Reconhecendo o dever do Estado de concretizar os direitos fundamentais, através de políticas públicas, e com o propósito de apresentar uma alternativa de proteção ambiental no país, utilizando o crédito rural como instrumento econômico indutor de condutas ambientalmente corretas, a presente dissertação propõe uma nova perspectiva de política pública de fomento ao agronegócio, visando ao desenvolvimento sustentável. Do jeito como está legislado no Brasil, o crédito para financiamento da produção agropecuária não exige dos produtores rurais apresentação de certidões negativas que comprovem o uso racional dos recursos naturais e a preservação do meio ambiente, podendo ser disponibilizado até mesmo para reincidentes poluidores e degradadores. Deste modo, buscará evidenciar, como confirmação da hipótese apresentada ao problema, a viabilidade jurídica de modificar a Lei n.º 4.829/1965, para vincular a concessão do crédito rural à efetiva proteção do meio ambiente, lançando mão, para tanto, do método analítico argumentativo e da pesquisa bibliográfica, com interpretação do Ordenamento Jurídico Brasileiro, mormente da Constituição de 1988, da Política Nacional do Meio Ambiente e demais institutos relacionados ao tema das políticas públicas. / Recognizing the duty of the State to achieve the fundamental rights through public policies, and in order to present an alternative to environmental protection in the country, using the rural credit as economic instrument to induce environmentally sound behavior, this thesis proposes a new perspective public policy promoting the agribusiness, aiming at sustainable development. As it stands legislated in Brazil, credit for agricultural production financing does not require of farmers submitting clearance certificates proving the rational use of natural resources and preservation of the environment and can be made available even to repeat polluters and degraders. Thereby sought to show, as confirmation of the hypothesis presented to the problem, the legal feasibility of modifying the Law n.º 4.829/1965, to link the granting of rural credit to the effective protection of the environment, making use, to this end, the argumentative and literature analytical method, with interpretation of the Brazilian Legal System, especially the 1988 Constitution, the National Environmental Policy and other related institutions to the issue of public policy.

O sistema de financiamento da cafeicultura evoluiu no processo da transição do trabalho escravo para o livre, ocasionando o aumento da demanda do crédito para o custeio anual da safra sobre os empréstimos de longo prazo exigidos durante o regime escravista. Por outro lado, a crise dos preços do café ocorrida entre 1896 e 1906 evidenciou as limitações do sistema de financiamento existente que estava baseado nos adiantamentos fornecidos por comerciantes. As novas necessidades de crédito e o crescente clima de descontentamento com os mecanismos comerciais de financiamento acabariam por suscitar propostas de intervenção do Estado com políticas de crédito agrícola a serem organizadas ou subsidiadas pelo governo do Estado de São Paulo e que viriam a ser concretizadas na esteira do programa de valorização do café, adotado em 1906. Tais intervenções incluiriam a criação de bancos agrícolas e o incentivo às cooperativas rurais de crédito, das quais os chamados Bancos de Custeio Rural são os primeiros experimentos desse tipo no estado e constituem nosso objeto de estudo. Os Bancos de Custeio Rural formaram uma rede de cooperativas de crédito, que atuou entre 1906 e 1914 no interior do estado de São Paulo. Esses bancos emprestavam apenas aos fazendeiros associados o valor demandado no financiamento anual da lavoura. Tendo surgido no contexto da crise cafeeira de 1896-1906, a sua reconstituição revela o intenso debate a respeito dos meios de se combater a crise e sobre o papel do Estado no financiamento agrícola. Os bancos de custeio surgiram como uma alternativa à intervenção governamental no sistema de crédito e representam a primeira experiência com o cooperativismo de crédito no Estado de São Paulo. Em 1914, eles estavam presentes em quarenta e nove cidades paulistas, no entanto, apesar de seu rápido crescimento, eles desapareceram após a falência da companhia que os organizava, em janeiro deste ano. Neste artigo discutimos as circunstâncias de seu surgimento, sua organização, atuação e falência / The financing system of coffee has evolved in the transition from slave to free labor process as credit for the cost of the annual harvest was imposed in relation to long-term loans required by the slave system. On the other hand, the crisis in coffee prices that occurred between 1896 and 1906 would demonstrate the limitations of the funding system, based on advances provided by merchants. The new credit requirements and the growing sense of discontent with commercial financing mechanisms would eventually raise proposals for state intervention through an agricultural credit policy to be organized by the state government of São Paulo and that was to be carried on the mat the coffee valorization program adopted in 1906. Such interventions include the establishment of agricultural banks and encouraging rural credit cooperatives of which the so-called Costing rural banks are the first experiments of this type in the state and constitute our object of study. The \"Bancos de Custeio Rural\" consisted of a network of credit unions that operated between 1906 and 1914 in the state of São Paulo. During this period, these banks lent, to associated farmers only, the necessary amount to fund their annual crop. Having arisen in the context of the coffee crisis of 1896-1906, their reconstitution reveals the intense debate regarding ways to tackle the crisis and the role of the state in agricultural finance. The BCRs emerged as an alternative to government intervention in the credit system and represented the first experience with the credit cooperativism in the state of São Paulo. In 1914, they were present in forty-nine cities of that state. However, despite its rapid growth, they disappeared as soon as the company that have organized them went bankrupt, in January of that same year. In this article, we discuss the circumstances of its emergence, organization, operations and bankruptcy

