Explaining declining agricultural total factor productivity in the Karoo districts of the Western Cape, 1952 to 2002

Abstract

ABSTRACT Conradie et al. (2009a and 2009b) identified the Central Karoo as the worst performing area in the Western Cape, but left the reasons for the region's declining total factor productivity (TFP) unexplained. The current paper uses a combination of literature review and analysis of anecdotal evidence to evaluate a set of hypothetical reasons for the decline. The world wool price clearly affected farm-level profitability, putting up to 50% of sheep farms out of business in some parts of the Central Karoo. If census data were properly collected, this in itself should not have affected TFP. The evidence for overgrazing and increasingly ineffective predator control was less convincing. For example, there is no conclusive evidence yet on whether game and lifestyle farms exert any negative externalities on remaining sheep operations. The cost-price squeeze resulting from falling prices and rising input costs has led to an extension of production systems and poor maintenance which will no doubt lead to a further decline in productivity. We concluded that the rate at which the Central Karoo is shedding sheep farming, and the reasons for and effects of it, should be investigated further.