Thesis (MScAgric)--Stellenbosch University, 1999. / ENGLISH ABSTRACT: The purpose of the study is to determine the rate of return to cover crop research in the wine industry. The method followed will prove an invaluable contribution toward the need to determine a suitable approach for evaluation studies. The importance behind such a study is the development of appropriate ex ante evaluation approaches, which will assist in the allocation of public research resources in both a social and economical manner. The wine industry is currently enjoying healthy international demand, but will need to remain competitive to reap the full benefit of international exposure. The need therefore exists for a continuation of research at the institutional level, in order to maintain the progressive nature of research knowledge that was available in the past. The evaluation of ex post and ex ante research will assist in maintaining government funding for research and help with campaigning for private investment of research in the wine industry. The use of two evaluation approaches was used for the analysis. Firstly, the production function approach achieved a rate of return of 44 percent, using weather and research expenditure as a means to explain the variations in wine grape yield. Secondly, a cost benefit approach was devised in order to make a direct comparison between the cost and benefits related to the cover crop research. The rate of return achieved for this mode of analysis is 37 percent, using trial plot data as a source of information on potential benefits. In addition to this the cost benefit approach was used to show the difference in rate of return that is achievable between two growing regions. The variable that exists between the two regions, is the higher rate of irrigation in one of the regions. The high rate of return achieved for the investment, provides suitable motivation for the increase in state funding for research in the wine industry, and provides valuable information for the enticement of support by private investors. The two methods used in the study will both draw a certain amount of criticism, largely as a result of the lack of available data. The empirical nature of the approaches is however simple and applicable down to the project level. / AFRIKAANSE OPSOMMING: Die doel van hierdie studie is om die opbrengs op navorsing oor dekgewasse in die Suid- Afrikaanse wynbedryf te bepaal. Hierbenewens het die studie dit ook ten doel om gepaste metodieke vir die evaluering van navorsingsprojekte daar te stel. In hierdie opsig maak hierdie studie ' n bydrae tot besluitneming oor die allokering van openbare fondse vir landbounavorsing op 'n ekonomies en sosiale optimale wyse. Die Suid- Afrikaanse wynbedryf beleef tans ' n bloeifase, hoofsaaklik as gevolg van sterk internasionale vraag na sy produkte, maar salop sy internasionale mededingendheid moet let indien die volle voordele hiervan benut kan word. Daarom is dit noodsaaklik dat die bedryf op tegnologiese gebied moet kan meeding, en dus dat navorsingsbesteding nie onoordeelkundig ingekort word rue. Inligting oor die opbrengs op navorsingsbesteding is dus noodsaaklik om die volgehoue betrokkenheid van die staat te kan regverdig, hetsy as finansier of as katalisator vir privaatsektor betrokkenheid. In hierdie studie is die opbrengs op navorsing gemeet deur beide die bekende produksiefunksie benadering sowel as deur koste-voordeel ontleding. In die eerste geval is 'n opbrengskoers van 44% gemeet, en in die tweede geval is dit 37%. By die kostevoordeel ontleding is ook 'n verdere onderskeid gemaak tussen twee wynbou-streke om die invloed van meer besproeiing te bepaal. Ten spyte van dataprobleme, veral wat betref die koste van navorsing, kan beweer word dat die inligting so verkry van nut sal wees vir besluitnemers by die toekenning van skaars navorsingsfondse, asook by bedinging om privaatsektor fondse.