Orientador : João Luiz Cardoso / Dissertação (mestrado) - Universidade Estadual de Campinas, Faculdade de Engenharia Agricola / Made available in DSpace on 2018-08-04T00:28:57Z (GMT). No. of bitstreams: 1 Campos_RodrigoFerrarinide_M.pdf: 503446 bytes, checksum: 8cbabe70f8cf724d4a28d756c7bf3214 (MD5) Previous issue date: 2004 / Resumo: O Pronaf, Programa Nacional de Fortalecimento da Agricultura Familiar, foi criado para promover o desenvolvimento sustentável da agricultura familiar, mediante o apoio financeiro das atividades agropecuárias e não agropecuárias. No entanto, desde a sua criação, em 1996, o grau de financiamento para custeio das lavouras familiares, proporcionado pelo Programa, apresentou grande variabilidade entre as unidades da federação, sobrepujando-se, principalmente, a região Sul do Brasil. O trabalho foi elaborado a partir de dados dos Anuários Estatísticos do Crédito Rural, publicados pelo Banco Central do Brasil, referentes aos anos de 1996, quando foi criado o Programa, até 2001 (último ano de dados disponíveis quando da elaboração do estudo). Nesse contexto, o objetivo geral do trabalho foi analisar as características da participação dos recursos do Pronaf no Sistema Nacional de Crédito Rural (SNCR). Além disso, foram analisadas as características próprias da distribuição dos recursos financeiros do Programa. Neste caso, foram calculados e analisados índices gerais que caracterizaram os valores médios dos contratos, os números de contratos e o grau de financiamento, no âmbito do Pronaf, por unidade da federação. Para o cálculo dos índices gerais, foram utilizadas as metodologias de Laspeyres, Paasche e Fisher, aplicadas ao caso específico do financiamento. Os resultados indicaram que, embora tenha ocorrido um substancial aumento no número de contratos realizados para a agricultura familiar no Brasil, não houve uma contrapartida distributiva desse montante. Assim, verificou-se que a desconcentração do crédito de custeio familiar, na região Sul, vem ocorrendo de forma bastante lenta. Além disso, alguns estados da região Norte e Nordeste perderam grande parte dos recursos financeiros concedidos pelo Programa em 2001, sendo que as culturas mais afetadas foram aquelas mais importantes na alimentação popular. Finalmente, espera-se que o Plano Safra para a Agricultura Familiar 2003-2004 contribua ainda mais para minimizar a falta de recursos enfrentada pelo Programa, mas será fundamental que a Secretaria de Agricultura Familiar concentre esforços na maior divulgação e distribuição dos recursos financeiros entre as unidades da federação, sobretudo para aquelas pertencentes às regiões Norte e Nordeste do Brasil / Abstract: The Pronaf, National Program of Improvement of Familiar Agriculture, was created to promote the development sustainable of familiar agriculture, by means of the financial support of the farming and not farming activities. However, since its creation, in 1996, the degree of financing for expenditure of the familiar farmings, proportionate for the Program, presented great variability enters the units of the federacy, being distinguished, mainly, the South region of Brazil. The work was elaborated from data of Statistical Yearbooks of the Agricultural Credit, published for the Brazilian Central Bank, referring to the years of 1996 the 2001. In this context, the general objective of the work was to analyze the characteristics of the participation of the resources of the Pronaf in the National System of Agricultural Credit. Moreover, the proper characteristics of the distribution of the financial resources of the Program had been analyzed. In this in case that, they had been calculated and analyzed general indices that had characterized the average values of contracts, the contract numbers and the degree of financing, in the scope of the Pronaf, for unit of the federacy. For the calculation of the general indices, the methodologies of Laspeyres, Paasche and Fisher had been used, applied to the specific case of the financing. The results had indicated that, even so a substantial increase in the contract number has occurred carried through for familiar agriculture in Brazil, did not have a distributive counterpart of this sum. Thus, it was verified that the redistribution of the credit of familiar expenditure, for is of the South region, comes occurring of sufficiently slow form. Moreover, some states of the region North and Northeast had lost great part of the financial resources granted by the Program in 2001, being that the affected cultures more had been the those most important ones in the popular feeding. Finally, one expects that the Plan Harvest for Familiar Agriculture 2003-2004 contributes still more to minimize the lack of resources faced by the Program, but will be basic that the Secretariat of Familiar Agriculture concentrates efforts in the biggest spreading and distribution of the financial resources between the units of the federacy, over all for that pertaining to the regions North and Northeast of Brazil / Mestrado / Planejamento e Desenvolvimento Rural Sustentável / Mestre em Engenharia Agrícola

