Defend Truth

Opinionista

Land Bank’s maladministration is crippling agriculture as farmers buckle under the stress of Covid-19

mm

Noko Masipa MP is a DA member on the Portfolio Committee on Agriculture, Land Reform and Rural Development.

One of the main reasons for the lack of government funding for agriculture is the fact that the Land and Agricultural Bank of South Africa has not been functioning for the past 18 months. Government’s loan guarantee could not assist farmers because of the Land Bank’s maladministration.

President Cyril Ramaphosa, in his most recent newsletter, acknowledged that small businesses were helped by various grants and loans provided by a number of government departments to survive the lockdown. While this is all good and well, the reality is that many businesses in need never received a cent from government. 

It was particularly the agricultural sector that experienced what can only be described as negligence from government. 

So, while the president spoke glowingly about the support offered to businesses, he failed to acknowledge that many commercial and non-commercial farmers never received any support from government. 

One of the main reasons for the lack of funding is the fact that the Land and Agricultural Bank of South Africa has not been functioning for the past 18 months. Government’s loan guarantee could not assist farmers because of the Land Bank’s maladministration. The bank was allocated a mere R100-million to support farmers affected by Covid-19. Yet, despite farmers facing severe liquidity challenges, this funding has yet to be exhausted. 

Farmers were also, surprisingly, deemed to have sufficient collateral in the form of land, infrastructure, and biological assets and were therefore excluded from the government guarantee of R200-billion set aside for businesses to fight the impact of Covid-19. 

The fact that much of government’s Covid-19 relief packages had race-based qualification criteria attached meant that while government might have striven to address inequalities of the past, they have only succeeded in perpetuating current financial struggles. By excluding certain commercial farmers from applying for Covid-19 relief, government has inadvertently allowed farmworkers of all colours working on those farms to face financial ruin.

The Department of Agriculture, Land Reform and Rural Development also failed to grasp the importance of protecting biological assets on farms, and the impact that it would have on income generation and the quality of future products from these farms. These biological assets, grapevines on wine farms for example, are typically reported in the balance sheet of companies and play a key part in capital raising, and as such are important economic assets vital to the business of agriculture. 

The most recent census of commercial agriculture shows that in 2017 agriculture created 757,628 direct farm jobs with a total wage bill of R36.7-billion from more than R120-billion farming debt. A capable state would protect this at all costs and not seek to destroy it.

The president mentioned in his newsletter that many companies are struggling to cope with the fallout of months without trade. For the wine industry, this lack of trade was imposed by government. This lack of trade meant a lot of pressure was placed on many farmers’ financial positions to maintain their infrastructure and biological assets. 

It should be noted that only 92,067 hectares of the 122 million hectares in South Africa are under vines and in only five demarcated regions, 29 districts and 92 smaller wards, yet more than 300,000 individuals are employed in this industry. The DA and many other concerned parties have constantly reminded government of the role these producers play in the bigger schemes of things, but national government failed to listen and to extend any support to them. 

The DA supports the president’s call to create an enabling environment for businesses to recover, spur job creation and attract investment. However, the president’s message seems to have fallen on deaf ears in his own party. The rising minimum wage and 27c a litre hike in the fuel levy is not supporting his call. 

There clearly seems to be no plan to support struggling farmers. Instead of being more flexible, the government continues to place restrictions on the agricultural sector on top of the job-killing and debilitating lockdown regulations. 

The president’s newsletter was filled with apparent “good intentions” for businesses but failed to acknowledge the businesses in the agricultural sector. A sector which he and his government continue to destroy with the following failures:

  • The expropriation of land without compensation through the amendment of Section 25 of the Constitution will ultimately thwart any attempts at true land reform and any plans to save the ailing economy;
  • Inflexible labour laws and the continuous rise in the minimum wage is against the spirit of saving jobs. The administrative burden and costs involved in applying for these exemptions are not worth it at all because of the incompetence and red tape of national government;
  • The increase in fuel levies is a huge cost on any farming operation. Farmers would want to see lowered input production costs. However, the budget speech announcement of an additional 27c per litre fuel levy is not going to bring down the input costs;
  • The Land Bank is failing and plagued with maladministration with poor support from government as a shareholder. This is not a great message to potential investors or creditors;
  • In 2017 government announced that it is working on a blended-finance capital-raising model to mitigate the risks in the transformation of the agricultural economy. The president went on to announce the implementation of R3.9-billion blended finance in 2019. This was not executed, and we do not know what happened to the R3.9-billion; and
  • The discriminatory approach to relief during a disaster has the potential to create more disasters, such as job losses, hunger, social problems in our communities and economic recovery challenges.

The most recent census of commercial agriculture shows that in 2017 agriculture created 757,628 direct farm jobs with a total wage bill of R36.7-billion from more than R120-billion farming debt. A capable state would protect this at all costs and not seek to destroy it.

For government to save agriculture it needs to reconsider its reform agenda and implementation instead of rushing the processes and making announcements to thrill voters. Government’s decisions must take into account farmworkers, unemployed farming and agriculture graduates, farmers, other stakeholders and investors, and local and interlinkages of the national and international economy. DM

Gallery

Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet

Please peer review 3 community comments before your comment can be posted