Masters Degrees (Agricultural Economics)

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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.
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    Evaluating Stellenbosch University students’ perceptions, knowledge and the factors affecting willingness-to-pay for organic vegetables
    (Stellenbosch : Stellenbosch University, 2024-03-04) Mtwesi, Sinako; van der Merwe, Melissa; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
    ENGLISH SUMMARY: The demand for organic foods is increasing significantly globally and in South Africa. Previous studies cite four reasons for this. Firstly, most consumers perceive organic food as a healthier alternative to conventional foods because of the belief that organic foods contain more nutrients. Secondly, consumers consider organic food safer, better in taste, and more enjoyable than conventional foods. Thirdly, consumers perceive organic foods as safe with no chemical residues. Lastly, consumers’ increasing knowledge about organic food products increased their organic food purchases. Very little studies have analysed the demand of students for organic products. Therefore, this study aims to determine students’ level of knowledge about organic foods, explore their perceptions about organic foods, and further assess the factors that affect their willingness to pay (WTP) for organic food, particularly carrots and spinach. Online surveys were sent out to all Stellenbosch University students. The total sample size was 339 after 103 surveys were eliminated due to incompleteness. Data was analysed using the R Statistical software version 4.0.2. Descriptive statistics were analysed by way of an ANOVA analysis. Multiple regression model and a double-bound dichotomous choice format of contingent valuation method used to evaluate the factors affecting willingness-to-pay for organic foods. The results show that 64% of the students defined organic food correctly, while 36% defined organic foods incorrectly. Students perceive organic food as expensive, environmentally friendly, and safe to consume. When purchasing organic foods, students reported to be motivated by health considerations, quality, and environmental impact. The majority of the students (55.5%) reported to purchase organic vegetables, with 56.4% reporting to purchasing organic vegetables occasionally. The most purchased vegetable category was leafy vegetables (53.7%). Woolworths (40.4%) was the most preferred supermarket, followed by Checkers (20.7%), other supermarkets such as Greengrocers (20.7%) and Pick n Pay (10.1%). On the contrary, 44.5% of the students reported that they do not purchase organic vegetables. The main deterrents to organic vegetable purchases were high price (30.9%), satisfaction with conventional vegetables (20.5%), and unavailability of organic vegetables (18.9%). Regarding WTP for organic vegetables, 62% of the surveyed students were willing to pay more for both organic spinach and carrots, while only 38% of the students surveyed were unwilling to pay more. The study found that 24% of the students, representing the highest majority, were willing to spend between R2 and R4 more for organic spinach over the assumed retail price of R15 per bunch of spinach. For organic carrots, 25% of students, which was the highest majority, were unwilling to pay more than R12.50 per kg for organic carrots. The multiple regression results revealed that the nutrient contents of food and WTP for nutrient-rich foods had a positive and significant effect on WTP for organic spinach and carrots. Education level also had a positive and significant effect on WTP for organic carrots. The age variable was found to have a negative and statistically significant effect on WTP for organic carrots. The income variable was found to have a negative and significant effect on WTP for organic spinach.
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    An analysis of the competitive performance of the Congolese palm oil industry
    (Stellenbosch : Stellenbosch University, 2024-03) Diambwa, Mania Donatien; Van Rooyen, Johan; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
    ENGLISH SUMMARY: The palm oil industry of the Democratic Republic of the Congo (DRC) provides an interesting case study. Richly endowed with the required natural resource base, the DRC was a leading palm oil producer and the main African exporter of palm oil and second in the world with 150 000+ metric tons from 1961 to 1975. Thereafter and due to neglect and decline, the Congolese palm oil industry reached the point, in the 1990s to 2010, where palm oil had to be imported to meet local demand. Since 2015, indications of recovery have been observed. This study measures and analyses the competitive performance of the Congolese palm oil industry to understand the factors constraining and enhancing competitiveness and to propose strategies for improvement. The New Trade Theory and Porter Diamond model provided a grounded theoretical construct for the analysis as it relates to converting comparative advantages, based on natural resource endowments (for palm oil production in the DRC), into business related competitive advantage positions. The relative trade advantage (RTA), the revealed comparative advantage (RCA), and the normalised revealed comparative advantage (NRCA) were used as quantitative measures, with trade data from FAOSTATS and Trade Map ITC. The RTA measurement shows fluctuating trends for the Congolese palm oil industry from highly competitive to negative ratings, with four phases of competitiveness: Phase 1 - “Post-impendence highly competitive but fluctuating” (1961-1975), with 1 849 as highest RTA and 703 as lowest; Phase 2 - “Decreasing positive competitiveness” (1975-1985), with 489 as highest RTA, and 0 as lowest; Phase 3 - “Neglect and nationalization with marginal to negative competitive performance”(1986-2015), with 50 as highest RTA and -83 as lowest; and Phase 4 - ”Recovery towards competitiveness” (2016 onwards), with 95 as highest RTA and 15 as lowest. From an export competitive performance perspective, RCA and NRCA indices show a marginal positive performance since 2015, indicating some recovery from the net import years. To explore the current reality of the competitive performance of the Congolese palm oil industry, analysis structured through the Porter Diamond model indicated that demand and market conditions (rating 3.4/5) and firm strategy, structure, and rivalry (rating 3.2/5) enhance competitiveness, with production factor conditions (rating 2.4/5) near neutral. Competitive performance is however constrained by weak related and supporting industries (rating 1.7/5), chance factors (rating of 1.8/5), and government policies and support (rating of 1.9/5) Note: 5/5 is viewed as most enhancing; 1/5 most constraining. The conversion of comparative into competitive advantages for the industry thus indicates constraining conditions within the Congolese palm oil industry. Strategies towards improving competitive performance require collaboration between the industry and government and include improving the business climate, power and electricity provision and rebuilding the general infrastructure. Linked to these are actions to be dealt with through private-public cooperation and improved industry value chain collaboration. These include research and development through the upgrading of the Nationale de Recherche Agronomies (INERA), technological innovation, replacement of obsolete equipment and improved processing facilities to increase the extraction rate of palm oil.
