Last update: November 24, 2010 02:10:12 PM E-mail Print




M.J. Herselman

Grootfontein ADI, Private Bag X529, Middelburg, 5900


1.         Introduction

Many livestock producers are not capable to overcome the challenge of modern day farming. To remain competitive in the global arena requires a total different approach towards the farming business. Producers are daily confronted with increased production costs and variable product prices on the one hand while, on the other hand, they are continuously bombarded with an enormous amount of information on ways to increase productivity in an fluctuating production environment. New technology is constantly introduced which further complicates matters. Most agricultural advisors are even more confused with the magnitude of information available and the expected financial implications of alternative production methods on farming enterprises. As a result of this, the Grootfontein Agricultural Development Institute initiated a project in 1987, which would enable the then extension officers of the Department of Agriculture to give more informed advice to extensive sheep producers.  By 1988, several simulation models were released and although extension officers in the field never extensively accepted them, they have been widely used by others for the purpose they were initially developed for.  Fifteen years after their release, these models are today still being used for the supply of financially based advice to producers. Minor improvements and upgrading over the years kept the models relevant to also cater for the latest technology. The purpose of this paper is to demonstrate the value of two of these models, namely SM2000 and VIAPRO, in decision-making for small stock producers.


2.         SM2000

The SM2000 model is the Microsoft Excel version of the models released in 1988. The model simulates a farming enterprise to the gross margin level. For this, the relevant information of the specific farmer/producers is entered into the model and the profitability of the enterprise is calculated. Subsequently, alternative information is entered and the profitability is again calculated. The economic value of the alternative practice is determined by comparing the different estimated gross margins with each other. During simulation the model:


2.1       Example: The use of SM2000 to determine the economic implication of supplementary feeding to pregnant and lactating ewes


The following data are entered into the model for a specific case to simulate the current enterprise: Farm size; grazing capacity; number of ewes and rams; replacement age and percentages of ewes and rams; month of mating; lambing percentage; body weights at birth, weaning, 12 months and adult sheep; mortality rate of different sheep classes; age and weight at which surplus lambs are marketed; dressing percentages of lambs and adult sheep; wool production data; meat and wool prices; different cost factors.


The integration of the aforementioned information with SM2000 produces an output as indicated in Table 1


Table 1            Expected gross margin for the current sheep farming enterprise without supplementary feeding

Subsequently, the information of the current farming enterprise is changed to reflect the situation and production data, which are expected when the supplementary feeding is supplied. This is done by entering the following information: 300 g of supplementation per ewe per day for a period of 28 days during late pregnancy at a price of R1250/ton as well as 400 g of supplementation per ewe per day for a period of 56 days after lambing at a price of R1250/ton; lambing percentage is increased by 10 percentage units as a result of a carry over effect in the next season; each of weaning weight, 12 month weight and weight of ewes are increased by 2 kg; mortality rate is decreased by 5 percentage units; lambs reach marketing weight 1 month earlier; wool production of ewes increases by 100g. The output produced with this information is indicated in Table 2


Table 2            Expected gross margin for the sheep farming enterprise when supplementary feeding is provided



From the two sets of output produced it is evident that it would not be profitable to provide the mentioned amounts of supplementary feeding if the expected response in production is not substantially higher than assumed.



3.         VIAPRO

The VIAPRO model is a Microsoft Excel based spreadsheet model developed for the purpose of viability projections of sheep farming enterprises. The model projects the economic and financial details of a farming enterprise over a period of 20 years. In addition to all the information required with SM2000, VIAPRO also requires all overhead costs, and financial information such as income from other sources, long term loans, bank balance, etc. The relevant information of the specific farmer/producers is entered into the model and the financial viability is then calculated. The long-term impact of specific factors, such as different sheep management practices, production levels, financial decisions etc. on the financial viability of the farming enterprise can be projected. A typical output produced by VIAPRO is illustrated in Figure 1.


Figure 1           Typical output produced by VIAPRO


4.         Conclusion

The use and flexibility of SM2000 and VIAPRO in the provision of financially sound agricultural advice has proven to be of great value. Without simulation models like these, which integrate production and financial information it is almost impossible to advise producers on more profitable farm management practices.