Gross margin analysis and determinants of savings among small-scale broiler producers in Vhembe District of Limpopo Province, South Africa

Abstract

The poultry industry consists of the broiler and layer production. Most of the broiler chickens produced by smallholder farmers in villages are sold to local customers with lower degrees of processing, compared to large commercial farmers who have access to retail and export markets. The aim of this study was to analyse the determinants of gross margin and savings among small-scale broiler producers in Vhembe District of Limpopo Province. In the analyses the following objectives were performed; identifying and describing their socio-economic characteristics, assessing their gross margin, analysing the factors influencing their gross margin and lastly, by analysing the factors affecting savings among these farmers. The study was conducted in three municipalities (Makhado, Thulamela and Musina) under Vhembe District, where 60 respondents were purposively and randomly selected. The total number of households per municipality in Vhembe District were used to determine the exact number of broiler producers to be interviewed in each municipality due to insufficient data available regarding the total number of broiler producers in the district. The respondents were interviewed face to face using structured questionnaires. To achieve the study objectives the study used Descriptive statistics, Gross Margin analysis, Multiple Linear Regression and Logistic Regression model. The results of the study showed that the small-scale broiler producers in Vhembe District are profitable, with an average Gross Margin of R6470.78 per cycle. Six variables from Multiple Linear Regression analysis were found to have an influence on Gross Margin among small-scale broiler producers in Vhembe District. These variables were gender, primary economic activity, cost of day-old chicks, feed cost, electricity cost and labour cost. Seven variables from Logistic Regression analysis were found to have significant influence on savings. These variables were age, primary economic activity, monthly income, gross margin, feeds cost, cost of day-old chicks and vaccines. The study recommends that the broiler producers invest in other heating methods that do not require the use of electricity since it plays an important role towards the savings. The study further recommends that the Department of Agriculture should encourage the small-scale broiler producers to register their enterprise to be able to access extension services and other services from the department when necessary.