Thesis (MScAgric)--Stellenbosch University, 2002. / ENGLISH ABSTRACT: African Acacia species are often major contributors to the progressive increase in the woody component of savannas, a phenomenon commonly referred to as bush encroachment. In Hluhluwe- Umfolozi Park, the numbers of adult Acacia nilotica (L.) Willd. Ex Del. trees per hectare far exceed (by III) that of A. karroo Hayne adults. The relative dominance is reversed in the juvenile stage with A. karroo (725 ha') outnumbering A. nilotica (225 ha-I) threefold outside closed woodlands. African acacias produce large quantities of seed and may have large soil-stored seed banks. They suffer pre-dispersal predation by bruchid beetles and may be either wind or animal dispersed. Once dispersed they are vulnerable to post-dispersal attack. This study tested several hypotheses regarding various aspects of seed ecology of A. karroo and A. nilotica. The null hypothesis that seed ecology does not contribute to the success of A. karroo over A. nilotica, was tested. Acacia karroo trees were smaller (mean basal diameter: 7.8 cm) than A. ni/otica trees (mean basal diameter: 18.5 cm) on average, but produced more seeds (A. karroo mean: 1628; A. nilotica mean: 992) for a given basal diameter size class. It was found that A. karroo showed less bruchid infestation (mean: 1.36-3.81%) than A. nilotica (mean: 14.67-86.70%) at all stages of pod development with a proportion of A. karroo seeds (7.1 %) being able to germinate after bruchid attack. Bruchid attack rendered A. ni/otica seeds unviable. There was no difference between the two species with regards to the soil-stored seed bank and the viability of seeds found in the soil. Acacia karroo showed higher germination levels (5.1%) and better establishment (4.9%) than A. nilotica (1.5% and 0.4% respectively). On average, there was no difference in germination levels between burnt and unbumt seeds, but there was a significant difference in germination of burnt seeds in both burnt (4.5%) and unbumt (2.5%) sites and unbumt seeds in both burnt (2.8%) and unbumt (4.9%) sites when considered separately. Post-dispersal predation of A. karroo seeds (21.8%) was higher than that of A. nilotica (12.7%). There was more rodent predation in tall grass areas (26.0%) than short grass (10.7%) or canopy areas (15.2%), and most seeds were lost from unprotected control groups. Rodent presence was a significant factor in unexplained seed disappearance. The ability of A. karroo to germinate easily and the low levels of beetle predation experienced by this species seemed to be its main advantage over A. nilotica as an encroaching species in Hluhluwe-Umfolozi Park. / AFRIKAANSE OPSOMMING: Die Acacia spesies van Afrika is dikwels belangrike bydraers tot die progressiewe toename in die houtkomponent van savannas. Hierdie verskynsel word algemeen na verwys as bosindringing. In die Hluhluwe-Umfolozi Park is die aantal volwasse Acacia nilotica (L.) Willd. Ex Del. bome per hektaar aansienlik meer (l l l meer) as die aantal volwasse A. karroo Hayne bome. In die jong stadium is die oorheersing omgekeerd, met driekeer soveel A. karroo (725 ha-I) as A. nilotica (225 ha-I) bome buite beboste gedeeltes. Afrika se Acacia spesies produseer groot hoeveelhede saad en kan oor aansienlike grond-gebergde saadbanke beskik. Voor verspreiding word die saad aan predasie deur bruchid-kewers blootgestel. Die saad kan óf deur wind óf diere versprei word en na verspreiding word dit ook aan predasie blootgestel. Hierdie studie het verskillende hipoteses rakende verskeie aspekte van die saadekologie van A. karroo en A. nilotica getoets. Die nulhipotese dat saadekologie nie tot die groter sukses van A. karroo teenoor A. nilotica bydrae nie, is getoets. Acacia karroo bome was oor die algemeen kleiner (gemid. basale omtrek: 7.8 cm) as A. nilotica (gemid. basale omtrek: 18.5 cm) bome maar het meer saad (A. karroo gemid.: 1628; A. nilotica gemid.: 992) per gegewe basale diameter grootte klas gelewer. Daar is geen verskil tussen die twee spesies rakende grondgebergde saadbanke en die lewensvatbaarheid van hierdie saad gevind nie. Acacia karroo het hoër vlakke van ontkieming (5.1%) en beter vestiging (4.9%) as A. nilotica (l.5% en .4% respektiewelik) getoon. Daar was oor die algemeen geen verskil in die ontkiemingsvlakke van gebrande en ongebrande sade nie, maar wel 'n beduidende verskil in die ontkieming van gebrande sade in beide gebrande (4.5%) en ongebrande (2.5%) areas en ongebrande sade in gebrande (2.8%) en ongebrande (4.9%) areas as dit afsonderlik geëvalueer is. Die predasie van A. karroo saad na verspreiding (21.8%) was hoër as dié van A. nilotica (12.7%). Daar was meer knaagdier-predasie in gebiede met lang gras (26.0%) as dié met kort gras (10.7%) of boomryke gedeeltes (15.2%). Die meeste saad is in onbeskermde kontrolegroepe verloor. Die teenwoordigheid van knaagdiere het 'n belangrike rol in die onverklaarde verdwyning van saad gespeel. Dit is gevind dat A. karroo se vermoë om maklik te ontkiem, asook die lae vlakke van insek skade aan die saad, die belangrikste voorsprong is wat dié spesie oor A. nilotica as 'n indringer in Hluhluwe-Umfolozi Park het.

