Future of FarmingNews

Lack of land tenure major inhibitor in developing emerging farmers

The lack of land tenure for small and communal emerging farmers is a major inhibitor to their development. This was the major theme that ran right through the third and final day of the recent inaugural Africa Agri Tech (AAT) Conference and Expo in Pretoria. There were three panel discussions during the day which centred on the South African economy and the financial outlook.

The lack of land tenure – or even Permission to Occupy (PTO) documents – for small and emerging farmers, together with a long-running lack of certainty about government policy, were highlighted throughout the sessions, which saw robust exchanges between the panellists.

Brenda Tlhabane, the spirited AAT ambassador, and a successful red meat farmer was particularly outspoken on these subjects. Tlhabane also urged more support for women and youth in the farming community, citing the example of the composition of her discussion panel where she was the only women and the only young person.

Jeff Every, a prominent dairy farming consultant from the Eastern Cape, also feels strongly on the subjects of land and policy, saying: “Land tenure is urgently required for farmers on communal land, where I have been operating for many years.”

Benny van Rooy, the CEO of Grobank, which is focussed on the agricultural and related industries, and Pragnesh Desai, of Galileo Capital, spoke in a similar vein, saying that tradeable assets were needed urgently to assist emerging farmers.

“These could be signed contracts or proof of being a long-term, reliable supplier of produce, but ultimately what is needed by banks and other financial institutions are deeds of ownership,” said Van Rooy. “This will unlock the potential of thousands of emerging farmers.”

He added that Grobank, which was formerly the South African Bank of Athens, has ambitious plans going forward, including developing financial packages for small and subsistence farmers.

Dr John Purchase, the CEO of Agbiz, suggested that proven “blended finance” schemes with lower interest rates as a means of growing the small farming industry by making it more efficient because finance will permit the use of some of the more affordable new technologies which are changing the farming landscape. Purchase, who pointed out that 42% of the cattle in South Africa are on black-owned farms, also stressed the necessity for government investment in infrastructure such as roads in rural areas.

The third panel discussion, which was focussed on equity investment in agriculture also pointed out the fact that a lack of title deeds for small and emerging farmers stymied investment potential.

Russell du Preez, founder, and Chief Investment Officer of the RusellStone Group said that agriculture remained a high-risk investment, although there could be good returns for patient investors who realised they must stay involved for the long term.

Du Preez cited the general lack of agricultural dams in KwaZulu-Natal and the Eastern Cape due to the large tracts of communal land where there was little formal infrastructure and therefore fewer opportunities for investment.

The lack of proper government support base for growing the agricultural industry – particularly smaller and communal farmers as well as the need for more formal, accredited agricultural training facilities were other obstacles mentioned as hindering agricultural development.

There was strong support for public private partnerships, with the recently announced Agricultural Development Agency being lauded, particularly as it is aiming to invest R25-billion in the next 10 years. In addition, there was an overall call for more collaboration in all aspects of the industry, including more large farmers mentoring smaller farmers to the benefit of the country.

However, it is still obvious there is tremendous potential for agriculture in Africa waiting to be unleashed. Among the statistics bandied about was the fact that it is predicted that growth in Africa will outstrip that of the rest of the world in the future, due to ageing populations in many countries and a slowing in the birth-rate.

Developments such as the Africa Free Trade Agreement were seen as further positives for growth in the agricultural sector as food was a very important product for regional trade.

Generally, interchanges during the discussions were robust and spirited with experienced facilitators and media presenters Bruce Whitfield and Jeremy Maggs handling the first two sessions, while Theo Vorster, the CEO of Galileo Capital, handled panel that discussed investing in agriculture.