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CHAPTER 8
Most farmers did not have long term records, most had built on carry-over debt due
to the low prices of the 2008 and 2009 seasons and there was a general hopelessness
as all were struggling to access production finance. Reports made by developing
farmers to the Working Group affirmed the crisis:
As a result of the poor profitability of grain farming, only a few farmers were financed
by the local agribusinesses and then were forced to take out Multi-Peril Insurance,
which significantly increased the production costs. A member of the ‘Voice of the
Farmer’ committee reported that the farmers are all struggling with carry-over debt
due to the low prices, and high production costs.
In this area there would be little production and no further development. For these
reasons it had become apparent that
something needed to be done differently
.
Grain SA had realised that government intervention at the highest level was neces-
sary in order to secure viability and sustainability for developing farmers.
In 2012 the Programme partnered with the Department of Rural Development and
Land Reform (DRDLR) to empower developing farmers across the country. For the
first time holistic business plans – not only the grain production aspects – were
drawn up. By September 2012 R36 million was transferred into a separate bank
account to be managed between the programme team and the farmers themselves.
In order to manage these funds, Grain SA had to register with the financial services
board. An internet based accounting system structured by Grain SA enables the
management of a bank account for each individual farmer. The bank accounts are
with Standard Bank and they are called Third Party Fund Administration (TPFA)
accounts. After the duration of the recap process, the farmer ‘loosens’ the account
from Grain SA and can then operate the account on his/her own. In this way, the
farmer also builds up a banking record over the duration of the project.
The 2012/2013 initiative focussed on 16 farmers identified in the Free State, North
West and Gauteng. Strict financial management ensured the funds were utilised
for mechanisation for land preparation, purchasing inputs for production and
establishment of the crop. Attention was also given to key infrastructure such as
sheds, fences and water et cetera. Recapitalisation continued into 2013 and 2014
with further projects in the Free State, Mpumalanga and the North West which
were funded by the DRDLR. Another recapitalisation programme was conducted
in the North West in partnership with the Department of Agriculture there.
This process began in 2012 and to date (2015/2016) the FDP has managed
R280 million for these farmers and is proud to say that they managed all the funds
efficiently in partnership with the farmers and their mentors. Not one cent has
disappeared and a clean audit was received from the Auditor General. The project
was a huge success but unfortunately politics and other agendas came into play
which brought what was originally intended to be a five year programme for the
farmers, to a halt.
Grain SA’s FDP will in future take on a different dimension in which production
financing is essential for new producers.
With the aidof theNational Treasury’s newly created fund for promoting job creation,
the Jobs Fund, the FDP managed to launch a programme during 2015 in terms of
which 1 577 smallholder farmers gained access to inputs and mechanisation to
cultivate 1 802 hectares.
In the meantime, new partnerships have been concluded with the government
with respect to research and farmer development. The database and projects of
the Farmer Development division were incorporated with the policy action plan for
agriculture of the Department of Agriculture, Forestry and Fisheries.
Grain SA’s FDP has never claimed to be THE ONLY answer to farmer development.
Rather it has always been a desire to build bridges and forge firm relationships
between farmers, representatives from the many companies in the sector,
finance institutions and agri-businesses. There has generally been positive
interaction between Grain SA and the different government departments on
both provincial and national level and many warm friendships have grown as a
result. Down the years there have also been a number of partnerships between
Video: A video overview of Grain SA’s partici-
pation in the Government’s recapitalisation
project.
