Strategies in the Beaufort West region to mitigate the negative financial impacts of a drought

Thesis (MCom)--Stellenbosch University, 2020.

ENGLISH SUMMARY : Droughts are a frequent occurrence in South Africa’s arid and semi-arid rangelands and can have severe ecological and economic consequences. Most of the agricultural land area of South Africa is not conducive to crop production. These regions can get as little as 400 mm of rain annually. A deficit of 25% of normal annual rainfall is considered a severe drought. Droughts pose an increasing challenge to rangeland users as the global climate changes. Gaining access to relief from government in the form of subsidization grants has proved to be a lengthy and difficult process. The research aims to identify and evaluate whole farming strategies that a farmer in the Beaufort West region can employ to mitigate the negative financial impacts of a drought on a typical sheep farming enterprise. This study makes use of participatory research to acquire data for the farming models. To understand the effect of a strategy e.g. a feeding program in a whole farm system, requires a method that integrates, rather than ignores the effect of such a factor on the performance of the whole farm. The identification and construction of a typical farm model for the area provided a basis for comparison of the strategies identified to mitigate a drought. Whole farm modelling is an analysis of the current state of the farm, determining the available land, labour, capital and management resources. An incremental budget model in the traditional sense is a financial model in which budget proposals and allocations are based upon the funding levels of the previous year. Only new revenue is allocated to the expenses of the budget model. The research identified and evaluated four whole farming strategies that a farmer in the Beaufort West region can pursue to mitigate the negative financial impact of a drought on a sheep farming enterprise. The strategies are stated below. Feed through the drought at cost. Shrink breeding stock during drought and rebuild after (protect genetic material). Relocate the entire enterprise to area not experiencing drought. Sell off the entire enterprise, invest in the capital market and buy back at the end of the drought The strategy to shrink breeding stock during a drought proved to be the most financially feasible. The advantage of implementing this strategy is that genetic material of the farming livestock is protected through the period of the drought. Furthermore, the long run effect of the strategy is easily rectified post drought merely by adjusting the rate at which livestock are sold and retained on the farming enterprise.

AFRIKAANSE OPSOMMING : Droogte kom gereeld voor in Suid-Afrika se dorre en halfdorre weivelde en kan erge ekologiese en ekonomiese gevolge dra. Droogte veroorsaak toenemende uitdagings vir weiveld gebruikers en wêreldklimaat verandering. Die navorsing mik om algehele boerdery strategieë vir n boer in Beaufort Wes omgewing te identifiseer en evalueer en om negatiewe finansiële gevolge van droogte op n skaap boerdery te voorkom. Die studie maak gebruik van deelnemende navorsing om inligting te verkry van boerdery modelle. Om die effek van die strategie te verstaan bv. N foedsel program in n algehele boerdery vereis n integreerde metode, eerder as om die optrede effek te ignoreer van die algehele boerdery. Die identifikasie en konstruksie van n boerdery model vir die gebied gebaseer op n vergelyking van strategieë kan droogte implikasie verlig. Algehele boerdery model is n analise can die huidige staat van die plaas, bepaling van die beskikbare land, arbeiders, kapitaal en bestuur hulpbronne. N inkrementele begroting model op die tradisionele manier is n finansiële begroting voorstel en allokasies is gebaseer op befondsing vlak van vorige jare. Slegs die nuwe jaar se inkomste word geallokeer na die uitgawe begrotings model. Die navorsing identifiseer en evalueer vier algehele strategieë van die boerdery in Beaufort Wes omgewing om negatiewe finansiële impakte van droogte op n skaapboerdery. Strategieë Voor deur die droogte teen koste Verminder teelvoorraad tudens droogte en herbou daarna Verplaas die hele onderneming na n gebied wat nie droogte ervaar nie. Verkoop die hele onderneming, belê in die kapitaalmark en koop die onderming weer aan na die droogte. Die strategie om teelvoorraad te verminder gedurende die droogte tydperk het finansiele haalbaarheid getoon. Die voordeel om die strategie te implementer is dat die genetiese material van die vee beskerm sal bly tydens die droogte tydperk, in die lang termyn is die effek van die strategie maklik omkeerbaar na die droogte typerk deur die aanpassing en verbanging van die strategie.

Masters