Efficient and competitive financing is the lifeblood of SA’s commercial agriculture sector. The summer season (2020/2021) has been hit by a financing crisis that will in all probability permanently change the financing environment of primary agriculture in SA. Various developments and factors have contributed to this crisis over the past couple of years, with the Covid-19 pandemic, subsequent lockdown and its effect on the economy creating the tipping point.

Data from the department of agriculture, land reform & rural development shows that SA’s primary agricultural debt ballooned from R70bn in 2010 to R187.5bn in 2019, in nominal terms. The four major commercial banks, together with the Land & Agricultural Bank of SA (Land Bank), hold just on 90% of that debt, with the Land Bank’s share alone amounting to 29%. Over this decade, the debt to assets (land, fixed improvements and livestock) ratio deteriorated from 27.2% to 36.3%. ..

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