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Lessening the financial burden of farmers essential to save SA agriculture
Interest rates continue to put pressure on commercial farmers already facing rising debt levels, local farmers face rising input costs compounded by the weakening Rand, all while South Africa continues to suffer under the drought. Local banks need to address this challenge to protect the livelihood of one of the largest industires of SA.
©budabar via 123RF
Frank Winder, director at Advanced Agri, explains that affordability is becoming increasingly difficult for SA farmers, especially in terms of disposable income to purchase the necessary products they need to maintain their operations.
Preferential interest rates
“While most banks provide farmers with financial advice and assistance in the form of loans, it is becoming imperative that preferential interest rates are offered as more than 50% of commercial farmers have debt they need to repay,” explains Winder.
In March, South Africa’s state-run Land Bank offered concessional loans to assist drought-stricken farmers, with below prime rates of 7.5% to be repaid over an extended period. The bank also offered tax relief to livestock farmers in disaster declared areas, where exemption for income tax was granted for livestock sold as a result of the drought.
“Owing to decreased yields and increased costs, farmers are finding it difficult to repay their loans on time, and these loans are rolling over. Preferential interest rates will assist in lessening the burden on our farmers, and it is important that more banks are willing to offer this.”
Giving farmers a better chance for success
In a display of the challenges faced by the agricultural industry, South Africa has only managed to produce 7.2 million tons of maize, down 28% from last year’s nine million tons. Additionally, it has been reported that a sequence of dry spells and extremely hot conditions can be expected over central parts of South Africa in September.
“There is no clear end in sight for the challenges facing SA farmers, and lessening their financial burden will assist in enhancing their chance of success in less than favourable conditions,” explains Winder.
