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Management decisions on commercial sugarcane farms in KwaZulu-Natal: a focus on choice bracketing behaviour for risk management

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Author Info
MacNicol, R.
Ortmann, G.F.
Ferrer, S.R.D.
Abstract

The sugar industry is an important contributor to the South African (SA) economy, with average annual production estimated at 2.5 million tons of sugar. This study aims to quantify actual use of management instruments by a sample of commercial sugarcane farmers in KwaZulu-Natal (KZN) that are commonly associated with risk management, and uses factor analysis to investigate the extent to which these farmers bracket their management decisions. Data were obtained in 2006 via personal interviews of a stratified random sample of 76 large-scale sugarcane farmers in two separate mill-supply areas of KZN. Respondents were asked questions regarding risk-related management strategies, including diversification of on-farm enterprises, investments and management time. Factor analysis identified six management choice brackets, collectively explaining 77% of the variance in all of the 12 risk-related management responses considered. Recommendations that stem from these findings include that policy makers create a more enabling business environment and that government make labour legislation more flexible. Farmers need to search for information more proactively and develop management strategies that reduce barriers to efficiency. Future research based on time series data could be important to identify how management portfolios and choice bracketing levels change over time.

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Publisher Info
Article provided by Agricultural Economics Association of South Africa (AEASA) in its journal Agrekon.

Volume (Year): 47 (2008)
Issue (Month): 1 (March)
Pages:
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Handle: RePEc:ags:agreko:5971

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Keywords: Commercial sugarcane farms; KwaZulu-Natal; choice bracketing behaviour; risk management; Crop Production/Industries; Farm Management; Risk and Uncertainty;

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  6. Pennings, Joost M.E. & Isengildina, Olga & Irwin, Scott H. & Good, Darrel L. & Garcia, Philip & Frank, Julieta M. & Kuiper, W. Erno, 2005. "Complex Choices: Producers Risk Management Strategies," 2005 Annual meeting, July 24-27, Providence, RI 19550, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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  18. Richard E. Just & Rulon D. Pope, 2003. "Agricultural Risk Analysis: Adequacy of Models, Data, and Issues," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 85(5), pages 1249-1256, December. [Downloadable!] (restricted)
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