DIE EFFEKTIWITEIT VAN RENTESUBSIDIES OP OORLAATSKULD AAN PRODUSENTE IN DIE NOORDWES-VRYSTAAT / The effectiveness of interest subsidies on carry-over debt to farmers in the North-Western Free State
Year: 1991
Type: article
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 farmers. 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. The 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 inflation situations. The results show that interest subsidy aid for the Ten year scheme is at present not enough to ensure the long term solvability of this farmers. 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 subsidies, a better solvency ratio could be achieved. With this form of aid the liquidity advantage for the farmer is larger and the state's funds are more efficiently spent. Better farming 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.
Source: Agrekon
Authors: T Swart, J M Laubscher
Institution: Department of Agriculture, Forestry and Fisheries
Language: Dutch
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2024948932