A system dynamics approach to understanding the ostrich industry of South Africa

Thesis (MEng)--Stellenbosch University, 2016.ENGLISH ABSTRACT: Although the livestock production sector is recognised as an essential contributor to the green economy in South Africa, there is a lack of simulation tool development for the green economy transition of livestock production. The ostrich production industry, mainly exporting leather and meat, is a significant part of livestock production of South Africa. In terms of the global ostrich product market, the ostrich industry of South Africa accounts for approximately 70% of the total supply. Ostrich leather is positioned as an exclusive luxury item, while meat is positioned as an every-day alternative to red meat in their respective markets. A strong relationship exists between previous market supply of ostrich leather and current income from leather, while the ostrich meat income is considered to be largely unaffected by market supply of ostrich meat. The meat market has the potential to absorb more than tenfold the current market supply of meat. This study contributed the only systems thinking analysis of the ostrich production industry in South Africa, known to the author. The analysis in the form of a system dynamics model, proposed a causal loop diagram, as well as a stock and flow diagram that represented the structure of the ostrich production industry of South Africa. The livestock model proposed was set within a different socio-economic environment, as well as a different type of commodity market, to that of the well-known hog cycle proposed by Meadows (1970). The model, known as the Ostrich Industry Model of South Africa (OIMSA), assumed that ostrich producers base their decision in terms of future production amounts on the gross pro t margin per ostrich, mainly influenced by income from leather, income from meat, as well as the production cost. The model forecasted future production size and income received from each commodity, in addition to replicating historical behaviour. Results from an extensive scenario and policy analysis indicated that the only influence that can cause a sustainable increase in the ostrich industry size is the market size of ostrich leather. Scenarios including disturbances is exchange rates, changes in market demands, changes in product values, food safety concerns, fluctuations in production cost as well as changes in economic climate are also investigated. Recommendations regarding the green economy transition of the South African ostrich industry include fixing the long term industry focus on ostrich leather, as well as the development of additional ostrich leather demand. Additionally, new entrant black farmers should be included into the industry at a rate corresponding to the growth in leather demand. The highly contentious subject of a mandatory transition to a small camp breeding system is shown to be sustainable, yet highly unpopular. The two potential policies, carbon tax per ostrich produced, and water tax on irrigated crops used for ostrich feed, will have the exact same effect of ostrich production, and is therefore not recommended to implement the two types of taxes simultaneously.AFRIKAANSE OPSOMMING: Hoewel die vee produksie sektor erken word as 'n noodsaaklike bydrae tot die groen ekonomie in Suid-Afrika, is daar 'n gebrek aan simulasie hulpmiddel ontwikkeling om die groen ekonomie oorgang, in terme van vee produksie, te bestudeer. Die volstruis bedryf, hoofsaaklik uitgemaak deur die uitvoer van leer en vleis, is 'n belangrike deel van vee produksie in Suid-Afrika. Die volstruis bedryf van Suid-Afrika is verantwoordelik vir ongeveer 70% van die wêreldwye volstruis produk aanbod. Volstruis leer is geposisioneer as 'n eksklusiewe en luukse item, terwyl volstruis vleis geposisioneer is as 'n daaglikse verbruiker alternatief tot rooivleis in hul onderskeie internasionale markte. 'n Sterk verhouding bestaan tussen vorige mark aanbod van leer en die huidige inkomste uit leer, terwyl vleis inkomste grootliks onaangeraak is deur mark aanbod van vleis. Die vleis mark het die potensiaal om meer as tien keer die huidige aanbod te absorbeer. Hierdie studie stel die enigste stelsels dink ontleding van die volstruis bedryf, wat bekend is aan die skrywer, voor. Die ontleding, in die vorm van 'n stelsel dinamiese model, stel 'n oorsaaklike lus diagram, sowel as 'n voorraad en vloei diagram voor om die struktuur van die volstruis bedryf in Suid-Afrika te verteenwoordig. Die vee model wat voorgestel word, word bevind in 'n ander sosio-ekonomiese omgewing, sowel as 'n ander tipe kommoditeit mark, as die wat deur Meadows (1970) se bekende vark siklus voorgestel word. Die model, genoem die Ostrich Industry Model of South Africa (OIMSA), veronderstel dat volstruis produsente hulle besluit oor toekomstige produksie baseer op die bruto winsmarge per volstruis. Die bruto winsmarge word hoofsaaklik beïnvloed deur inkomste uit leer, inkomste uit vleis, asook die produksiekoste. Die model herhaal historiese gedrag in van die volstruis bedryf en voorspel toekomstige produksie grootte en inkomste ontvang uit elke kommoditeit. Die model, in 'n toestand van ewewig, ondergaan ook uitgebreide scenario en beleid analise. Resultate van 'n uitgebreide scenario en beleid analise dui aan dat die enigste invloed wat 'n volhoubare toename in die volstruis bedryf grootte kan veroorsaak word, is die mark aanvraag grootte van volstruis leer. Scenario's insluitend versteurings in wisselkoerse, veranderinge in die mark aanvraag, veranderinge in die produk waardes, voedselveiligheid kommer, veranderinge in produksiekoste sowel as 'n verandering in ekonomiese klimaat was ook ondersoek. Aanbevelings ten opsigte van die groen ekonomie oorgang van die Suid-Afrikaanse volstruis bedryf sluit die vasstelling van die langtermyn industrie fokus op volstruis leer, sowel as die ontwikkeling van bykomende volstruis leer aanvraag in. Daarbenewens moet nuwe toetreder swart boere by die bedryf ingesluit word teen 'n koers wat ooreenstem met die groei in leer aanvraag. Die hoogs omstrede onderwerp van 'n verpligte oorgang na 'n klein kamp stelsel is bewys as volhoubaar, tog baie ongewild. Dit word nie aanbeveel om die twee potensiële beleide, koolstof belasting per volstruis geproduseer, en water belasting op besproeide gewasse gebruik word vir volstruis voer, gelyktydig te implementeer nie, aangesien die twee tipes belastings presies dieselfde uitwerking op die volstruis bedryf sal hê