A model to determine capital needs for efficient boer goat farming

Abstract

The purpose of this study is to determine the optimal capital needs to establish a Boer goat farm. A study was performed to simulate the financial performance of 55 scenarios, with varying farm sizes and varying levels of capital employed. These results formed the basis to create a data envelopment analysis model, where farm sizes and capital employed are used as input variables versus eight financial performance indicators as output variables. The study found that the scenarios are technically efficient, but only 23 of the 55 scenarios are fully scale efficient, with six scenarios operating on a scale that is too small and 26 operating on a scale that is too large, which implies that 32 of the scenarios did not achieve economies of scale. Furthermore, nine of the ten farm sizes used are not scale efficient when using 100% of their capital needs. The study therefore concludes that the financial success of starting a South African (SA) Boer goat farm is locked up in the natural growth of the herd, with the practical implication that aspirating SA Boer goat farmers will be most efficient when using a limited amount of capital and not immediately stock the farm at the maximum level of animals, but to stock it only partly and wait for the gain in the growth of the herd.