Effects of farmer support programmes on consumption and investment

Effects of farmer support programmes (FSPs) of the Development Bank of Southern Africa on consumption and investment are determined by utilising cross‐sectional survey data from the Mashamba and Khakhu areas of the Venda homeland in South Africa. Income elasticities indicate that the demand for goods (staple food) produced by households increases less than the demand for purchased goods. A discriminant analysis of surplus versus deficit producers indicates that surplus production is associated with farmers who participate in the FSP (ie farmers using chemical fertilizers and purchasing inputs on credit). The existence of soil erosion, availability of ploughing services, expenditure on transport education, medical and personal items, and the existence of a savings account also play important roles in explaining the difference in production performance between surplus and deficit food‐producing households.