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Analysis of determinants of South Africa's sugar production and export performance within the tripartite free trade area : a case of raw and refined sugarMamashila, Mokgoshi John 03 1900 (has links)
This study was conducted with the aim of investigating the trends and determinants of
South Africa’s sugar production and exports within the TFTA between 1996 and 2014.
The specific objectives of the study were (1) to identify trends in South Africa’s sugar
production and exports within the TFTA between 1996 and 2014; (2) to determine the
drift rate in South Africa’s sugar exports within the TFTA between 1996 and 2014; (3)
to investigate the correlation between South Africa’s sugar production and exports
between 1996 and 2014; and (4) to determine the factors that affect production and
exports in South Africa’s sugar industry in order to identify the industry’s major
challenges and opportunities for sustained performance.
The secondary data, obtained from the Economic Analysis and Agricultural Statistics
Directorate of the Department of Agriculture, Forestry and Fisheries (DAFF), were
used to meet the first three objectives of the study. The primary data, obtained by
means of a survey questionnaire and interviews with key stakeholders, were used to
meet the fourth objective of the study. A 7-point Likert scale was applied to indicate
the degree to which each of the determining factors are perceived to affect the
performance and resulting competitiveness of the sugar industry. The Johansen test
and Porter’s Diamond Model were the analytical techniques used in the study.
The results of the analysis of the secondary data revealed continued fluctuations in
sugar production in South Africa between 1996 and 2014. On the basis of this, the
researcher rejected the hypothesis that there is no trend in South Africa’s sugar
production. It was therefore concluded that seasonal variations accounted for these
fluctuations in the sugar industry. As determined using the Johansen test, drift rate
variations came to 51%, indicating that there is potential for growth in South Africa’s
sugar exports. This was confirmed by the results of the bivariate correlation between
production and exports which clearly indicated a positive relationship between the two
and prompted the researcher to accept the hypothesis that there is a positive
relationship between the production and export of sugar.
In determining the factors that influence South Africa’s sugar production and exports,
a number of obstacles to competitiveness success were identified. With regard to
sugar production, applying Porter’s Diamond model revealed that the major constraints experienced by respondents in the study area were the availability of
skilled labour; cost of doing business; level of infrastructure development; cost of
infrastructure; water availability; climatic conditions; soil quality; rainfall patterns;
availability of financial services; access to credit; crime; and HIV/AIDS. In terms of
exports, tariffs were found to be the major constraint along with certain of the abovementioned
factors. While the majority of respondents view macroeconomic policy and
trade policy as export constraints, South Africa’s labour, B-BBEE and competition
policies are seen as neither constraining nor supportive. Product design; packaging;
labelling and pricing; as well as the manager’s willingness to export; level of education
and training; length of time in the business; experience; and language had a positive effect on competitive success. / Agriculture, Animal Health and Human Ecology / M. Sc. (Agriculture)
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Economic and institutional factors affecting the performance of the graduated mortgage loan repayment scheme used by medium-scale sugarcane farmers in KwaZulu-Natal.Mashatola, Mopai Clement. January 2003 (has links)
Private sector sugar millers and Ithala Development Finance Corporation (Ithala)
implemented a graduated mortgage loan repayment scheme in the 1995/96 sugarcane
production-season to try and improve access to farmland by aspirant commercial
farmers in KwaZulu-Natal. By March 2001, the scheme had financed 106 "medium
scale farmers" (MSFs), 99 of whom were still in the scheme (one loan had been
repaid from own funds, and another six from the proceeds of life insurance policies).
The first aim of this study was to analyse factors affecting whether or not the MSFs
were current or in arrears on loan repayments as at 31 March 2001. A logit model
based on full information for 83 MSFs shows that the estimated probability of a MSF
being current on loan repayments was higher for clients with higher levels of average
annual gross turnover relative to loan size, and for clients with access to substantive
off-farm income. This suggests that farm size (proxied by annual farm 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. Smaller-sized, creditworthy farms with loan sizes that are relatively
low compared to the expected average annual gross income may also be viable.
Access to off-farm income could also be considered as a criterion in selecting
potential farmers for future similar schemes, as it helps to provide additional liquidity
to fund future operations and debt repayments, and can reduce leverage levels.
The second aim was to conduct personal interviews with the 99 MSFs between July
and September 2001 in order to identify what aspects of the scheme could be
improved for new members . Responses from 88 of these MSFs show that 68% of
them would opt to first rent land before purchasing, while 78% of them recognize, or
have experienced, the cash flow problem associated with land purchase. Most of the
MSFs felt that long-term sugarcane supply agreements constrain enterprise
diversification, and that the quality of mentorship that they currently received was not
satisfactory. Industry players could consider leveraging donor funding for
empowerment projects to improve the quality of future mentorship programmes.
