There are huge opportunities for banks to be involved in the transformation of South Africa's agricultural sector by providing the necessary finance to small holder farmers and advice to established farmers seeking black economic empowerment (BEE) partners.
"Standard Bank Group foresees an increase in BEE activity in the agricultural sector in the medium term as large-scale farmers continue to come under more pressure to comply with transformation requirements," says Standard Bank Group's Diale Mokgojwa.
"Government's AgriBEE policy includes a target that calls for 50% of South Africa's agricultural produce sold by retailers to be procured from previously disadvantaged producers, partly as a means of improving market access for previously disadvantaged producers. Most big farmers produce for the local market, especially large retailers, who are now insisting on their suppliers being more compliant with BEE requirements," says Mr Mokgojwa.
The time is therefore opportune for all stakeholders in agriculture to play a constructive role in developing black entrepreneurs.
He says Standard Bank Group is considering financing farm worker equity stakes, especially in the Western Cape province where "there is a huge appetite" among existing large-scale farmers to have black equity partners.
Mr Mokgojwa says Standard Bank Group is on track to advance the R500-million ring-fenced credit line it announced last year as part of its strategy to assist small holder farmers. A number of funding projects are nearing completion. The fund is part of the bank's strategy to empower black farmers to become part of mainstream agriculture, and its broader transformation plan.
"We aim to be a leading bank in the transformation of agriculture. But no single sector or organisation can achieve transformation in agriculture on its own. It's critical that sector partners such as government, commercial farmers, suppliers and communities work together with each doing what they're best at."
He says Standard Bank Group has under consideration projects in the sugar, citrus, livestock and grain production sectors, and should have more news on some of these projects over the rest of 2011.
"The overarching goal with the ring-fenced credit line is to make finance accessible to the right entrepreneurs. We are hoping to provide banking services and financing to more black farmers or black consortiums buying stakes in existing entities," he says.
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