“The road hasn’t been easy, but for aspiring [commercial-scale] farmers like myself, there’s a crucial message: keep knocking on doors and seize the opportunities government provides.” These are the words of Happy Letsitsa, a crop farmer from Welkom in the Free State whose success story highlights the power of the Land Bank’s blended finance scheme.
Speaking at Food For Mzansi and Land Bank’s lunchtime conversation series presented as part of the 2024 Nampo Harvest Day currently underway in Bothaville, Letsitsa inspired new-era farmers with his journey from financial advisor to farmer.
Letsitsa said he aims to farm on 1 500 hectares. Currently, he is operating on 900 hectares of leased land. “To be a commercial farmer, one must operate on a scale of over a thousand hectares at least, and that is what I’m looking at.
“But I must say from the onset, farming is tough – especially when you do not have the capital to start your operations. There will be chancers, but to farmers out there, be aware and knock on the correct doors. Do not let chancers take you for a ride,” he said.
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Letsitsa described his blended finance partnership with Land Bank as a game-changer, citing its significance in not only securing financing for his farming ambitions but also providing valuable expertise. Prior to this collaboration, he had unsuccessfully approached other banks.
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Blended finance paves way for inclusive agriculture
Land Bank’s popular blended finance scheme, presented in partnership with the department of agriculture, land reform, and rural development, offers both loan and grant components to previously disadvantaged farmers.
These farmers focus on grains and oilseeds, fruits and nuts, livestock, agro-processing, wool, mohair, and cotton, which are the targeted commodities aligned with the Agriculture and Agro-Processing Master Plan.
Its goal is to commercialise development farmers, facilitating the meaningful participation of black producers and majority black-owned enterprises in owning and controlling agricultural value chains, explained Sydney Soundy, the executive manager: strategy and communications and acting executive manager: commercial development and business banking at Land Bank.
“It is important we recognise the challenges faced by the agricultural sector in terms of its current dualism, where you will find that the established commercial enterprises are owned by whites and there is very little participation by historically disadvantaged persons,” said Soundy.
“Some of the figures show that not more than 5% of the value of activity comes from black entrepreneurs in the agricultural sector, so blended finance was established as part of the solution to increase the inclusion of black participants in the sector.”
Responding to a question by Food For Mzansi co-founder Ivor Price, Soundy added that there was little truth to perceptions that Land Bank had ditched white commercial farmers to focus solely on black farmers.
More than 80% of the bank’s book is still dedicated to white commercial-scale farmers, which is hugely important. The only change was to also accelerate the growth of black farmers to aid food security in a country where the average farmer is 64 years old.
Accelerating farming applications
Meanwhile, Chris Chaka, Gauteng provincial manager of Land Bank, urging farmers from across South Africa to interact with the bank and allow the due processes to follow when their applications are in process.
“So, agriculture is a multifaceted sector, and different commodities have different types of investment and capital requirements. As a bank, we are a loan-based institution, so we need to secure funds as well to continue operating. And to add [to a question raised by an audience member], yes, we cover all types of farming.
“However, our loans have rules and processes to be followed. We ask that farmers collaborate with us, and provide us with correct information to allow the feedback time to be quicker. We should also highlight that no money, no matter the value, will be disbursed without us visiting the farm,” he said.
Chaka said he understands the frustrations that some farmers have with regard to the approval processes of applications. In the past, these processes were handled only by the national office; however, it is now handled in provinces, which has sped up the processes in many instances.
“We were also frustrated ourselves, but now that we have been given some power as the ground forces, we are able to make those decisions on applications,” he added.
Tech-savvy farming
Mzi Shabangu, GIS specialist for the agricultural technical services department at Land Bank, explained how the bank uses technology to better understand farming operations and assess future potential.
By utilising Geographic Information Systems (GIS), Land Bank gains insights into soil quality, climate patterns, and crop yield potential, aiding in informed decision-making for loan applications. This technology also helps in anticipating trends and identifying emerging opportunities in agriculture, ensuring the bank supports the growth and sustainability of farming enterprises.
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