Department of Agricultural Economics

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Browsing Department of Agricultural Economics by Subject "Agricultural conservation"

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    The financial implications of regenerative agriculture in the Southern Cape and the subsequent impact on future animal and winter cereal crop production
    (Stellenbosch : Stellenbosch University, 2021-03) Hayward, Clinton Todd; Hoffmann, Willem H.; Strauss, Johann; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
    ENGLISH SUMMARY : Dryland farming systems in the Southern Cape are largely reliant on external inputs to function in a financially feasible manner. In recent years, the prices of key farming inputs have begun to put financial pressure on farming systems in the Southern Cape. A trial was recently started in the Southern Cape to assess soil regeneration and the impact thereof on future crop and livestock production. The trial was used as a point of reference in this study to simulate potential production scenarios. Regenerative agriculture shares selected principles with other farming practices such as conservation agriculture (CA) but emphasises biomimicry over external inputs. The aim of this study is to conduct explorative research on the financial implications of future regenerative farming practices in the Southern Cape. A proposed result of the long-term implementation of regenerative farming practices in the Southern Cape is the establishment of agricultural practises that are well adapted to internalise the impacts of changing weather patterns and harmful farming practises. The explorative nature of this study was well suited to the use of simulation modelling where hypothetical changes can be made to the typical conservational farming system in the Western Rûens homogenous farming area, to gain insight into the possibilities surrounding purely regenerative farming practices. A multidisciplinary group discussion was held to incorporate expert knowledge and producer experience on possible production scenarios concerning various purely regenerative farming practices. The concept of the typical farm was applied as a theoretical tool to simulate various production scenarios that CA-like farming systems in the Western Rûens homogenous farming area may face when converting to purely regenerative farming practices. A whole farm multi-period budget model was constructed based on information collected by a local business, during the group discussion and various direct communications. The net profit value (NPV) and the internal rate of return (IRR) are indicators of whole-farm profitability and were used to conduct the relevant financial assessments. Four scenarios based on regenerative principles were assessed according to the financial implications imposed on the IRR and NPV of a typical farm. Scenario planning was used to apply the various changes to the initial state of the typical farm and to assess the financial implications of a percentage change in the IRR and NPV on whole-farm profitability in the subsequent state. The initial state of the typical farm simulated had an IRR of -3.22% and an NPV of -R66 405 812.70. An annual reduction of 10% in the amount of inorganic nitrogen applied, a carrying capacity of 5.5 SSU/ha, a sliding feed scale and a crop/livestock ratio of 70/30 were the most profitable changes made to the typical farm over a period of 20 years. Changes made to the machine inventory had a negative effect on whole-farm profitability. The accumulative changes made to the typical farming system had a positive effect on whole-farm profitability. The IRR and NPV of the typical farm in its subsequent state was -2.29% and -R64 372 818.85 respectively.