Original Research

Causes of bankruptcy amongst maize and extensive beef farmers in South Africa: 1970-1994

D. S. Swanepoel, G. F. Ortmann, M. A.G. Darroch
South African Journal of Economic and Management Sciences | Vol 1, No 1 | a1868 | DOI: https://doi.org/10.4102/sajems.v1i1.1868 | © 2019 D. S. Swanepoel, G. F. Ortmann, M. A. G. Darroch | This work is licensed under CC Attribution 4.0
Submitted: 07 August 2020 | Published: 31 March 1998

About the author(s)

D. S. Swanepoel, Department of Agricultural Economics, University of Natal, South Africa
G. F. Ortmann, Department of Agricultural Economics, University of Natal, South Africa
M. A.G. Darroch, Department of Agricultural Economics, University of Natal, South Africa

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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 farms failures between 1970 and 1994 can therefore be ascribed to changed agricultural price and macroeconomic policies

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Crossref Citations

1. AGRICULTURAL POLICY RESEARCH IN SOUTH AFRICA: CHALLENGES FOR THE FUTURE
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Agrekon  vol: 39  issue: 4  first page: 432  year: 2000  
doi: 10.1080/03031853.2000.9523664