South Africa's agriculture, forestry and fisheries department is pledging to take over operational loans on farms of emerging black farmers who are "under distress" which amount to about 10 percent of the 283 farmers facing financial troubles as identified by the land bank.
The double pronged move is also intended to salvage the land bank from certain collapse.These farmers as a whole owe R232 million to the land bank, which falls under the treasury department. The department's spokesman Steve Galani confirmed that the operational loans amounted to about R23 million to cover the costs of operational loans of about 30 farmers.
The new agriculture minister Minister Tina Joemat-Petersson who reported at the results presentation of the land bank that the new rural development and land reform department would take over the land loans - about 90 percent of that which is owed. This was over R200 million.
The bailing out of the bank was welcomed by agriculture business chamber chief executive John Purchase and AgriSA president Johannes Moller who noted that the bailouts would reduce pressure on the land bank.
Purchase who also welcomed the announcement by the minister that government would look at merging and coordinating the work of the various development finance institutions.
Purchase noted at present that the various institutions were involved in targeting the same farmers in need and many of them shopped around resulting in duplication. The coordination of their work would remove unnecessary duplication.
Moller said the bailout could in fact rescue the land bank from going under but it was unclear where the two ministers would get the budgets from to take over the land and operational loans of the distressed farmers.
He said Joemat-Peterssen had noted during a recent meeting with AgriSA that she was considering the reestablishment of the agricultural credit agency which previous existed. This meant that farmers could loan money - at a lower rate - to pay back more expensive loans, including from the land bank.
Ben Marais, president of the Transvaal Agricultural Union which represents conservative white commercial farmers, said he was uncertain of the benefits of palming the bulk of the loan obligations onto the rural development and land reform department.
That department's mandate was to redistribute land and what had been happening was that commercial farms had been taken out of production. He was concerned that this would not change simply through this rearrangement of funding.
Joemat-Peterssen said it was of critical importance that government would not "just be throwing money into the problem and walking away." Government would not allow the distortion of normal flow of business processes to rescue individuals who were not willing to put their shoulders "behind the wheel".
