THE EFFECT OF DEBT BURDEN, INTEREST RATES AND INFLATION ON THE SURVIVAL OF FARMING ENTERPRISES: A CASE STUDY IN THE WESTERN TRANSVAAL AND THE NORTH-WESTERN BUSHVELD

Abstract

In this study the effect of varying yield levels (drought), structural input price inflation, interest rates and initial solvency position (as influenced by debt burden) on typical farming enterprises in the Western Transvaal and the North-western Transvaal Bushveld is determined. Initial solvency situation, interest rates and structural inflation have a significant effect on financial results of farming enterprises. Analysis of variance shows that these three factors and their effects are interdependent. The effect and influence of each on survival are therefore influenced by the levels of the other factors. Consequently all three factors must be influenced simultaneously in order to obtain positive results with regard to the survival of farming enterprises in the Western Transvaal and the North-western Transvaal Bushveld.

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