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Perceptions of key business and financial risk by large-scale sugarcane farmers in KwaZulu-Natal in a dynamic socio-political environment

Listed author(s):
  • MacNicol, R.
  • Ortmann, Gerald F.
  • Ferrer, Stuart R.D.
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    This study identifies sources of risk that commercial sugarcane farmers in the province of KwaZulu-Natal (KZN), South Africa, presently perceive to pose the greatest threat to the viability of their businesses. Sugarcane contributes approximately 82% of the income from field crops in KZN, with 72% of the crop planted by large-scale growers. Data obtained in 2006 via structured personal interviews of 76 large-scale sugarcane farmers from a stratified random sample of 110 farmers in two separate mill-supply areas of KZN were used to elicit farmersÂ’ perceptions of various sources of risk. The most important risk sources were found to be the threat posed by land reform, minimum wage legislation and the variability of the sugar price, in that order. Land reform and minimum wage legislation did not feature prominently in past studies of KZN farmers during the 1990s. Factor analysis identified additional risk dimensions that exist within the remaining risk sources. Regional differences between the two study areas were also evident. Recommendations include that government improve accessibility to information regarding future plans for land and labour policies, and that farmers become more proactive in terms of obtaining information to reduce uncertainty and resultant efficiency barriers.

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

    Volume (Year): 46 (2007)
    Issue (Month): 3 (September)

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    Handle: RePEc:ags:agreko:8011
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    1. Patrick, George R. & Wilson, Paul N. & Barry, Peter J. & Boggess, William G. & Young, Douglas L., 1985. "Risk Perceptions and Management Responses: Producer-Generated Hypotheses For Risk Modeling," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 17(02), pages 231-238, December.
    2. Moschini, Giancarlo & Hennessy, David A., 2001. "Uncertainty, risk aversion, and risk management for agricultural producers," Handbook of Agricultural Economics,in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 2, pages 88-153 Elsevier.
    3. Barry, Peter J. & Stanton, Bernard F., 2003. "Major Ideas In The History Of Agricultural Finance And Farm Management," Working Papers 14750, Cornell University, Department of Applied Economics and Management.
    4. Boggess, William G. & Anaman, Kwabena A. & Hanson, Gregory D., 1985. "Importance, Causes, and Management Responses to Farm Risks: Evidence From Florida and Alabama," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 17(02), pages 105-116, December.
    5. 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), September.
    6. Read, Daniel & Loewenstein, George & Rabin, Matthew, 1999. "Choice Bracketing," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 171-197, December.
    7. Boggess, William G. & Anaman, Kwabena A. & Hanson, Gregory D., 1985. "Importance, Causes, And Management Responses To Farm Risks: Evidence From Florida And Alabama," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 17(02), December.
    8. Stockil, R.C. & Ortmann, Gerald F., 1997. "Perceptions Of Risk Among Commercial Farmers In Kwazulu-Natal In A Changing Economic Environment," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 36(2), June.
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