Government policy effects on cattle and wildlife ranching profits in Zimbabwe

Abstract

The profitability of alternative range-based production systems is frequently affected by government policies. Moreover, the comparative profitability of wild and domestic animal production systems on African semi-arid savannas has not been well analyzed. This paper presents a simple method for analyzing government policy effects on ranch profits and reports application of the method to 30 commercial cattle, 7 wildlife, and 13 mixed ranches in Zimbabwe. Ranches were selected in 4 contiguous woodland savanna areas with abundant wildlife and in 2 adjacent open savanna areas with sparse wildlife. Financial profits were calculated from 1989/90 ranch data and economic profits were estimated from the opportunity costs of inputs and outputs. A policy analysis matrix was used to estimate financial-economic profit-differences. Cattle ranches in the 2 areas with sparse wildlife were the most profitable group studied. Profits were lower (but similar) for cattle and mixed ranches in the areas with abundant wildlife. The financial profit was higher than economic profit for all ranch types, thus creating production disincentives. However, currency over valuation and implicit taxes on exported beef created greater production disincentives for cattle than wildlife producers. While the policy interventions negated the government's stated objectives of increasing foreign currency earnings and being self sufficient in beef production, they did appear to have beneficial range management consequences by encouraging fewer cattle on historically overstocked cattle ranches.