Cape Town - Despite policy uncertainty around the expropriation of land without compensation, banks say loans to the agricultural sector grew by 10% last year while in the first four months of 2018, loans to the sector boomed by 11.63%.
According to the Banking Association of South Africa (Basa) the total exposure of loans to the agricultural sector is R148 billion.
Basa deputy chief Pierre Venter said it is essential that land reform does not disrupt the sector.
Basa and several other business and banking groups are against the amendment of Section 25 of the Constitution to allow for the expropriation of land without compensation.
Venter said they concur with the findings of former president Kgalema Motlanthe’s High Level Panel report on the assessment of key legislation.
“We are of the view that South Africa has all the legislative and policy tools, but politics, patronage, corruption, government paralysis and lack of prioritisation has been responsible for the poor progress on land reform,” Venter said.
Agri Western Cape chairman Carl Opperman said there had been a sombre mood in the industry, but several positives are keeping hope alive.
“Farmers have not sold their farms. They are sticking to what they have, but the political and economic uncertainty is not good. This will lead to less farmers investing in their crops, because we all are waiting to see how this process around the land issue will pan out. I can’t guarantee that farmers won’t sell in the end,” he said.
Opperman however said that farmers would do anything to prevent a food shortage. “Our food security remains the most important issue for all our farmers. The breakfast and supper you eat daily, the fruits and wine you consume, those all come from a farm and we cannot run the risk of placing our food at risk. In the worst case we will have to import food and that will lead to further challenges.”
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