‘View agriculture as an investment vehicle’

File picture: Juho Tastula

File picture: Juho Tastula

Published Mar 15, 2016

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Johannesburg - Standard Bank on Tuesday urged South Africa’s farmers to view agriculture as a long-term investment vehicle despite the ongoing drought that was crippling the industry.

The bank’s head of Agribusiness SA, Nico Groenewald, in a statement said although agriculture had always been the backbone of most rural economies, it can become a social and financial investment vehicle capable of driving positive change at national and regional levels.

Read: Drought hits SA's citrus crops

Groenewald advised that farmers wanting to take “an investment approach” should stick to the basics of financing, as proven by banks.

Groenewald was speaking at Standard Bank’s annual road show held in Centurion on Tuesday, where he encouraged primary producers to take a long-term view rather than being caught up in the immediate crisis of the country’s worst drought in 80 years.

“This is not just a financial consideration. It also has immense social implications. It will shift agriculture into the domain of social investment, whereby people invest not only for a financial return, but also to ensure that society functions more equitably as a result of their input,” Groenewald said in the statement.

Groenewald also said that banks were in the business of creating wealth, “but they can do that only through entrepreneurs who invest in themselves and the future”.

“We believe it’s time for farmers to be such entrepreneurs,” Groenewald said.

Groenewald said banks with agricultural business units provided ancillary services that could help farmers achieve a competitive advantage and mitigate their risks.

These include; access to specialists focusing on financial viability, repayment ability and appropriate debt restructuring, agricultural market trend and information services, agricultural publications, value chain funding solutions, and tangible support of organised agriculture.

The government’s Crop Estimates Committee last month said South Africa would likely harvest 7.255 million tons of maize in 2016, 27 percent less than the 9.95 million tons reaped last year. They attributed the decline in the harvest to the drought and late plantings.

Local and foreign traders said as a result, South Africa would have to source hundreds of thousands of tons of white maize in the coming months from Mexico.

According to Grain SA, the country would need at least R20 billion to import the 5 to 6 million tons of maize needed to mitigate the effects the drought has had on crop production in the country, which had cost the agricultural sector R16 billion so far.

White maize is the staple source of calories for most South African households, but shortages are looming, driving up domestic prices and inflation.

Agriculture’s value added percentage of gross domestic product in South Africa was last measured at 2.49 percent in 2014, according to the World Bank.

ANA

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