Trends in South African agricultural land prices
| dc.contributor.advisor | Van Schalkwyk, Herman D. | |
| dc.contributor.author | Obi, Ajuruchukwu | |
| dc.date.accessioned | 2015-10-09T09:26:57Z | |
| dc.date.available | 2015-10-09T09:26:57Z | |
| dc.date.copyright | 2006-12-07 | |
| dc.date.issued | 2006-12-07 | |
| dc.date.submitted | 2006-12-07 | |
| dc.description.abstract | English: In recent years, concern has been expressed over rising agricultural land prices in South Africa. A major concern was that this situation would impede the successful implementation of the on-going land reform programme. This study aimed to examine the trends and draw conclusions about their determinants against the backdrop of recent policy developments to restructure the agricultural sector and empower the black population to participate more effectively in the nation’s agricultural economy. On the basis of a comprehensive literature review, it was established that land issues have played an important role in past and present configuration of the economy and politics of South Africa. In South Africa as elsewhere in the world, agricultural land prices are central to how land enters the political and economic equations for which reason they are important subjects for research as well as developmental interventions. Despite the implementation of far-reaching governance reforms and agricultural restructuring over the past 12 years, no recent model of farmland prices has explicitly considered these new issues. This study therefore employed cointegration analysis to model the long-run and short-run dynamics of the relationships so as to identify the key determinants as well as attempt a tentative forecast within the constraints imposed by limited data availability to the extent that the available time series permits. To that extent, this study contributes in an important way to the debate and provides a basis for more sophisticated and focused work in the future. Building on previous structural modelling of farmland prices in the country, but using much expanded and some new time series spanning forty-nine years, it was possible to establish clear patterns of relationships between real farmland prices and a range of macro-aggregates, including real interest rate on debt, the rate of inflation, real Gross Domestic Product (GDP) per capita, among others. The results suggest that real farmland prices have strong positive relationships with real GDP per capita and real farm debt per hectare. The importance of real net farm income and the real exchange rate of the rand were also demonstrated. Although the inflation rate was found to be positively related with real farmland prices, the relationship was found to be insignificant. Overall, strong policy effects were confirmed by significant structural breaks in the series. But the fitted error correction model suggests that the systems rapidly adjust to its long-run equilibrium, with most of the deviations being corrected within the next year. While there is no basis to conclude from the results that rising farmland prices are hurting the land reform process, there is no question that sudden increases in prices generate uncertainties and call for measures to ensure greater stability. Actions to moderate the impact of price increases on smallscale and emerging farmers should therefore be explored, particularly by making redistributable agricultural land more abundant and accessible to small-scale farmers unable to compete in the unregulated land market. This will include drawing from the existing pool of state land and purchasing indebted farms for redistribution. Adjusting the rate of interest to keep consumption spending in check can have additional benefits in land price stabilization. Importantly, a fixation on rising agricultural land prices may be diverting attention from the crucial support needed by newly settled farmers to make agricultural land more productive through improvements in the input delivery systems, extension services to enhance the knowledge base of new entrants into the farming business, rural road networks, etc. | en_ZA |
