Factors Influencing Profitability of Land Reform Farm Enterprises in the KwaZulu-Natal Province of South Africa
DOI:
https://doi.org/10.17159/2413-3221/2025/v53n6a21844Keywords:
Profitability, Enterprise, Investment, Returns, Land ReformAbstract
Various factors influence the profitability of enterprises owned by land reform farmers. This study aimed to identify the factors influencing the profitability of land reform farm enterprises in KwaZulu-Natal. Data were collected from 262 land reform farmers in KwaZulu-Natal through a structured questionnaire. Using the linear odds model, the study established that production input costs, extension advisory services, training received, household size, labour man-days, and marketing costs have a statistically significant influence on the profitability of land reform farms in KwaZulu-Natal. Household size and marketing costs have a negative effect, whereas production input costs, extension advisory services, training received from government and stakeholders, and labour man-days have a positive effect on profitability. Other variables were not statistically significant. The study concluded that comparing marginal costs and marginal returns to inform farm investment decisions, as well as the provision of extension advisory services and training by government and stakeholders, are indispensable instruments that drive profitability. Utilising family labour to mitigate the impact of household size, reducing marketing costs, and enhancing labour efficiency increases profitability. The study proposes a policy overhaul on training and extension services, prioritising the Key Result Areas (KRAs) for small-scale farmers and land reform farm enterprises.
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