Role players in the agricultural sector have welcomed the newly launched Agro-Energy Fund worth R1.2 billion. The fund is said to be a much-needed solution to the agricultural sector that has been reeling from the effects of the country’s energy challenges.
The blended finance instrument, launched by the department of agriculture and Land Bank, is said to be a solution that will help the sector mitigate the impact of load shedding on the sector.
According to Agbiz CEO Theo Boshoff, the launch of the fund is a relief for the long-term competitiveness of the sector.
“The timing of it is also important, especially considering that in January and December last year we were the most constrained from a logistical point of view. That’s when we had the hot and dry conditions and stage 6 load shedding, so the sector struggled a lot, especially with irrigation.
“It’s good that the fund covers a good range of small to large-scale farmers. However, I do think in terms of some of the agro-processing this would assist, but there’s probably some additional private sector finances needed,” he said.
Boshoff advised applicants of the fund to not overextend themselves and take on more debt than they can afford.
Much-needed relief for farmers
Gauteng farmer and youth leader at the African Farmers’ Association of South Africa (Afasa) Lufuno Netshikhudini, described the fund as a breakthrough for small-scale farmers.
“This is a green light for small-scale farmers in terms of growth and expanding their business opportunities. But also to venture into solar systems considering that the electricity bill is too high for farmers and they are losing their production due to load shedding.
Meanwhile, Saamtrek Saamwerk coordinator Sehularo Sehularo said they are appreciative of the efforts made by the government and Land Bank to help farmers.
“We urge our members to knock on the right door and seek the relief fund as it will go a long way to keep them in business and relieve the burden,” Sehularo said.
“We also, on the same note, call on the government and Land Bank to monitor and evaluate the funds, to make sure the money goes to the right people and that there is a level of accountability. It is the taxpayer’s money after all.”
How farmers can benefit
Land Bank has set aside R710 million, which will be matched with an allocation of R500 million in grant funding from the department.
The fund is said to benefit all farmers. Smallholder producers are eligible for a grant of up to 70% of the total financed amount, with the grant portion capped at R500 000 per applicant, while medium-scale producers are eligible for a grant of up to 50% of the total financed amount, with the grant portion capped at R1 million per applicant.
Large-scale producers are eligible for a grant of up to 30% of the total financed amount, with the grant portion capped at R1.5 million per applicant.
Fund to reach over 500 farmers
In her address, agricultural minister Thoko Didiza said her department and other stakeholders felt it prudent to also intervene in providing solutions to enable food production and minimise production interruptions, particularly for producers who rely largely on energy.
“The scope of the Agro-Energy Fund will be used by qualifying producers for the purchase of capital equipment and infrastructure (Capex) for alternative energy sources directly linked to energy-intensive farming operations,” she said.
Meanwhile, according to Land Bank deputy chairman Andrew Makenete, the fund is expected to support over 500 farmers across the country.
“The Agro-Energy Fund may not reach all South African farmers, but this initiative, with its specific focus on renewable energy solutions, will catalyse the agricultural sector’s adoption of more sustainable farming practices.”
He said the initiative also signals the Land Bank’s commitment to playing its part in the mitigation of climate change which, if unmanaged, may negatively affect the country’s food security.
“As a member of the United Nations Environment Programme Finance Initiative (UNEP-FI) whose focus is to drive the banking industry’s awareness and role in the environmental agenda, we have committed ourselves to the principles for responsible banking.”
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