An Analysis of the Relationship between Farm Margins and Land Values in the South African Sugar Industry

This paper analyses the relationship between net farm incomes and market values of cane land within the South African sugar industry. A comparison is drawn between market values represented by actual sales, and productive land values, which relate more specifically to net farm incomes. The aim of the paper is therefore to estimate the degree of correlation between net farm incomes and land market values, with a view to analysing the variation in the return on investment between farming regions. All data was sourced from the South African Cane Growers’ Association and South African Sugar Association surveys that are conducted annually to collate information on grower costs, land transfers, area under cane and cane production. All data is presented on a ‘per hectare under cane’ basis.