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On-farm tree cultivation is considered an important strategy to mitigate detrimental environmental impacts of agricultural land-use change (ALUC). In South Africa, however, little is known about farm-level incentives and constraints that govern ALUC decisions among small-scale farmers. To address this knowledge gap, this study employs a mixed multinomial logit model by using a combination of revealed and stated preference data. After correcting for endogeneity, the estimated results show that decisions about ALUC are rationally derived and driven by clear but heterogeneous preferences and trade-offs between crop productivity, food security and labour saving. The results further show that the decision to plant sugarcane is constrained by landholding, whilst farmland afforestation is negatively influenced by household size. Decisions to convert land use are also driven by the behaviour of peer groups and agro-ecological conditions. Based on these findings, important policy implications for sustainable land use are outlined.