An economic evaluation of crop rotation systems under centre pivot irrigation in the Southern Free State sub-area

[摘要] English: The lack of sufficient and accurate knowledge of the effectof alternative crop rotation systems on economic profitabilityand financial feasibility for irrigation farming indicates thatfarmers purchase mechanisation systems and plant successive cropswithout having determined the effect of these actions on longterm farm profitability and feasibility.The importance of the study is reflected by the largenumbers of irrigation farmers and the relatively large number offarmers having a high debt to asset ratio. The study is done inthe irrigation area below the P.K. le Roux Dam but can also beapplied to other irrigation areas without the need for structuralchanges.The objective of this study is to determine the economicprofitability and financial feasibility of alternative croprotation systems in the research area, taking into considerationprice, production and financial risks.The lack of comparable and accurate information on cropyield and gross water requirements over a lengthy period necessitatedthese values to be simulated. Data on crops, soils andclimate are used to validate and calibrate the PUTU crop growthsimulation model P9MZAB3 for this area. The BEWAB irrigationscheduling model is .used to determine the irrigation schedulingof the crops. The calibrated PUTU model then is used to generatethe crop yields and .gross water requirements for wheat, latemaize, cotton, peanuts, dry beans, lucerne and soyabeans for aperiod of eleven consecutive years .Selected farmers in this area provided the data on crops andcrop rotation systems. Based on economic, agronomic and practicalprinciples, fourteen alternative crop rotation systems aredeveloped. For each typical crop rotation system an appropriatemechanisation system, which includes a centre pivot irrigation system, is developed.The crop rotation systems are evaluated torun over a period of ten years. The irrigation systems are usedto irrigate an area of sixty hectares with a predominantly sandysoil. Depending on the crop rotation system various land utilisationpercentages (degree of double cropping) are considered.The systems are used to irrigate areas with two different pumpingheights: +10 m (Sarel Hayward canal) and -15 m (Ramah area). Thesimulated gross water requirements of the crop rotation systemsare calculated and compared for the ten-year period to theavailable water quota. The results indicate that the maximumwater quota of 900 000 m3 is sufficient in satisfying the grosswater requirements of the follbwing crop rotation systems:45W45LM15P (The number refers to the number of hectares while the symbols are explained as W = Wheat, LM = Late Maize,P = Peanuts, L = Lucerne, S =:= Soyabeans and C = Cotton)30W30S30L,30W30LM30L30W30S30LM30L30W30LM30C30L30W30S30C30LPrice risk is the result of crop prices that change overtime. For late maize and wheat price scenarios are determined.By using linear regression analysis on the basis of historicalnational production levels of these crops, equivalent 1990adjusted national production levels and prices are calculated.The prices of dry beans and lucerne hay are subject to pricevariability and determined largely by supply and demand situations.A procedure, is followed to generate a distribution ofprices for these two crops that takes the price variability intoconsideration. For soyabeans, cotton and peanuts noquantifiable price risk is assumed and subsequently predeterminedfixed prices are used.By using an irrigation system cost calculation method thefixed, variable and marginal irrigation system costs are calculatedfor the two systems with different pumping heights. On thebasis of the supplied data on crops, mechanisation costs anddetermined average crop prices and yields, the crop budgets aredeveloped and the net margins calculated. The crop net marginsare the basis on which the different crops are analysed for economic profitability.For the consideration of production and price risks the netmargins of the crops in the budgets are calculated for each yearof. the ten-year period on the basis of randomly selected cropprices and yields from the respecti ve price and yielddistributions. This process is repeated twenty times to obtain adistribution of twenty net margins for ten years for each crop.The net present value method is used to calculate the economicprofitability of the crop rotation systems. By includingin the calculation the distributions of the determined net marginsthe production and price risks are taken into consideration.On the basis of the net present values and ratios of net presentvalues to investment the economic profitability of the croprotation systems can be evaluated on an equal basis.The results indicate that crop rotation systems with latemaize and/or soyabeans as the main summer crops are the leastprofitable, while crop rotation systems with lucerne and cottonas the main summer crqps are the most profitable.The results also indicate that crop rotation system irrigatedby the systems with higher pumping heights have a considerablylower economic profitability.In the financial feasibility analysis the crop rotationsystems are analysed for a hypothetical farm for cash deficitsfor the ten-year period by comparing basically the cash incomeswith the cash costs (financial obligations). On the hypotheticalfarm two sixty-hectare areas are irrigated and only the associatedrevenues and costs are considered.In the financial feasibility analysis the financial risksare firstly incorporated by including the distribution of netmargins and secondly by using three different debt to asset ratios.The annual cash costs are calculated for each year for theten-year period and for each debt to asset ratio. The annualcash incomes are calculated from the crop net margins minus thenon-cash fixed costs for each year for the ten-year period. Adecision rule is implemented to determine. when a crop rotationsystem is feasible.The results indicate that the debt to asset ratio is themain factor influencing financial feasibility of the croprotation systems. For a 70/30 debt to asset ratio all croprotation systems are unfeasible for the irrigation systems with apositive pumping height (+10 m) and unfeasible, except one(30W30S30C30L), for the negative pumping height (-15m). For a50/50 debt to asset ratio only five crop rotation systems arefeasible for irrigation systems with positive and negativepumping heights (30W30S30L; 30W30S30LM30L; 30W30LM30L;30W30LM30C30L; 30W30S30C30L). For a 20/80 debt to asset ratioall crop rotations systems except one (60W60LM) are feasible forboth pumping heights.The conclusion is that the debt to asset ratio is moreimportant in obtaining financial feasibility than the choice ofthe crop rotation system and the given crops.

[发布机构] University of the Free State