This study is a component of a research project on the economic costs of eutrophication in the Vaal River system. Its objective is to investigate the relationship between raw water quality and the chemical costs of producing potable water at two water treatment plants: Zuikerbosch Station #2 (owned by Rand Water) in the Upper Vaal Water Management Area (UVWMA), and Balkfontein (owned by Sedibeng Water) in the Middle Vaal Water Management Area (MVWMA). Time series data on raw water quality and chemical dosages used to treat raw water were obtained for Zuikerbosch Station #2 (hereafter referred to as Zuikerbosch) for the period November 2004 – October 2006 and for Balkfontein for the period January 2004 to December 2006. Descriptive statistics reveal that raw water in the Vaal River is of a poorer quality at Balkfontein compared to that at Zuikerbosch. Furthermore, the actual real chemical water treatment costs (measured in 2006 ZAR) averaged R89.90 per megalitre at Zuikerbosch and R126.31 at Balkfontein, indicating that the chemical water treatment costs of producing potable water tend to increase as raw water quality declines. Collinearity among water quality (WQ) variables at both water treatment plants was analysed using Principal Component Analysis (PCA). The dimensions of water quality identified in the analysis are similar to those reported in Pieterse and van Vuuren’s (1997) study of the Vaal River. For both water treatment plants, Ordinary Least Squares (OLS) regression was used to identify the relationship between real chemical costs of water treatment and the dimensions of water quality identified through the respective Principal Components Analyses. The estimated regression models account for over 50.2% and 34.7% of variation in real chemical water treatment costs at Zuikerbosch and Balkfontein, respectively. The coefficient estimated for PC1 at Zuikerbosch is statistically significant at the 1% level of probability with high negative loadings of total alkalinity and turbidity. Increases in the levels of total alkalinity and turbidity in raw water treated at Zuikerbosch is negatively related to the chemical costs of water treatment. An increased total alkalinity level was found to reduce the chemical costs of treating potable water. PC2 is statistically the most important variable in the estimated explanatory model for Balkfontein. The estimated regression coefficient for PC2 is statistically significant at the 5% level of probability. The estimated relationship between chemical water treatment costs and PC2 shows that there is a positive relationship between the raw water temperature and chemical water treatment costs. However, increases in the levels of chlorophyll and pH in raw water treated at Balkfontein is negatively related to the chemical costs of water treatment. Total hardness, magnesium, calcium, sulphate, conductivity, and chloride, being the highest positive loadings in PC1, relate negatively to the chemical cost of treating water. For predictive rather than explanatory purposes, a partial adjustment regression model was estimated for each of the two water treatment plants. Using this model, real chemical water treatment costs were specified as a function of real chemical water treatment costs in the previous time period, and of raw water quality variables in the current period. The R2 statistics for the two regression models were 61.4% using the data for Zuikerbosch and 59.9% using the data for Balkfontein, suggesting that both models have reasonable levels of predictive power. The chemical cost of water treatment for Zuikerbosch and Balkfontein are predicted at R96.25 and R90.74 per megalitre per day respectively. If raw water nitrate in the UVWMA increases by 1% per megalitre a day while other factors remain constant, chemical water treatment costs at Zuikerbosch can be expected to increase by 0.297% per megalitre and the cost accompanied this change is (R0.285*1998ML*365days) R207,841.95 provided that Zuikerbosch treats an average of 1998 megalitres per day. Likewise, if Zuikerbosch maintains its daily average operating capacity and is able to maintain an optimal level of total alkalinity in UVWMA, the estimated saving on chemical water treatment cost will be R150.063.78 per annum. At Balkfontein, chemical water treatment cost is expected to increase on average by 0.346% per megalitre per day for a 1% per megalitre per day increase in the level of chlorophyll-a, and the cost accompanied this change is R41,128.20 per annum. The prediction also shows a 2.077% per megalitre per day increase chemical water treatment cost for a 1% increase in turbidity and this accompanied with a chemical water treatment cost of R 249,003 per annum, provided that Balkfontein operates at its full capacity (i.e., 360 megalitres per day). / Thesis (M.Sc.Agric.)-University of KwaZulu-Natal, Pietermaritzburg, 2009.

