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05 June 2023 | Story Leonie Bolleurs | Photo Supplied
Prof Bahta
For the past three years, Prof Yonas Bahta has studied the resilience of smallholder livestock farmers in agricultural drought, and the competitiveness of agri-food commodities.

The agricultural sector is marked by farmers’ daily struggles, including price hikes, climate change effects, and pest and disease outbreaks.

Prof Yonas T Bahta, Associate Professor and astute National Research Foundation (NRF) C2-rated researcher in the Department of Agricultural Economics at the University of the Free State (UFS), found that smallholder farmers who received drought relief support saw an improvement in their welfare. The study also found that economic capital, social capital, human capital, and natural capital substantially affected the welfare of smallholder farmers.

Agricultural drought

These findings came from the study, titled: The resilience of households to agricultural drought in the Northern Cape province of South Africa. Prof Bahta’s aim with this study was threefold – to assess household resilience to agricultural drought among smallholder livestock farmers, to evaluate the welfare of smallholder farming households affected by agricultural drought, and to identify factors influencing agricultural drought resilience and food insecurity among smallholder livestock farmers.

During his investigation, he found that only 9% of the smallholder livestock farmers were resilient to agricultural drought. According to him, farming households with access to credit, farmers who received assistance from the government (such as training and feed) during drought, and farmers who are part of a cooperative proved to be more resilient to agricultural drought.

When it comes to food security, he discovered that assets, social safety nets, and indicators of adaptive capacity had a positive influence on households' ability to withstand food insecurity. Alternatively, climate change indicators negatively impacted households’ resilience to food insecurity.

For the past three years, he has studied the resilience of smallholder livestock farmers in agricultural drought. He believes that resilience – the ability to bounce back from adversities – is crucial.

According to him, both the smallholder livestock sector (farmers) and the agrifood industry need to develop resilience to effectively cope with and recover from agricultural drought, macroeconomic stability (inflation), competitiveness, productivity, and other related factors.

Competitiveness of agri-food commodities

Prof Bahta also launched investigations into the competitiveness of agri-food commodities in South Africa as well as Namibia.

The studies were titled: Competitiveness of Namibia’s Agrifood Commodities: Implications for Food Security and Competitiveness of South Africa’s Agrifood Commodities.

In these studies, he respectively looked at the competitiveness of South Africa’s and Namibia’s agrifood products, the factors that influence it, and its implication for food security.

In both countries, he discovered a combination of comparative advantage and disadvantage.

“South Africa and Namibia exhibited a trade structure that was less concentrated and not dependant on international trade in the agri-food industry, having minimal impact on Namibia's food security. The productivity of agriculture and GDP per capita positively influenced the comparative advantage of South Africa, whereas land productivity and GDP per capita influenced the degree of food insecurity in Namibia,” explains Prof Bahta the main research findings.

Research outputs

The study on the resilience of smallholder livestock farmers was supported by funding from the National Research Foundation. To explore the competitiveness of agri-food commodities, Prof Bahta collaborated with the Namibia University of Science and Technology (NUST), benefiting from their strong existing academic relationship. The UFS Office for International Affairs played a key role in facilitating this study, with research partnerships existing between the universities of both countries.

According to Prof Bahta, the findings of these two studies have resulted in the publication of more than 13 articles in journals ranking in the highest (Q1) and second highest categories (Q2) in the specific field. A paper will also be presented at the upcoming International Food and Agribusiness Management Association (IFAMA) international conference in New Zealand from 17 to 20 June 2023.

Furthermore, five popular articles on the main findings of the studies (written in non-technical language) were also published on these topics, focusing on the farmers and policy makers (as a policy brief and popular) as the target audience. These articles looked at, among others, the impact of policy intervention on food insecurity in times of shock; coping strategies of smallholder livestock farmers during food insecurity shocks; measuring the resilience of female smallholders in South Africa; and farming for success.

This study also resulted in the graduation of three master's students (two with distinction) and three honours students.

Looking ahead, Prof Bahta emphasises the necessity for conducting similar studies targeting both commercial and smallholder farmers, focusing on crops and livestock in various provinces across South Africa. He also feels that connections need to be established with universities besides NUST.

News Archive

Producers to save thousands with routine marketing strategies, says UFS researcher
2014-09-01

 

Photo: en.wikipedia.org

Using derivative markets as a marketing strategy can be complicated for farmers. The producers tend to use high risk strategies which include the selling of the crop on the cash market after harvest; whilst the high market risks require innovative strategies including the use of futures and options as traded on the South African Futures Exchange (SAFEX).

Using these innovative strategies are mostly due to a lack of interest and knowledge of the market. The purpose of the research conducted by Dr Dirk Strydom and Manfred Venter from the Department of Agricultural Economics at the University of the Free State (UFS) is to examine whether the adoption of a basic routine strategy is better than adopting no strategy at all.

The research illustrates that by using a Stochastic Efficiency with Respect to a Function (SERF) and Cumulative Distribution Function (CDF) that the use of five basic routine marketing strategies can be more rewarding. These basic strategies are:
• Put (plant time)
• Twelve-segment pricing
• Three-segment pricing
• Put (pollination)(Critical Moment in production/marketing process), and
• Pricing during pollination phase.

These strategies can be adopted by farmers without an in-depth understanding of the market and market-signals. Farmers can save as much as R1.6 million per year on a 2000ha farm with an average yield.

The results obtained from the research illustrate that each strategy is different for each crop. Very important is that the hedging strategies are better than no hedging strategy at all.

This research can also be applicable to the procurement side of the supply chain.

Maize milling firms use complex procurement strategies to procure their raw materials, or sometimes no strategy at all. In this research, basic routine price hedging strategies were analysed as part of the procurement of white maize over a ten-year period ranging from 2002–2012. Part of the pricing strategies used to procure white maize over the period of ten years were a call and min/max strategy. These strategies were compared to the baseline spot market. The data was obtained from the Johannesburg Stock Exchange’s Agricultural Products Division better known as SAFEX.

The results obtained from the research prove that by using basic routine price-hedging strategies to procure white maize, it is more beneficial to do so than by procuring from the spot market (a difference of more than R100 mil).

Thus, it can be concluded that it is not always necessary to use a complex method of sourcing white maize through SAFEX, to be efficient. By implementing a basic routine price hedging strategy year on year it can be better than procuring from the spot market.

Understanding the Maize Maze by Dr Dirk Strydom and Manfred Venter (pdf) - The Dairy Mail


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