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.
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Denne historien er fra May 24, 2019-utgaven av Farmer's Weekly.
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Syngenta Seedcare celebrates a decade of innovation
Syngenta's ambition is to enable their customers' investments to grow in healthy soil from treated seeds to young plants through innovation and collaboration, writes Magda du Toit.
Agri workers shine at Western Cape awards
Lindie-Alet van Staden, a garden and olive orchard manager at L’Ormarins Wine Estate in Franschhoek, was crowned as the Western Cape Prestige Agri-Worker of 2024 at a gala event recently held near Paarl.
Small and large farmers recognised at grain awards
The annual Grain SA/Syngenta awards ceremony bears testimony to the quality of farmers in the grain industry.
Growing partnerships: Fedgroup's flexible and innovative approach
Janine Ryan spoke to Warren Winchester, general manager of impact investing at Fedgroup, about why the company became involved in agriculture, and what it offers farmers and their immediate communities.
Why fish farms fail, and how to avoid becoming a statistic
The popularity of launching fish farms is not matched by their success. Leslie Ter Morshuizen, owner of Aquaculture Solutions, explores the factors that cause most of these businesses to go under.
Where history and modernity meet in a luxurious setting
Brian Berkman kept his eyes peeled for ghosts in the oldest continuously run hotel in South Africa, but all he found was a fabulous two-night stay.
THE HITCHING POST
I'm a stylish elderly lady with a radiant glow and a good sense of humour that keeps me young at heart.
Cutworms: check the weeds on your fields!
Zunel van Eeden explains why understanding the ecological interplay between cutworms and weeds is crucial for effective pest management. Producers should disrupt the life cycle of cutworms to minimise crop damage.
Does high-density grazing mimic grazing patterns of game?
In their paper on high-density grazing in Southern Africa, professors Angelinus Franke and Elmarie Kotzé from the Department of Soil, Crop and Climate Sciences at the University of the Free State say high-density grazing systems may not accurately reflect natural ecosystems. Roelof Bezuidenhout reports.
Global grain outlook: 2024/25 marketing season
In its latest summer crops report, the Crop Estimates Committee says South African farmers intend to plant 4,47 million hectares of summer grains and oilseeds in the 2024/25 season, up 1% from the previous season. As South Africa exports maize and soya bean, Annelie Coleman reports on the latest trends in the international grain and oilseed markets, amid fluctuations in weather conditions and ongoing armed conflicts.
