Abstract
Factors such as increases in population, urbanization, growth in per capita income and changes in consumer taste and preferences are causing gradual increases in livestock product consumption and demand. South Africa is addressing this predicted increase in livestock products demand by commercializing smallholder livestock producers. The Limpopo Industrial Development Corporation (IDC) Nguni Cattle Development Project is an example of such effort. The economic performance of these efforts needs to be evaluated. We use gross margin analysis to evaluate the performance of the Limpopo IDC Nguni Cattle Development Project. Additionally, we use regression analysis to identify factors influencing gross margins. Our results indicate that although smallholders show potential to commercialize, they lack commercial farming experience and require that a strong extension support system be used as one of the strategies to improve profitability. We also noted that individual farmers were more profitable than group farmers. Multiple regression analysis shows that three variables could be used to stimulate gross margin among the Limpopo IDC Nguni Cattle Development Project farmers. These are herd size, distance to market and farm size. Since farm size is a given, policy should focus on assisting farmers to build their herds and to have better access to markets.
Highlights
Livestock product consumption and overall demand is gradually increasing due factors such as increases in population, urbanization, growth in per capita income and changes in consumer taste and preferences [1, 2]
The gross margins were calculated from 61 smallholder livestock farmers who provided required data
The fact that the individual farmer gross margin is higher than that of the group managed farms can be explained by the fact that, in the group managed farms the decision making, for example, the production and sale of livestock may be complex, requiring more consultation than that of an individual farm
Summary
Livestock product consumption and overall demand is gradually increasing due factors such as increases in population, urbanization, growth in per capita income and changes in consumer taste and preferences [1, 2]. According to [3], the demand for beef in South
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