Browsing by Author "Botha, Petrus Johannes"

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    The financial implications of specific citrus production practices in the Boland
    (Stellenbosch : Stellenbosch University, 2024-03-05) Botha, Petrus Johannes; Hoffmann, Willem; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
    ENGLISH SUMMARY: As global agriculture faces ongoing environmental changes, the profitability of farming is under threat, particularly in specialised regions like the Boland of South Africa. Historically, this region was dominated by grape and cash crop cultivation. This study explores the potential of citrus cultivation as an alternative to not only diversify risk but also enhance overall profitability. The primary objective of the study is twofold: first, to determine the profitability of specific citrus production practices with a focus on orchard establishment, and secondly, to evaluate the financial implications of different production practices at the whole-farm level in the Boland. The overall question addressed the profitability of citrus cultivation in this region, weighing the financial growth potential against reduced production risks. The importance of considering costly production decisions, with a specific focus on establishment choices is emphasized in the study. Citrus production includes a wide array of varieties and rootstock options that demand specialised knowledge. Integrating discipline-specific knowledge from horticulture, consulting, agricultural economics, and practical farming is deemed crucial. Given the scarcity of citrus farms in the Boland, a simulation model was constructed to evaluate the financial implications of specific production practices, focusing on their effects on the entire farm. Financial analysis utilised standard budgeting techniques and accounting principles for comparability across time and different areas. Scientific measurements conducted for a newly established citrus orchard were integrated into a practical farm’s financial model, capturing horticultural evidence through equations. Three distinct production practices, biochar, controlled released fertiliser (CRF), and compost were examined for their potential to optimise orchard establishment and enhance performance over a 25-year period. The Internal Rate of Return (IRR) was used as the criterion for profitability, revealing that CRF and compost outperformed biochar, mainly due to the latter's high investment costs. Cash flow assessments incorporating borrowed capital at different ratios highlighted challenges in meeting financial obligations. Despite these challenges, all practices exhibited promising expected IRRs of at least 6% in good years and 3% in average years. The study stresses that while diversifying income is beneficial, long-term financial sustainability should be the primary focus. Citrus production, despite high establishment costs causing initial hesitancy among producers, emerges as a lower-risk investment in the long run, reducing price volatility through access to diverse markets. To summarise, this study underscores the potential of citrus cultivation in the Boland, offering a less risky path to financial stability. Recommendations include expanding cultivar trials, conducting similar studies in other production areas, and exploring additional production practices within citrus cultivation. The study acknowledges the limitations associated with geographic specificity and emphasizes individualised judgement for the financial feasibility of crop conversion based on each farm's unique circumstances.