Hundreds of black farmers who have received loans and land through the Department of Rural Development and Land Reform since 1994 have failed to pay back their start-up loans to the Land Bank.
This has prompted the department to take the land back as part of a multimillion-rand bailout programme.
A curatorship model has been developed which entails babysitting the farmers until they can farm profitably under the new Proactive Land Acquisition Strategy (Plas).
The programme is the result of a team effort by the Land Bank, the Department of Rural Development and Land Reform, the Department of Agriculture, Forestry and Fisheries and the National Treasury.
So far the scheme has reportedly forked out R232.4 million to bail out all 222 of the struggling black farmers but attempts to verify these figures from the Department of Rural Development and Land Reform have been unsuccessful.
Thirty-six of the farmers are from the Eastern Cape, 32 from the Free State, one from Gauteng, 23 from KwaZulu-Natal, 56 from Limpopo, 14 from Mpumalanga, 11 from the Northern Cape, 18 from North West and 31 from the Western Cape.
Under the scheme the department will take back the land and lease it out to the erstwhile owners, only giving it back when the farmers prove they can farm profitably.
The department will also no longer issue grants for the outright purchase of farms by land reform beneficiaries, but will lease the land out to them.
About R900 million has been set aside for a period of three years to recapitalise all the failed and ailing projects through Plas.
This would make it possible for the state to intervene should an emerging farmer experience financial troubles, Eddie Mohoebi, the head of communications at the Department of Rural Development and Land Reform, said on Wednesday.
Mohoebi said the department had realised it was set to lose millions of rands as the Land Bank was going to repossess the farms of farmers who could not repay loans.
“The situation was that if we had bought the farm for R7 million, and the farmer took out a production loan of R250 000 from the Land Bank, due to the lengthy process of acquiring the farm it would be operational at a time when it was too late to grow crops and the farmer would have been burdened by operational costs.
“The Land Bank would then have to repossess the farm, which meant that the department was making a loss. That is why we had to bail them out and protect the interests of the department,” he explained.
The beneficiaries would pay 6 percent of the purchase price as a rental fee over three years as part of the loan agreement.
Musa Mchunu, the head of communications at the Land Bank, said the curatorship would ensure that the government provided guarantees and the Land Bank would provide production loans to the leasing farmers.
Mchunu said the farmers would be given a grace period of three to five years to turn things around and, if they succeeded, the lease would be extended as the farmer would be able to service the debt. However, if they failed, the government would look for alternative black farmers to take on the responsibility.
According to the department’s 2009/10 annual report, a further R250 million was allocated for the recapitalisation and development of the struggling Plas farms.
Mchunu said figures for farmers who qualified for the 2011/12 budget were still being calculated and the Land Bank would provide assistance in “negotiating an off-take agreement and resources for after care with the primary mandate being financial products”.
The president of AgriSA, Johannes Moller, said it was a positive sign that the government was bailing out struggling farmers but he stressed that it had to establish new farms if its initiative was to succeed.
He added that the current approach was treating the symptoms and not the problem because there was no proper plan to produce new farmers.
He said the government should encourage joint ventures where established commercial farmers with expertise worked closely with it and emergent farmers. - Ayanda Mdluli
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