Impact of investments in livestock research and development programmes in South Africa.

Abstract

This study assesses the economic impact of livestock production research and development (R&D) programmes in South Africa from 1970 to 1996. The objectives of the analysis are to estimate the costs and returns to investments in livestock improvement schemes. The net present values (NPVs) and the rates of return (RORs) to investments in the livestock improvement R&D programmes were estimated using the Akino Hayami model. The estimated RORs to the dairy cattle, beef cattle, mutton sheep and pig improvement schemes were 51%, 29 44%, 25-54% and 2-14%, respectively. The estimated NPVs for all the schemes at all discount rates (i.e. 5%, 10% and 15%) were positive, and substantial, except for the pig scheme at 15% discount rate. These RORs are, except for the pig scheme, higher than the opportunity cost of investment in South Africa. The high RORs to livestock improvement R&D programmes do not only justify past investments, but also indicate possible under-investments in some livestock R&D programmes. The NPVs show that the payoffs to livestock production research can more than pay for the investment costs. These livestock improvement schemes depend on public funding. In the climate of increased competition for government resources, future alternative cost recovery measures should be pursued with an increasing share of private sector investment.