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Income And Debt Components Of Farm Financial Stress: A Natal Example

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  • Leslie, J. R.
  • Darroch, M. A. G.

Abstract

This study allocates farm financial stress into an income problem and a debt problem (leverage and interest rate) for a selected sample of Natal farms. This is done by comparing leverage and interest rates for farms experiencing financial stress (negative rate of return to equity) with a target leverage ratio and interest rate for those farms which are financially successful (positive rate of return to equity). The results show that some 65.4% of financial stress, for sample farms, is due to an income problem, 25.6% to leverage and 9.0% to an interest rate problem. Policies which alleviate the income problem will therefore be the most effective for these farms.

Suggested Citation

  • Leslie, J. R. & Darroch, M. A. G., 1992. "Income And Debt Components Of Farm Financial Stress: A Natal Example," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 31(4), December.
    • Handle: RePEc:ags:agreko:267549
    DOI: 10.22004/ag.econ.267549
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    References listed on IDEAS

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    3. Jolly, Robert W. & Paulsen, Arnold & Johnson, James D. & Baum, Kenneth H. & Prescott, Richard, 1985. "Incidence, Intensity, and Duration of Financial Stress Among Farm Firms," Staff General Research Papers Archive 11380, Iowa State University, Department of Economics.
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    Agricultural Finance; Financial Economics;

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