An economic evaluation of the National Red Meat Development Programme in the Eastern Cape Province South Africa

Abstract

There are substantial and unexploited market opportunities for communal farmers in the Eastern Cape, yet they own 3.3 million head of cattle. ComMark embarked on the Eastern Cape Red Meat Project in 2005 with the aim of increasing participation in formal markets by communal farmers. With the closure of ComMark in 2008, the National Agricultural Marketing Council (NAMC) was approached to take over the project since it had made a significant contribution to communal farmers through improved participation in formal markets. NAMC embraced the opportunity by accepting the proposal, and that was the birth of the National Red Meat Development Programme (NRMDP). NRMDP was established to improve income from animal husbandry and to create opportunities for communal farmers to commercialise, as well as participate in the formal markets. This research therefore 1) assesses the factors that contribute to improved market participation of communal farmers as a result of the NRMDP; 2) estimate household income of communal red meat farmers since the implementation of the NRMDP and 3) determine if the programme has a positive economic and social return. Using primary data obtained from 150 farmers, both purposively and randomly sampled in the Eastern Cape of South Africa, the analysis of the performance of the programme showed an increase in market participation over the years since the inception of the NRMDP. The results of the study suggested that incomes received by the farmers have increased, which means that the farmers are beginning to understand the requirements of the market, and they have increased their asset bases. From the analysis, it can be deduced that farmers with larger livestock herds are more likely to sell their livestock to formal markets than those with smaller herds. The off-take rate has increased after the implementation of the NRMDP from 5 % to an approximated average of 12.5 %. However, this rate is still far below the 25 % for commercial farmers. In determining the factors that influence household incomes of communal farmers, participating in the NRMDP was found to be statistically significant at 5 % level. It was observed that most of the farmers that participate in the NRMDP are aware of the requirements of the market, and that they produce high-value products and comply by delivering cattle of good quality. For that reason, the programme is essential in improving household incomes for communal farmers, and in consequence, improving rural livelihoods. A cost benefit analysis was also performed to test the viability and worth of the programme. The calculated NPV was found to be positive, suggesting that the public funds invested in the programme have a good social and economic return. Nevertheless, there are some hurdles that influence participation of communal farmers in high-value markets. To improve the impact of the programme, it was recommended that such programmes should be aligned with other initiatives implemented by government to maximise formal market participation and prevent duplication of similar programmes. It is envisaged that this alignment will enable farmers to be competitive in formal markets and enjoy the benefits of participating in high-value markets.