Money for South African farmers exists, but risk, missing collateral and businesses that are not yet ready keep it locked up, speakers told the South African Future of Food Conference in Centurion, hosted by Food for Mzansi with Land Bank and South Africa Wine.
"There's no question, there's enough money in the system. Why is it not going where you want it to go? That answer is risk," said Deon Scheepers, a lecturer in agricultural economics at the University of Pretoria who also works in crop insurance and farming. He pointed to land rights and collateral, especially where farmers have no title deeds to offer as security.
Robert Matsila, head of agricultural banking and monitoring support at Land Bank, said demand had exhausted the grant component of the bank's land and finance product. The bank is talking to government about a top-up and will offer concessionary loans blended with commercial loans so that farmers can keep planting through the summer grain season.
Quinton Naidoo, head of socio-economic development at Kagiso Trust, said the trust had hundreds of farm funding applications yet returned some money last year because it could not be deployed. It now judges applicants on the entrepreneur, the enterprise and the ecosystem, and has built a readiness framework and a "capital ladder" running from readiness funding through concessionary loans towards commercial finance.
Cuthbert Kambanje, an agrifood investment and policy specialist at the Food and Agriculture Organization's Southern Africa office, said instruments must be designed for small, fragmented farm businesses and questioned whether grants alone de-risk enough to draw in commercial capital. He called for financial and regulatory tools together, regional cooperation and investment along economic corridors.
Diale Tilo, executive director of the Kgodiso Development Fund, said the fund lends across the food system, from farming to processing, packaging, transport and storage, without requiring collateral or equity and can finance 100% of the amount, provided a business shows it generates enough cash in its cycle to repay. The report was written by Patricia Tembo.
Source: Food for Mzansi
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