There is global recognition that climate variability and its impacts are affecting most aspects of our lives, and frequently. Climate variability includes aspects like rising global temperatures, changing rainfall patterns, and elevated carbon levels in the atmosphere. Some of the climate variability impacts are observed with the regularity of incidences of drought and animal disease. These occurrences affect smallholder farmers and the vulnerable members of society. Most rural households depend on agriculture and are primarily involved in livestock production. There are 1.3 billion people in the world who depend on the livestock sector, which uses 45 percent of the planet’s land surface. As a result, livestock marketing is crucial for agricultural transformation and economic development, especially in developing countries. Livestock marketing alleviates poverty in agricultural households, while also allowing smallholder farmers to commercialize their operations. In South Africa, 80 percent of agricultural land is ideal for extensive grazing, with a total beef herd of 13.69 million animals. However, smallholder farmers, despite owning 40 percent of the total cattle herd in South Africa, have a low market participation rate, with only a 5 percent offtake rate. Drought and animal disease outbreaks have been linked to regional differences in cattle offtake rates in the literature. This study used data from a four-wave panel survey of 2,534 South African livestock owners to provide empirical evidence on the effects of drought, animal diseases, and the combined impact of both drought and animal diseases on smallholder farmers’ market participation. Since market participation is a binary response variable, the discrete choice logit model was chosen for this analysis. The pooled model, the fixed effects model, and the random-effects model were all examined. The random effects parameter was found to be accurate by the likelihood ratio test; as a result, the random-effects model was more consistent than the pooled model was. The panel structure of the data and the disaggregation of smallholder farmers by province were not considered by the pooled model. Provincial effects accounted for 17.03 percent of the overall residual variance, reflecting a marginal but significant relationship between consumer participation and region. Between fixed effects and random-effects models, the Hausman test was used to determine which model was more suitable. At a one-percent significance level, the Hausman test result (24.06) was significant, suggesting that the fixed effects model was the best fit. Individual effects of animal disease on smallholder farmers’ market participation were found to be negative and significant, while the individual impact of drought was found to be insignificant. Drought and animal disease outbreaks had a negative combined impact on smallholder farmers’ participation, which was greater than the individual effects of drought and animal disease. As a result, the study found that outbreaks of animal disease, as well as the combined impact of drought and animal disease occurrences, decreased the probability of smallholder farmers participating in livestock markets. The results suggested the need for the government to enhance smallholder farmers’ access to livestock vaccines and medicines through improved extension service provision. Smallholder farmers should also receive compensation commensurate to whether they are exposed to the individual effects of drought or the combined effects of both drought and animal diseases to increase their participation in livestock markets.
Mini Dissertation (MSc Agric (Agricultural Economics))--University of Pretoria, 2021.