Abstract

The recent surge in input markets has serious implications for the South African cane growers. The Bureau for Food and Agricultural Policy (BFAP), have estimated that the aggregate South African farm input cost will rise by 53% in 2008. This situation is creating cash flow and solvency concerns for sugarcane growers. This study attempts to examine the factors influencing sugarcane production on large scale farms, the resource use efficiency pattern and returns to scale to report evidence related to resource use and farm productivity. This study was based on data collected from a sample of 31 large-scale sugarcane farmers in the Eshowe-Entumeni areas; these are farmers that produce in excess of 5000 tonnes seasonally. Given the increasing input prices in the sugarcane industry and management objective to minimize production costs, a double-log production function was estimated using the total sugarcane harvested in tonnes per hectare as dependent variable subject to the production costs. The result of the study indicates that farm staff and fertilizer is the most predominant costs item accounting for 62% of the total cost of production, while the double log estimates revealed that the coefficients of all the explanatory variables included in the model are statistically significant in explaining the variation in sugarcane output on the farm. The results further points to the non optimal use of resources, and a decreasing returns to scale, hence the need for resource adjustment. Policy implication for potential increase in productivity and farm income are discussed.

Key words: Sugarcane, productivity, resource use, efficiency, return to scale.