Assessing farmer perceptions about the available financing mechanisms and financial services – the case of the seed potato industry in South Africa

[摘要] ENGLISH SUMMARY : Farmers lack the opportunities to increase levels of production and improve efficiency for a number of reasons. The lack of a fully functioning financial services market is often identified as a primary constraint in this context. Owing to a supply-led market, financial services in rural areas are both inadequate and costly. Recent policy developments in South Africa note the strategic importance of intensive agriculture in creating employment and stimulating rural economic activity. However, unlocking the potential of the agricultural sector requires an investigation into alternative financing arrangements for agribusinesses.Potatoes form part of the major staple food groups and are a more efficient producer of calories per hectare farmed than both rice and wheat. In South Africa, potatoes account for more than 50% of the value of all vegetable sales at fresh produce markets; the industry is considered to be one of high export potential and strategic in terms of food security. This thesis uses the seed potato industry as a case study to investigate the demand-side perceptions of the available financing mechanisms and financial services. The seed potato industry is highly concentrated, thus it was appropriate to use a convenience sample to conduct interviews and request questionnaire responses. The result was a rich database, representative of approximately 40% of the seed potato industry in terms of production area. However, the limited number of responses offers little in the way of statistical inference.The investigation develops an understanding of the current financial services environment in the industry. Access to financial services is identified as a major hindrance to new entrants while unique financing mechanisms are used to limit reliance on Financial Service Providers (FSPs). The findings indicate that contract enforcement is not necessarily important to agricultural businesses as transactions tend to consider a long-term view and are often concluded without traditional intermediaries. Further, financial advisory services like tax planning and management are important considerations for these farmers but are inadequately provided to the case study group. These findings could be used as a basis for future work in the design of alternative financial services and products for farmers.

[发布机构] Stellenbosch University