Investments in productive assets by broad-based black economic empowerment (BEE) enterprises in South Africa (SA) during the 1990s have been constrained, in part, by a lack of access to capital. Even if capital can be sourced, BEE businesses often face a liquidity problem, as conventional, equally amortized loan repayment plans do not take into account the size and timing of investment returns, or there are lags in the adjustment of management to such new investments. The aim of this dissertation, therefore, is to compare five alternative loan products to the conventional fixed repayment (equally amortized) loan (FRL) that lenders could offer to finance BEE investments in productive assets that are faced with liquidity stress, namely: the single payment non-amortized loan (SPL); the decreasing payment loan (DP); the partial payment loan (PPL); the graduated payment loan (GPL); and the deferred payment loan (DEFPLO-2). This is done firstly by comparing loan repayment schedules for the six loans using a loan principal of R200 000, repaid over 20 years at a nominal contractual annual interest rate of 10%. Secondly, data from five actual BEE loan applications to ABSA Bank and Ithala in KwaZulu-Natal (KZN) during 2003 are used to compare how the FRL, SPL, DP, GPL, and DEFPLO-l, affect investment profitability, and both the borrower's and the lender's cash-flows, assuming that the lender sources funds from a development finance wholesaler. Results for the first part of the study show that the SPL has smaller initial annual repayments than the FRL (R20 000 versus R23 492) that ease liquidity stress in the early years after asset purchase, but requires a nominal balloon repayment of both interest and principal in year 20 of R220 000. The SPL is also the most costly loan, with total nominal and real repayments that are R130 162 and R43 821, respectively, more than the FRL. The PPL has the lowest total nominal and real repayments assuming that the borrower can make the nominal balloon repayment in year 5 of R202 173. If not, the ending balance of the loan in year 4 would have to be refinanced at current market interest rates. In this situation, the PPL uses very similar financing terms to that of the variable rate long-term loans already used in SA, and thus may not be a useful option to consider for BEE investments facing a liquidity problem. Interest rates may have risen over the last four years of the loan, encouraging lenders to add a premium into the interest rate for the refinanced loan, which could worsen the liquidity position of the BEE enterprise. The DP requires higher initial nominal annual loan repayments (R6 508 more than the FRL) that do not ease the liquidity problem in the early years of operation. The DP loan, however, has total nominal and real repayments that are R59 838 and R23 118, respectively, less than the FRL. A GPL with diminishing, finite interest-rate subsidy seems to have the most potential to ease the BEE investment's liquidity stress. The 17YRGPL used to buy land had total nominal and real repayments that were R84 634 and R67 726 (after subsidy), respectively, less than the FRL. If the GPL was used to purchase machinery-type assets, then the 6YRGPL would have required total nominal and real repayments of R13 957 and R12 596, respectively, less than the FRL. Finally, the DEFPLO-2 loan required a total nominal repayment of R531 128 (R61 290 more than the FRL) and a total real repayment of R345 358 (R26 095 more than the FRL). Clearly, the GPL and DEFPLO-2 loan repayment schedules can partly resolve the liquidity problem in the early years (assuming no major income shocks), although the DEFPLO-2 plan requires higher total repayments than the FRL. The question remains whether lenders would be prepared to implement these two financing plans for BEE investments in productive assets, where the funds to finance the diminishing, finite interest-rate subsidy or the deferment would be sourced, and how the interest-rate subsidy would affect asset values. In the second part of the study, the profitability of the five proposed BEE investments in KZN during 2003 was compared for the five loan products using the Net Present Value (NPV) and the Internal Rateof- return (lRR) capital budgeting procedures. The loan terms, interest rates, principal and characteristics of each BEE firm are different with current rates of return on equity varying by business type. Companies A (five-year loan) and C (10-year loan) are agribusinesses with a higher expected current rate of return of 8% on machinery investments, while companies B (eight-year loan), D (15-year loan), and E (20-year loan) invest in farmland with a lower expected current annual rate of return of 5%. The five business plans may not be representative in a statistical sense of all BEE firms in KZN, but were used because they were readily available. Initially it was assumed that donor/grant funds from a development finance wholesaler were lent to an intermediary (like a commercial bank), which in turn, could finance the five investments using any of the five alternative loans, with the lender's repayment to the wholesaler being via a FRL. It was then assumed that the lender could repay its borrowed funds using the same loans, or combinations of them, that it had granted to these companies. Results show that GPLs and DEFPLs can resolve the liquidity problem associated with investments like land in the early years after purchase provided that projected business performance is adequate, while the SPL and GPL are preferred for BEE projects with stronger initial cash-flows like machinery investments. The study also shows that the loan product that best improves the borrower's liquidity is not always best suited to the lender. In most cases, the GPL suited the borrower, but in four of the five cases, the lender would prefer the SPL