FNB remains positive about the local agriculture industry and will support and assist its clients as per the relevant regulatory and credit criteria.
Agribusiness head of information and marketing Dawie Maree said while the bank could not share how many agribusinesses were approaching it for financing, it aimed to assist as many clients as possible given the regulatory environment in which they operated.
Maree acknowledged that there would be some pressure on producers, given the increased financing costs due to rising interest rates, and for this reason, he advised farmers to make sound financial decisions.
“The industry is in a fortunate position in that we produce food and fibre for the nation, as well as the export market,” Maree said.
The general state of agribusinesses was still positive, he said.
“Agriculture had a good season in terms of production and early forecasts are also on the positive side. There were obviously some challenges with regard to logistics given the social unrest in KwaZulu-Natal, as well as the floods that hit the province.”
However, FNB Agribusiness said that agriculture was to a great extent shielded given the diversity of the industry. Logistics was currently being sorted out, while agribusinesses had also established alternatives like making citrus exports via the Port of Maputo.
The bank said that the sector compared over time had seen agribusinesses improve, given that the country experienced drought conditions (some parts still do) over the last few years. The unit said that the past two seasons were “reset” seasons for agriculture.
Maree said the Land Bank was working on a liability solution to cure the event of default to enable it to restart the rebuilding process towards a true development finance institution. It was a very important and a necessary player in the market, especially in terms of the development of new commercial farmers in the country.
However, commercial banks were always open to stepping in and assisting their clients where possible, he said.
In its presentation to Parliament’s select committee on finance last month giving an update on challenges and quarterly reports in April, 2021 to March, 2022 the Land Bank acknowledged that it could not commence with its developmental and transformation initiatives, if it was not “cured from the default”.
It said work was in progress between the Land Bank, lenders and the shareholder to develop a liability solution that would be acceptable to all stakeholders “to cure the bank’s default”. It said the solution would take cognisance of the conditions of the capital injection outlined by the finance minister, following the appropriation of R7 billion of equity injection by Parliament.
In the meantime, there has been a significant reduction of the bank’s corporate and commercial business portfolio, with the proceeds of settlements and collections being used to reduce the bank’s debts to lenders by 42.84 percent (including the fourth capital reduction currently being implemented).
The Land Bank said at the time that it was gearing itself to support clients’ working capital and production loan financing needed for the current planting season. It said its operating model would be highly impacted by the implications of the conditions that may come with the concluded liability solution.
A strategic trajectory, which maintained a portion of the corporate and commercial portfolio and grew the development and transformation portfolio going forward, was envisaged, the bank said.
given.majola@inl.co.za
BUSINESS REPORT