Mark A.G. Darroch

FACTORS AFFECTING THE LOAN STATUS OF SUGARCANE FARMERS USING A GRADUATED MORTGAGE LOAN REPAYMENT SCHEME IN KWAZULU-NATAL

Abstract Factors affecting whether or not 83 medium-scale sugarcane farmers using a graduated mortgage loan repayment scheme in KwaZulu-Natal were current or in arrears on loan repayments as at 31 March 2001 were analysed using a logit model. Results show that the estimated probability of a farmer in the scheme being current on loan repayments was higher for clients with higher levels of average annual farm gross turnover relative to loan size, and for clients with access to substantive off-farm income. This suggests that farm size (proxied by annual gross turnover) does matter when policymakers in South Africa consider future similar schemes designed to improve access to commercial farmland by people that previously could not buy farmland. Access to off-farm income could also be considered as a criterion in selecting potential farmers for such schemes, as it helps to provide additional liquidity to fund future operations and debt repayments.

Factors influencing adoption and intensity of adoption of orange flesh sweetpotato varieties: evidence from an extension intervention in Nyanza and Western province, Kenya

This study applied logit and logit transformed regression to examine factors affecting the adoption of orange flesh sweet-potatoes (OFSP), and intensity of such adoption, by a representative sample of 340 farmers in the Busia and Rachuonyo districts of Kenya in 2009. The study also investigated whether participation in a value chain extension intervention programme increased these farmers’ likelihood of adopting OFSP. The results suggest that the district where the farmer comes from, knowledge on value addition and nutritional benefits, and availability of vines were the key factors for adoption. The results also suggest that participation in a value chain extension programme enhanced the probability of adoption. Factors affecting intensity of adoption were site, value addition, vines availability, level of commercialization and having a child of up to five years.

Capturing Value In The Supply Chain: The Case Of High Oleic Acid Soybeans

The oil produced from high oleic acid soybeans (HOS) offers benefits to both consumers and food manufacturers. It is lower in saturated fat and more heat-stable than commodity-grade soybean oil. Optimum Quality Grains L.L.C. is working with seed distributors, elevators, and crushers across the Midwestern U.S. to develop a new supply chain which keeps the HOS and the resulting oil separate (identity preserved (IP)) from commodity-grade soybean oil. This case illustrates the challenges and key issues facing three players - an agricultural inputs dealer, a grain elevator, and a soybean crusher - that must decide whether to join the new supply chain as the HOS research commercialization. The case can be used to create a discussion about how each player can create and capture value from this specialty crop. The case works well either as part of an undergraduate capstone course or a graduate course in agribusiness, or in an executive education course, especially such a course aimed at managers from seed and life sciences companies.

An economic analysis of the impacts of monetary policy on South African agriculture.

Abstract Following world wide trends, closer integration of agriculture into the macroeconomy has exposed farmers to the effects of changes in interest rates, exchange rates and prices that are associated with changes in monetary policy. In South Africa, farmers are faced with persistently high inflation, fluctuating interest rates and declining rand exchange rate. A general equilibrium simultaneous equation model was constructed to analyse the impacts of monetary policy on South African agriculture. Annual data (1960–1987) were used to estimate equations representing the field crop, horticultural, livestock and manufacturing sectors, and the money and foreign exchange markets. The interest, inflation, and exchange rates were determined endogenously and key macrolinkages whereby the impacts of monetary policy are transmitted to agriculture were simulated. Due to insufficient degrees of freedom, the model was estimated by two-stage principal components. The estimated model was used to simulate the dynamic ...

Food‐aid dependency in Lesotho: Issues and policy implications

This article analyses food-aid dependency in Lesotho and how it can be reduced. The study uses primary data on food aid, statistics collected from various food-aid agencies and institutions, and secondary data obtained from government sources. Food-aid de pendency is likely to continue in the long term, as food aid enhances food security in Le sotho by supplementing commercial imports to meet the shortfall in local cereal produc tion. Food aid improves the nutritional and consumption levels of vulnerable Lesotho households but shows no correlation with producer and consumer prices. If the level of food-aid dependence is to be reduced, measures to alleviate poverty and generate income must be implemented.

