THE POTENTIAL FOR COMMERCIAL MILK GOAT PRODUCTION IN THE ARID EASTERN CAPE REGIONS: ECONOMIC ANALYSIS OF THE PERFORMANCE INDICATORS

Dairy goats appear to be the most suitable milk producing animal species for the arid parts of the Eastern Cape Province. Dairy goats fetch high net returns to a small-scale farmer. A study was carried out to evaluate the long-term economic viability of investments in dairy goats, in the Eastern Cape Province of South Africa. Results of the study show that commercial production of dairy goats, together with a milk processing plant in the region, would be profitable and would have benefits from both economic and social points of view as well as for the environment. With a discount rate of 15%, the Net Present Worth (NPW), Benefit/Cost ratio (B/C) and Internal Rate of Return (IRR) were found to be R4.3 million, 1.44 and 54% respectively. Further, a sensitivity analysis to changes in benefits and costs of inputs was conducted. This found the above proposal to be viable, even when benefits are reduced by 25%. The project proposal was still viable when cost of inputs was inflated by 25%. In both cases, the Benefit/Cost ratio is greater than 1 and IRR is greater than the current market rate of interest. However, the combined effect of reducing the benefit by 25% and inflating costs by 25%, would result in negative NPW. Results from a survey carried out further show the possibility and viability of producing satisfactory levels of milk from dairy goats in the Eastern Cape