Doctoral Degrees (Agricultural Economics)

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Browsing Doctoral Degrees (Agricultural Economics) by browse.metadata.advisor "Hoffmann, Willem H."

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    Investigating farm-level exit decisions and exit rates in commercial agriculture in South Africa, an agent-based approach
    (Stellenbosch : Stellenbosch University, 2022-04) Cloete, Johanna Cecilia; Hoffmann, Willem H.; Greyling, Jan C.; Mann, Stefan; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
    ENGLISH SUMMARY : Land supply is an undeniable but neglected component in the agriculture transformation debate, with discussions on and research in the field of structural change in the sector considered overdue. The structural transformation of the agricultural sector rests on the interplay between exogenous and endogenous decisions in the agricultural sector that feed back into the sector’s operations, as a collective, and the role players within it as individuals. Ignoring the factors that motivate commercial producers to exit farming has resulted in a substantial gap in the literature regarding this important component of land reform. This study aimed to uncover the reasons that lead to decisions to exit or stay by making use of an analytically rigorous process to bridge the land supply literature gap. Considering the ex-post review of commercial agriculture over the last 100 years and its learnings, this study explores how an ex-ante modelling analysis approach to the planned and potential effects on producer numbers over the next ten years can enhance land-use planning. A core outcome of this study is the creation of a baseline projection for remaining in or exiting from primary agriculture, and how the exploration of the underlying factors in individuals’ strategic decision-making can inform policy and affect structural change. Three methods are applied in this study. The characteristics of producers planning to exit were identified through clustering. A consequent regression analysis determined the drivers of the ex-ante decision to exit or remain in agriculture, highlighting the interplay between business climate and capital invested. An agent-based model was constructed to create a virtual laboratory in which the output provides insight into how the structure of the sector – demographics, land use, production output, farm size and numbers – will change as the aggregate of the decisions made at the individual farm level drives the structural change at a sector level. Findings from the cluster analysis show that farm exit decisions are affected by financial problems, access to dependable labour, uncertainty regarding land reform policy and concerns about rural safety. In the subsequent regression analysis that was performed to order the key drivers, age (as a categorical variable), cost of investment and financial constraints feature most prominently in the decision to exit, whilst the presence of production loans and business confidence are significant in countering the decision to exit. From the cluster and regression analyses, two alternative scenarios were constructed in which some factors that appear to keep producers locked in were removed. The outcomes thereof were then compared to the baseline exit rate from the extrapolated and upscaled survey data. The baseline and two alternative scenarios in the agent-based model provided exit rates of 22.43%, 25.63% and 34.81%, respectively over ten-year periods, with the structural effects of the different rates discussed at a sub-sector level. Consideration is given to the barriers to exit, which subsequently limit the opportunities and scope for new entrants into commercial agriculture. This output is a critical element in the continued interaction between demand for and supply of land in the land reform debate.