Bad expropriation execution will turn off funding taps, says Land Bank
Commercial banks can cut back on their lending to the agricultural sector if they believe there is too much risk — but the Land Bank does not have that option
Commercial banks can cut back on their lending to the agricultural sector if they believe there is too much risk — but the Land Bank does not have that option. Other than an ill-fated diversification into golf courses, which it is now writing off, its entire focus has been on land and agriculture. It is not a conventional bank — it is not a member of the Banking Association, for example, but a development institution, owned by the government. It has a higher risk tolerance. Its target for nonperforming loans is below 10% (to its credit this is falling from 7.1% to 6.7% in 2018). Emerging farmers will certainly turn to the Land Bank before commercial banks, and they will expect a more sympathetic hearing. But the bank has a dual mandate: to support both the commercial sector and emerging farmers. Commercial loans, usually to established "white" farmers, account for 80% of the loan book. With total loans of R43.4bn, the Land Bank claims a 29% share of all agricultural loans extended.L...
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