Analysing the financial performance of emerging broiler farmers in Gauteng Province

Abstract

Emerging broiler famers are faced with the challenge of acquiring contracts with the contract providers in South Africa. The question is, are these emerging farmers able to perform well financially regardless of the availability of contracts to their disposal. Profitability is one of the core issues to the development and sustainability of emerging broiler farmers. A well performing farmer is the one who is able to manage and improve the good financial performance of the farm in general. In order to determine the financial performance of the farm, financial ratios can be useful in determining and analyzing how a farm performs financially. In this study, four financial ratios are used to analyze and determine how emerging broiler farmers in Gauteng perform financially. This is done through a representative farm model which makes use of ten emerging farmers situated in the southern and northern sides of Gauteng. Out of ten emerging broiler farmers that took part in the study, the results show that only two of them are producing under contracts. This is an indication that emerging broiler farmers in Gauteng are characterized by both financial and production risk. This further implies that farmers who do not have contracts are likely to have a poor financial performance in as far as broiler enterprise is concerned. The study establishes the differences between the contract growers and the non contractors that form the representative farm model and this is achieved by looking the results of the financial ratios. The study further distinguishes the financial performances between the southern and northern sides of Gauteng which form the representative farm model. The results indicated that although 80% of the emerging broiler growers in Gauteng do not produce under contracts, they are still able to perform well financially. However the contract growers outperform the no contractors in terms of financial performance due to a well defined market structure.