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    The financial impact of postharvest packaging on export table grapes focusing on shelf-life and fruit losses
    (Stellenbosch : Stellenbosch University, 2024-03) Stringer, Cidney Jamie; Hoffmann, Willem; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
    ENGLISH SUMMARY: Grapes of inferior quality are not viewed as attractive to consumers. This causes reduced demand and prices for those grapes resulting in financial losses in highly competitive domestic and export markets. South Africa is the fourth-largest exporter of table grapes in the world. In South Africa, table grapes are mostly produced for export with the main destination markets being in the Northern Hemisphere. Exporting to the Northern Hemisphere involves long transport time windows due to logistical problems associated with harbor functions, Covid-19, and a trend for container ships to travel at lower speeds to limit carbon emissions. The shipping and storage processes of table grapes have therefore been prolonged, and the restrictions implemented during Covid-19 created major backlog issues at the ports. This also worsened the logistical bottlenecks at the harbours, especially for exports. There is therefore a stronger incentive to control the occurrence of postharvest decay and diseases in table grapes for an extended time. Prolonged storage increases table grapes’ sensitivity to decay. It is therefore important that grapes are protected and maintain their quality for a prolonged period until they reach the consumer in the export market. Storage and shelf-life extension are generally associated with a decrease in overall table grape quality and the longer the grapes are stored, the worse the quality. Maintaining the quality and prolonging the shelf life of table grapes postharvest is important as typically, the grapes are subjected to the risk of various postharvest losses and long periods of storage before they reach their final market/point of sale. The articles generated during the literature review all focused on the effect that packaging has on table grape quality and not the financial impacts. None of the articles used a budget model to calculate which option is the most economically feasible given the damage that it can cause. Therefore, enterprise budget models are constructed to determine if the packaging costs of different packaging combinations are economically feasible given the quality deterioration that might occur with prolonged shelf life.
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    A critical analysis of the PALS initiative to determine its contribution to land redistribution and agricultural development in South Africa
    (Stellenbosch : Stellenbosch University, 2024-03) Abdoll, Caitlyn; Kirsten, Johann; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
    ENGLISH SUMMARY: Since the start of South Africa’s democracy in 1994 and the deregulation of the country’s agricultural market in 1997, the agricultural sector has been undergoing transformation. In 1994, the newly elected ANC government set the target to redistribute 30 percent of white-owned agricultural land by 2014. This process is facilitated through a three-pronged approach to land reform consisting of land restitution, land redistribution, and tenure reform. Progress has been made with respect to land transfers, but a more effective approach is needed to accelerate the pace of land redistribution and agricultural development. In February 2021, President Ramaphosa announced the creation of a Land Reform and Agricultural Development Agency to address the issue of land ownership inequality. This concept of the land reform agency has many similarities to, and seemed to build on, the framework of the Partners in Agri Land Solutions (PALS) initiative which was launched in August 2014. The primary objective of this research was to do a critical analysis of the PALS initiative, its different projects, and its reported success in redistributing agricultural land and establishing commercial black farmers on this land. This analysis helped to understand whether it is feasible to use the PALS framework as the blueprint for the Local Land and Agricultural Development committees as part of the proposed Land and Agricultural Development Agency. A literature review identified land access, beneficiary selection, access to capital, market access, post-settlement support, and an exit strategy as the challenges impacting land reform and agricultural development in South Africa. A case study analysis was conducted on 20 implemented Witzenberg PALS projects. Qualitative primary data were collected by conducting semi-structured interviews and reviewing official project documentation of the projects. The projects were measured against the seven factors and the level of empowerment created through the private redistribution of land. The results indicated that Witzenberg PALS has facilitated the redistribution of 19 997.16 hectares of farmland through substantial black-owned private land redistribution projects. However, 6 388.86 hectares of redistributed land was transferred by means of an equity share scheme arrangement. Two of the implemented Witzenberg PALS projects are classified as equity share schemes, with minority black shareholding, where the commercial partner oversees all farming activities. Of the 468 beneficiaries involved in the Witzenberg PALS projects, only 64 were permanently employed by the respective joint ventures. This limited the empowerment of the historically disadvantaged beneficiaries as they were not involved in the project’s day-to-day farming operations. The PALS initiative should address the nature of employment and management conditions of the equity share scheme projects to improve the empowerment of the beneficiaries. The PALS centre can be replicated and adapted as the Local Land and Agricultural Development Office in the proposed land reform agency. It is recommended that the government should enable a supportive environment to promote public private partnerships and involve the private sector in the implementation of land redistribution. The results of this study are not generalisable as it was restructured to measuring the private implementation of land redistribution in the Western Cape only. Future studies could include the impact of the private sector in other regions of South Africa.