Farm sales under pressure due to demand slowdown

Despite the debate about expropriation without compensation and the economic impact thereof on the agriculture sector, there is still demand for agricultural land in South Africa, according to Karl Markram, CEO of Farm Expert Properties and Auctioneers.

Farm sales under pressure due to demand slowdown

Despite the debate about expropriation without compensation and the economic impact thereof on the agriculture sector, there is still demand for agricultural land in South Africa, according to Karl Markram, CEO of Farm Expert Properties and Auctioneers.

Specialising in farm sales in the greater North West, Northern Cape and Free State regions, Markram said that in his experience, the current market showed that farms up to the value of R3 million were in demand.

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However, farms valued above this threshold were often on the market for long periods of time.

“Farms sell at bank valuation prices. I would advise sellers to obtain a bank valuation or a sworn appraisal to [ensure they obtain an accurate price for their farms],” Markram said.

Many buyers up to the R3 million threshold who wanted to start a farming enterprise were obtaining bank loans based on their incomes in urban areas, or using existing homes in a town as collateral.

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Markram said most buyers of farms above R3 million were well-schooled in business and had BEE partners, or knew what the future BEE requirements for agricultural operations would be.

According to Markram, it was difficult to determine the current price per hectare of grazing land, for example, as the carrying capacity of the land had to be taken into account before determining such a price.

He suggested a guideline of R40 000 to R50 000 per large stock unit for grazing land.

Variables such as existing farm infrastructure and proximity to a river, for example, were among the other factors that would determine the price charged for a farm.

According to Dawie Maree, head of agriculture information and marketing at FNB, although land prices in North West did not decrease, they were also not increasing, as there was no real demand for farmland in the region.

“This tendency is closely tied to the low maize price. But if one looks at land prices in, for example, irrigation areas, there is demand. Those [farms that produce] high-value export [commodities] are expanding.”

Gerhard Uys grew up as a real city lad, but spends his free time hiking and visiting family farms. He learnt the journalism trade as a freelance writer and photographer in the lifestyle industry, but having decided that he will be a cattle farmer by the age of 45 he now indulges his passion for farming by writing about agriculture. He feels Farmer’s Weekly is a platform for both developed and emerging farmers to learn additional farming skills and therefore takes the job of relaying practical information seriously.