Characterizing Commercial Cattle Farms in Namibia : Risk, Management and Sustainability

Commercial cattle farming in semi-arid regions is subject to high rainfall risk. At the same time, it is prone to rangeland degradation. Theoretical works suggest that rainfall risk management by means of financial instruments may stabilize farming-derived income over the short-term, but provides little incentives for conservative rangeland management. Thus, the use of financial strategies of income stabilization may accelerate rangeland degradation over the long term, as opposed to production or organization strategies which may alternatively be used to stabilize farming incomes. In this paper, we provide an empirical characterization of Namibian commercial cattle farming and explore the link between risk, management, and sustainability by examining structural farm patterns with a cluster analysis. Our data comes from a large-scale survey across the Namibian commercial cattle farming area, to which 398 farmers responded. Our results show that the most distinct of the three identified clusters is characterized by high sustainability and low financial risk management, and that it does not differ from the remaining two clusters with respect to income. This suggests an inverse relationship between financial risk management and sustainability, and thus supports theoretical insights