South Africa’s food security and the survival of agribusinesses depend on the entry of more black farmers to the sector. While subsistence farming has a place in rural communities, commercial farming needs to grow to sustain agriculture. This growth requires the support of innovative financing packages.
Access to financing is probably the biggest hurdle faced by farmers worldwide, says Nico Groenewald, head of Agribusiness at Standard Bank. “This is particularly true in South Africa, where emerging farmers coming into the market need capital to start their businesses.” Transformation requires money and the means to fund it, whether through grants or loans, must be found.
Groenewald believes working together is key to meeting the financing challenge. “We need to become more collaborative; we need to break down the silos so that we can become more effective and gain momentum,” he adds.
In a collaborative initiative, the Department of Agriculture, Land Reform and Rural Development (DALRRD) has relaunched the Blended Finance Scheme, which backs private funding to support black participants in agricultural production and processing and in land acquisition.
Many transformation financing models have been ineffective, primarily because they have been driven by political rather than agricultural agendas. Investors and lenders need to know they are engaging with serious operators. This is where successful commercial farmers play an invaluable role.
Witzenberg Partners in Agri Land Solutions (PALS) is a land reform and transformation initiative started by a group of commercial fruit farmers in the Ceres area. Based on sound business principles, mentorship and the training of black farmers, it is a collaborative partnership between commercial farmers, local communities and government.
Black commercial stone fruit farmer Raymond Koopstad of the farm La Vouere says he has benefited enormously from his association with PALS.
There is compelling evidence that these transformation models can be profitable and sustainable. “We should replicate the successful transformation models in agribusiness without further delay,” concludes Groenewald.