Masters Degrees (Agricultural Economics)

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Browsing Masters Degrees (Agricultural Economics) by Subject "Agricultural diversification -- Western Cape (South Africa)"

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    The financial implications of diversifying wine grape production to include citrus in the Robertson area, Western Cape, South Africa
    (Stellenbosch : Stellenbosch University, 2020-03) Bezuidenhout, Blanche Chenay; Hoffmann, Willem H.; Johnson, Shelley; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
    ENGLISH ABSTRACT: In the past years diversification became very popular as it was successfully applied to overcome many challenges faced by farmers. Diversification is defined as the change in traditional norms and strategies towards the success of a farming operation. South Africa’s wine grape industry is important to the country’s economy. In recent years this industry have faced a number of challenges, which compelled them to generate additional alternative income. Four trends were identified which contributed to these challenges. The four trends are the reduction in the area under wine grape vineyards, increase of additional alternative crops, stagnated average wine grape prices and the impact of the drought that occurred in the Western Cape from 2015 – 2017. Consequently, wine grape farmers in the Robertson area diversified to include citrus. A number of uncertainties occurred in terms of the financial viability of this diversification process. Therefore, the research objective of this research study was to evaluate the financial implications associated with the outcomes of the diversification process by wine grape farmers in the Robertson area. Three multi-period whole-farm budget models within a systems thinking approach was developed. A systems thinking approach is ideal as it accommodates the complexity of a farm systems and the development of the knowledge of a farmer to make more informed decisions. Simulation modelling accounts for interrelated interactivity of components. Whole-farm budget models are essential simulation models as it accommodates a large number of variables, consists of interrelated interactivity, are understandable by participants, is user-friendly and easily adaptable. The financial results obtained, was remarkable. The financial results presented that the worth of the farm increased, as the Net Present Value (NPV) was negative in Model 1, and positive in Model 3. There is also no significant changes that occur in the use of infrastructure, as the capital investment required did not increased substantially. These results was based on the assumption a replacement ratio of 1:1. This means that for every hectare of wine grape removed, mainly due to age, one hectare of citrus was replaced. However, this assumption was not a representation of the reality. There were two factors which was important in citrus production. The first factor was the water requirement (m3 per year) for citrus which was significantly higher, compared to the water requirement (m3 per year) for wine grapes. Secondly, farms are affected during the irrigation season from citrus by the Brandvlei dam scheme, as the farmers do not have access to water for the full time period, due to maintenance of the dam. Considering these two factors, two scenarios were developed to accommodate the factors where the replacement ratio was adjusted to 1:0.8 and 1:0.7, respectively. However, the impact on the financial performance remained closed to the original results obtained. Therefore, wine grape farmers are advised to consider diversifying with citrus.