Special loans for farmers

2012-10-16 00:00

THERE were mixed reactions in the farming community regarding the special interest rate on loans to emerging farmers that was announced by Agriculture, Forestry and Fisheries Minister Tina Joematt-Pettersson.

The minister announced that the Land Bank will give a special interest rate of prime minus five percent, instead of prime plus five percent, to emerging farmers, Business Day reported yesterday.

President of National African Farmers Unions Dr Mandla Buthelezi said the special rate would have no impact on emerging farmers, and it would be “pouring water on the duck’s back”.

“What is the point in giving someone a discount on interest on loans when that person is either blacklisted or is battling to settle other debts due to lack of productivity?

“What we are saying is that the government should help the emerging farmers with grants and help those people progress and gain access to the markets.”

He said any loans given to emerging farmers will disappear without yielding profit and that person will have to pay it back, and that will leave farmers in a worse off position than they were.

There is confusion about the implementation of the rate cut. Johan Pienaar, deputy executive director of Agri SA, said they understood it to be a special deal for emerging farmers, which would not be implemented across the board.

“This is to encourage emerging farmers to enter the market as it’s quite a challenge … without resources,” he said.

The minister’s spokesperson, Palesa Mokomele, said the rebate would be applied to smallholders and commercial farmers alike.

Pienaar said if the rate cut was implemented correctly it could help alleviate the burden of interest on emerging farmers. “We have been advocating for this, and we would have welcomed it being implemented across the board, but we are realistic that it will not be affordable for the Land Bank.”

The announcement is in line with a call by Finance Minister Pravin Gordhan in August that the Land Bank is to find ways to reduce the cost of lending money to farmers and to help rein in the failure rate of farms.

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