Year: 2014
Working paper number: 344
Author: Conradie, Beatrice
Unit: SSU
Data envelopment analysis (DEA) was used to benchmark extensive sheep operations in Laingsburg in the Central Karoo, South Africa, with data from the 2012 production season. An input oriented variable returns to scale frontier identified twelve efficient firms, and nine more that are technically efficient but not scale efficient. The top third's overall efficiency score was 0.999. For the bottom third the average efficiency score was just 0.346, which indicates that there is substantial room for improvement amongst bottom third producers in this production system. Overall efficiency was correlated with stocking density, flock size, unit production cost and profitability, cumulative family experience of farming and the use of family labour, but not with farm size, breed choice or any proxy for individual experience or ability. Predation rates in particular were uncorrelated with productivity scores and reproductive performance was only weakly correlated with it. While most farms could theoretically improve their efficiency by intensifying their operations, a closer analysis of best practice firms revealed a spectrum of optimal intensities including the possibility of restoring rangelands by deliberate understocking. Grazing strategy and the degree of labour self-sufficiency emerged as the key determinants of optimal intensity.
Publication file: WP 344.pdf