THERE is a need for agricultural finance in South Africa, particularly developmental finance or flexible finance products, to help new entrant farmers, says Agricultural Business Chamber chief economist Wandile Sihlobo.
His remarks follow meetings around the country with various Agbiz members and other role players in the agricultural sector.
“Agricultural finance is another topic that has received attention in various engagements. This encompasses the blended finance programme led by the Department of Agriculture, Land Reform and Rural Development, which should be open to all agribusinesses and financial institutions, and separately, the Land Bank, which could also play a key role in supporting the new entrant farmers to the sector, as well as the existing commercial farmers,” Sihlobo said.
This area would require increased focus during phase two of implementation of the Agriculture and Agro-processing Master Plan.
The blended finance instrument from the government should include all agribusinesses and financial institutions in the sector.
“At the same time, the government should also support the reform of a critical developmental finance institution, that is, the Land Bank, which has a long history in the sector. As we have argued previously, the goal should be to build agricultural finance instruments that help grow the agriculture and agribusiness sectors of 'South Africa Inc'."
Other issues that were raised by the sector role-players included the need for expansion of the export markets and much-needed effort to regain the existing ones, such as the EU; the need for improvements in logistics – roads, rail and ports; and the need to build trust, accountability, as well as monitoring and evaluation of various sector plans.
Agbiz said priorities were:
- The government/DALRRD should in the near term, implement all the regulatory interventions that required less capital and provided consistent updates to social partners.
- Reprioritise the DALRRD budget in line with the master plan interventions to signal the government's commitment to ensuring the plan's success.
- Support state entities such as Transnet to improve effectiveness at the ports.
- Work closely with the National Treasury to resolve the Land Bank's financial challenges, so that the bank could play an influential role as outlined in the master plan.
- Intensify efforts to open more export markets for South African agriculture.
- Release land in the government's hands to new beneficiaries with long-term tradeable land rights or title deeds.
- Root out corruption at various levels within the department to ensure the effectiveness and efficiency of staff.
It also said that the private sector should build trust among various farmer organisations and agribusiness to have a unanimous private sector voice, which should speak to the government.
The private sector should also recognise the need for collaborative efforts in rebuilding South Africa and expanding the agriculture and agribusiness sector, through a partnership with new entrant farmers in the development programmes of various commodity organisations, as well as showcase and expand partnership programmes that have proven successful in various commodities and parts of the country.
Sihlobo said Agbiz believed these were interventions that could move the needle with regards to translating the ideas on paper in various plans into tangible projects that could contribute to growth and job creation in South Africa's agricultural sector.
“South Africa's agricultural sector faces numerous challenges, which are now well understood by both the government and various industry stakeholders. South Africa needs a plan of action, particularly on the four areas of interventions that were consistently outlined in various farmer and agribusinesses engagements we had this past week,” he said.
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