Dry areas attract farmers, investors

9 Oct 2009

According to Wayne Rubidge, manager for Pam Golding Properties, the extensive nature of Karoo and Kalahari farms, low population density of these areas, coupled with limited crime and political involvement in farms, low capital inputs and a highly desirable lifestyle, is placing them high on buyers' priority lists.

Karoo commercial farms, including irrigation farms, are also proving to be sound investments, particularly given a growing awareness of the pressing issue of food security and utilisation of water.

With its huge spaces and numerous and diverse locations, this region offers a wide variety of commercial sheep and cattle farms, which generally range in size from 3000-20000ha and are mainly merino or dorper sheep farms. Merino sheep are bred for wool and meat, while dorper sheep - a South African breed developed by crossing Dorset Horn and the Blackhead Persian - are bred for mutton.

Why farmers relocate

Rubidge says those seeking livestock farms tend to be farmers relocating from the northern provinces and KwaZulu-Natal as well as business executives entering the market from an investment perspective - who may either recruit managers to run their operations or offer the seller a retainer to stay on for a couple of years.

“The main reason for farmers relocating is that having experienced a land claim or having sold to the state they do not wish to go through this process again, preferring to put down roots where they will not be under further pressure. Many of these purchasers have sold for up to R10000/ha in the higher rainfall Limpopo province, so a Karoo farm at R3000/ha is an appealing alternative.

Prices vs capacity

For those interested in acquiring a sheep farm, the western interior of the Karoo with its lower rainfall generally has the larger sheep farms that can carry on average around one sheep per 5ha, with prices around R650-R1200/ha.

As one moves eastwards, the rainfall increases and farms can carry more sheep per hectare. In the central area, one needs three hectares per sheep and prices range from R1500 to R2500/ha.

This central area around Graaff-Reinet, Middelburg and Colesburg is fast becoming a prime game area due to its healthy climate and quality grazing, with some properties having the option to be sold as a livestock or game farm. The eastern region has the highest rainfall, as one enters the grassy Karoo and leaves the bush vegetation behind, cattle farms are in evidence, generally smaller than sheep farms and able to carry up to four hectares per Large Stock Unit (LSU).

“Irrigation farms, either from the Orange or Fish River irrigation schemes, are very popular with irrigation ground selling up to R60000/ha depending on what crop is available and the irrigation infrastructure. For example, export fruit grapes of a popular cultivar and situated near the Upington or Port Elizabeth export markets can command a premium. Citrus is currently doing very well and these farms are hard to come by, while maize and Lucerne farms are also in demand” concludes Rubidge.