Assessing the determinants and impact of financial record-keeping among smallholder vegetable farmers in the Eastern Cape Province: an empirical study

Abstract

The study explores the determinants and impact of financial record-keeping among smallholder vegetable farmers in the Eastern Cape Province of South Africa. Despite the critical role of vegetable farming in rural livelihoods and food security, many farmers lack proper financial management practices, particularly record-keeping, which limits their productivity, access to finance, and long-term sustainability. Using primary data collected from 150 smallholder farmers through structured questionnaires, the study employed descriptive statistics, logistic regression, and Propensity Score Matching (PSM) for analysis. Results revealed that most respondents were middle-aged men engaged in family-based farming with modest education levels and limited financial literacy. Although many kept informal records, only a few maintained formal financial documentations. Determinants significantly influencing record-keeping included education, access to extension services, credit availability, farm size, membership in farmer organizations, and financial training, while record-keeping difficulties had a negative effect. The PSM analysis showed that maintaining records increased productivity by 0.38 t/ha and farm income by ZAR 1,795 per season, both significant at the 1% level. The study concludes that financial record-keeping enhances smallholders’ efficiency, profitability, and resilience. Based on the study, the policymakers should prioritize strengthening rural extension systems and linking farmers to financial institutions. Extension officers should be capacitated to integrate financial management support into their advisory services, while credit providers can incentivize good record-keeping practices as a criterion for loan access. This approach would improve both the financial discipline and productivity of smallholder farmers, enhancing their long-term sustainability.