There is also some scope for Ithala to improve the client-lender relationship by better
clarifying the structure of the graduated repayments, sending loan statements on time,
and helping clients to interpret loan statements. Growers perceive the need for a
coordinator to monitor, and advise on how to improve, their financial performance this
could be a new commercial service opportunity. Using an independent valuer to
conduct farm valuations may also be necessary to avoid perceptions of bias in the
value of farms offered for sale by the millers.
A logit model of the MSFs' preferences for first renting land before purchase shows
that new growers joining this scheme, or similar schemes for other farm products, with
relatively less liquidity and less farming experience should be given the choice to rent
land with an option to purchase. The preference for first renting by most of the
surveyed MSFs could indicate that many very highly leveraged MSFs still experience
cash flow stress despite the interest rate subsidy. A second policy implication,
therefore, is that the current subsidy level, which reduces the effective starting interest
rate level to about ten per cent relative to a typical five per cent current return on land,
could be increased to promote access to farmland markets. Alternatively, loan terms in
the next round of the scheme could be changed to require higher proportions of own
equity (lower leverage levels), or to permit the deferral of principal payments, or to
permit the purchase of smaller farms by creditworthy, part-time farmers. Another
strategy to improve liquidity is to advise growers to limit family drawings in the early
years after farmland purchase. / Thesis (M.Sc.Agric.)-University of Natal, Pietermaritzburg, 2003.
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An economic analysis of the factors that affect the success of new freehold growers in the South African sugar industry.Floyd, Warren N. January 2009 (has links)
The South African (SA) Sugar Industry is committed to transformation in land ownership and supports the SA government's target to transfer 30% of freehold sugarcane land to previously disadvantaged individuals (PDls) by 2014 via the land market under the willing buyer/willing seller principle. The medium-scale farmer scheme for emerging commercial sugarcane farmers, which was introduced in 1996 to help redistribute commercial sugarcane farmland to PDIs is an important component of the SA Sugar Industry's land reform strategy. The average financial performance of emerging commercial farmers (now called New Freehold Growers or NFGs) in the SA Sugar Industry was below that of large-scale commercial farmers during 1997-2007 (real average annual net return per hectare of R390 versus R3 075 in 2007 Rand). Given that this trend raises concerns about the long-term viability of NFGs, the first aim of this
study is to identify factors that distinguish between successful, less successful and unsuccessful NFGs using a stratified random sample of 96 NFGs in KwaZulu-Natal (KZN) surveyed during July-November 2008. These NFGs were classified according to whether their mortgage loans were current (successful), in arrears (less successful) or in the process of legal action (unsuccessful). Student t-tests indicate that successful NFGs, on average, had statistically significantly more experience in farming sugarcane, larger farm sizes (proxied by average annual gross farm income), greater solvency and liquidity, and larger areas annually replanted to sugarcane than the less successful and unsuccessful NFGs. The successful NFGs also placed relatively more emphasis on computerized record keeping systems that can save time in conducting production and financial analyses to improve farm profitability. They also on average tended to make more use of their own financial record keeping system in addition to the services of bookkeepers, and used more risk management strategies than unsuccessful NFGs, in particular having off-farm investments and keeping cash and credit reserves. A multinomial logit model of factors affecting the sample NFGs' mortgage loan
repayment status estimated that extension contact, production and financial risk management capacity, farm financial and production management ability, own record keeping and cash management, and having more sugarcane farm experience to operate larger farm sizes were key determinants of successful loan repayment. The results suggest that policy makers can promote the viability of NFGs by (1) encouraging them to manage solvency and liquidity levels and implement replanting schedules in line with industry norms (e.g. debt:asset ratio of 0.5 or lower, and the replanting of 10% of the area under cane (AUC) per annum); and (2) facilitate the transfer of adequate size farms
(expected annual gross farm income can meet annual loan repayments) in commercial transactions or transactions funded via government grants to farmers who have the relevant farming experience. New Freehold Growers are also encouraged to build business relationships with industry support staff, implement good record keeping practices, and develop strategies to manage risk (e.g. off-farm investment and holding cash and credit reserves). The second aim of this study was to document the NFGs' perceptions of the scheme and industry role players in order to identify what aspects could be improved for both current and future farmers. The results suggest that most sample respondents (84%) can identify with, or have experienced the relatively low current returns (cash flow problems) usually associated with the early years after land purchase, while about 60% of the sample NFGs would have preferred to first lease their land before buying. Future NFGs, or the
beneficiaries of other land reform initiatives, must be informed that an investment in land has low current returns relative to capital growth and that the annual profit from farming is low relative to the land value. The possibility of leasing could also be considered for future land transfers to NFGs or other land reform beneficiaries to help manage the liquidity constraints associated with land purchase. Ninety-nine percent of the sample NFGs felt that it was important for new farmers to have a mentor. Post-settlement support thus needs attention from industry role players, and a sustainable mentorship programme could, in part, meet this need. / Thesis (M.Sc.Agric.)-University of KwaZulu-Natal, Pietermaritzburg, 2009.
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