An economic analysis of the leasing system to develop diary goat production : a case study at Ga-Mampa, Mafefe rural community in Limpopo Province of South Africa

Abstract

The main objective of the study was to analyze the economic viability and sustainability of the leasing system in the development of dairy goat’s keepers group in Ga-Mampa, Mafefe rural community. Mafefe is one of the rural communities where dairy goat keeping is given little or no care by the dairy goat keepers. Through an action research process implemented within the community by the Center for Rural Community Empowerment (CRCE/University of Limpopo: Turfloop Campus), community members became interested in developing dairy goat keeping, which was very dubious to the community members as it was their first time to hear about goats bred for milk production. In Limpopo Province, goats are the most common livestock among communal farmers and yet they do not make a significant contribution to the economy of the place, let alone improve income of the households who keep dairy goats. The purpose of the study, therefore, was to find ways to transform the current subsistence system of producing indigenous goats by households in Ga-Mampa Mafefe (Capricorn District (CD)) in the Limpopo Province of South Africa into a viable system of producing, processing and marketing both dairy goats and their byproducts through formal markets. The study attempts to find out as to how a commodity group manages capital through a leasing system to sustainably insure that its members can access a technical innovation: dairy goat keeping. This study also looks at how leasing contributes to the development of the dairy goat project, the community and the development of individual members of the project. The Net Present Value (NPV) and Benefit Cost Ratio (BCR) criteria were used to evaluate the economic viability of the leasing system towards the development of dairy goats. The results indicate that the NPV in this study is greater than zero, therefore the project is considered to be economically viable and sustainable, and also the BCR is greater than one indicating that the project is still profitable and hence acceptable. According to the findings from the analytical techniques, production of dairy goats through the leasing system would be profitable to dairy goat keepers. vi A sensitivity analysis to changes in benefits and costs of inputs was conducted. This found the above project proposal to be viable, even when benefits are reduced by 20%. The project proposal was still viable when the cost of inputs was inflated by 20%. In both cases, the benefit cost ratio is greater than one. Also the combined effect of reducing the benefit by 20% and inflating cots by 20% would result in positive Net Present Value (NPV). Results from a survey carried out further show the possibility and viability of producing satisfactory levels of milk from dairy goats in Limpopo Province.