits substantial sensitivity to changes in the Rand per tonne price and tonne per hectare of apples.
Rooibos tea production cost activity-based costing break-even point farm financial planning cost allocation
(Stellenbosch : Stellenbosch University, 2023-11) Britz, Karla; Hoffmann, Willem; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
ENGLISH SUMMARY: Rooibos tea, Aspalathus linearis, is an endemic subshrub to South Africa and is the only plant in the Aspalathus genus with an economic value. The production cycle of Rooibos tea is nine years with an average of four harvests. Production of Rooibos tea is semi-intensive and a crucial consideration for producers is production cost due to relatively low yields. Since there is significant variation in farm types, yields, farming orientation, mechanisation and limited alternative enterprise selection, there is a lack of understanding of the full cost of tea production. The aim of this study is to determine the break-even yield for Rooibos producers in areas to improve the decision-making process to produce more cost-effectively. One of the characteristics of the Rooibos industry is recurring cycles where there is a shortage in the market for Rooibos tea which leads to high prices, this is followed by an increase in production, which leads to an oversupply in Rooibos tea and low to very low prices in the market. Therefore, the research question is what are the design criteria and implementation ability of a financial decision support tool to measure the impact of different production processes and yields on the production cost of cultivated Rooibos tea? The research techniques used include enterprise budgets, a literature study and gathering secondary data. In the process, a Rooibos tea cost calculator in Excel is created to calculate the total production cost per kilogram of dried tea produced and to calculate the break-even yield in terms of wet Rooibos tea harvested. First, an understanding of the Rooibos tea production process was needed to create the model. The understanding was formed by having discussions about the production process and how the industry works. Implementing the concept of activity-based costing and the equations to determine the break-even point, the model is created. In order to ensure the model is user-friendly it was used in different rounds of testing to identify possible problems. In this research project, there is a comparison of three different Rooibos production areas namely Clanwilliam, Sandveld and Tierberg to illustrate the difference in locations, soil composition, climate, planting density, yield, and production cycles. This is followed by a comparison between the total allocated production cost per hectare and the total cost per hectare. In the different areas, the total cost per hectare for 2023 is R6 219,35 in Clanwilliam, R4 108,18 in the Sandveld area, and in the Tierberg area, the cost is equal to R8 275,29 per hectare. The average cost per kilogram between 2021 and 2023 is equal to R23,20 in Clanwilliam, R28,79 in the Sandveld, and R33,48 in the Tierberg area. Only in Clanwilliam in 2023 was a producer able to break even. The main conclusions of the research project are that a deeper understanding of the production process is evident in the model construction and that the activity-based costing principle, and the inclusion of break-even analysis are useful attributes.
The value of pest monitoring for the economic sustainability of South African apples for the export market
(Stellenbosch : Stellenbosch University, 2023-12) Loos, Dawn; Hoffmann, Willem; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
ENGLISH SUMMARY: There is a risk of market closure for South African Fuji apples due to phytosanitary pest interception. Pests that are proving problematic in our local climate include codling moth (Cydia pomonella), mealybug species (Planococcus citri, Pseudococcus longispinus and Pseudococcus viburni), mites (Panonychus ulmi and Bryobia) and woolly apple aphid (Eriosoma lanigerum). This is problematic due to this market paying a large premium for these fruits, not realised elsewhere and otherwise making this widely planted variety significantly less profitable to produce. While applying more pesticides to reduce pest presence is effective, it reduces environmental and economic sustainability. A 25-tree per two-hectare monitoring program was applied to address this issue, alongside codling moth trap counts, a preharvest assessment and packhouse fruit sampling. This was applied to 264 Fuji orchards across the Elgin, Grabouw, Vyeboom and Villiersdorp (EGVV) area. Data was collected biweekly and analysed using various methods appropriate to the data type. The findings of this study showed that both using this monitoring program effectively or using an aggressive spray program significantly reduced the occurrence of mealybug while woolly apple aphid was best managed using regular monitoring. Mite and codling moth presence were unaffected. Mites were shown to be managed efficiently through the use of natural predatory mites. Woolly apple aphid, while having high levels of parasitism by A. mali, was still a hindrance to export due to mummies left on fruit. The preharvest assessment showed to be significantly more effective at reducing risk when allocating orchards to a particular market, when compared to the use of a packhouse sample. Various orchard environmental factors were identified as being influential on each of the phytosanitary pests’ presence. Financial data used in partial budget modelling revealed that the use of monitoring to reduce risk of phytosanitary pests could result in a 62% increase on return on investment of annual costs per hectare. These findings show that implementing holistic monitoring systems can aid in reducing the risk of market closure while simultaneously improving growers’ financial standings and better serving the environment. Further research should be aimed at studying seasonal differences in phytosanitary pest pressures and what impacts this may have as well as place focus on industry leaders to make trade more sustainable and less volatile to closure.
Assesing measures for agroecological competitive advantage
(Stellenbosch : Stellenbosch University, 2023-12) Naicker, Keenan; De Lange, Willem; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
ENGLISH SUMMARY: The evaluation of agroecological farming practices is a subject of current interest in the field of sustainable agriculture. While agroecology has gained attention as a potential solution for sustainable food systems, assessing its economic performance relies on measuring its competitive advantage. Traditional metrics, including Total Factor Productivity (TFP), Private Cost Ratio (PCR), Profit Margin (PM), and Return on Assets (ROA), are commonly used to evaluate competitive advantage in various sectors, but their applicability to agroecological farming remains unclear. This master's thesis explores the applicability of traditional competitive advantage measures when applied to agroecology principles within the agricultural sector. The study applies the Analytical Hierarchy Process (AHP) to two Delphi panels to assess agroecological principles' priority and competitive advantage measures' alignment. Results indicate soil health as the most crucial agroecological principle, closely followed by fairness and biodiversity. Total Factor Productivity (TFP) emerges as the preferred measure of agroecological competitive advantage, followed by Profit Margin (PM) and Production Cost Ratio (PCR). While TFP is favoured, it presents limitations such as data requirements and the inability to capture certain externalities. The study underscores the need for new measures aligned with agroecology's holistic nature and acknowledges limitations, including the inclusive and context-specific nature of agroecology. This master's thesis contributes to the discourse on agroecological competitive advantage, emphasizing the importance of reevaluating traditional measures within the context of agroecology. It underscores the potential for sustainable agricultural practices to reshape competitive strategies, ultimately fostering a more resilient and equitable food system.
A discrete-time survival analysis of smallholder contract farmers in Malawi
(Stellenbosch : Stellenbosch University, 2023-04) Pretorius, Hendrik Stephanus; Greyling, Jan; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
ENGLISH ABSTRACT: This study investigates the durability and dynamics of smallholder participation in contract farming arrangements (CFAs) in Malawi, which are seen as a potential way to increase smallholder commercialisation and participation in modern high-value markets. The study finds that while CFA participation can offer benefits, there is considerable variation in participation durations, and high rates of smallholder exit. Factors related to productive resources and farmer performance have a large influence on the likelihood and timing of exit. Policymakers should have a realistic view of what can be expected from CFAs and consider differentiated policy responses for farmers likely to sustain participation versus those at high risk of exit. Developing farmers' capacities, particularly those factors that raise the propensity for sustained participation, should be prioritized to improve smallholder commercialisation through more durable modern-market participation. Furthermore, efforts should be made to further develop Malawi’s non-physical resources.

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