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Sugarcane Growers' Perceptions Of A Graduated Mortgage Loan Repayment Scheme To Buy Farmland In Kwazulu-Natal, South Africa

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  • Darroch, Mark A.G.
  • Mashatola, M.C.

Abstract

A survey of 88 medium-scale sugarcane farmers (MSFs) using this scheme in 2001 shows that most MSFs would opt to first rent land before purchasing, and recognize that annual returns to land are low relative to land value. Most MSFs view long-term sugarcane supply agreements as a constraint on enterprise diversification, and consider that the quality of mentorship currently received was not satisfactory. Industry players could leverage international donor funding for empowerment projects to improve the quality of mentorship programs. Client service can be improved be better clarifying the structure of the graduated repayments, sending loan statements on time, and helping clients to interpret loan statements. There is also a new commercial opportunity to act as a co-ordinator to monitor and improve the MSFs' financial performance. Using an independent farm valuer would avoid perceptions of bias in the valuations of farms offered for sale in later rounds of the scheme. Options to improve client liquidity in later rounds include requiring larger equity down payments, choosing buyers with substantive off-farm income, and renting before buying. Younger potential clients with less liquidity and less farming experience are likely to choose the latter.

Suggested Citation

  • Darroch, Mark A.G. & Mashatola, M.C., 2003. "Sugarcane Growers' Perceptions Of A Graduated Mortgage Loan Repayment Scheme To Buy Farmland In Kwazulu-Natal, South Africa," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 5(4), pages 1-10.
    • Handle: RePEc:ags:ifaamr:34401
    DOI: 10.22004/ag.econ.34401
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    References listed on IDEAS

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    1. Hattingh, H. S. & Herzberg, A., 1980. "Ownership Or Leasing Of Agricultural Land: Production Economic Aspects," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 19(2), April.
    2. Patterson, Brian & Hanson, Steven D. & Robison, Lindon J., 1998. "Characteristics Of Farmland Leasing In The North Central United States," Staff Paper Series 11610, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    3. MC Lyne & MAG Darroch, 1997. "Broadening access to land markets: Financing emerging farmers in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 14(4), pages 561-568.
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    Agricultural Finance;

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