Farmers turn to commercial banks as the Land Bank stalls

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If the Land Bank’s woes are not resolved, much is at stake, because the firm extends financing to small farmers that do not meet the lending criteria at private-sector banks. Picture: iStock/Gallo Images
If the Land Bank’s woes are not resolved, much is at stake, because the firm extends financing to small farmers that do not meet the lending criteria at private-sector banks. Picture: iStock/Gallo Images

Farmers are increasingly turning to commercial lenders to top up their working capital as the Land and Agricultural Development Bank battles a liquidity crisis.

The Land Bank, which supplies about 30% of loans in the agricultural industry, missed a loan repayment in April that triggered a cross-default provision in some of its bonds. As the state-owned lender works with its funders and National Treasury to restore its financial affairs, farmers are looking elsewhere.

“Some Land Bank clients are adopting a proactive approach in exploring new financial partners as they do not want to wait until the last moment,” said John Hudson, the head of agriculture at Johannesburg-based Nedbank Group’s business-banking unit.

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