Dr Romanus Monji of Peulwana Agricultural Financial Services, an agricultural economist, told me how his own foray into farming taught him that, in farming, doing things strictly by the book is almost never an option.
After studying and teaching in the US, he returned to Tanzania with a plan to grow bananas.
All the details were carefully planned and each input and output carefully calculated. Everything was going exactly according to plan until a few days before the fruit were to be harvested when, one night, thieves entered the farm and stole almost his entire crop.
Without sympathetic financial support, a new farmer would almost certainly not be able to recover from such a setback. It was this realisation, said Monji, that has helped him approach lending to new and small-scale farmers on a case-by-case basis, rather than depending on strict organisational guidelines and algorithms.
Two days after meeting Monji, I visited a dynamic new farmer on her plot of rented land just outside of Boksburg. She has been farming for just over two years and has had to deal with many disasters, but she persisted regardless and now stands on the cusp of success.
Within the next few months, she will have entered into a supplier agreement with a major retailer, and will have been able to invest substantially in infrastructure improvements on the farm thanks to money coming from venture capitalists who have bought into her vision.
However, unable to procure funding from commercial banks or the Land Bank, she has had to invest over R200 000 of her own money in the business, and she has not paid herself a salary in more than two years.
Few aspiring, young farmers have access to that kind of money, and without a loan, many will never move past their first harvest. To quote Monji: “They have the land, some of them have the passion, few of them have the skill, but they don’t have the money.”
The Land Bank has come a long way in the last few years and the institution has made a commendable turnaround.
According to the bank’s 2017 Annual Report, it managed to increase the proportion of its gross loan book that drives transformation to R4,9 billion (11% of the total loan book) during the period under review, compared with R2,5 billion (6%) in the 2016 financial year.
Hopefully the Land Bank will, in future, be given the type of backing it needs from Treasury in order to adopt a more open-minded and flexible approach to supporting new and smallholder farmers, so that those farmers who have proven that they have the ability, passion and opportunity to farm, are not denied loans simply because they don’t tick all the boxes on a standard application form.
As Monji said: “When working with new farmers and smallholder farmers, you can’t use the traditional funding model. If you are only willing to adhere to the normal principles of lending, you will not be useful in this subsector.”