Farmer Support and Extension to Land Reform Farms in the Central Karoo - Part 2: A baseline assessment of farm-level economic viability.

Abstract

A study was undertaken on land reform farms acquired over the past ten years in the Central Karoo district of the Western Cape in South Africa. On-farm personal interviews with the managing members/decision makers of 15 farms were conducted in 2008 in order to establish a baseline measurement of the infrastructural, production and economic viability at farm level. This paper focuses on the economic viability of farms and some implications for extension support. Data from individual enterprises were analysed at the gross margin level and the full farm at net farm income level in order to assess farm efficiency and return on investment. Baseline evidence suggests lower than expected returns. Amongst the main findings reported in the paper is the fact that farms in general are too small to provide a sustainable income, given the resource potential and number of owners/beneficiaries per farm. Stock losses due to problem-animals, together with low reproduction performance and drought related mortalities negatively influenced the capacity to generate sufficient returns. In addition, farm management knowledge, skills and experience are at low levels. Baseline evidence suggests that agricultural extension  services and institutions involved in land reform policies need to upscale on farm economics and viability assessments of farm operations. Management information systems need to be established and maintained to record physical and financial information in order to assist emerging farmers with agricultural economics extension.

Keywords: baseline study; land reform; economic viability; extension.