While finance minister Tito Mboweni believes a R7-billion bailout could put the Land Bank “on a stable and sustainable development path,” Mzansi’s farmers are, instead, eager to see a new agricultural bank built around their needs.
Details are still sketchy, but Food For Mzansi can confirm that plans are underway to establish an alternative agricultural financial institution within a year.
Theo de Jager, president of the World Farmers’ Organisation and chairperson of the Southern African Agri Initiative (SAAI), is driving this initiative.
He says if deliberations go well, the independently owned and financed bank could be up and running by this time next year.
Deliberations for this bank didn’t start recently, he tells us, but in 2017 with the late agricultural icon Professor Mohammad Karaan. Karaan, a former member of President Cyril Ramaphosa’s advisory panel on land
reform, died of Covid-19 complications in mid-January.
3 business models explored
To assist farmers, De Jager says agricultural groups have proposed the part-privatisation of the Land Bank to ensure that farmers have a reliable source of finances.
The suggestions for a an alternative to the Land Bank follows the bank’s announcement of a R2.8-billion loss in the previous financial year with R8.18 billion in non-performing loans.
De Jager says currently three options are being pursued as an alternative source of financing for farmers. This include raising capital from foreign investors and making an offer for the Land Bank; establishing a farmer-owned co-operative bank; or establishing a structure to partner with international agricultural commodities.
“At the moment, we are in discussions with various potential investors from overseas. We have Zoom meetings every week to raise capital to make the government an offer,” says De Jager.
“while there is great interest from foreign investors, some are hesitant due to political uncertainty regarding land expropriation policies.” – THEO DE JAGER
What do farmers want?
Meanwhile Food For Mzansi has been inundated by up-and-coming farmers who are hopeful that a new, independently owned agricultural bank would cater for the current and future needs.
Sinelizwi Fakade, a commercial grain farmer near Ugie in the Eastern Cape, believes that such a bank must have a flexible approach.
“As a young farmer who has had a rough time experiencing financial access in the country, if this bank is going to be speaking to me, I need to be able to access credit with more relaxed but yet commercial standardised criteria,” he tells Food For Mzansi.
“So, for example, we are not breaking the standard of the financial levy. All we are saying is that in reality the new bank must speak to our concerns today.”
Even as a newly commercialised farmer, Fakade says, “If I don’t have a base of R12 billion, I am not considered in any form by banks currently. The financial structure currently is not speaking to my ability to enhance my opportunity. So, a new bank must be flexible towards the current needs of farmers.”
Expectations for ‘alternative Land Bank’
Eric van Zyl, co-designer of the The Agri Assistant app and a farmer from Vredendal in the Western Cape, desires an agricultural bank that focuses more on farmers’ sustainability instead of just filling their own pockets.
“I would like us to have a bank that will stand by me and help me in tough times. For example, with this alcohol ban, the wine farmers were impacted negatively by it. Our salaries got cut by 70% plus, so we only got 30% of our salaries,” he explains.
“Many farmers had to go to the bank for loans just to get through this difficult time. But what happened, especially since the alcohol ban, is that banks told us, ‘Listen, we see that your biggest income is mostly wine and currently we are in this situation with the alcohol ban.
“So, we can’t give you any money or help you out because we don’t know if the alcohol ban will be reinstated again and if you will be able to pay us back.’”
Mentorship and financial literacy
Alfreda Mars, an award-winning grain and sheep farmer and the owner of Middelpos farm in the Western Cape, also hopes that a new agricultural bank would more flexible to assist particularly black farmers.
“Many of us are blacklisted at the moment and we couldn’t get help from any other bank. I applied to the Land Bank through the Jobs Fund for funding and I have not received anything.
“So, they are not really flexible in assisting the farmers. That is the one thing that we actually want to see, and they must be more open to the agricultural sector,” she says.
Annalea van Niekerk, a cattle farmer from Reitz in the Free State, tells Food For Mzansi that a new bank must also provide mentorship and financial literacy to farmers to ensure help them become independent and successful.
Furthermore, Whernit Dirks, a commercial farmer from Piketberg in the Western Cape, hopes that a new bank will assist farmers with easier access to funding to purchase land and build production facilities on farms.