In today’s agricultural environment, the industry is driven by two global obligations: feeding a growing population and protecting the planet. Executive head of mid-corporate at Nedbank, Herman de Kock, said South African farmers face the dual challenge of producing affordable food while conserving increasingly scarce natural resources.
South African farmers have long shown exceptional productivity, De Kock added, even under challenging conditions. However, their ability to sustain this performance requires more than resilience; it requires financial viability.
Sustainable farming practices
He said farmers can only implement environmentally sustainable practices if they are economically sustainable.
“It’s about understanding the finite capacity of natural resources and how we can use them, not only responsibly but also strategically to increase production. We believe the key lies in adopting a balanced and strategic approach to investing in sustainability within farming operations. Ultimately, this ensures improvements in your bottom line.
“The financial sector needs to focus on developing products that align sustainability with improved credit profiles. This includes structuring loans to be cash-flow friendly, offering lower interest rates for lower-risk, sustainable investments, and creating financing tools that support integrated, not just isolated, improvements,” he said.
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De Kock noted that too often, sustainability is viewed through a narrow lens. “It’s not just about solar panels or water-saving irrigation. It’s about a holistic strategy that integrates soil health, water management, alternative energy, and governance practices.”
He said sustainability must be understood holistically by going beyond considering just the financing that enables the investment to understand the actual business impact.
“Sustainability investments take time to yield results, so you need to assess and manage the risks. It’s not only the bank’s role to support this through finance. We can offer advice and financial expertise, but especially on an industrial scale, you also need experts in this field to evaluate whether the investment brings a tangible return.
“Ultimately, your return is improved profitability, which in turn improves the bankability of your farming operation. You need to consider sustainability from this broader perspective, and directors will increasingly be held accountable for managing climate-related risks and ensuring transparency in their disclosures. Failure to do so could lead to personal liability.”
Integrating environmental, social, governance strategies
De Kock emphasised the crucial role that data and technology play in evaluating environmental, social, and governance (ESG) metrics from a financing perspective. Yet, many farmers are reluctant to share data, citing concerns over privacy, cost, and competitive risk. However, farmers are realising that rising input costs mean that understanding net profit per hectare is more important than yield alone, he added.
“It comes back to the fact that it’s everyone’s responsibility. And from a banking perspective, the focus isn’t just on financing capex. It’s also about bringing in expertise to help ensure that the investment achieves its intended outcome. That’s critical. It’s not just about the money, it’s about education, assessment, and support.
“Farmers must be equipped with the right tools, knowledge, and incentives to adapt. By integrating ESG strategies into the heart of farming and finance, South Africa can secure its food systems, protect its environment, and enhance global competitiveness,” he said.
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