Agri finance in a time of uncertainty and risk

Farm debt is now in the region of R160bn and near an all-time high. Financiers and clients need to approach the coming season with realism and care, says Dr John Purchase, CEO of Agbiz. “As we approach the new season in the summer rainfall region of South Africa, and a new cycle of production finance, it is opportune to take stock of the past season, as well as to consider the coming season.”

While the Agbiz/IDC Agribusiness Confidence Index remains in positive territory for GDP (Agriculture) growth, South Africa’s economic and political woes are creating an environment of uncertainty and risk. Depressed local and international grain and oilseed commodity prices, also coupled to expected large carryover stocks of white maize, will result in marginal production areas having to consider alternatives, or abstaining from planting and leaving lands fallow if production is realistically deemed not to be profitable. Solid business and cash flow plans are essential if producers wish to access production finance for the coming season.

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