Advice about borrowing money

With farming profitability under pressure, it often happens that a farmer works all year to produce a crop to sell, but at the end of the season does not have enough money to repay the production loan.

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This is a devastating situation because the farmer will have worked for nothing, and most likely can’t afford to plant the next crop. On the other hand, planting the next crop may be the only way to repay the debt on the previous crop, but lending institutions have to be careful of reckless lending.

Top tips on borrowing money:

  • Make careful calculations.
  • Don’t underestimate your production costs.
  • Don’t overestimate the potential yield.
  • Don’t overestimate the possible price per ton.
  • Only plant in your best soils.
  • Choose the crop with the lowest risk of failure.
  • Get good advice.
  • Plant a smaller area, but do it really well – don’t overstretch yourself and your budget.
  • If you’re a beginner, start small and grow your business slowly to limit your risk.
  • Buy good-quality inputs from reputable outlets.
  • Buy at the lowest possible price, but don’t compromise on quality.
  • Sell your crop at the highest possible price.
  • Make sure that you do everything in good time – don’t leave anything until the last minute .

As a farmer, you’re very valuable to South Africa – be proud that farmers feed and clothe the world.

Source: Jane McPherson, programme manager of Grain SA’s Farmer Development Programme.

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