and to repay the wholesaler using the SPL. The SPL, however, is unlikely to be used, given the large negative real net cash-flows that it generates when the final payments are due. Recent SA experience with the GPLs (interest rate subsidies funded by private sector sugar millers via Ithala) and the DEFPLs (via the Land Reform Empowerment Facility (LREF) which is a wholesaler of funds in SA) suggests that there is scope to alleviate the liquidity problem if a wholesaler of funds can offer such terms to private banks and venture capital investors who then on-lend to finance BEE asset investments that are otherwise considered relatively high credit risks. This would shift the liquidity problem away from the client to the wholesaler of the funds, but requires access to capital at favourable interest rates. Such capital could be sourced from dedicated empowerment funds earmarked by the private sector, donors and the SA government. The lesson for policymakers is that broad-based BEE could be promoted in other farm and non-farm sectors in SA using similar innovative loan products to complement cash grant funds via financial intermediaries, bearing in mind the limitations of the GPL and DEFPL - such as how to finance the subsidy or deferment, and the impact of income shocks. Donor and National Empowerment Fund capital could be used to allocate grants to provide previously disadvantaged individuals with own equity and also to fund finite, diminishing interest-rate subsidies via GPLs, or to fund DEFPLs (many LREF loans have been leveraged by a cash grant component). This could create an incentive for public/private partnerships, as public/donor funds could be then used to attract private sector funds to finance broadbased BEE investments in SA that satisfy empowerment criteria. The five case studies did not show how the GPLs and DEFPLs could make all profitable (positive net present value) but financially infeasible (returns do not match the size and timing of the lender's financing plan) BEE investments in productive assets under the FRL feasible, except for Company E that showed a positive NPV and IRR when the 19YRGPL was used. They did, however, show how the alternative loans could improve liquidity for investments with either strong or poor cash-flows. The financiers consulted to source case studies in KZN in 2003 at the time of the study could not provide the researcher with any profitable, but financially infeasible, BEE business plans. This raises some concern about how effective these empowerment loan products could be in the future as there is uncertainty over how many potential BEE investments in productive assets in SA are likely to be profitable but financially infeasible. Further research is thus needed to assess the impact of these alternative loans on a wider range of broad-based BEE investments, particularly non-farm projects, than considered in this dissertation. / Thesis (M.Agric.Mgt.)-University of KwaZulu-Natal, Pietermaritzburg, 2005.

Broad-based black economic empowerment (BBEE) is a policy objective in South Africa. Farmworker equity-share schemes (FWES) satisfy several of the empowerment goals specified by the proposed AgriBEE Scorecard. Information about the costs and benefits of subscribing to an empowerment label will help managers to make more informed decisions about empowerment and could therefore promote BBEE. The Thandi label is an initiative to market fruit and wines originating from FWES and farms operated by previously disadvantaged farmers. A case study of the Thandi label was undertaken to determine whether or not the accredited empowerment attribute adds value to Thandi products. An exploratory-explanatory case study was adopted basing questions largely on the theoretical propositions of asymmetric information, the benefits of product labelling and the preconditions for a successful label. Primary data were collected via in-depth interviews with managers of Capespan, The Company of Wine People and empowerment farms participating in the Thandi label. The study made use of in-depth interviews with key informants to investigate issues considered (on theoretical grounds) to be critical in establishing a successful label. Responses were subsequently tabulated and compared, where relevant, across respondents in order to check for consensus views. Results indicate that the Thandi label had not succeeded in differentiating fruit, whereas the Thandi wine label had increased sales revenue and was covering accreditation costs incurred by farms as well as the recurring costs of maintaining and marketing the label. Thandi fruit had not grown its share of the domestic or export markets and did not command a price premium, Capespan subsequently discontinued the Thandi fruit label. Thandi wine, on the other hand, had grown its export market and consumers were prepared to pay a premium for Thandi wine products. The data indicate that empowerment attributes were useful in finding shelf space for products, but that quality is essential to grow market share and to earn price premiums. In short, accredited empowerment attributes can add value to quality products sold to discerning consumers who lack information about empowerment and quality attributes at the point of sale. Empowerment labels must include quality attributes. Government should at least absorb some of the transaction costs confronting producers and marketing agencies in negotiating standards for farms and firms participating in generic empowerment labels. It could also offer auditing services to local accreditation agencies to improve their credibility. Further research estimating consumers' willingness-to-pay for products branded with empowerment labels is necessary to estimate the size of premiums that different products may command. / Thesis (M.Ag.Man.)-University of KwaZulu-Natal, Pietermaritzburg, 2007.