| dc.description.abstract | Afrikaans: In die onlangse verlede is kommer uitgespreek oor stygende landbougrondpryse in Suid-Afrika. Daar was veral besorgdheid dat die situasie die suksesvolle implementering van die voortgesette grondhervormingsprogram nadelig sal beïnvloed. Die doel met hierdie studie is om teen die agtergrond van onlangse beleidsontwikkeling, die landbousektor te herstruktureer en die swart bevolking te bemagtig om meer effektief deel te neem aan die landbou-ekonomie van die land, die tendense te ondersoek en te bepaal wat hulle dryf. Op grond van ’n omvattende literatuur-oorsig, is bevind dat grondsake in die vorige, sowel as die toekomstige beplanning van die ekonomie en politiek in Suid-Afrika belangrike rol gespeel het en steeds speel. Soos elders in die wêreld, is die pryse van landbougrond die kern van hoe grond die politieke en ekonomiese vergelykings betree en daarom is dit belangrike onderwerpe vir navorsing sowel as ontwikkelingsintervensies. Ten spyte van die implementering van verreikende regeringshervorming en landbouherstrukturering programme gedurende die afgelope 12 jaar, het geen onlangse model vir landbougrondpryse hierdie nuwe sake in ag geneem nie. Daarom gebruik die studie ko-integrasie om die lang- en korttermyndinamika van dié verhoudings te modelleer om die sleutelveranderlikes te bepaal sowel as om ’n tentatiewe vooruitskouing te doen binne die beperkinge van beperkte databeskikbaarheid soos deur die beskikbare tyd toegelaat. Met inagneming van vorige strukturele modelle van landbougrondpryse in die land, maar deur gebruikmaking van langer tydperke van tot nege-en-veertig jaar, was dit moontlik om duidelike verbandhoudende patrone tussen reële landbougrondpryse en ’n reeks makro-veranderlikes, insluitend die reële rentekoers op skuld, die inflasiekoers en reële Bruto Binnelandse Produk (BBP) per kapita te bepaal. Resultate dui daarop dat pryse vir reële landbougrond sterk positief verband hou met reële BBP per kapita en reële boerderyskuld per hektaar. Die belangrikheid van reële netto vii boerdery-inkomste en die reële wisselkoers van die rand, het ook na vore getree. Alhoewel die inflasiekoers positief verbind kon word met die reële pryse vir landbougrond, het die verband nie betekenisvol geblyk te wees. Oor die algemeen is sterk beleidsinvloede deur beduidende strukturele onderbrekings in die reeks bevestig. Volgens die gepaste fout-regstellingsmodel herstel die stelsel vinnig tot sy langtermyn balans, met die meeste van die afwykings wat in die volgende jaar reggestel word. Terwyl daar glad nie uit die resultate afgelei kan word of stygende landbougrondpryse die grondhervormingsproses benadeel nie, is dit nie te betwyfel nie dat skielike prysstygings tot onsekerheid lei wat maatstawwe noodsaak om groter stabiliteit te verseker. Daar moet dus gekyk word na stappe om die uitwerking van prysverhogings op kleinskaal- en opkomende boere te verminder, veral deur die beskikbaarstelling van landbougrond meer volop en toeganklik te maak vir kleinskaalse boere wat nie op die onbeheerde grondmark kan meeding nie. Dit sal bestaande staatsgrond insluit, sowel as die aankoop van plase met ’n skuldlas, vir herverdeling. Die aanpassing van die rentekoers om verbruiksbesteding te beheer, kan bykomende voordele inhou om grondpryse te stabiliseer. Vaspenning van landbougrondpryse mag die aandag aflei van die dringende ondersteuning wat deur nuutgevestigde boere benodig word om landbougrond meer produktief te maak deur middel van verbeterings in die inset-leweringstelsels, voorligtingsdienste om nuwe toetreders tot die boerderybedryf se kennis te verbreed, landelike padnetwerke, ens. | af |
| dc.identifier.uri | http://hdl.handle.net/11660/1346 | |
| dc.language.iso | en | en_ZA |
| dc.publisher | University of the Free State | en_ZA |
| dc.rights.holder | University of the Free State | en_ZA |
| dc.subject | Exchange rates | en_ZA |
| dc.subject | Foreign buyers | en_ZA |
| dc.subject | Gross domestic product | en_ZA |
| dc.subject | Structural breaks | en_ZA |
| dc.subject | Cointegration | en_ZA |
| dc.subject | Recursive analysis | en_ZA |
| dc.subject | Error correction | en_ZA |
| dc.subject | Inflation | en_ZA |
| dc.subject | Land reform programme | en_ZA |
| dc.subject | Farmland prices | en_ZA |
| dc.subject | Farms -- Prices -- South Africa | en_ZA |
| dc.subject | Agriculture and state -- South Africa | en_ZA |
| dc.subject | Farms -- Valuation | en_ZA |
| dc.subject | Thesis (Ph.D. (Agricultural Economics))--University of the Free State, 2006 | en_ZA |
| dc.title | Trends in South African agricultural land prices | en_ZA |
| dc.type | Thesis | en_ZA |