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

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

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.

Suggested Citation

  • Swanepoel, Deon S. & Ortmann, Gerald F. & Darroch, Mark A.G., 1997. "Causes of Bankruptcy Amongst Extensive Beef Farmers in South Africa: 1970-1994," 11th Congress, University of Calgary, Canada, July 14-19, 1997 346368, International Farm Management Association.
    • Handle: RePEc:ags:ifma97:346368
    DOI: 10.22004/ag.econ.346368
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    References listed on IDEAS

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