Credit plays a significant role in agricultural growth, and it is understood that development of credit programmes will have a valuable impact on agricultural production earnings of smallholder farmers. It is also a strategic factor to poverty alleviation. In Gauteng, smallholder farmers source their loans commonly from informal moneylenders. This results in access to formal credit being at a low rate. Results show that low level of education, main occupation, group membership and household income are significant and have encouraging effects on access to credit financial services. The results also reveal that threats associated with borrowing are high interest rates and unavailability of credit financial institutions. These threats are the main challenges faced by smallholder farmers in this study. Financial institutions claim that farming is a risky business; the distance of getting to farmers makes the evaluation procedure challenging, and strict principles in the aspect of collateral is a main challenge in providing credit to smallholder farmers. It is recommended that accessibility to credit by smallholder farmers be developed by providing advanced financing schemes that will address problems of smallholder farmers who do not have security and thus reduce lengthy processing of documents and other requirements. In this manner, smallholder farmers may be stimulated to use formal credit and decrease their dependence on informal moneylenders, thus avoid higher interest rates, which will positively lead to increased smallholder farm production and household income.

M.Com. (Business Management) / Please refer to full text to view abstract

M.Com. (Strategic Management) / Please refer to full text to view abstract

Thesis (M.Sc.(Agricultural Economics)) -- University of Limpopo, 2015 / Capital is one of the most important factors of production. In South Africa, among other things, lack of finance is one of the fundamental problems hampering production, productivity and income of rural farm households. Smallholder farmers in South Africa face many challenges in accessing financial services, despite the numerous reforms undertaken by the government to transform smallholder agriculture and improve its contribution to rural income, food security and employment. Many rural farmers have remained in poverty with limited capacity to access means of production like credit to militate against hunger and poverty. The aim of the study was to analyse the determinants of loan acquisition from the Land Bank of South Africa by smallholder farmers in peri-urban areas of Mopani District in Limpopo province. The objectives were to identify the constraints smallholder farmers face in accessing credit, to analyse the determinants of loan acquisition among smallholder farmers and to profile loan acquisitions of the farmers based on their socio-economic characteristics. The study used primary data, which was collected through a field survey. The method that was used to collect information was face-to-face interviews using structured questionnaires. The study employed the snowball sampling technique in its data collection strategy due to the fact that the population size was unknown due to the sensitivity of the study. Smallholder farmers were classified as beneficiaries and non-beneficiaries of the Land Bank. The total sample size comprised 62 smallholder farmers from the peri-urban areas of Tzaneen and Giyani of Mopani District, Limpopo province. The data was captured into the Statistical Package for Social Sciences (SPSS). Principal component analysis was carried out so as to get the principal factors or new uncorrelated variables that affect the ability of smallholder farmers to access credit from the Land bank and it was also use to profile the farmers according to the socio-economic variables. After carrying out the principal component analysis, probit analysis was then used to determine the relationship between the socio-economic characteristics of smallholder farmers and their ability to access credit. The principal component analysis (PCA) extracted important information from the data table and expressed the information as a set of new orthogonal variables called principal components. The PCA reduced the original variables to six (6) principal components. The six (6) principal components were labelled as; component 1 (Old-experience smallholder farmers), component 2 (business-oriented smallholder farmers), component 3 (part-time smallholder farmers), component 4 (smallholder farmers who receive grants based on gender), component 5 (smallholder farmers with fixed assets and their distance to the nearest town) and component 6 (smallholder farmers who belong to cooperatives). The smallholder farmers where classified and ranked into this six components based on their level of accessibility to agricultural credit from the Land Bank. A majority of the smallholder farmers involved in the study were ranked lowly on their level of accessibility to agricultural credit from the Land Bank; they were classified under the old and experienced smallholder farmers. Probit regression result indicated that the variables gender, education, farm income, pension, land size, cooperative, fixed assets and registered