The impact of the energy crisis on the agricultural sector is felt right through the value chain – from a loss of production on farms, to processing, logistics, and point of sale. However, alternative energy solutions are available. In this week’s episode of African Farming, Ross Simons, the managing director of AFGRI Financial Solutions discusses financing options available to farmers seeking those solutions.
“We’ve all felt the impact of the energy crisis in our personal lives, but in the agricultural sector farmers must deal with it in their production cycle,” says Simons. “Whether it disrupts irrigation or the temperature for broilers, milling operations, or even cold storage in the value chain. The costs of not having a sustainable energy supply are felt daily on farms.”
There are solutions to these problems such as solar power, inverters, and backup batteries that can be tailor made to the farmer’s specific needs. However, all this costs money. This is where AFGRI Financial Solutions comes in. The company has partnerships with solar providers, as well as financiers, and can bring those solutions to the farmer.
“We’ll take a specific expert out to visit the farmer to understand what his energy requirements are. Based on that, a plan is decided upon, for example how many solar panels he will need, when it must produce power and more. This will determine the financial solution needed.”
Financing can be done through an ownership model by which it is financed outright and paid back over a set term. Another option is a power purchasing agreement. This is a long-term contract between an electricity generator and a customer over a particular time. That energy is purchased at very competitive rates and includes a well-understood escalation.
“The farmer is therefore not only certain of his energy supply, but also understands the pricing and cost of that energy,” says Simons.
For more information, visit afgri.co.za
