Agriculture a preferred sector

Current market conditions instil confidence for investment in agriculture, and financial institutions consider agriculture as one of their preferred sectors.

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This view is shared by Agri SA and Agbiz, which had facilitated a meeting with representatives of the agriculture divisions of the four major commercial banks to discuss matters relating to agricultural financing. During the discussions, the macro-economic conditions under which agriculture functions were considered, as well as the relatively favourable production and market conditions of the past five years which were supportive of profitability and asset growth within the sector.

While the overall financial position of agriculture is favourable, there are nevertheless certain commodity branches and regions which remain under pressure. The above organisations and commercial banks, however, regard these as exceptions which do not detract from the general optimism regarding the industry’s prospects.

Representatives of the commercial banks invited farmers to discuss with them their short- and long-term business plans and gave assurance that financing was readily available, including for farms claimed under the restitution programme. Applicants will obviously have to comply with normal criteria such as repayment ability and surety. Against this background, the fair market value of land remains an important prerequisite in creating confidence on the part of both financiers and investors in agriculture.

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Hans van der Merwe, Executive Director, Agri SA, 082 3880001
John Purchase, Chief Executive Officer, Agbiz, 082 4412308