business had a significant positive influence on smallholder farmers’ accessing agricultural credit from the Land Bank in the last three years. In addition, marital status, farming experience, off-farm income, loose assets, farm commodity and farm record had an insignificant positive influence. The probit result also showed that the variables age had a significant negative influence on smallholder farmers’ accessing agricultural credit. In addition, household size, employment, distance to the nearest town and farmers’ association had an insignificant negative influence. Based on the results of the study, it is recommended that the government and other institutions could design agricultural credit programmes that are promptly responsive to the needs of the smallholdCapital is one of the most important factors of production. In South Africa, among other things, lack of finance is one of the fundamental problems hampering production, productivity and income of rural farm households. Smallholder farmers in South Africa face many challenges in accessing financial services, despite the numerous reforms undertaken by the government to transform smallholder agriculture and improve its contribution to rural income, food security and employment. Many rural farmers have remained in poverty with limited capacity to access means of production like credit to militate against hunger and poverty. The aim of the study was to analyse the determinants of loan acquisition from the Land Bank of South Africa by smallholder farmers in peri-urban areas of Mopani District in Limpopo province. The objectives were to identify the constraints smallholder farmers face in accessing credit, to analyse the determinants of loan acquisition among smallholder farmers and to profile loan acquisitions of the farmers based on their socio-economic characteristics. The study used primary data, which was collected through a field survey. The method that was used to collect information was face-to-face interviews using structured questionnaires. The study employed the snowball sampling technique in its data collection strategy due to the fact that the population size was unknown due to the sensitivity of the study. Smallholder farmers were classified as beneficiaries and non-beneficiaries of the Land Bank. The total sample size comprised 62 smallholder farmers from the peri-urban areas of Tzaneen and Giyani of Mopani District, Limpopo province. The data was captured into the Statistical Package for Social Sciences (SPSS). Principal component analysis was carried out so as to get the principal factors or new uncorrelated variables that affect the ability of smallholder farmers to access credit from the Land bank and it was also use to profile the farmers according to the socio-economic variables. After carrying out the principal component analysis, probit analysis was then used to determine the relationship between the socio-economic characteristics of smallholder farmers and their ability to access credit. ii The principal component analysis (PCA) extracted important information from the data table and expressed the information as a set of new orthogonal variables called principal components. The PCA reduced the original variables to six (6) principal components. The six (6) principal components were labelled as; component 1 (Old-experience smallholder farmers), component 2 (business-oriented smallholder farmers), component 3 (part-time smallholder farmers), component 4 (smallholder farmers who receive grants based on gender), component 5 (smallholder farmers with fixed assets and their distance to the nearest town) and component 6 (smallholder farmers who belong to cooperatives). The smallholder farmers where classified and ranked into this six components based on their level of accessibility to agricultural credit from the Land Bank. A majority of the smallholder farmers involved in the study were ranked lowly on their level of accessibility to agricultural credit from the Land Bank; they were classified under the old and experienced smallholder farmers. Probit regression result indicated that the variables gender, education, farm income, pension, land size, cooperative, fixed assets and registered business had a significant positive influence on smallholder farmers’ accessing agricultural credit from the Land Bank in the last three years. In addition, marital status, farming experience, off-farm income, loose assets, farm commodity and farm record had an insignificant positive influence. The probit result also showed that the variables age had a significant negative influence on smallholder farmers’ accessing agricultural credit. In addition, household size, employment, distance to the nearest town and farmers’ association had an insignificant negative influence. Based on the results of the study, it is recommended that the government and other institutions could design agricultural credit programmes that are promptly responsive to the needs of the smallholder farmers. It was also recommended that the Department of Agriculture, Forestry and Fisheries (DAFF) should ensure that the agricultural extension officers are well equipped to be able to disseminate their information to farmers irrespective of their location