Irrigation farmers in the Lower Orange (Kakamas and Boegoeberg) and Lower Crocodile rivers (between Nelspruit and Komatipoort) areas in South Africa were surveyed during October 2003 in order to study whether water marketing has promoted efficiency in water use. This study is a follow-up on research undertaken by Armitage (1999) in the Lower Orange River area and Bate et al. (1999) in the Lower Crocodile River area. Factors associated with future investment in irrigation farming were also studied in the Lower Orange River Irrigation Scheme. Econometric procedures used included principal component analysis, and logit and ridge regression. Results from the two areas will be discussed separately. Econometric results for the Lower Orange River farmers indicate that purchasers of water rights produce lucrative export grapes and horticultural crops with relatively less raisin, wine or juice grapes and less field crops; are more specialised in production (table grapes); have more livestock (probably liquidity factor) and have a less negative view of the five-year water license review period. The water market has facilitated a transfer of water use from relatively lower value crops to relatively higher value crops, and also promoted the use of more advanced irrigation technology. An investment model using Ridge Regression indicates that the following variables are associated with increased future investment in irrigation farming; higher expected profitability and lower levels of risk perception and risk aversion (Arrow/Pratt). Results confirm that farmers who are more risk averse are likely to invest less in the future as can be expected from theory. Policies that increase risk in agriculture will have a significant negative effect on future investment in irrigation. What is significant from the results is that irrigation farmers in the Lower Orange River area are highly risk averse (down-side). Results also show that farmers who feel that water licenses are not secure expect to invest less in the future. The latter effect is thus amplified, as farmers appear to be highly risk averse. This has important policy implications, and measures should be taken to improve the perceived security of water licenses. This could be achieved by keeping farmers more informed about the practical implications of the New Water Act (NWA) (Act 36 of1998) and, specifically, water licenses. In the Lower Crocodile River area, almost all the water trades (permanent and rentals) observed in this study were from farmers above the gorge to farmers below the gorge. It is concluded that in the transfer of water some attributes in the purchasing area such as lower production risk (sugar cane) and lower financial risk and better cash flow (bananas and sugar cane) were more important than the expected income per cubic meter of water. Water supply in this area is highly irregular, while sampled farmers were again found to be extremely risk averse especially as far as down-side risk is concerned. The average water price in this area in recent years (2002 to 2003) was between R2000 and R3000 per ha (l ha = 8000 cubic meters). Buyers have large farms and are progressive farmers that purchase (and rent) from many sellers (or lessors). It is concluded that information on water transfers (sale prices and rents) is asymmetrical. Few permanent transfers have taken place in the Crocodile River in recent years. It is concluded that there are reasons why transfers at present are not processed, such as excess demand for water (due to the irregular flow of the Crocodile River, and role players should discuss these reasons and possible solutions before further action is taken. / Thesis (M.Sc.Agric.)- University of KwaZulu-Natal, Pietermaritzburg, 2004.

Private sector sugar millers and Ithala Development Finance Corporation (Ithala) implemented a graduated mortgage loan repayment scheme in the 1995/96 sugarcane production-season to try and improve access to farmland by aspirant commercial farmers in KwaZulu-Natal. By March 2001, the scheme had financed 106 "medium scale farmers" (MSFs), 99 of whom were still in the scheme (one loan had been repaid from own funds, and another six from the proceeds of life insurance policies). The first aim of this study was to analyse factors affecting whether or not the MSFs were current or in arrears on loan repayments as at 31 March 2001. A logit model based on full information for 83 MSFs shows that the estimated probability of a MSF being current on loan repayments was higher for clients with higher levels of average annual gross turnover relative to loan size, and for clients with access to substantive off-farm income. This suggests that farm size (proxied by annual farm gross turnover) does matter when policymakers in South Africa consider future similar schemes designed to improve access to commercial farmland by people that previously could not buy farmland. Smaller-sized, creditworthy farms with loan sizes that are relatively low compared to the expected average annual gross income may also be viable. Access to off-farm income could also be considered as a criterion in selecting potential farmers for future similar schemes, as it helps to provide additional liquidity to fund future operations and debt repayments, and can reduce leverage levels. The second aim was to conduct personal interviews with the 99 MSFs between July and September 2001 in order to identify what aspects of the scheme could be improved for new members . Responses from 88 of these MSFs show that 68% of them would opt to first rent land before purchasing, while 78% of them recognize, or have experienced, the cash flow problem associated with land purchase. Most of the MSFs felt that long-term sugarcane supply agreements constrain enterprise diversification, and that the quality of mentorship that they currently received was not satisfactory. Industry players could consider leveraging donor funding for empowerment projects to improve the quality of future mentorship programmes. There is also some scope for Ithala to improve the client-lender relationship by better clarifying the structure of the graduated repayments, sending loan statements on time, and helping clients to interpret loan statements. Growers perceive the need for a coordinator to monitor, and advise on how to improve, their financial performance this could be a new commercial service opportunity. Using an independent valuer to conduct farm valuations may also be necessary to avoid perceptions of bias in the value of farms offered for sale by the millers. A logit model of the MSFs' preferences for first renting land before purchase shows that new growers joining this scheme, or similar schemes for other farm products, with relatively less liquidity and less farming experience should be given the choice to rent land with an option to purchase. The preference for first renting by most of the surveyed MSFs could indicate that many very highly leveraged MSFs still experience cash flow stress despite the interest rate subsidy. A second policy implication, therefore, is that the current subsidy level, which reduces the effective starting interest rate level to about ten per cent relative to a typical five per cent current return on land, could be increased to promote access to farmland markets. Alternatively, loan terms in the next round of the scheme could be changed to require higher proportions of own equity (lower leverage levels), or to permit the deferral of principal payments, or to permit the purchase of smaller farms by creditworthy, part-time farmers. Another strategy to improve liquidity is to advise growers to limit family drawings in the early years after farmland purchase. / Thesis (M.Sc.Agric.)-University of Natal, Pietermaritzburg, 2003.

