Commercial viability of conservation and social forestry outreach nurseries in South Africa

Nurseries are risky ventures, even in conducive operating environments. Unlike many of their international counterparts, financial objectives are usually important to South African outreach nurseries, to generate funds for projects and/or to enhance local livelihoods. However, most are situated in low-income areas where residents have limited spending power. This paper examines the commercial viability of ten outreach nurseries from six provinces, with a range of conservation objectives. Management performance was assessed through correspondence and financial ratio analyses. Although seven projects had built up steady markets, this took 5-8 years to achieve, even in intensively funded projects. Only one nursery had achieved a steady annual net profit. The prolonged establishment phases impacted negatively on participants' livelihoods and project processes. Marketing difficulties included a lack of markets, nurseries being located far from markets, pricing difficulties, inadequate transport and limited marketing communications. Seasonal factors exacerbated liquidity shortfalls. Conservation activities such as greening and rehabilitation programmes provided markets, but medicinal plant nurseries struggled to achieve both conservation and socio-economic objectives, largely through difficulties experienced in providing seedlings at prices that subsistence sector resource users could afford. To achieve commercial viability, outreach enterprises need to adhere to business fundamentals viz. effective planning, management and coordination of resources, monitoring and control. Thorough viability studies are crucial. Alternate natural resource management and income generating strategies need to be evaluated, as a nursery may not be the best means of achieving these. The current Build-Operate-Transfer approach to projects by many supporting organisations is cause for concern as even small-scale projects usually require intensive support.