Efficiency analysis of small-scale wool production in the former transkel South Africa

A non-parametric data envelopment analysis (DEA) is used to measure the relative efficiency of wool production on farms in the former Transkei. The agricultural activities on the farms are merely non-commercial. Wool is considered as a by-product of keeping sheep, which are slaughtered on special family occasions or sold live. A sample of farmers in three villages of the former Transkei (Mhlahlane, Xume and Luzie) was interviewed. In Luzie a shearing shed was built to organise the marketing of the wool, leading to a higher revenue from wool. The farmers however are not able to convert this into a positive gross margin. A small number of farms succeeds in maximising the production of wool given the relative large investment. The negative result of wool farming on the other farms is partly compensated by high benefits from the sales of live sheep. Also in Xume a shearing shed was built, and extension on production practices is provided. But no marketing of wool through the shearing shed was done at the time of the survey. The existence of a shearing shed should be essential for a higher retail price for wool and extension does have a positive influence on the benefits of the farms. However, the production practices are not adapted to the production of wool only, so that the use of inputs is too high for the generated output.