The South African (SA) Sugar Industry is committed to transformation in land ownership and supports the SA government's target to transfer 30% of freehold sugarcane land to previously disadvantaged individuals (PDls) by 2014 via the land market under the willing buyer/willing seller principle. The medium-scale farmer scheme for emerging commercial sugarcane farmers, which was introduced in 1996 to help redistribute commercial sugarcane farmland to PDIs is an important component of the SA Sugar Industry's land reform strategy. The average financial performance of emerging commercial farmers (now called New Freehold Growers or NFGs) in the SA Sugar Industry was below that of large-scale commercial farmers during 1997-2007 (real average annual net return per hectare of R390 versus R3 075 in 2007 Rand). Given that this trend raises concerns about the long-term viability of NFGs, the first aim of this study is to identify factors that distinguish between successful, less successful and unsuccessful NFGs using a stratified random sample of 96 NFGs in KwaZulu-Natal (KZN) surveyed during July-November 2008. These NFGs were classified according to whether their mortgage loans were current (successful), in arrears (less successful) or in the process of legal action (unsuccessful). Student t-tests indicate that successful NFGs, on average, had statistically significantly more experience in farming sugarcane, larger farm sizes (proxied by average annual gross farm income), greater solvency and liquidity, and larger areas annually replanted to sugarcane than the less successful and unsuccessful NFGs. The successful NFGs also placed relatively more emphasis on computerized record keeping systems that can save time in conducting production and financial analyses to improve farm profitability. They also on average tended to make more use of their own financial record keeping system in addition to the services of bookkeepers, and used more risk management strategies than unsuccessful NFGs, in particular having off-farm investments and keeping cash and credit reserves. A multinomial logit model of factors affecting the sample NFGs' mortgage loan repayment status estimated that extension contact, production and financial risk management capacity, farm financial and production management ability, own record keeping and cash management, and having more sugarcane farm experience to operate larger farm sizes were key determinants of successful loan repayment. The results suggest that policy makers can promote the viability of NFGs by (1) encouraging them to manage solvency and liquidity levels and implement replanting schedules in line with industry norms (e.g. debt:asset ratio of 0.5 or lower, and the replanting of 10% of the area under cane (AUC) per annum); and (2) facilitate the transfer of adequate size farms (expected annual gross farm income can meet annual loan repayments) in commercial transactions or transactions funded via government grants to farmers who have the relevant farming experience. New Freehold Growers are also encouraged to build business relationships with industry support staff, implement good record keeping practices, and develop strategies to manage risk (e.g. off-farm investment and holding cash and credit reserves). The second aim of this study was to document the NFGs' perceptions of the scheme and industry role players in order to identify what aspects could be improved for both current and future farmers. The results suggest that most sample respondents (84%) can identify with, or have experienced the relatively low current returns (cash flow problems) usually associated with the early years after land purchase, while about 60% of the sample NFGs would have preferred to first lease their land before buying. Future NFGs, or the beneficiaries of other land reform initiatives, must be informed that an investment in land has low current returns relative to capital growth and that the annual profit from farming is low relative to the land value. The possibility of leasing could also be considered for future land transfers to NFGs or other land reform beneficiaries to help manage the liquidity constraints associated with land purchase. Ninety-nine percent of the sample NFGs felt that it was important for new farmers to have a mentor. Post-settlement support thus needs attention from industry role players, and a sustainable mentorship programme could, in part, meet this need. / Thesis (M.Sc.Agric.)-University of KwaZulu-Natal, Pietermaritzburg, 2009.

