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The relative importance of liquidity and other constraints inhibiting the growth of small-scale farming in KwaZulu-Natal

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  • Louise Fenwick
  • Mike Lyne

Abstract

A logit model is used to examine the extent of liquidity constraints relative to other constraints inhibiting small-scale farming in KwaZulu-Natal. These other constraints include poor access to land, labour and information, and high transaction costs. Data for the analysis were sourced from two rural districts in the former KwaZulu. The results suggest that liquidity is important, while imperfect land markets, information costs and high transaction costs are also significant inhibiting factors. Investments in literacy and language skills, vocational training, and business and financial management skills may improve income opportunities for rural people and hence enhance their ability to invest, save and borrow. Better roads, telecommunications and legal institutions are also required to realise the full benefit of investment in extension and credit services.

Suggested Citation

  • Louise Fenwick & Mike Lyne, 1999. "The relative importance of liquidity and other constraints inhibiting the growth of small-scale farming in KwaZulu-Natal," Development Southern Africa, Taylor & Francis Journals, vol. 16(1), pages 141-155.
    • Handle: RePEc:taf:deveza:v:16:y:1999:i:1:p:141-155
    DOI: 10.1080/03768359908440066
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    Citations

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    Cited by:

    1. Mahabile, M. & Lyne, Michael C. & Panin, A., 2005. "An empirical analysis of factors affecting the productivity of livestock in southern Botswana," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 44(1), pages 1-19, March.
    2. Delali Dovie & E. Witkowski & Charlie Shackleton, 2005. "Monetary valuation of livelihoods for understanding the composition and complexity of rural households," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 22(1), pages 87-103, March.
    3. Wynne, Adrian T. & Lyne, Michael C., 2003. "Rural Economic Growth Linkages and Small Scale Poultry Production: A Survey of Poultry Producers in KwaZulu-Natal," 2003 Annual Conference, October 2-3, 2003, Pretoria, South Africa 19095, Agricultural Economics Association of South Africa (AEASA).
    4. Lovo, Stefania, 2008. "Market Imperfections And Class Structure: The Case Of South Africa," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6675, European Association of Agricultural Economists.
    5. Solomon Asfaw & Silvio Daidone & Benjamin Davis & Josh Dewbre & Alessandro Romeo & Paul Winters & Katia Covarrubias & Habiba Djebbari, 2012. "Analytical Framework for Evaluating the Productive Impact of Cash Transfer Programmes on Household Behaviour – Methodological Guidelines for the From Protection to Production Project," Working Papers 101, International Policy Centre for Inclusive Growth.
    6. Ortmann, Gerald F., 2005. "Promoting the competitiveness of South African agriculture in a dynamic economic and political environment," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 44(3), pages 1-35, September.
    7. Wynne, Adrian T. & Lyne, Michael C., 2004. "Rural economic growth linkages and small scale poultry production: A survey of producers in KwaZulu-Natal," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 43(1), pages 1-21, March.
    8. Ortmann, Gerald F., 2000. "Promoting competitiveness in South African agriculture and agribusiness: The role of institutions," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 39(4), pages 1-33, March.
    9. Dengu, T. & Lyne, Michael C., 2007. "Secure land rental contracts and agricultural investment in two communal areas of KwaZulu-Natal," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(3), pages 1-12, September.
    10. Stefania Lovo, 2012. "Market imperfections, liquidity, and farm household labor allocation: the case of rural South Africa," Agricultural Economics, International Association of Agricultural Economists, vol. 43(4), pages 417-428, July.
    11. Dovie, Delali B. K. & Witkowski, E. T. F. & Shackleton, Charlie M., 2003. "Direct-use value of smallholder crop production in a semi-arid rural South African village," Agricultural Systems, Elsevier, vol. 76(1), pages 337-357, April.
    12. Stefania Lovo, 2014. "Analyzing the welfare-improving potential of land in the former homelands of South Africa," Agricultural Economics, International Association of Agricultural Economists, vol. 45(6), pages 679-692, November.
    13. Clover, T.A. & Darroch, Mark A.G., 2005. "Owners' perceptions of factors that constrain the survival and growth of small, medium and micro agribusinesses in KwaZulu-Natal, South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 44(2), pages 1-26, June.
    14. Osborne, Theresa, 2006. "Credit and risk in rural developing economies," Journal of Economic Dynamics and Control, Elsevier, vol. 30(4), pages 541-568, April.

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