Broadening access to land markets: Financing emerging farmers in South Africa

This article reports on a pilot survey of commercial farms acquired by disadvantaged people in the province of Kwazulu-Natal, and describes a recent financial strategy to improve access to land. The survey tested a sampling technique to gather information about the rate of land redistribution, the source of terms and conditions of loans used to finance land, and the nature of property rights, managerial arrangements and land use patterns on farms acquired by disadvantaged people. It was estimated that only 0,09 per cent of the farmland available for redistribution was transferred to disadvantaged people during 1995. This low rate of transfer was attributed largely to legislation regulating the subdivision of farmland, and liquidity problems created by traditional mortgage loans. Recent experiments involving mortgage loans with graduated repayment schedules have helped to address the cashflow problem. However, these financial innovations, funded largely by the private sector, are not widely available and their impact is constrained by the Subdivision of Agricultural Land Act. It is recommended that the government amend or scrap this Act, and include financial strategies used by the private sector in its own range of land redistribution programmes.

CHALLENGES FACING AGRIBUSINESS SUPPLY CHAINS IN SOUTH AFRICA BEYOND 2000

The managers of agribusiness supply chains in South Africa face three key challenges beyond 2000—namely the need to manage the drivers of change, to build core competencies to form and manage supply chains, and to overcome barriers to successful supply chains management. Appropriate actions to meet these challenges include having shared visions and compatible goals, flexible market response, cost controls, effective logistics and risk management, information sharing and, critically, building trust and incentives so that playas will invest resources in supply chains, Creative solutions are also needed to handle the potential impacts of HIV/AIDS on market growth and business costs, and to viably integrate communities that were previously denied access to economic opportunities into existing and new supply chains, These issues are likely to create business opportunities for firms that are competent coordinators and customizers. Learning from the “best practices” used by non-agribusiness firms ill South Africa and other countries to successfully perform supply chain activities will also improve cost competitiveness.

Impact on South African meat demand of a possible free trade agreement with the European Union

The Rotterdam model is used to estimate a demand system for South African (SA) beef, chicken, mutton and pork during 1971-1995 and identify the potential impacts on demand for these meat types of a Free Trade Agreement (FTA) between SA and the European Union. Conditional cross-price Slutsky elasticity estimates show that for a given 1% change in each meat price under an FTA, the beef price change would have the largest impact on consumption of the other meats. The net effect of the FTA would depend on the extent to which different meat prices fall if meat imports increase. Import competition may be felt particularly from poultry imports as most of SA beef imports are of a low quality.

IMPROVING THE PROVISION OF FINANCIAL SERVICES TO MICRO-ENTREPRENEURS, EMERGING FARMERS AND AGRIBUSINESS: LESSONS FROM KWAZULU-NATAL

Three development finance institutions (DFIs) which operate in KwaZulu-Natal (KZN) province were assessed in 1996/97 to see how they could improve financial viability and outreach to emerging farmers, agribusiness and micro-entrepreneurs. Improved service quality and emphasis on mobilising savings would help clients and enable the DFIs to diversify their portfolios. Better access to branches and lower loan approval times (improved screening and administrative procedures) could also lower client transaction costs. Charging a suitable interest rate spread is necessary but not sufficient for lenders to achieve subsidy independence. Reducing arrears through stricter loan contract enforcement (borrower accountability for loan repayment, lower collateral specific risks, secure and transferable collateral) will also promote financial viability. Providing both savings and loan services together would reduce borrower access costs, and allow savings to serve as a form of collateral and borrower information for lenders.

USE OF MAIZE MARKETING ALTERNATIVES AND PRICE RISK MANAGEMENT TOOLS BY COMMERCIAL MAIZE FARMERS IN SOUTH AFRICA / GEBRUIK VAN MIELIEBEMARKINGSALTERNATIEWE EN PRYSRISIKO-BESTUURSMIDDELS DEUR MIELIEBOERE IN SUID-AFRIKA

The demise of the Maize Board in South Africa in 1997 placed responsibility for maize marketing in the hands of individual producers. Given the inelastic nature of maize supply and demand, these farmers now face considerable price risk. In the absence of the Maize Board, price risk management mechanisms have evolved to serve maize farmers. Results of a postal survey of commercial maize producers in 1998 indicate that maize farmers are making increased use of the forward contracting market relative to the spot market. The percentage of respondents using SAFEX increased markedly over a three-year period, the hedging ratio rising from 27 percent in 1997/98 to reach 49 percent for 1998/99 and 1999/2000. Survey respondents were divided into lower- and higher- level users of price risk management tools, based on their scores for an index of price risk management. Higher-level users tended to operate larger farms, and be younger, less experienced, but more educated, computer-adopting operators who were less like...