During the third episode of African Farming, the agricultural television show on Mzansi Wethu (channel 163), Mr Praveen Dwarika, Managing Director of Lemang Agricultural Services, explained to the show’s host, Angie Khumalo, why it is possible for them to provide financial loans to farmers that don’t own their land.
Mr Cocky Mokoka leases his farm, Holfontein near Vanderbijlpark in Gauteng, from the government. He bought his first farm in 1997 near Zeerust in North West, but the weather wasn’t optimal for his plans with the farm. He learned that government was giving people the opportunity to lease land and that is how he ended up on a farm in Vanderbijlpark. This farm is bigger than the one he had owned, so it has given him the chance to add cattle and more crops to his business.
However, like many emerging farmers, Mokoka finds himself in the difficult position of having to lease his farm from government. This of course complicates the securing of loans as he can’t put up his farm as collateral. Mokoka does however already have a loan with AFGRI.
AFGRI’s passion for development of new-era farmers comes from its deep-rooted and multi-generational support of farming in South Africa. In keeping with its commitment to enable food security, AFGRI remains acutely focused on empowering new-era farmers to become commercial farmers by providing them with, amongst other services, access to financing.
“Generally, financiers have always looked at land as the primary security. It has almost become a concern or fear amongst farmers, that if they don’t have ownership of the land, they can’t raise financing against it.
“We have a solution for that. Moveable assets on the farm play a great role and we attach a value to it because we know what agricultural equipment is worth, and how easy it is to realise cash from those assets,” explained Dwarika.
“Insurance policies also have a very important role to play. We can lend against crop insurance policies. So, it is important where it’s an area with a good climatic record, good production records, and good long-term averages from crop production. We can attach a value to the proceeds of insurance policies and lend against those.
“There certainly is a possibility to raise financing without having ownership of the land. Ultimately, it is about banking the farmer, not so much the farm. It’s about the passion and the drive and the capabilities that exist for the farmer that we place a lot of reliance on.”
For information: follow the link, https://www.afgri.co.za/lemang-agricultural-services/