Description and Compilation of Enterprise Budgets

CHAPTER 4. RESEARCH METHODOLOGY

4.3 Description and Compilation of Enterprise Budgets

North Coast planting cost, ratoon management and harvesting costs (Appendix 1, 2 and 3) were extracted from the SACGA website and modified in the focus group discussions with farmers (as described in section 4.3) to compile enterprise budgets that are a reflection of farmers in the Gledhow milling area. Additionally, an eldana cost schedule was compiled through focus group discussions. The costs of chemical control of eldana were accounted for using the costs of applying Coragen Chlorantraniliprole, because it is currently the most common method of chemical control of eldana in the Gledhow area. For the purpose of analysis of the cost value, it is assumed that a GM sugarcane cultivar with IR and HT traits, is hypothetically available. Scenarios were developed to analyse the difference between chemical costs of conventional sugarcane (Scenario 1) and GM sugarcane (Scenario 2) in Table 4.2. This scenario has been done for a hypothetical farm in the Gledhow milling area firstly to analyse the total cost of eldana control and secondly, the results are used in the enterprise budgets, where gross margins are analysed, for different production cycles (Table 4.3). A similar approach is used to compile herbicide costs using the normal spraying program based on the South African Canegrowers’ Association planting and ratoon management cost for the 2017/2018 season (SACGA, 2018). For conventional sugarcane, the cost is calculated to be R2589 per hectare, while for the GM cultivar the cost is R1851 per hectare at planting. At ratoon, these costs are calculated to be R731 per hectare for conventional sugarcane, and R182 per hectare for GM sugarcane (Appendix 4).

The same control agent is used for both scenarios, the major difference is in the application rate.

An area that has a high population E-count (a measure of eldana population) is sprayed three (3) times on average annually (Naude, 2018, Pers.com). With the IR trait on the GM cultivar, it is assumed that eldana would be chemically controlled once annually if need be. Scouting of eldana is done approximately 15 hours annually, in a field that has low eldana population (GM sugarcane field); scouting may be reduced owing to less eldana population

39 Table 4.1 Comparison of eldana Chemical Control Scenarios

Normal Spraying Programme

Scenario

One Chemical Labour Cost

Total Cost

Total Cost/Yr

Operation

Eldana Control Agent

Application Rate

Herbicide

Cost Frequency

Herbicide Cost

Labour

Cost Mandays

Labour

Cost

(L/ha) (R/L) (R/ha) (R/hr) (hr/ha) (R/ha) (R/ha)

General

Spray Coragen 0.2 2300 2 920 16.25 2 65 985 2955

Chlorantraniliprole

Scouting 5 labourers@ 3hours

Scouting is done by Ext Staff at no

additional Cost.

GM Cane

Scenario

Two Chemical Labour Cost

Total Cost

Total Cost/Yr

Operation

Eldana Control Agent

Application Rate

Herbicide

Cost Frequency

Herbicide Cost

Labour

Cost Mandays

Labour

Cost

(L/ha) (R/L) (R/ha) (R/day) (Days/ha) (R/ha) (R/ha)

General

Spray Coragen 0.2 2300 2 920 16.25 2 65 985 985

Chlorantraniliprole

Scouting 5 labourers @2hours

Scouting is done by Ext Staff at no

additional Cost.

Source: (Adapted from Gledhow Commercial Farmers, 2018, Pers.com).

Appendix 1, 2, 3 and 4, including results obtained in Table 4.1, are used to compile an enterprise budget for each sugarcane cultivar under each production cycle. These results are used in a production cycle sensitivity analysis (on Excel) to extrapolate the results over a sugarcane production cycle from planting, through numerous ratoons, to plough out. The sugarcane production cycle used in the analysis is the 14-16 month cycle and the 18-month cycle. The assumed months are based on the effect eldana has had on the North Coast sugarcane farmers (refer to Chapter 2). This analysis is done in order to identify potential net gains per hectare under cane for each production cycle, and including that of a GM cultivar. Following recommendations by SASRI biotechnologists, for the purpose of this study, N52 is hypothetically modified as GM sugarcane by assuming a cultivar of sugarcane that is similar to N52 but also has the IR and HT traits. N51 is a secondary cultivar selected and hypothetically modified with IR and HT traits as it is a cultivar suitable for the coastal area. It is assumed that in the Gledhow cane supply region these cultivars will be produced on an 18-month cycle.

A description of a possible GM cultivar of sugarcane that has both the IR and HT traits, including how its production is expected to differ from production of conventional cultivars (e.g. a change in application of chemicals to control pests), and its expected performance (yield distribution) across various categories of arable land on each of the representative farms is compiled. The IR and HT traits are expected to improve the cane yield by 5% and 2%, respectively above that of the conventional cultivars to which full chemical eldana and conventional weed control are applied.

Additionally, RV% is assumed to increase by 1 unit for the GM cultivar due to superior eldana control (Rutherford 2018, Pers. Com). N52 cultivar is therefore modified with these traits in the different subject fields. Table 4.2 compares gross margins of N52 on 14-16 month and 18-month production cycles with the GM cultivar on a typical farm in the Gledhow area.

The analysis was extended to include additional sugarcane cultivars, as advised by SASRI extension staff in each of the two representative farms. The findings are summarized in Table 4.3, which reports the performance of the best two cultivars and a hypothetical GM cultivar in different soil types. A detailed enterprise budget comparing cultivars which are used in Linear Programming farm models is attached in the Appendix List (Appendix 5).

Table 4.3 Comparison between the gross margins of GM cultivars against the best performing conventional cultivars in Gledhow on an 18-month production cycle.

Locality Land