Gerhard Coetzee

Food security and structural adjustment: Empirical evidence on the food price dilemma in Southern Africa

This article considers effects of price on food security and the food equation in the developing areas of South Africa. Firstly, the food (or hunger) equation is examined in more detail. Secondly, thefood price dilemma is analysed using empirical data obtained elsewhere in sub‐Saharan Africa. Thirdly, the situation in the developing areas of South Africa is examined. Empirical evidence in sub‐Saharan and Southern Africa accentuates the skewness and concentration in the market participation profile of rural households with respect to especially staples. Supply response to higher prices in these areas is also limited. These findings place the food price dilemma on centre stage in Southern Africa.

COMMERCIALIZATION AS A STRATEGY FOR RECONSTRUCTION IN AGRICULTURE / KOMMERSIALISASIE AS 'N STRATEGIE VIR REKONSTRUKSIE IN DIE LANDBOU

Farmers commercialize in order to acquire other goods. Commercialization leads to improved production and welfare, accelerates linkages and eases financing conditions. Logit models were estimated to determine socio-economic factors that distinguish more commercially oriented farmers from moderately commercial and less commercial farmers. The more commercial farmers are more likely to have used credit, formal marketing channels, kept farming records, listened to agricultural information. These farmers require more land. The less commercial groups require a comprehensive approach that include credit and market facilities, input and technology transfers, training, price guarantees and crop insurance. The objective should be to achieve overall commercialisation.

INDEXING PARTICIPATION IN THE MARKET ECONOMY THROUGH FACTOR ANALYSIS: IMPLICATIONS FOR FOOD SECURITY / INDEKSERING VAN DEELNAME AAN DIE MARKEKONOMIE DEUR FAKTORANALISE: IMPLIKASIES VIR VOEDSELSEKURITEIT

The paper aims to determine patterns used by emerging farmers to participate in the market economy. The eight components of participation (six crop sales, livestock sales and off-farm earnings) were subjected to factor analysis. The results indicate that there are five sources of market participation; viz. sales of staples, cash crops, snacks, livestock and off-farm earnings. That is, participation in the market through one of the sources may or may not be preconditioned by another source. Implications for food security are that commercialisation of both maize and beans should be promoted to ensure starch and protein intake respectively, while cotton and vegetables will provide income and employment, livestock as a food risk management base, and off-farm income as a livelihood enhancing mechanism.

THE EFFICIENCY AND OUTREACH OF RURAL FINANCIAL INSTITUTIONS IN SOUTH AFRICA

The current literature on the provision of rural financial services places far more emphasis on the sustainability of rural financial institutions as a means of ensuring effective provision than has been the practice to date. This paper reviews the various measures that have been used to measure both the efficiency (defined as effectiveness and productivity) and the outreach of rural financial institutions, as two key areas that have to be attended to if institutional sustainability is to be achieved. The results of some preliminary investigations into rural financial institutions in South Africa are then reported.

Discrimination in hire‐purchase lending by retailers of consumer durables in apartheid South Africa

A double‐hurdle partial observability model of hire‐purchase lending is specified and estimated to test for racial discrimination by retailers of consumer durables during apartheid. ‘Discrimination’ is defined as supplying no loans or less desirable loans to certain borrowers, who do not differ from more successful borrowers with respect to creditworthiness but who do differ with respect to race. There is strong evidence of discrimination. In particular, black households are 13 percentage points more likely to desire a hire‐purchase loan but not to have one supplied to them than are other households equivalent in all ways except race. Although the statistical test cannot determine whether race affected lending because lenders were bigoted or because race is correlated with unobserved characteristics correlated in turn with creditworthiness, increased access to formal loans for all South Africans could be promoted by relaxing the Usury Act and by removing from loan applications information that could revea...

SAVINGS MOBILIZATION IN RURAL AREAS LESSONS: FROM EXPERIENCE / BESPARINGSMOBILISERING IN LANDELIKE GEBIEDE: LESSE UIT ONDERVINDING

Two myths or assumptions led to neglect of mobilization of savings in the rural areas. These myths seem to dissipate with time. The first myth is the asswnption of pervasive rural undersavings; the second is the asswnption that demand for financial savings instrwnents is low. A large amount of empirical evidence from Asian, Latin American and some African countries suggest that the rigid notion of low or zero savings capacity of poor rural households does not hold true. This paper looks at the old approach of rural finance, argwnents for and against rural savings mobilization, bottlenecks and conditions for effective savings mobilization in rural areas.

PROPOSALS ON LAND REFORM, PRIVATISATION AND FARMING MODELS—SOME LESSONS FROM EXPERIENCE IN SOUTH AFRICAN AGRICULTURE

Abstract Privatisation of farming and land use should be viewed as potentially an important strategy in the process of agricultural restructuring and land reform in view of its “empower” attributes as well as providing incentives to productively invest in farming. Privatisation, however, is but one instrument towards rural restructuring and land reform. Farming is essentially a private sector action. Ownership of assets and the right to decision-making are vital elements for successful farming. The choice of farming model will therefore be important. Present land tenure arrangements must be expected to be an additional major factor in the selection of appropriate farming models.

THE ROLE OF CREDIT IN THE FARMER SUPPORT PROGRAMME: IS IT THE KEY TO SUCCESS? / Die rol van krediet in die Boerdery-ondersteuningsprogram: Is dit die sleutel tot sukses?

Abstract This paper concentrates on the credit element of Farmer Support Programmes (FSP) and the financial environment in which FSP credit is applied with a view to assess the importance of the credit component in the FSP. First, the theory on rural financial markets and intermediation is briefly reviewed. This is followed by an application to the FSP. The paper concludes with some policy implications of the findings. The main points that FSP financial policy should incorporate are: avoid loan subsidies and targeting; mobilise deposits; charge positive real rates of interest; avoid concessionary discount lines; reduce transaction costs; and emulate informal finance.

RESTRUCTURING RURAL FINANCIAL INSTITUTIONS

South Africa is in a process of change. This is also true for the agricultural sector and thus all related services. Agricultural finance, as a segment of rural finance, is the topic of an intended commission of inquiry, The current and intended public sector agricultural financial support structure should be measured against a set of guidelines. These are elaborated on in this paper. In addition, given the framework, some views are put forward as to what direction rural finance, and specifically agricultural finance should take, and what structure should be applicable, given the principles as outlined. The paper is concluded with some remarks about institutional change in South Africa and the intended rural financial services commission of inquiry.

FINANCING AGRICULTURE—CHALLENGES TO FINANCIAL INSTITUTIONS / Die finansiering van die landbousektor—Uitdagings aan finansiële instellings

Abstract The agricultural sector is in a process of change. The sector is seen as one sector encompassing all farmers in South Africa. An inequitable approach was followed in the past in supporting the sector, especially regarding the provision of financial services. The needs and participants in the sector and the different financial institutions are discussed and the inequitable approach is reiterated. The challenges to the financial institutions servicing agriculture are highlighted, that is a change in approach towards agricultural policy, interest rates, transaction costs, regulations and financial services. Changes needed are proposed. It basically entails changing the mind-set of the institutions. In the targeting of services, the role of public sector institutions will also include a high priority servicing of the previously ignored farmers in the sector. In considering the whole agricultural sector, unco-ordinated an inequitable approaches of the past will be excluded. The challenge however is to...