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An analysis of financial implications of switching between crop production systems in Middle Swartland

Thesis (MScAgric)--Stellenbosch University, 2015. / ENGLISH ABSTRACT: Sustainability issues and the structural over-supply of wheat in the Western Cape since the
middle 1990‟s have caused the introduction of alternative crop rotation systems in the Middle
Swartland, a dry-land winter cereal production area of the Western Cape. Crop rotation
systems typically consist of cereals and oilseed crops and pastures. Alternative crop rotations
systems are currently scientifically evaluated at the Langgewens Experimental farm.
Currently more than half the cultivated area in the Swartland is still under wheat production,
a third of which is wheat monoculture. An issue regarding the adoption of such a crop
rotation system is the cash flow and affordability of implementing such an alternative system.
The goal of this study is to determine the cash-flow implications of a shift from wheat
monoculture to a crop rotation system. Typical strategies available to producers to support
such a shift are investigated. The complexity of farm systems as well as the interrelationships
between crops within such a crop rotation system necessitates the implementation of a
systems approach. A multi-period, whole-farm budget model was constructed to capture the
interrelationships of the farm system and to express the financial performance thereof in
standard profitability criteria.
The farm model is based on a typical farm for the Middle Swartland. The model was used to
determine the expected profitability of various crop rotation systems and to evaluate
alternative strategies to accommodate the shift to alternative systems. The Langgewens crop
rotation trial results are used to determine expected profitability of various crop rotation
systems. A wheat-monoculture system serves as basis for the shift to alternative systems with
the focus on the practical implications of such as shift.
The profitability calculations show that various crop rotation systems are expected to be more
profitable than wheat monoculture. The most profitable system is one year canola followed
by three years of wheat, followed by a wheat/medic system with Dohne Merino sheep on the
medic pastures. The shift from wheat monoculture is simulated by four scenarios. The first
evaluated the financial implications of a shift form monoculture to the three year wheat and
one year canola system. The second simulates a shift from monoculture to a wheat/medic
system within two years and using own funds. The third scenario simulate the same shift with
own funding, but over a ten year period. The fourth is similar to the second, but borrowed
money is used to fund the shift.Lower input costs and consistently higher yields results in higher expected gross margins for
the crop rotation systems, especially with nitrogen fixing plants. The inclusion of medic and
medic/clover pastures and alternative cash crops such as canola and lupins show a higher
yield on investment than wheat monoculture. Insight into the factors that producers should
consider was also generated by this study, concerning changes to crop rotation systems.
These factors include; time period over which a shift is planned and the availability of
financing options. It seems that a quicker shift, using borrowed funds, is more profitable over
the longer term. / AFRIKAANSE OPSOMMING: Volhoubaarheidskwessies, en die strukturele ooraanbod van koring in die Wes-Kaap, het
sedert die middel 1990‟s, gelei tot alternatiewe gewasproduksiestelsels in die Swartland, ʼn
droëland wintergraanproduserende area van die Wes-Kaap. Gewasproduksiestelsels bestaan
tipies uit graan- en oliesaad- en weidings gewasse. Alternatiewe gewas-wisselboustelsels
word wetenskaplik gevalueer op die Langgewens proefplaas. Tans is meer as die helfte van
die area in die Swartland steeds onder koring produksie, ʼn derde daarvan is koring
monokultuur. ʼn Bekommernis rakende die aanneem van wisselboustelsels is die kontantvloei
en bekostigbaarheid van die implementering van so ʼn alternatiewe stelsel.
Die doel van hierdie studie is om te bepaal wat die kontantvloei implikasies van ʼn skuif van
ʼn koringmonokultuurstelsel na ʼn wisselboustelsel is. Tipiese strategieë beskikbaar aan
produsente om so skuif te finansier is ook ondersoek. Die kompleksiteit van boerderystelsels
en die interverwantskap tussen gewasse in ʼn wisselboustelsel noodsaak die insluiting van ʼn
stelselsbenadering. ʼn Multi-periode, geheelplaasbegrotingsmodel is ontwikkel om die
interverwantskap van die boerdery te verenig en finansiële prestasie uit te druk in erkende
winsgewendheid kriteria.
Die boerderymodel is gebaseer op ʼn tipiese plaas vir die Middel-Swartland. Die model is
gebruik om die winsgewendheid van verskillende wisselboustelsels te bepaal en om
verskillende strategieë te assesseer wat die oorgang van wisselboustelsel kan akkommodeer.
Die Langgewens wisselbouproefdata is gebruik om die winsgewendheid van verskillende
wisselboustelsels te bepaal. „n Koringmonokultuurstelsel dien as basis vir die oorskakeling na
alternatiewe wisselboustelsels, met die fokus op die praktiese implikasies van so ʼn skuif.
Die winsgewendheid bepaling wys dat verskeie wisselboustelsels meer winsgewend is as
koring monokultuur. Die mees belowende stelsels is een jaar canola gevolg deur drie jaar
koring en ʼn koring/medic stelsel met Dohne Merino skape op die medic weidings. Die
oorskakeling vanaf koring monokultuur is gesimuleer deur vier scenario‟s. Die eerste
scenario evalueer die finansiële implikasie van ʼn skuif van koringmonokultuur na ʼn
wisselboustelsel met een jaar canola. Die tweede scenario evalueer ʼn skuif na ʼn koring medic
stelsel binne twee jaar met eie fondse. Die derde scenario simuleer dieselfde skuif maar oor ʼn
tien jaar tydperk, met eie fondse. Die vierde scenario simuleer dieselfde skuif na
koring/medics maar oor ʼn twee jaar periode met geleende fondse.
Laer insetkoste en konstante hoër opbrengste lewer hoër brutomarges vir die
wisselboustelsels, veral die met stikstofbindende weidingsgewasse. Die insluiting van medic
en medic/klawer weidings en alternatiewe kontantgewasse soos canola en lupiene wys ʼn
beter opbrengs op kapitaal investering in vergelyking met koringmonokultuur. Bykomende
daartoe verskaf die resultate van die studie insig in die faktore wat graanprodusente behoort
te oorweeg wanneer ʼn oorskakeling na alternatiewe wisselboustelsels oorweeg word. Die
faktore sluit in, die tydperk waaroor die oorskakeling beoog word en die beskikbare
finansieringsopsies. Dit blyk dat ʼn vinniger oorskakeling, selfs teen die koste van
finansiering, oor die langtermyn meer winsgewend is.

Identiferoai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/96805
Date04 1900
CreatorsMakhuvha, Mmbengeni Constance
ContributorsHoffmann, W. H., Stellenbosch University. Faculty of Agrisciences. Dept. of Agricultural Economics.
PublisherStellenbosch : Stellenbosch University
Source SetsSouth African National ETD Portal
Languageen_ZA
Detected LanguageEnglish
TypeThesis
Format171 pages : illustrations, maps
RightsStellenbosch University

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