Lack of land tenure a major inhibitor in developing emerging farmers
Technology, consumer trends, economic trends and investment opportunities in agriculture came under the spotlight at the AFGRI Grobank conference hosted on Day 3 of Africa Agri Tech 2020
The first panel was chaired by business commentator Bruce Whitfield. Panellists were Chris Venter, outgoing CEO of AFGRI; Professor Roelof Botha, economics commentator; Wandile Sihlobo, Chief Economist of the Agricultural Business Chamber (AgBiz); Professor Elmien du Plessis, Faculty of Law from the North-West University, and prominent political analyst Prince Mashele.
Contributions were robust with Mashele emphasising the need for quality education as a vehicle to unlocking the economy and creating employment. Sihlobo added that educating and empowering local municipalities provided a means to build employment on a local basis. The need for agricultural training facilities was highlighted as was the need for a proper government support base for growing the agricultural industry and encouraging food exports particularly to high-population countries such as China and India. Professor Botha proposed limits on imports from China with local companies being called upon to make up the shortfalls in sectors such as clothing manufacture. This would serve both to create employment and develop local skills.
The second panel was hosted by another prominent media personality, Jeremy Maggs. Panellists: were Johan Barnard, Chief Digital Officer of AFGRI; Pragnesh Desai, Galileo Capital; Dr John Purchase, CEO of AgBiz; Brenda Tlhabane, successful red meat farmer; Kobus Pienaar, Technical Manager of Food Security at Woolworths; Bennie van Rooy, CEO of Grobank and Jeff Every a dairy farming consultant from the Eastern Cape.
The session lead to spirited debate on the necessity for land tenure documentation and policy uncertainty. Jeff Every stated that tenure was urgently required particularly on communal land to enable farmers to secure farmers and become more productive.
Dr Purchase pointed out that 42% of cattle in South Africa are held in black-owned farms and stated that a "blended finance" model with low interest rates would assist in growing the small farming industry making it more efficient. He stressed the need for public sector investment in infrastructure such as roads in rural areas. There was strong support for public private partnerships such as the recently launched Agricultural Development Agency and an overall call for greater collaboration in all aspects of the industry including commercial farmers mentoring small scale farmers to the benefit of the country.
The third panel discussion, facilitated by Theo Vorster, CEO of Galileo Capital, focussed on the case for equity investment in agriculture. Panellists were Russell du Preez, founder and Chief Investment Officer, Russell Stone Group; Jannie Stockenström, co-head of investments at the Wiphold Group and Stephan van der Walt, managing director of corporate finance advisory, Pallidus.
Du Preez cited the lack of infrastructure such as agricultural dams on large tracts of communal land in KwaZulu-Natal and the Eastern Cape as a limiting factor for investment. He added that whilst agriculture remained a high-risk investment there were good returns for patient investors who realised they must stay invested for the long term. According to van der Walt the increase in technology was positive as it was speeding up the return on investment in agriculture. Stockenström shared an uplifting insight into agricultural investment through his involvement with Wiphold which is a black-woman owned business with 200 000 beneficiaries. He illustrated that investment in agriculture can be very successful with the company having been able to buy out Afgri's sizeable investment in silos and bunkers providing returns for their investors.
Bennie van Rooy, CEO of Grobank .shared that the bank was focusing on developing packages for small scale and emerging farmers and are investigating establishing a fund to assist emerging farmers secure development funding.
The model would centre around a model partnering emerging farmers with commercial farmers who would provide mentorship and advice. Integrating emerging farmers into a commercial farmer's value chain would ensure a market for the emerging farmer de-risking the funding model. Several commercial farmers had already indicated an interest in participating in this model.
"Our food and business offering, coupled with our continuous leadership in the alliance banking market, as well our service-driven attitude to banking means that we are a bank that truly provides a special something that will change the lives of our customers and stakeholders going forward", concluded the Grobank CEO. "Grobank may be seen as a relative newcomer to banking in South Africa, but is has a long and successful track record, going back to 1947, so we have a wealth of experience to back up our new foray into focussing on the agricultural and related businesses sectors"
Futurist and strategist, Pieter Geldenhuys, stirred up proceedings with a spirited overview of how consumer trends may impact farming in the future. He believes that growing consumer interest and understanding of the link between nutrition and health provides great opportunities for farmers. Consumers are increasingly looking to the food they eat to act as preventive medicine. This trend is particularly significant considering the advent of the Coronavirus currently sweeping the world with consumers adopting healthier eating habits to bolster their immune systems.
He predicted that America would become progressively more insular with the free trade agreements they had previously espoused replaced by heightened trade barriers as they encourage companies to move plants back to the American continent from the East with Mexico becoming the continent's low-cost manufacturing hub.
Brenda Tlhabane, AAT Ambassador and head of Temo Ya Tlhabane Holdings had the following to say at the conclusion of the event.
“Thank you once again to the AAT / Brand Republic Teams for having chosen me to be part of this amazing initiative. Sometimes, it takes putting your heart out for someone to listen to one’s daily challenges.
I have received invitations from numerous parties to meet and see if we can put together a Support Programme for Women and Youth. We will see how far it can take us, but as they say…