Can you afford to become a farmer?

Throughout the 104-year existence of Farmer’s Weekly, our readers have turned to us for advice on agricultural issues. Currently, the most frequently asked questions are: “Where can buy a farm?” and “What do I farm?”

May 11, 2015 11:41 am

The first is an indication of how property agents have neglected developing farmers when marketing farms. Few of these farmers will be able to afford multi-million rand properties and their loan applications might require some extra work, but one would think the number of transactions in aggregate would make their business attractive to a property agent.

The second question touches on more complex issues. If an aspirant farmer does not even know what to farm, it indicates clearly how unprepared he or she is for the world of farming. If you haven’t grown up in a farming family how are you supposed to know anything about farming? Land dispossession has deprived several generations of the opportunity to learn directly from their fathers how to farm.

The editor of The Silo, Lesotho’s agricultural newspaper, explained to me some time ago that herdboys overgraze the veld because they have not had the opportunity to learn stockmanship from their fathers, who have all left home to work in South Africa’s mines.

Similarly, in South Africa, people were forced off their land, or they moved to cities to find better-paying jobs. Now that land is being restored to these people, they have no idea how to farm, nor do they have the capital to do so. In a 2013 report by Finmark Trust on the status of rural and agricultural finance in South Africa, the authors estimated that up until that year, government had spent R18 billion on acquiring land, as well as fixed and moveable assets, for historically disadvantaged farmers.

In contrast, it had supported these beneficiaries with working capital loans averaging just R1,5 billion annually. Commercial grain farmers have a rule of thumb for how much capital is required for inputs each year: the equivalent of the combined value of their farmland, fixed improvements and movable equipment!

It’s no wonder the failure rate of land reform projects is so high – beneficiaries don’t have the means to fund their farming operations themselves, nor do they get adequate funding from the state. The easiest way to access a loan for farm working capital is by using your land as collateral. This option is not available to communal farmers or land reform beneficiaries.

The state-funded Mafisa financial scheme was supposed to fill this gap but its reach was too limited and now it appears to have been put on ice. DAFF is doubtless looking at alternatives but they had better work quickly and this time focus on better implementation.