Browsing by Author "Makhuvha, Mmbengeni Constance"
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- ItemAn analysis of financial implications of switching between crop production systems in Middle Swartland(Stellenbosch : Stellenbosch University, 2015-04) Makhuvha, Mmbengeni Constance; Hoffmann, Willem H.; Stellenbosch University. Faculty of Agrisciences. Dept. of Agricultural Economics.ENGLISH ABSTRACT: Sustainability issues and the structural over-supply of wheat in the Western Cape since the middle 1990‟s have caused the introduction of alternative crop rotation systems in the Middle Swartland, a dry-land winter cereal production area of the Western Cape. Crop rotation systems typically consist of cereals and oilseed crops and pastures. Alternative crop rotations systems are currently scientifically evaluated at the Langgewens Experimental farm. Currently more than half the cultivated area in the Swartland is still under wheat production, a third of which is wheat monoculture. An issue regarding the adoption of such a crop rotation system is the cash flow and affordability of implementing such an alternative system. The goal of this study is to determine the cash-flow implications of a shift from wheat monoculture to a crop rotation system. Typical strategies available to producers to support such a shift are investigated. The complexity of farm systems as well as the interrelationships between crops within such a crop rotation system necessitates the implementation of a systems approach. A multi-period, whole-farm budget model was constructed to capture the interrelationships of the farm system and to express the financial performance thereof in standard profitability criteria. The farm model is based on a typical farm for the Middle Swartland. The model was used to determine the expected profitability of various crop rotation systems and to evaluate alternative strategies to accommodate the shift to alternative systems. The Langgewens crop rotation trial results are used to determine expected profitability of various crop rotation systems. A wheat-monoculture system serves as basis for the shift to alternative systems with the focus on the practical implications of such as shift. The profitability calculations show that various crop rotation systems are expected to be more profitable than wheat monoculture. The most profitable system is one year canola followed by three years of wheat, followed by a wheat/medic system with Dohne Merino sheep on the medic pastures. The shift from wheat monoculture is simulated by four scenarios. The first evaluated the financial implications of a shift form monoculture to the three year wheat and one year canola system. The second simulates a shift from monoculture to a wheat/medic system within two years and using own funds. The third scenario simulate the same shift with own funding, but over a ten year period. The fourth is similar to the second, but borrowed money is used to fund the shift.Lower input costs and consistently higher yields results in higher expected gross margins for the crop rotation systems, especially with nitrogen fixing plants. The inclusion of medic and medic/clover pastures and alternative cash crops such as canola and lupins show a higher yield on investment than wheat monoculture. Insight into the factors that producers should consider was also generated by this study, concerning changes to crop rotation systems. These factors include; time period over which a shift is planned and the availability of financing options. It seems that a quicker shift, using borrowed funds, is more profitable over the longer term.