Causes of Bankruptcy Amongst Extensive Beef Farmers in South Africa: 1970-1994

Deon S. Swanepoel, Gerald F. Ortmann and Mark A.G. Darroch

No 346368, 11th Congress, University of Calgary, Canada, July 14-19, 1997 from International Farm Management Association

Abstract: The number of extensive beef farms declared bankrupt in the cattle grazing regions of South Africa increased from 10 farms in 1970 to 35 farms in 1994. Bankruptcies rose in particular from the early 1980’s onwards, against a background of drought and rising interest rates. Ordinary least squares regression and principal component analysis show that bankruptcies increased with lower real beef producer prices, lower annual rainfall and higher real stockfeed and transport subsidies (business risk factors). Higher aggregate farm leverage and real interest rates (financial risk factors) also led to more bankruptcies amongst extensive beef farmers. All variables were related to bankruptcy with a time lag, implying that the bankruptcy process is dynamic.

Keywords: Agricultural Finance; Livestock Production/Industries (search for similar items in EconPapers)
Pages: 14
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ifma97:346368

DOI: 10.22004/ag.econ.346368

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