Thesis (MBA (Business Management))--University of Stellenbosch, 2009. / ENGLISH ABSTRACT: The research report investigates the risk/return relationship in the primary agricultural sector in the Western Cape from a commercial bank's perspective. The study investigated the correlation between credit risk and return within a randomly selected portfolio of agricultural borrowers. Different risk categories were investigated to detennine which category correlates best with return. The effect of below prime and above prime pricing on return was also investigated. The study was conducted in the context of the turmoil in financial markets since the beginning of 2008, caused by excessive credit risks. This has led to the need for better regulation in the financial services industry and better pricing decisions. Factors supporting this need for better regulation include securitisation of debt, consolidation, globalisation and the systemic risk that banks impose on the economy. The Basel Capital Accord introduced new regulatory requirements for the banking industry to ensure more effective management of credit risk. Risk management processes in agriculture are also subject to the requirements of this accord. The agricultural sector is characterised by unpredictable climatological conditions, poor governmental support, low profitability, overcapitalisation and price volatility, which cause this sector to be especially exposed to credit risk. The credit risk of borrowers within the case study bank was measured in tenns of a default grade using a behavioural risk rating model. Risk ratings are used for profitability analysis, risk management and regulatory reporting. These ratings are assigned during the annual review process, when borrowers are exposed to a business viability assessment. Banks incur risk costs when accommodating a borrower's credit risk, which has a negative effect on the return that the borrower generates for the bank. This emphasises the importance of correlation between credit risk and pricing and by implication return for sustainable profit margins. The research results indicated that no correlation exists between credit risk and pricing. This lack of correlation can be attributed to eontracrual agreements, relationship banking, technological constraints, asset growth, price sensitivity in the agricultural sector and the nature of the risks in agriculture. The study also found that a negative correlation exists between credit risk and return. This can be attributed to the fact that the higher the credit risk, the more economic capital is required to support this risk and the more it costs. This implies a lower return on capital. It is recommended that the risk/return relationship should be improved by reducing credit risk, increasing non-interest income, ensuring that new borrowers are priced adequately, differentiating the existing portfolio in terms of value and improving the negotiating skills of bankers. No meaningful conclusion could be drawn with regard to the effect that below prime and above prime pricing have on return. / AFRIKAANSE OPSOMMING: Die studieverslag ondersoek die verwantskap tussen risiko en opbrengs in die primere landbousektor in die Wes-Kaap vanuit die perspektief van 'n kommersiele bank. Dit ondersoek die korrelasie tussen kredietrisiko en opbrengs in 'n ewekansige steekproef van landboukliente. Verskillende risikokategoriee is ondersoek om te bepaal watter kategorie die beste korrelasie tussen risiko en opbrengs verteenwoordig. Die invloed van beprysing onder en bo prima op opbrengskoers word ook ondersoek. Die studie is gedoen in die konteks van die krisis in die finansiele markle sedert die begin van 2008, wat veroorsaak is deur oornatige kredietrisiko. Dit het die behoefte aan beter regulering in die finansiiHedienste-industrie asook beter beprysingsbesluite laat ontstaan. Faktore wat hierdie behoefte aan beter regulering ondersteun, sluit in die verhandelbaarheid van krediet, konsolidasie, globalisasie en die sistemiese risiko wat banke vir die ekonomie inhou. Die Baselooreenkoms het nuwe regulatoriese vereistes aan die bankindustrie gesteil om meer effektiewe bestuur van kredietrisiko te verseker. Risikobestuursprosesse in die landbou is ook onderhewig aan die vereistes van die Baselooreenkoms. Die landbousektor word gekenmerk deur onvoorspelbare klimatologiese toestande, swak regeringsondersteuning, lae winsgewendheid, oorkapitalisering en prysskommelinge, wat veroorsaak dat hierdie sektor buitengewoon blootgestel is aan kredietrisiko. Die kredietrisiko van die kliente van die gevallestudiebank is gemeet volgens 'n waarskynlikheidsgradering wat verkry word vanaf 'n risikomodel wat op gedragspatrone gebaseer is. Risikograderings word gebruik vir winsgewendheidsontledings, risikobestuur en regulatoriese verslaggewing. Dit word tydens die jaarlikse hersieningsproses toegeken, wanneer kliente aan 'n lewensvatbaarheidstudie blootgestel word. Banke gaan risikokostes aan om die kredietrisiko van kliente te akkommodeer, wat 'n negatiewe uitwerking het op die opbrengs wat daardie klient vir die bank genereer. Dit beklemtoon die belangrikheid van korrelasie tussen kredietrisiko en beprysing en by implikasie opbrengs vir volhoubare winsgrense. Die navorsingsresultate toon dat daar geen korrelasie tussen kredietrisiko en beprysing bestaan nie. Hierdie gebrek aan korrelasie kan toegeskryf word aan leningskontrakte, verhoudingsbankwese, tegnologiese beperkings, bategroei, pryssensitiwiteit in die landbousektor en die aard van die risiko's in die landbou. Die studie het ook bevind dat daar 'n negatiewe korrelasie is tussen kredietrisiko en opbrengs. Dit kan toegeskryf word aan die feit dat hoe hoer kredietrisiko is, hoe meer ekonomiese kapitaal vereis gaan word om hierdie risiko te ondersteun en hoe hoer gaan die risikokostes wees. Dit impliseer 'n laer opbrengs op kapitaal. Om die verwantskap tussen risiko en opbrengs te verbeter, word aanbeveel dat kredietrisiko verminder word, nie-rente-inkomste verhoog word, nuwe kliente korrek beprys word, differensiasie van die bestaande portefeulje plaasvind in terme van waardetoevoeging en die onderhandelingsvermoe van bankiere verbeter word. Geen betekenisvolle gevolgtrekking kon gemaak word aangaande die effek wat beprysing onder en bo prima op die opbrengskoers het nie.

