The Department of Agriculture, Land Reform and Rural Development together with the Industrial Development Corporation (IDC) have announced a new fund aimed at helping local small-scale Black farmers access necessary capital. The Agri-Industrial Fund as it has been christened will have a reported R5 billion available in funding for farmers to help commercialise their operations.
“The aim is to develop a competitive industry in the food, beverage, fibre, forestry, and agro-derivative industries; that utilises and develops local and regional resources to supply domestic demand and increase participation in international trade,” explains a press release (PDF) that unpacks the Fund further.
“The broader agricultural sector is central to the recovery of the local economy, but most importantly, this Fund’s objectives are consistent with the IDC’s role in increasing the number of black commercial farmers,” added IDC CEO Tshokolo Nchocho, during a media briefing for the announcement earlier today.
The IDC adds that the Agri-Industrial Fund will see the organisation provide an estimated R4 billion of debt and quasi-debt over the next three years, while government will contribute the remaining R1 billion via grants.
“Not only do we intend to work in commercial land areas where there is freehold title but we intend to work, and aggressively so, in rural areas and communal areas where land is handled under different land tenure systems,” Nchocho added.
With the economy already in a state of recession before last year’s COVID-19 pandemic hit and exacerbated matters, the IDC is hoping that the Fund will serve as a way of jump starting the country’s vital agriculture industry.
Applications for funding are not available to all, with specific criteria needing to be met in order to access.
The IDC has listed the criteria for consideration as:
- “The Investee must be at least 60% black owned entity.
- The acquisition of primary agricultural land parcels and/or commercially viable agricultural sector value chain operating entities (agri-businesses).
- Support existing operations for expansion in production on privately owned or land reform farms (brownfields and greenfield operations).
- Funds must be used for purchasing capital equipment and infrastructure (“CAPEX”).
- Working capital and/or production loan.”
There has been much conjecture, and in some cases violence, over the South African agriculture industry in recent years, so it remains to be seen what reaction there will be to this Fund’s announcement, especially with government spending falling under greater scrutiny during the pandemic.