The Land and Agricultural Development Bank of South Africa (Land Bank) has responded to recent public commentary and media reports about its debt recovery processes and ongoing legal action involving some agricultural borrowers.
In a statement, Land Bank said it recognises the concerns raised and the significant impact that financial distress can have on farmers, their employees, families and rural communities.
“As a development finance institution with a specific mandate to support South African agriculture, the bank remains committed to engaging borrowers constructively and, wherever reasonably possible, pursuing solutions that support the sustainability of viable farming enterprises.
“At the same time, Land Bank has a responsibility to safeguard public resources and to manage and recover monies advanced in accordance with applicable law, contractual arrangements and sound banking practice,” Land Bank said.
Clarification regarding ongoing litigation
This follows reports and allegations that Land Bank has engaged in “controversial” and “aggressive” debt-collection methods against farmers.
The bank responded that some recent commentary relates to loans historically originated through agricultural businesses and cooperatives under service-level arrangements with Land Bank and subsequently transferred to the bank.
“Certain borrowers have challenged Land Bank’s legal standing to enforce these debts, including the validity and enforceability of the underlying sale and cession arrangements. These issues are the subject of ongoing litigation and are therefore appropriately determined through the courts,” Land Bank stated.
Land Bank said it has also obtained favourable judicial outcomes in matters concerning its rights and continues to place the relevant evidence before the courts for determination on the merits.
Related stories
- North West and Land Bank partner to boost emerging farmers
- Land Bank unlocks growth, tackles financing gaps at Nampo
- SAWIPB launches opportunity to formalise wine industry skills
- Emseni Farming scoops top honour at KZN Top Business Awards
Given that a number of these matters remain before the courts, the bank said it would refrain from commenting on the detailed merits of individual cases and will respect the judicial process. The litigation matters are therefore sub judice.
Land Bank’s approach to distressed borrowers
According to Land Bank, it does not regard liquidation or the disposal of productive agricultural assets as its preferred approach to resolving borrower distress.
“Where circumstances permit, the bank seeks to engage clients to identify sustainable solutions, which may include restructuring, voluntary disposal of assets, repayment arrangements and other appropriate resolution mechanisms. Formal legal recovery processes are pursued where reasonable alternatives have been exhausted or where this is necessary to protect the bank’s legitimate interests.
“Land Bank recognises that not every proposal can be accommodated, as any agreed solution must be commercially sustainable while providing a reasonable and viable basis for addressing the outstanding indebtedness.”
The bank said it remained open to making greater use of mediation and other alternative dispute-resolution mechanisms where these may contribute to the fair, constructive and efficient resolution of longstanding disputes. However, it stated that to date, no formal engagement or proposal regarding alternative dispute resolution has been presented to the Land Bank for consideration.
“Land Bank acknowledges that each borrower circumstance is different. We remain committed to ensuring that recovery decisions are considered responsibly, within the law and with due regard to both its developmental mandate and its fiduciary responsibility to safeguard public resources.
“Land Bank respects the constitutional oversight role of parliament and notes the petition submitted to the National Council of Provinces concerning these matters.”
It reiterated that should the bank be called upon to participate in any parliamentary process arising from the petition, it would cooperate fully and provide the relevant information required to assist parliament in its consideration of the issues raised.
“Land Bank’s mandate is to support the development, transformation and long-term sustainability of South African agriculture. The bank, therefore, has no interest in unnecessarily displacing viable farmers or undermining productive agricultural enterprises.
“At the same time, responsible development finance requires the bank to balance support for its clients with prudent management of credit risk and the protection of public funds,” Land Bank said.
READ NEXT: FMD milestone: North West vaccinates over one million cattle
