Economic evaluation of management strategies for cattle ranching in semi-arid regions.

Abstract

Arid and semi-arid regions have increasingly become the subject of much research and debate by scientists. By their very nature, these regions characteristically exhibit extremes which complicate the implementation of effective management strategies that ensure sustainable productivity and economic output. Namibia is one such region where low and highly variable rainfall conditions and fluctuating productivity pose a challenge to managers of commercial livestock enterprises, / who seek to optimise economic benefits while controlling the negative effect on herd production and income of unpredictable and unfavourable climatic events. Various management approaches are proposed as a means of exploiting periods of abundant productivity and so optimising income from herd production, while controlling for the effects of drought conditions. To analyse the effects of these various offtake strategies, a rainfall-driven plant-herbivore simulation model is used. The model comprises components simul~tihg vegetation and herbivore dynamics. The vegetation component incorporates soil moisture and nutrient allocation to plant parts. The herbivore dynamics sub-model comprises age and sex classes, population dynamics and animal energy requirements which govern accumulated fat reserves. The model is adapted to account for climatic and vegetation attributes specific to Namibia. An economic component including a seasonal monthly price structure is developed, and a dynamic feedback governing management decisions is incorporated. The much debated issue of whether to maintain a constant stocking rate or to track climatic variation by employing a variable stocking level is investigated, with the performance of management strategies incorporating these approaches ranked according to various factors, including annual returns, associated risk and annual stock mortality. The economic consequences of the timing of offtake are investigated, with the simulation of management strategies that implement destocking in the face of anticipated drought conditions. A dynamic projection of expected income allows the impact of forecasting potential economic gains on decision-making to be analysed. Results indicate that the performance of management strategies is not as dependent on climatic and seasonal price variability as was originally expected, with the application of a constant stocking level proving to be the most favourable strategy in terms of economic gain and variability of income. Tracking climatic variation by adapting stocking levels does not provide the improvement in economic returns from a livestock production system that was anticipated, although this approach is successful in effecting a significant reduction in annual stock mortality. Further results show the sensitivity of income to the long-term average stocking level characterising the management strategies investigated, as well as to the elasticity of the underlying price structure. The results of this study indicate that the implementation of management strategies designed to track climatic variation does not offer significant economic advantages over the application of a constant stocking approach.