A Financial Analysis Of Producing Pellets From The Encroacher Bush Senegalia Mellifera As A Potential Livestock Feed: A Cost Benefit Analysis Approach

ABSTRACT

About 70 million hectares of land in Namibia is suitable for agriculture, of which approximately 71% is utilized by livestock farmers. Namibia’s Livestock Producers are faced with bush encroachment that reduces the carrying capacity of agricultural land due to the suppression of perennial grasses and herbs thus limiting rangeland productivity. Namibia can stand to make about N$734.7 million annually from bush-based feed production which could reduce the current feed cost. Thus, this study assessed whether harvesting of the bush encroacher Senegalia mellifera at Neudamm farm to produce animal feed on a commercial basis was viable. The objectives underlying the study were to use a Cost Benefit analysis (CBA) model to determine the viability of the production as well as to use a Willingness To Pay (WTP) method to determine the market availability of the bush-feed pellets. CBA indicators like Net Present Value (NPV) and Benefit Cost Ratio (BCR) were used to determine viability. An online survey and a key informant questionnaire were used to collect data on the WTP of farmers for the bush-based feed. A total sample size of 33 respodents was used. Two methods were compared, a highly mechanized and a manual method of production. Judging from the positive NPV and a BCR greater than 1, the results suggested that both methods were viable. The highly mechanized method was found to have a NPV N$ of 73,965,835.43 and BCR of 2.28 while the manual method had a NPV N$ 62,086,180.39 and BCR of 2.66. The avarage WTP for the bush-based feed was 173.07 per 50 kg bag. The results suggested that the associated costs and benefits of producing bush-based feed pellets using encroacher bush (Senegalia mellifera) is viable and investing in the project should be considered. It was recomended in this study that small scale and upcoming farmers consider venturing in the mannual method of production as it was less costly comparered to the mechinized method, it was iii alsorecommended that efforts be put in creating awareness about bush-based feed pellets to increase the WTP for the pellets by farmers. The government should also provide encroacher bush de-bushing programms to help with high de-bushing costs