Recent years have seen an unprecedented global increase in the production and use of biofuels. This has been driven primarily by government support for biofuel industries. Soybeans are the only field crop produced in sufficient quantities in the province of KwaZulu- Natal (KZN) that the South African (SA) industrial biofuel strategy identifies as a potential biodiesel feedstock. Thus, this study is an evaluation of the economic feasibility of producing biodiesel on farms from soybeans in the main soybean-producing regions of KZN, using batch processing biodiesel plants. A mixed integer linear programming model was developed to simulate observed agricultural land rental rates (estimated at 4.48% of the market value of land) and cropping behaviour of commercial crop farms in the study regions. The model incorporates various alternative crops, crop rotations, tillage techniques, arable land categories and variance-covariance matrices to account for risk in production. All data are on a real 2009/10 basis. The model is used to predict possible farmer investment behaviour and determine the minimum biodiesel subsidy required to stimulate soybean-based biodiesel production in the study areas. Results suggest that biodiesel production is currently not an economically viable alternative to fossil fuel, and that the incentives and commitments outlined by the current industrial biofuel strategy are inadequate to both establish and sustain a domestic biodiesel industry. Under baseline assumptions, a realistic minimum implicit subsidy of R4.37 per litre of biodiesel is required to draw soybean-based biodiesel production into the optimum solution for commercial farms. The economic feasibility of on-farm biodiesel production is highly dependent on the soybean price (i.e., the feedstock input cost) and the soybean oilcake price (i.e., the highest valued byproduct). Thus, future promotion of biodiesel ventures could primarily target a reduction of feedstock costs through the development of new technologies which increase yields of available feedstocks and/or permit the use of lower cost alternatives. Higher subsidy levels are anticipated for: (i) small-scale initiatives (particularly in the absence of a rental market for cropland); (ii) soybean-based biodiesel production in areas with less suitable growing conditions for cultivating soybeans; and (iii) using sunflower and/or canola as biodiesel feedstock. To the author’s knowledge no other previous studies have attempted to quantify the minimum level of support needed to stimulate biodiesel production in South Africa. The SA industrial biofuels strategy promotes a development-oriented strategy with feedstock produced by smallholders and processed by traditional producer-owned cooperatives. However, traditional cooperatives suffer from a myriad of institutional problems that are associated with ill-defined property rights. As such, it is argued that these initiatives will fail to attract the capital and expertise needed to process biodiesel. This research, therefore, highlights the need for South Africa’s current Cooperatives Act to be amended. Accordingly, this also infers a need to revise the proposed SA industrial biofuels strategy. It is concluded that smallholder participation in biodiesel ventures would require a rental market for cropland, co-ownership of the processing plant in a non-traditional cooperative or investor-owned firm, information and training, and a high level of government subsidy. This research advocates that government consider promoting soybean oil extrusion ventures as a means of stimulating rural development for small-scale farming initiatives rather than soybean-based biodiesel production, as they will likely require less government assistance, whilst potentially combating the food versus fuel debate against biofuels. This is compounded by the fact that South Africa has historically been a net importer of both soybean oilcake and soybean oil. Importantly, however, the proliferation of such initiatives should not be based on the current notion of traditional cooperatives. The need for government to play a proactive role in such ventures through facilitating the development of appropriate business models which stimulate private investment in feedstock and processing facilities is clearly evident. / Thesis (M.Sc.Agric.)-University of KwaZulu-Natal, Pietermaritzburg, 2010.

This study presents two separate competitiveness analyses to assess changes in, and factors influencing, the long-term competitiveness of a panel of commercial milk producers in East Griqualand (EG), South Africa. The Unit Cost Ratio (UCR) method was used to measure competitiveness of EG milk producers. It is defined as the ratio of dairy enterprise accounting costs plus an opportunity cost of management at 5% of milk revenue, to total dairy enterprise revenue. The initial UCR analysis was used to partly investigate the impact of dairy market deregulation on the relative competitiveness of EG milk producers over the period 1983 to 2006. The results of this UCR analysis found that the sample of EG milk producers were not competitive based on the net local price, PL, received for milk but were competitive when dairy cattle trading income was included. This suggests that dairy cattle trading income played an important role in enhancing the competitiveness of EG dairy enterprises in the study period. Further UCR analysis revealed that differences in the inherent ability of members of the EG group to manage market deregulation impacted on the relative competitiveness of EG milk producers. The top onethird of the sample of EG milk producers remained relatively competitive from 1983 to 2006 due to higher real milk prices and lower real unit costs than producers in the bottom one-third category. Differences in relative competitiveness between the top and bottom one-third categories of producers were statistically significant. Based on the findings of the UCR analysis, a Ridge regression analysis was then used to investigate other factors influencing the long-term competitiveness of selected milk producers from EG using unbalanced panel data for the period 1990 – 2006. Results of the regression analysis showed that dairy herd size, the level of farm debt, annual production per cow, technology and policy changes over time, and the ratio of trading income to total milk income influence the long-term competitiveness of these milk producers. To enhance their competitiveness in a deregulated dairy market, relatively small and profitable EG milk producers should consider increasing herd sizes as the importance of herd size in explaining competitiveness suggests that size economies exist. All EG milk producers should consider utilising more pasture and other forages to lower feed costs and select dairy cattle of superior genetic merit to improve milk yields. / Thesis (M.Sc.)-University of KwaZulu-Natal, Pietermaritzburg, 2009.