When smallholders and previously disadvantaged farmers approach financial institutions for funding, they are often turned away, not because money isn’t available, but because of factors such as weak balance sheets and poor record-keeping.
By Lebogang Mashala, editor at African Farming
According to Sylvester Lubambo, development specialist at AFGRI Farmer Development (AFD), finance is actually the easiest part of the process.
“Funding availability is not a problem. It’s a straightforward process. However, there are some issues farmers need to address to become eligible. When you come to us, we look at your financial statements and whether you are in a position to repay,” he explained.
Lubambo highlighted that many black farmers are deemed “unfundable” because of issues such as poor record-keeping. “If I ask you what your yield was last year, you don’t know.”
Farmers Must Stop Undermining Their Own Work
He added that some farmers engage in disempowering practices. “Instead of opening a folio number with the nearest agribusiness to store their maize and build their own track record, some farmers hand produce to neighbours, strengthening others while weakening their own businesses,” he explained.
“Farmers must stop undermining their own work. Build a proper business, keep your records and present your farming enterprise as fundable. That is when finance becomes easy,” said Lubambo.
He added that weak governance also contributes to ineligibility for funding. He said many operate as sole proprietors or cooperatives without proper governance structures, which financial institutions are hesitant to fund.
Also read: Expert advice from Sylvester Lubambo, training and development manager at AFGRI Farmer Development
“We’re not going to dictate what kind of entity you should run. But my advice is: Separate your business from yourself. Register a company, keep clear records and get a bookkeeper. Even if the turnover is only R50 000 a year, make sure the information is there. Funders want to see proper controls and clear money flows,” he said.
“Governance remains one of the biggest stumbling blocks. Institutions want to see functional structures, accurate financial statements and proof of asset value. Farmers must document their machinery, equipment and other assets, with proper valuations.”
Also read: ‘Farming is not about luck’ – Sylvester Lubambo
Lubambo stressed that AFGRI does not discriminate between farmers who own land, lease it or farm on communal land, as long as valid lease agreements or permission to occupy documents are in place.
According to him, the minimum land requirements for funding depend on the crop:
- For maize, canola, soya and wheat (irrigated): 50ha;
- For soya and wheat (irrigated only): as little as 10ha; and
- For dryland farming: at least 100ha, although exceptions are made if farmers can demonstrate steadily improving yields (for example, consistently achieving above 5 tonnes per hectare).
Despite recent industry shocks, agriculture remains one of the most resilient sectors, contributing positively to the economy. “There is still money to be made in this industry when farmers do the right things,” said Lubambo.
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