IDEAS home Printed from https://ideas.repec.org/a/ags/agreko/9501.html
   My bibliography  Save this article

An analysis of factors contributing to the use of an income equalisation deposit scheme by commercial farmers in South Africa

Author

Listed:
  • Lishman, J.-L.
  • Nieuwoudt, W. Lieb

Abstract

Recent research suggests that an Income Equalisation Deposit (IED) scheme could be a feasible new risk management tool for commercial farmers in South Africa. This prompted a study of practicing consultantsÂ’ (tax experts) views on determining what types of farmers would be likely to use the scheme. During 2000, a postal survey of 24 consultants was conducted mainly in KwaZulu-Natal, and in the Maize Triangle and surrounding areas. Each consultant was to review nine scenarios (eight plus a control, giving 192 observations) and decide whether they would recommend an IED scheme for each scenario. A statistical experimental design was used to structure the scenarios, allowing for main and interaction effects between variables that could influence the potential use of an IED scheme. Discriminant analysis revealed that, ceteris paribus, farmers with higher annual net farm incomes (>R300,000), lower debt/asset ratios (<15%), more variable net farm incomes, and less off-farm income would most likely use an IED scheme. In terms of ranking, ceteris paribus, high risk maize farmers, intermediate risk maize farmers and high risk livestock farmers are more likely to use an IED scheme than are low risk maize farmers, low and intermediate risk livestock farmers and diversified farmers. These results support the use of an IED scheme as a risk management tool as higher risk farmers are more likely to make use of the scheme.

Suggested Citation

  • Lishman, J.-L. & Nieuwoudt, W. Lieb, 2003. "An analysis of factors contributing to the use of an income equalisation deposit scheme by commercial farmers in South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 42(4), December.
  • Handle: RePEc:ags:agreko:9501
    as

    Download full text from publisher

    File URL: http://purl.umn.edu/9501
    Download Restriction: no

    References listed on IDEAS

    as
    1. Stephen C. Gabriel & C. B. Baker, 1980. "Concepts of Business and Financial Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 560-564.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Blanck, Niklas & Bahrs, Enno, 2011. "Die Wirksamkeit Und Das Budgetbelastungspotenzial Einer Risikoausgleichsrücklage In Der Deutschen Landwirtschaft," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114505, German Association of Agricultural Economists (GEWISOLA).
    2. Bahrs, Enno & Blanck, Niklas, 2009. "Die Risikoausgleichsrücklage als Instrument des landwirtschaftlichen Risikomanagements," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 58(4).

    More about this item

    Keywords

    Agricultural Finance;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:agreko:9501. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/aeasaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.