DIE EFFEKTIWITEIT VAN RENTESUBSIDIES OP OORLAATSKULD AAN PRODUSENTE IN DIE NOORDWES-VRYSTAAT

T. Swart and J. M. Laubscher

Agrekon, 1991, vol. 30, issue 3

Abstract: Interest subsidies, as one of the emergency relief schemes to drought stricken farmers in the summer rainfall regions, was implemented to give producers the opportunity to recover from their financial setback through alleviating their interest burden and financing of new production credit. The aim of this study was to evaluate whether this aid can make a sufficient contribution to the financial recovery of this fam1ers. As basis for the approach in this study a typical farm was constructed for each relief scheme with data collected through a postal questionnare survey and group discussions. 111e North-western free State were used as study area. A simulation model was used to determine the influence this assistance will have on the typical farm over a ten year period, with three different inflat!~n situat(ons. The results show that interest subsidy aid for the Ten year scheme is at present not enough to ensure the long term solvah1hty of this farm ers. If the present value of the state's expences on interest subsidies are given as a single amount for carryover debt reduction, with no further subsidie~, a better solvency ratio could be achieved. With this form of aid the liquidity advantage for the fam1cr is larger and the state's funds are more efficiently spent. Better farmrng efficiency and management skills is essential to survive during a period of input cost inflation. Assistance given to improve the management quality of farmers will be the best form of aid to ensure their financial recovery.

Keywords: Agricultural and Food Policy; Agricultural Finance; Financial Economics (search for similar items in EconPapers)
Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:ags:agreko:267370

DOI: 10.22004/ag.econ.267370

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