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

This study is an exploratory analysis of the impact and accessibility of formal agricultural credit to small-scale farmers, based on data collected from a sample of farmers in two regions of South Africa’s Limpopo Province. The main aims of the research were to: -- Determine the impact of credit and its shadow price. -- Investigate the efficiency of the rural financial market. -- Determine the characteristics and factors that influence the accessibility of credit in the small-scale farming sector, as well as the differential access to credit within the sector. The results of the study indicate that productivity differs between borrowers and non-borrowers. The difference of 40% in favour of borrowers is caused both by credit use (21%) and the farmers’ inherent characteristics. Thus, credit can increase a randomly selected farmer’s output b 21 per cent. The marginal credit return rate is 2.10 at zero loan, implying a 110 per cent shadow price of capital. The hypothesis that non-borrowers are credit constrained is empirically supported. The marginal credit effect at mean loan size is 1.35, indicating that the average loan size is below income-maximising size. This implies that loan-quantity rationing is still prevalent among borrowers, and that it is possible that borrowers may still be liquidity constrained but to a lesser degree than non-borrowers. The estimated shadow-price of credit (35%) exceeds the average interest rate (18%) also suggesting that the rural credit markets in the survey areas are not o9perating in the most efficient manner. It also indicates that the farmers in the study area can afford to pay the prevailing market interest rate. About 29.4% of the farmers sampled for the study had access to formal credit. More than 57% of the credit used by small farmers comes from informal credit. Access to formal credit is also highly skewed, and shows greater ease of access for large farm size than smaller groups. Factors such as area cultivated, family labour, title deed, non-farm income, remittances and pensions (social benefits), awareness of the availability of credit, and repayment records are found to be important variables in predicting accessibility of credit to small scale farmers in the study area. The main findings are: -- Small-scale farmers have limited and differential access to credit; those with holdings approaching commercial size are better-off. -- Rural agricultural financial markets are inefficient. Borrowers and non-borrowers alike are credit constrained. -- Credit is not too expensive to be used profitably; it effects on productivity can improve the welfare of small-scale farmers. In view of these findings, the following policy proposals are suggested. Firstly, the policy of not providing interest rate subsidies for loans is justified. Credit subsidisation, with its unfortunate history, should be avoided. Secondly, there is the need to restructure costly and poorly performing rural financial institutions to effectively and efficiently provide the needed services to its clientele. To ensure rapid credit delivery, it is also imperative that agricultural institutions are encouraged to decentralise their activities. Expansion of banking outlets is one of the most important surge factors affecting financial services. In addition, policy makers should also focus on critical elements of the financial infrastructure, such as the information system and training facilities, which are necessary for the development of the rural financial system in South Africa. Finally, the threshold for entry into the financial market is simply too high for many. Hence, creating a conducive environment in rural areas is one of the areas that will require more attention. Investment in rural infrastructure will also act as catalyst for the establishment of some of the missing institutions that cause market failures in rural financial markets. / Thesis (PhD (Agricultural Economics))--University of Pretoria, 2006. / Agricultural Economics, Extension and Rural Development / unrestricted