Thesis (M.Sc. Agriculture (Agricultural Economics) -- University of Limpopo, 2019 / Agriculture has long been argued to be the dominant sector of the South African economy. Despite the huge agricultural potential of the country, the agricultural sector is underperforming in Less Developing Countries (LDCs) to some extent because female small-scale farmers, who play a vital role in agriculture, encounter credit constraints because of their gender and this in turn reduce their productivity. Therefore, the gender gap in terms of access to credit indicates that there is a need to reassess the problem of credit access by small-scale farmers on the basis of gender. This study was carried out in the Greater Letaba Municipality (GLM) which is situated in the Mopani District of Limpopo Province, with the aim of analysing factors that influence formal credit access by both female and male small-scale farmers. Structured questionnaires were employed to collect the data for the analyses from 140 sampled small-scale farmers (70 males and 70 females) selected using stratified random sampling technique. The findings of the probit regression model discovered that gender, extension services, land ownership, age, collateral and farm size had a significant positive influence on small-scale farmers` access to formal credit in the GLM. Additionally, the findings further revealed that household size, farming experience, farm-income, marital status had an insignificant negative influence on the small-scale farmers` access to formal credit whereas education level had an insignificant positive influence on the small-scale farmers` access to formal credit. On average, male and female small-scale farmers with access to formal credit were 71 % and 29 %, respectively whereas the male and female small-scale farmers without access to formal credit were 35% and 65%, respectively. The female small-scale farmers` perceptions towards the credit system that were derived from the Principal Component Analysis (PCA) are as follows: (i) male smallscale farmers effortlessly get credit from banks contrasted with their female counterparts, (ii) small-scale farmers with more education and collateral tend to access formal credit than their counterparts and (iii) small-scale farmers who are nearest to iii the banks are more likely to access credit than small-scale farmers who are far away. Based on the study findings, a set of recommendations for achieving equitable formal credit access by male and female small-scale farmers were put forward. / National Research Fund (NRF)

The main objective of the study was to investigate the causes underlining small-farmers default on bank loan repayments in the North West Province. One hundred and sixty farmers were randomly selected to be part of the sample. Questionnaires were issued to both farmers and bank officials. Descriptive statistics, correlation and regression models were used to analyse the data. The overall results indicate that most of the small farmers are in the old age category (58 years on average) with very low educational level. This scenario poses a challenge to the stakeholders in agriculture specifically the succession plan to these elderly people when they leave agriculture due to retirement. It was revealed by the study that the farmers do not keep either financial or production records. The analysis shows that the small farmers lack skills in financial management therefore, they are unable to execute the prerequisite to modern farming which are literacy and numeracy as indicated by Woohall et. al.,( 1985). Most of the respondents have outstanding debt from Agribank yet they received loans from Landbank. Because of their low production and other many responsibilities, they are unable to repay loan instalments thus leading to loan default to their current financial supplier, which is Landbank. Lack of monitoring of loan funds was identified as one of the causes of the farmers Joan default. The analysis also indicates that the small farmers have access to finance but the major problem is lack of financial management skills, more involvement in household responsibilities, and lack of technical assistance from relevant stakeholders like extension officers and project managers from the bank or from the Department of Agriculture. Since the Land bank have no field officers to assist the farmers, it is recommended that the bank should have field officers to assist farmers in their business, especially with production, marketing, financial management and farm management Skills. The inability of the farmers to access good value markets for their products was identified as one of the problems, which led to loan default because the farmers are unable to market their products at the right time for good value in excess of their cost. It is recommended that financial institutions should assist their clients to access better markets for their products for better price which will in turn give them better income in order to repay their loans. / M.Sc. (Agric. Economics) North-West University, Mafikeng Campus, 2005

