Prime minus 5% loans for all farmers unlikely

Agricultural economists around the country remain baffled following minister of agriculture Tina Joemat-Pettersson’s announcement at Agri SA’s congress in Johannesburg in October that Land Bank will be offering loans of prime minus 5% to all farmers.

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Land Bank and the Portfolio Committee on Agriculture, Forestry and Fisheries said that they were not aware of the offer. Committee member, ANC MP Salam Abram, said the minister had no place making such an announcement, as it would not be possible. “How will the bank make money if everyone gets prime minus 5%?” asked Abram.

Speaking at the Agricultural Business Chamber’s agriculture development finance workshop, Dr Litha Magingxa, head of strategy at Land Bank, said: “We still need to sit down with the minister to find out how it can be done, because the deal was news to us.”

Meanwhile, the minister’s announcement has seen agricultural economists inundated with phone calls from farmers and financial institutions seeking clarity. Agricultural Business Chamber CEO Dr John Purchase said the statement needed to be corrected. “It is just not feasible from a fiscus point of view, which was confirmed to me by the finance minister, Pravin Gordhan. “Certainly, Land Bank won’t be offering prime minus 5% to all farmers. It is only for a select few,” he said. 

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