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oa South African Journal of Economic and Management Sciences - Causes of bankruptcy amongst maize and extensive beef farmers in South Africa: 1970- 1994

 

Abstract

The number of maize farms and extensive beef farms annually declared bankrupt in South Africa rose sharply over the period 1970 to 1994. Principal components regression confirmed a priori expectations that maize farm and extensive beef farm bankruptcies were negatively related to annual rainfall (business risk factor), but positively related to the lagged aggregate farm debt/asset ratio and lagged real interest rates (financial risk factors). Maize farm bankruptcies also increased as lagged real maize and beef producer prices fell (business risk factors). Beef farm bankruptcies rose with lower lagged real beef producer prices and higher lagged real stockfeed subsidies and transport rebates (business risk factors). Part of the rise in maize and extensive beef farm failures between 1970 and 1994 can therefore be ascribed to changed agricultural price and macroeconomic policies.

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/content/ecoman/1/1/AJA10158812_144
1998-03-01
2016-12-06
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