Farming without drought relief: Time to revisit an income equalisation deposit scheme Report as inadecuate




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In a recent report to government, an Income Equalisation Deposit (IED) Scheme for commercialfarmers and crop insurance for small scale farmers have been recommended as risk managementstrategies. An IED has been considered in the past in South Africa but rejected largely due to taximplications. Conditions have now changed as various countries (Australia, Canada and USA)strongly promote such a scheme as a risk management strategy while the South African cropinsurance program has failed to attract farmers. A main criticism of an IED in the past was thatif it is used in conjunction with the In/Out farmer’ tax provision, that farmers can obtain taxbenefits if they destabilise their incomes. This can be avoided by adopting a tax rule that farmersmay only invest the positive difference between their current taxable income and their movingaverage taxable income in an IED. It is further recommended that the Land Bank deposit scheme(Income Tax Paragraph 13A) be abolished and be replaced by an IED that covers both livestock,crops and horticulture.

Subject(s): Farm Management

Issue Date: 2000-09

Publication Type: Journal Article

PURL Identifier: http://purl.umn.edu/54241 Published in: Agrekon, Volume 39, Issue 3 Page range: 332-356

Total Pages: 25

Record appears in: Agricultural Economics Association of South Africa (AEASA) > Agrekon





Author: Nieuwoudt, W. Lieb ; Howell, John

Source: http://ageconsearch.umn.edu/record/54241?ln=en







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