A scenario-based enterprise optimisation of mixed farming units in the Hessequa district of the Western Cape Province, South Africa

Abstract

Over the past 20 years, the farming environment has changed significantly, becoming much more integrated and complicated. Whereas the focus was primarily on farming before, it has become a business, where farmers have to plan and optimise to be sustainable and survive every single scenario presented to them. To operate in a financially feasible manner, farming systems in the Western Cape of South Africa are heavily dependent on external inputs. What makes the farming environment so much more complicated is the fact that it is influenced by external factors from the social, political, economic and climatic environment, over which a farmer has very little control. This study investigated farm-level profitability under a range of scenarios as a mechanism to utilise as a basis for a strategic tool for advising farmers in a specific geographical area about challenging weather and approaching perilous times. This study used qualitative and quantitative methodologies to give farmers a strategic view of the future. Although the study’s main theme is scenario development, data were collected and analysed through using surveys and modelling. The concept of the typical farm was applied within the framework of scenario building to simulate the impact that a change to the input cost structure and weather (rainfall) would have on the structure of mixed farming operations in the mountainous area of Riversdale, Southern Cape. Using the enterprise data collected within linear modelling, possible changes to the typical farm setup were studied and analysed to provide farmers with an optimal and sustainable solution. From the results of the various scenarios, it is clear that mixed farming operations are important, as both livestock and cropping enterprises are needed to survive challenging financial periods. It can further be seen that the livestock component should be the flexible component of a mixed farming enterprise. By combining the linear model results from the four scenarios, an optimised average of a typical mixed farming operation is obtained. It is therefore suggested that, to survive three of the four scenarios, a typical farm should be split 70:30 in favour of cropping enterprises. Although the suggested mixed farming setup might not be optimal in years with favourable cropping conditions, the study aims to provide an optimal yet sustainable solution, and therefore a long-term optimised average profit would be obtained.