An economic and investment analysis of apiculture in the Cape Winelands District Municipality, South Africa

Abstract

In recent years, the global bee population has been on the decline due to challenges such as shortage of forage caused by an increase in new housing developments, and an increased use of pesticides on forage. There is therefore a need to understand the economic contribution and investment appraisal within different beekeeping systems in South Africa. Literature has shown that beekeeping provides positive returns in other countries. The study sought to conduct an investment and economic analysis of beekeeping in the Cape Winelands District Municipality in the Western Cape Province of South Africa. The aim was to establish viable options among the production systems and establish the production category that generates the highest net margins. Data was collected from 51 beekeepers from six local municipalities of the Cape Winelands District Municipality using questionnaires. Beekeeping farms were categorized into three, according to the number of beehives owned (150, 500 and 1 000 beehives per farmer). Gross margin analysis for honey, pollination and the combination of both honey and pollination services revealed that beekeepers with 150 beehives achieved a return on variable costs of 57.34%, 114.22% and 365.60% respectively. Likewise, the return on gross margin analysis for the combination of honey and pollination services for 500 and 1 000 beehives resulted in 216.35% and 180.52% respectively, which conformed to the findings of previous studies. The net present value (NPV) for the split production of honey and pollination for 150 beehives was -R923 051.75 and -R595 680.18 respectively, with an undetermined internal rate of return (IRR) and payback period due to indefinite negative cumulative net cash flow. However, the NPV for the combination of honey and pollination was R143 367.40 with an IRR of 17.70% and a payback period of 3.14 years. For 500 and 1 000 beehives, the NPV was R361 091.17 and R2 074 082.94, with an IRR of 17.67% and 34.95% and a payback period of 3.15 and 2.22 years, respectively. The findings suggest that the split production of honey and pollination services is only profitable for 500 and 1 000 production units, whereas the combination of honey and pollination yields positive profits for all three production units. Beekeepers are advised to combine honey production and pollination services for positive return on investment. Additionally, further research can be conducted on the economic contribution of the sub-sector to the GDP of the country including gross value addition.