Page 29 - MiNDSPACE Issue 2 2022 - Old Mutual Corporate

The overriding factor, though, is the precarious financial situation in which many find themselves. Given their financial constraints and lack of business confidence, their strategy is to cut costs and reduce farming activities. This has a spillover impact on the local economy, the number of people employed, food production and the farmer’s profitability.
R346.035 billion
The value of SA’s agricultural production in 2020/21 (R310.179 billion in 2019/20).
– Agri SA
There is an exciting group of young Black farmers emerging. They are professional farmers and not subsistence farmers, not small-scale farmers, not mega farmers. They are young, they studied agriculture and they want to farm professionally. They attend big events like Nampo Harvest Day where they come looking for opportunities.
And yet there is an interesting new phenomenon.
A NEW COHORT OF PROFESSIONAL BLACK FARMERS
They, too, have their financial challenges. They invest their own money and farm independently, but they get no help from government. A bank may be happy to lend them R5 million or R6 million to buy a farm, but they also need to borrow money to start production. This is not unusual and most farmers get a production loan each year that they repay after the harvest.
Large farmers are more likely to get production loans as they can put up the farm as collateral. Either way, I have come to realise that our farmers often produce food on the back
of debt. South Africa’s total agricultural debt has grown by 7.5% to R204.8 billion at the end of December 2021. It equals approximately 35% of agricultural assets. Gross agricultural income for 2021 has grown with 11.5% to R368 billion, but the cost of inputs has grown with 7.1% to R202 billion.
In these young farmers’ case, though, banks often don’t extend further credit. Perhaps because they already owe a large amount or suffered drought the previous year and could not reach their targets. Many are then forced to let their land, or a portion of it, to larger farmers to avoid having to sell it.
changeSPACE food security
Christo van der Rheede
is Executive Director
of Agri SA where he combines his work with a deep-rooted dedication to community development – a commitment he
has lived out since beginning his career as
a music teacher on the Cape Flats.
In a recent SAfm interview, Mmatlou Kalaba, an agricultural economist and lecturer in Agricultural Economics at the University of Pretoria, described what would happen if small and medium-sized farmers were to be removed from the market: when external factors cut deep, like the Ukraine/Russia war that is pushing up the price of inputs, smaller farmers play a critical role in rural and township economies where they supply traders and local shops with affordable foodstuffs. If they disappear, those areas will be hit hard.
This is just one of the reasons that the new Agriculture & Agro-Processing Master Plan has been created – to ensure inclusivity and equal access to equal opportunities.
WHY UP-AND-COMING FARMERS MUST BE SUPPORTED
Despite its relatively small share of South Africa’s total GDP – 2.3% in 2020 – primary agriculture is an important sector in the South African economy. Agriculture remains a significant provider of employment, especially in the rural areas and a major earner of foreign exchange.
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