Finding money for agriculture during a drought is difficult. The South African agriculture sector, farmers and financiers alike, is facing a perfect storm, according to Prof Sanlie Middelberg of the School of Accounting Sciences at North-West University. She spoke to Annelie Coleman.
WHY DO YOU DESCRIBE THE CURRENT SITUATION FACING THE AGRICULTURE SECTOR IN SOUTH AFRICA AS A ‘PERFECT STORM’?
A ‘perfect storm’ is defined as a bad situation, aggravated by a combination of adverse circumstances. Factors behind the perfect storm facing agriculture include the ongoing drought in certain areas of the country, policy uncertainty about the expropriation of land without compensation, and the decline in agricultural land prices because of this uncertainty.
This is exacerbated by minimum wage increases and labour law changes, as well as the decline in meat prices due to the foot-and-mouth disease outbreak. The situation is made worse by the volatility of the rand against major currencies. Excessive farming debt, lack of access to funding and crime also add to the crisis.
COMMERCIAL BANKS ARE A MAJOR AGRICULTURAL FINANCIER IN SOUTH AFRICA. WHAT IMPACT HAVE THESE CRISES HAD ON THESE INSTITUTIONS?
Commercial banks carry an enormous credit risk because of loan defaults and a decline in agricultural producers’ ability to present security for loans at the moment. This is underscored by the fact that 61% out of roughly R160 billion of farming debt in South Africa, as on 31 December 2017, is owed to commercial banks. Many farmers are unable to repay their loans because of failed harvests, ever-increasing input costs and low livestock prices.
Agricultural land is typically offered as security by a farmer when applying for credit, and a mortgage bond is registered over the property. The decreasing value of agricultural land and uncertainty around the loss of ownership negatively impact the value of collateral held by banks.
Denne historien er fra May 24, 2019-utgaven av Farmer's Weekly.
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Denne historien er fra May 24, 2019-utgaven av Farmer's Weekly.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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New farmers' seedling pitfalls
Inexperienced farmers may be tempted to grow seedlings from seed themselves, but they have much to gain by trusting a seedling grower at a nursery to perform this task for them instead
South African avocado production: a success story
Avocado production in South Africa has expanded markedly since the industry's humble beginnings over 80 years ago. From a small grove planted in 1938 in what was then Nelspruit, the industry has blossomed to seven million trees planted on 20 000ha. Dr Guy Witney, project manager at Great Brak Avos, spoke to Annelie Coleman about the country's avocado production.
Unlocking value through livestock exports
Exporting livestock might sound like a daunting business that's better left for big companies, but Gerrie Ferreira, who farms near Oudtshoorn in the Western Cape, has been doing it successfully for almost 30 years, sometimes in partnership with other breeders. He spoke to Glenneis Kriel about the huge potential this market holds, and offers some advice for farmers who are contemplating going this route.
An agribusiness's dedication to community upliftment
For agribusiness NWK, located in Lichtenburg, North West, corporate social investment is an important part of creating a positive influence alongside financial returns. Johan Bezuidenhout, NWK’s group manager of corporate marketing and communication, spoke to Annelie Coleman about why the company chooses to invest millions of rands in the area it operates in every year.
Empowering dreams, transforming lives
Since its launch in 2013, the Agri's Got Talent competition has revolutionised the lives of many farmworkers by unlocking their hidden talents and fostering a culture of empowerment. Glenneis Kriel spoke to various finalists about how the contest has changed their lives.
Foreign investment: agriculture maintains its appeal
South Africa remains a popular destination for foreign investors, despite an often negative outlook from its citizens. It is a gateway to Africa, and with its counterseasonal production to the Northern Hemisphere and favourable weather, local agriculture is especially well placed to attract foreign interest, bringing with it hope for rural communities
The real value and message of COP29 for SA agriculture
While the 2024 Conference of the Parties may have disappointed those who hoped for real progress, it's more important for South African agriculture to highlight its role in carbon mitigation
Improving efficiencies in feed and grain milling
Bühler, a Swiss-based company that provides solutions and equipment for various industries, including food and animal feed processing, has pledged that by 2025, it will deliver scalable solutions that will reduce energy, waste and water by 50% in the value chains of its customers.
Tips for better olive production
At an SA Olive Association field day in November, industry experts shared ways to improve olive production efficiencies, from soil preparation to harvesting.
More effort needed to protect vulnerable cheetah
On International Cheetah Day, commemorated every year on 4 December, emphasis was placed on the vulnerability of the species.
