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Factors affecting the loan status of sugarcane farmers using a graduated mortgage loan repayment scheme in KwaZulu-Natal

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  • Mashatola, M.C.
  • Darroch, Mark A.G.

Abstract

Factors affecting whether or not 83 medium-scale sugarcane farmers using a graduated mortgage loan repayment scheme in KwaZulu-Natal were current or in arrears on loan repayments as at 31 March 2001 were analysed using a logit model. Results show that the estimated probability of a farmer in the scheme being current on loan repayments was higher for clients with higher levels of average annual farm gross turnover relative to loan size, and for clients with access to substantive off-farm income. This suggests that farm size (proxied by annual gross turnover) does matter when policymakers in South Africa consider future similar schemes designed to improve access to commercial farmland by people that previously could not buy farmland. Access to off-farm income could also be considered as a criterion in selecting potential farmers for such schemes, as it helps to provide additional liquidity to fund future operations and debt repayments.

Suggested Citation

  • Mashatola, M.C. & Darroch, Mark A.G., 2003. "Factors affecting the loan status of sugarcane farmers using a graduated mortgage loan repayment scheme in KwaZulu-Natal," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 42(4), pages 1-13, December.
    • Handle: RePEc:ags:agreko:9502
    DOI: 10.22004/ag.econ.9502
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    References listed on IDEAS

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    1. Robert C. Vogel, 1981. "Rural Financial Market Performance: Implications of Low Delinquency Rates," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(1), pages 58-65.
    2. Francois Kamajou & C. B. Baker, 1980. "Reforming Cameroon's Government Credit Program: Effects on Liquidity Management by Small Farm Borrowers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(4), pages 709-718.
    3. MC Lyne & MAG Darroch, 1997. "Broadening access to land markets: Financing emerging farmers in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 14(4), pages 561-568.
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    Cited by:

    1. Finnemore, G.R.L. & Darroch, Mark A.G. & Lyne, Michael C., 2004. "Loan products to manage liquidity stress when broad-based black empowerment enterprises invest in productive assets," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 43(4), pages 1-22, December.
    2. Jorge Mota & António Carrizo Moreira & Cristóvão Brandão, 2018. "Determinants of microcredit repayment in Portugal: analysis of borrowers, loans and business projects," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 17(3), pages 141-171, November.
    3. Darroch, Mark A.G. & Clover, T.A., 2005. "The effects of entrepreneurial quality on the success of small, medium and micro agri-businesses in KwaZulu-Natal, South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 44(3), pages 1-23, September.
    4. 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.

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    Keywords

    Agricultural Finance;

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