Banks are now offering clients such incentives as part of an effort to encourage farmers to up take loans, says Antois van der Westhuizen, agriculture business unit divisional manager at Nedbank.
The government is pushing for more funding for farmers, especially small-scale farmers.
It also follows a new partnership between the Department of Rural Development and Land Reform with Grain SA to offer technical expertise and mentorship training to beneficiaries of the land reform and restitution programme.
Van der Westhuizen said on its part, Nedbank was no longer just expecting farmers to walk into the bank cap-in-hand to ask for funding. Instead, it was looking at ways to build their capacity and this included organising and arranging mentorship programmes with small-scale farmers. Such programmes include pairing a small-scale farmer with commercial farmers to learn the basis of business administration, the technical aspects of new farming methods and production management, among other skills.
"It is not good enough to just finance a farmer and assume that he/she has other crucial aspects of the business, such as a market to sell their produce, under control in order for the loan to be properly serviced."
Nedbank's strategy is similar to that of the Land Bank, which has begun to look at offering training and technical expertise to clients to reduce the number of nonperforming loans.
Announcing a R1bn loan from the African Development Bank (AfDB) last week, Land Bank CEO Phakamani Hadebe said not only would the facility enable both emerging and established farmers to access finance at affordable rates, but the AfDB would also provide farming technical expertise that would be directed at smallscale farmers to help improve their capacity and yields.
The facility was the first significant international funding for the state-owned Land Bank since the Treasury intervened in 2009 to save the institution from possible collapse after a period of mismanagement, and is indicative of a growing confidence in its operations.
Last year, the bank acquired Afgri's GroCapital division debtor book, valued at about R2,4bn. In April the bank established the Nerpo Farm Machinery and Infrastructural Improvement Fund - administered by Nerpo Financial Services - a subsidiary of Nerpo Group.
These vehicles were meant to assist the bank as it sought to extend its reach to farmers in remote areas.
Van der Westhuizen said it was in the interest of agricultural finance institutions to contribute through training and mentorship programmes.
These programmes, he said, could also assist commercial farmers to learn about new farming technologies.
Source: Business Day
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