Despite many decades of experimentation with supplier-led approaches to credit, limited success has been achieved in improving access to credit for smallholder farmers. In Mozambique, previous attempts by government to improve access to credit for smallholder farmers have not been successful; hence the government is looking for other effective strategies to improve access to credit for smallholder farmers. In the search for effective strategies, Mozambique can draw lessons from the experiences of other developing countries that have succeeded in improving access to credit for smallholder farmers. The purpose of this study is to examine the experiences in other developing countries in Africa and Asia. The results of the analysis are used to identify the most appropriate government intervention strategy to improve access to credit for smallholder farmers in Mozambique. The study addresses the following questions: What went wrong with government strategies implemented in Mozambique in an attempt to improve access to agricultural credit for smallholder farmers? What are the positive experiences with government intervention strategies implemented in other developing countries of Africa and Asia that have resulted in the successful improvement of access to agricultural credit for smallholder farmers? What can Mozambique learn from the countries with good government intervention strategies that have succeeded in resolving or ameliorating the lack of access to agricultural credit for smallholder farmers? What is the most appropriate intervention strategy for the Government of Mozambique that would effectively lead to improving access to credit for smallholder farmers? The study examined four case studies were selected from Botswana, Zimbabwe, Thailand and Indonesia. The data set collection method comprised a combination of primary data collected through in-depth interviews with key informants from smallholder farmers’ associations and government-funded agricultural financial institutions in Botswana, Mozambique and data from Zimbabwe and secondary data sources. The results of the study reveal that the first strategy to improve access to credit for smallholder farmers in Mozambique included the establishment of the People’s Development Bank (BPD), which was given a mandate to provide agricultural credit to smallholder farmers. However, the BPD did not succeed in fulfilling its mandate due to a variety of factors, including the following: poor macro-economic environment during the first decade of independence (1975–1985); lack of human expertise, poor rural infrastructure, market failure problems and the ongoing civil war. The lack of institutional capacity to enforce mechanisms for timely loan repayments, and political interference by government, and lack of credit culture and discipline on the side of the beneficiaries, also led to high loan default rates. The BPD eventually closed down and was privatised to form the new bank (the Austral Bank). The Austral Bank never concerned itself with lending to the smallholder agricultural sector. Other alternative strategies by government in Mozambique included the establishment of the fundos do foment (funds for jump-starting activities), particularly the funds for jump-starting agricultural, hydrological and agricultural development activities. However, both government funds also failed to improve access to credit for smallholder farmers. They are currently experiencing management problems and shortage of funds. The main reasons for their poor performance include lack of qualified managers, skilled field staff and specialists in rural financial markets. The private sector, particularly the concessionary input credit firms, is currently trying to rescue the smallholder farmers by contracting them to engage in cultivating some cash crops. However, many difficulties are experienced, including lack of access to farmer support services (e.g. extension services), due to a complete withdrawal of government support for the concessionary input credit schemes. Thus, smallholder farmers in Mozambique remain marginalised in terms of access to agricultural credit. The results of the study reveal that strategies to improve access to credit for smallholder farmers in Mozambique did not succeed, mainly due to the lack of institutional capacity to enforce mechanisms for timely loan repayments as well as political interference. Lessons drawn from these cases shed light on what the most appropriate intervention strategy for the Government of Mozambique could entail if it is to succeed in improving access to credit for smallholder farmers. The study concludes that lack of access to agricultural credit for smallholder farmers in Mozambique reflects not only market failures in rural financial markets but also inappropriate lending policies. The study concludes that the most appropriate strategy for the Government of Mozambique to succeed in improving access to credit for smallholder farmers should entail the re-establishment of a public rural bank. The study recommends that rural financial institutions should adopt a demand-driven approach, which enables them to design products that fit the needs of a variety of clients. At the same time, reforms at both the fund for jump-starting agricultural activities and the fund for jump-starting hydrological and agricultural development activities need to be undertaken in order for these agricultural development funds to start operating more professionally, with minimum government interference. Finally, the government needs to extend its role to complement efforts by the private sector, particularly the cash crop input schemes. Copyright / Dissertation (MScAgric)--University of Pretoria, 2010. / Agricultural Economics, Extension and Rural Development / unrestricted