MSAEC / Department of Agricultural Economics and Agribusiness

In the literature there are mixed results on the link between credit and agricultural output growth. Some authors argue that credit leads to growth in agricultural output. Others view growth as one of the factors that influence credit supply, thus growth leads and credit follows. By and large, studies have not endeavoured to establish the short-run impact of agricultural credit on output. They are generally limited in establishing the long-run relationship between credit and agricultural output and thus present a research gap in this respect. This study contributes to the existing body of literature by focusing on the finance-growth nexus at sectoral level as a departure from extant literature that has focused on the macroeconomic level. Using South African data, the study investigated the causal relationship between the supply of credit and agricultural output as well as whether the two are cointegrated and have a short-run relationship. The study found that bank credit and agricultural output are cointegrated. Using the error correction model (ECM), the results showed that, in the short-run, bank credit has a negative impact on agricultural output, reflecting the uncertainties of institutional credit in South Africa. However, the ECM coefficient shows that the supply of agricultural credit rapidly adjusts to short-term disturbances, indicating that there is no room for tardiness in the agricultural sector. The absence of institutional credit will immediately be replaced by availability of other credit facilities from non-institutional sources. Conventional Granger causality tests show unidirectional causality from (1) bank credit to agricultural output growth, (2) agricultural output to capital formation, (3) agricultural output to labour, (4) capital formation to credit, and (5) capital formation to labour, and a bi-directional causality between credit and labour. Noteworthy and significant for South Africa is that for the agricultural sector, the direction of causality is from finance to growth, in other words supply-leading, whereas at the macroeconomic level, the direction of causality is from economic growth to finance, in other words, demand-leading. Applying a structural equation modelling approach to survey data of smallholder farmers, the positive relationship between bank credit and agricultural output observed from analysis of secondary data was confirmed. / Business Management / DCOM (Business Management)

In the literature there are mixed results on the link between credit and agricultural output growth. Some authors argue that credit leads to growth in agricultural output. Others view growth as one of the factors that influence credit supply, thus growth leads and credit follows. By and large, studies have not endeavoured to establish the short-run impact of agricultural credit on output. They are generally limited in establishing the long-run relationship between credit and agricultural output and thus present a research gap in this respect. This study contributes to the existing body of literature by focusing on the finance-growth nexus at sectoral level as a departure from extant literature that has focused on the macroeconomic level. Using South African data, the study investigated the causal relationship between the supply of credit and agricultural output as well as whether the two are cointegrated and have a short-run relationship. The study found that bank credit and agricultural output are cointegrated. Using the error correction model (ECM), the results showed that, in the short-run, bank credit has a negative impact on agricultural output, reflecting the uncertainties of institutional credit in South Africa. However, the ECM coefficient shows that the supply of agricultural credit rapidly adjusts to short-term disturbances, indicating that there is no room for tardiness in the agricultural sector. The absence of institutional credit will immediately be replaced by availability of other credit facilities from non-institutional sources. Conventional Granger causality tests show unidirectional causality from (1) bank credit to agricultural output growth, (2) agricultural output to capital formation, (3) agricultural output to labour, (4) capital formation to credit, and (5) capital formation to labour, and a bi-directional causality between credit and labour. Noteworthy and significant for South Africa is that for the agricultural sector, the direction of causality is from finance to growth, in other words supply-leading, whereas at the macroeconomic level, the direction of causality is from economic growth to finance, in other words, demand-leading. Applying a structural equation modelling approach to survey data of smallholder farmers, the positive relationship between bank credit and agricultural output observed from analysis of secondary data was confirmed. / Business Management / D. Com. (Business Management)