Wannabe farmers battle for funds

Farming has ‘high barriers to entry’, which means it is neither simple nor cheap to get into farming, and it can be a tough way to make a living.
Farming has ‘high barriers to entry’, which means it is neither simple nor cheap to get into farming, and it can be a tough way to make a living.
Shutterstock[http://www.shutterstock.com]

Cape Town – While the farming sector has a lot of appeal for budding entrepreneurs, the reality of getting off the ground is daunting, but with collaboration and government funding, there is a glimmer of hope.  

Fin24 user Mduduzi Dube, 27, is a freelance TV producer based in Soweto who has a keen interest in farming.

“I currently own 10 cows and would like to see my investments grow,” he told Fin24. “I am struggling with acquiring land that I can farm on, as well as knowledge and funding to expand further.”

Diale Mokgojwa, head of enterprise development at Standard Bank, said Dube should do research on leasing land from individuals and government.

“You can also contact the department of Rural Development and Land Affairs for assistance for more information.”

Fetola director Catherine Wijnberg said the farming sector has a lot of appeal. “We all know that people have to eat, and that agriculture has a bright future, and there is certainly great potential in this sector,” she said.

“As a young black South African, you may be able to attract funding to cover the capital costs of land, stock, equipment and the like, but the reality is that you will also need some matching funds, proven farming expertise and a realistic farming business plan in order to do so.

“You have 10 head of cattle at the moment – perhaps you can team up with other small farmers in your area and create a working partnership? Together you could apply for funds from the Department of Social Development, or the co-operative fund at the dti to put in a small feedlot, for example. This community approach has a lot of potential as a business model for a part-time farmer.

“Alternatively you could lease grazing land from another farmer, and pay for it by sharing the offspring. Leased land is common in other countries and is a good way to farm without having to find a fortune to purchase land. You could also become a ‘mixed farmer’ by renting land with good water supply and raising a range of animals (sheep, goats, chickens, vegetables) to make intensive use of a smaller piece of ground.

“If you plan to ‘go big’ you will need to find a partner who has commercial farming skills, a partner who has money, and a partner who has land, plus access to a market that wants your cattle at the right price. Together you can achieve the scale of operation to turn this into a profitable commercial business, but you will need a large amount of money and considerable farming and business expertise.

“One final comment is that farming has ‘high barriers to entry’, which means it is neither simple nor cheap to get into farming, and it can be a tough way to make a living.

“There is an old saying, ‘How do you make a small fortune in farming?’ To which the answer is, ‘By starting with a large fortune’; so beware before proceeding!”

Budding farmers lack investment

Fin24 user Tebello Mainoane wants to set up a fish farm in East London and has struggled to get finance and investors for three years.

Fin24 user Netswanesoni has three pigs and wants to expand, but doesn’t have money to grow.

Standard Bank’s Mokgojwa said: “We would suggest that you find an investor to support your venture. The scale of this business is too small for a bank to consider.”  

Fin24 user Desreen Walker wanted to start a chicken farming business. “I have been doing a lot of research, have the minimum amount of funding available, but I don’t know where to start,” said Walker.

“Furthermore, I would like to opt for the option of leasing agricultural land from the government versus purchasing my own land, but again I don’t know where to start, who to contact, or how do I get mentored by an expert in this field that can help me to start the background work and guide me toward setting up my business.”

Mokgojwa said: “Please contact the department of Rural Development and Land Affairs for assistance in acquiring a farm.”

For more advice and assistance, contact:

- Rural Development and Land Affairs on (012) 312 8911 or visit Rural Development
- Agri SA: emerging farmer division
- Land Redistribution for Agricultural Development (LRAD) Programme (W Cape)
- National Empowerment Fund (NEF)
- The DTI Cooperative Fund
- Program for Land & agrarian Studies) PLAAS

- Fin24.

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