Access to patient capital that understands the realities of farming will be essential if South Africa hopes to resolve the ongoing challenge of agricultural finance for new-era farmers.
By Lebogang Mashala, editor at African Farming
This was the message from the Minister of Agriculture, John Steenhuisen, during a Nation in Conversation panel discussion hosted at Nampo Harvest Day 2026 by Phahama Grain Phakama (PGP), the development arm of Grain SA focused on supporting emerging grain producers.
Steenhuisen was responding to questions about how state-owned land leased by farmers could be leveraged to improve access to funding.
He said lease agreements are not considered bankable assets and therefore cannot easily be used by farmers to secure finance, especially from commercial banks.
“There is no need for the state to remain a landlord when we have deserving farmers who have already proven themselves successful. We should transfer this land to them so that they have an asset they can use to approach private lenders and secure the funding they need,” he said.
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Land Ownership and Finance Barriers
According to Steenhuisen, barriers to finance remain significant even within progressive lending institutions such as Land Bank, where lending thresholds and regulations often disadvantage emerging farmers.
“One of the regulations farmers are complaining about is the requirement to leave full-time employment while establishing a farming business. Many farmers rely on their salaries to sustain them while building their operations. Demanding that they give up their jobs as a condition for funding is essentially cutting off their legs and expecting them to move,” he said.
Steenhuisen described Land Bank as an institution still recovering after years of financial instability.
“It’s a patient that was taken out of the Department of Agriculture and admitted to hospital. The patient is better now, but it has not yet been discharged and brought back home,” he said.
He added that government should re-evaluate the role and purpose of Land Bank to ensure it responds effectively to the financing crisis facing the sector.
“When you look at the historic development of what is today known as the formal agricultural sector, it was built on institutions like the agricultural credit board that provided preferential patient capital to agriculture,” he said.
“Unless we secure patient capital that understands the dynamics of farming, we risk creating a development finance institution that operates no differently from a private commercial bank.”
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‘The Problem is not Money’
Steenhuisen stressed that the real challenge is not necessarily a shortage of money, but rather the shortage of patient and appropriately structured capital.
“Agriculture is very different from running a spaza shop, where you buy stock and immediately begin generating income. In farming, the high input and entry costs mean profitability takes time,” he said.
He argued that the commercial lending environment often lacks the patience needed to accommodate agricultural production cycles and risks.
“This is where progressive lenders like Land Bank can make a meaningful impact. Not that they should ignore risks, but they must recognise that some risks are worth taking, especially in agriculture,” he said.
Quinton Naidoo, head of socioeconomic development at the Kagiso Trust, echoed Steenhuisen’s sentiments, saying South Africa’s biggest challenge is not the availability of funding, but access to it.
“In my experience, many funding applications we receive are simply not fundable or not ready to be funded. We’ve noticed that applicants, as individuals or within the ecosystems they belong to, are often not prepared to receive funding,” said Naidoo.
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Readiness Beyond Financial Statements
Naidoo explained that “readiness” extends beyond bookkeeping and audited financial statements.
“It includes enterprise readiness, human readiness and ensuring that the ecosystem surrounding the business is also prepared,” he said.
He added that fragmented and uncoordinated support systems continue to undermine sustainable agricultural development.
“I don’t believe funding itself is the issue, nor is there a lack of economic growth potential in the sector. The real problem lies in the uncoordinated delivery mechanisms needed to guide people towards sustainable practices,” he explained.
AJ Mthembu, president of the African Farmers’ Association of South Africa (AFASA), also highlighted the difficulties black farmers face in accessing finance, particularly the lack of transparency around loan rejections.
“One of the major challenges is that applicants often do not understand why they were denied funding. There is no coordinated effort to guide farmers on what they need to improve before applying,” said Mthembu.
He urged funders, especially Land Bank, to intensify farmer education and outreach initiatives through roadshows and awareness campaigns.
“There is a common assumption that all farmers inherently know how to apply for funding, but this misconception is detrimental to their success,” he said.
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