A sustainable land reform solution

At the Nampo Cape agriculture show, held in Bredasdorp in September this year, a new partnership was announced between the South African Partners in Agri Land Solutions (SA PALS) and Nedbank Commercial Banking.

The goal is to facilitate further transformation in the agricultural sector by not only providing finance to acquire land and equipment for farming but also providing training, mentorship, specialist advisory support and capacity building for farmers.

During a recent Moneyweb webinar Nedbank Commercial Banking Head of Client Value Propositions for Agriculture, Cobus de Bruyn, told editor Ryk van Niekerk that the bank realised post-financing support in the agriculture sector was sometimes more important than securing funding.

“It is not just only about getting access to land. It is about getting access to knowledge, access to markets, access to training and mentorship. SA PALS is able to unlock this and the partnership between Nedbank and SA PALS provides a solution for all farmers and Agribusinesses,” said De Bruyn.

SA PALS was established in 2015 and is a private land reform and development initiative. It was started in Ceres by a group of commercial farmers along with local communities.

De Bruyn explained that the initiative identifies black and white farmers that want to farm together and then provides them with support in different formats: training, drafting of mentorship agreements, structuring the new businesses and legal support. “They also support with access to market and assist in the engagement with government, for example on water licences specifically.

Under the partnership agreement, Nedbank has provided SA PALS with a grant of R7m over three years. This is divided into R2m a year as enterprise development funding for SA PALS to build their capacity and expand to more provinces than the three where it is currently active (Western Cape, Free State and Mpumalanga) and an additional R1m for the training of farmer groups where required.

De Bruyn responded to a question from Van Niekerk on whether established commercial farmers are accepting of the model and embracing working with small farmers. “We see white commercial farmers actively seeking partnerships with black farmers and vice versa and believe this model can make a difference. The fact is also that in many cases the black farmer is already farming commercially,” he said.

While post-finance support has not necessarily been within the normal ambit for a bank to provide to entrepreneurs, De Bruyn believes it is the way of the future and does not exclude the possibility that the agreement could include more of the players in the value chain in years to come.

SA PALS can identify the farmer partnerships that could be successful and then, through its one-stop-shop approach assists with the required expertise and support once Nedbank has considered finance for the agriculture venture.

“We provide full-package finance – not just the investment to acquire the land, but also for working capital, equipment procurement, and machinery. Then we extend it further, for sustainability, by looking at renewable energy, water solutions, soil health and biodiversity,” says De Bruyn.

The SA PALS and Nedbank partnership is similar to the partnership that the bank has already established in the retail fuel sector, where it works together with an organisation called PetroCONNECT to identify, train and capacitate potential petrol station owners.

Nedbank then provides the funding for the investment into the site, while PetroCONNECT continues its relationship with the entrepreneur to assist in establishing the business and building it up further.

De Bruyn believes that it is crucial to find a real solution for continued land reform. “I see inclusive agriculture as a very crucial component of the sector. The decisions that we make now will determine the future of agriculture in South Africa,” he said. “I believe this approach can work and encourage commercial farmers, black or white, to contact Nedbank or SA PALS to understand the potential that the partnership holds for them.”

Brought to you by Nedbank Commercial Banking.

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