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

Agricultural loans issued to farmers in Virginia from the years 1980-1985 are examined to determine the factors which significantly predict repayment ability. Through a review of literature, extension meetings, conferences and informal conversation with agricultural lenders in the state, a list of financial variables and operation characteristics is compiled and analyzed. Results of the analysis are considered in terms of their immediate and potential assistance to lenders in making loan decisions. Using data from various commercial banks, Production Credit Associations and Farmers Home Administrations throughout Virginia, a model is developed to determine repayment ability of a borrower. Results indicate that several factors are significant in determining this process. Financial ratios such as percent equity, current debt, cash flow I and cash expense-cash receipt are important in determining if a borrower will repay his loan as scheduled. A number of operation characteristics were also found significant. These include: the number of creditors of the borrower, the amount of diversification of the operation and the amount of non-farm income. The results of the study should prove to be a significant aid to lenders and implies need for further research in the loan repayment area. / M.S.

Agricultural leases issued to forestry, dairy and cash crops operators from 1980-1992 are reviewed to determine factors statistically significant in predicting risk level (probability of default and/or probability of late payment) of the lessee for each industry. From a previous study of Telmark, 1990, literature review and the Recommendations of the Farm Financial Standards Task Force financial, operator/lessee and farmer/operator variables are selected for analysis. Data obtained from Telmark,Inc. are used to develop a model to explain lease risk level of the forestry, dairy, and crops industries. Results show that for forestry the following financial, lessee/operator, and farmer/operator variables are useful in determining riskiness: operating expense to revenue, cash flow coverage, capital turnover, years in business, gross revenue, and owner's equity. The dairy results indicate that the following variables are important: current ratio, cash flow coverage, return on assets, capital turnover, operating expense to revenue, FHA loan secured, owner's equity, and gross revenue. The crop results indicate percent equity, current ratio, cash flow coverage ratio, return on assets, capital turnover, operating expense to revenue, interest to income, real estate owned, years in business, FHA loan-secured, and owner's equity are significant variables for determining lease risk. Using the results from these models, a weighted average cost of misclassifying a lease is calculated. This is used to develop a profit maximizing criterion for determining whether a lease is high or low risk. The need for future work is discussed. In the area of weighted average cost of misclassifying a lease, additional information on the costs of leasing and riskiness of the population would aid in reducing the misclassified leases in the portfolio. Further study exploring some of the unexpected results in this study would be beneficial to both the lessee and the lessor. / Master of Science

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.