South Africa
Sector
Agriculture & Agri-processing
Land Bank Overview
The Land and Agricultural Development Bank of South Africa (Land Bank) is a development finance institution (DFI) whose mandate is to support, promote and facilitate the development and transformation of the agricultural sector through the objective of the Land Bank Act. The Land Bank was established in 1912 to promote rural and agricultural development. The is wholly owned by the Government and is a key financial player in agriculture.
New Beginning
The Bank is steadily emerging from a period of instability that adversely affected the sustainability of many of its operations. In recent years the Bank was unable to implement its development mandate as articulated in the Land Bank Act. While there may have been an acute awareness of the need to implement the objectives of the Act, the Bank struggled to create a balance between financial sustainability and implementation of its development mandate. The new strategy of the Land Bank represents a deliberate attempt to redirect the Bank to meet its mandate in alignment with the Land Bank Act.
Rural Development and Agrarian Reform
The Land Bank, as a rural and agricultural DFI has a responsibility to support Government’s efforts to increase access to land, provide support for emerging farmers and raise rural incomes.
Food security
Food production at all levels of agriculture needs to be increased to feed South Africa, as well as to maintain healthy export levels. The coordination of programmes and interventions in the relevant departments and public entities can improve food security in rural and peri-urban settlements where abject poverty is still a stark reality. The Bank’s role is to ensure that financing is available to food producing agriculture.
Land and agrarian reform
While gains have been achieved in land redistribution and agriculture, major challenges remain. Experience has highlighted the need for improved post settlement support for land reform beneficiaries. Also, Government programmes need to make sure that the right infrastructure is put into place to enable successful agricultural production and entrepreneurial activities. This has to include support for human habitation such as financial services, housing, sanitation and education. Notwithstanding the magnitude of the challenges, Government remains committed to accelerating land and agrarian reform and the Land Bank is expected and poised to play a key role.
Development impact
A major challenge facing DFIs is their ability to maximise their developmental impact. The Land Bank, over its nearly 100 years of existence, has greatly affected agricultural development by supporting the policy of the day. However, in the post 1994 support for land reform and creating entrepreneurs has been limited. The Land Bank Act requires the Bank to drive transformation in the agricultural sector and promote rural development. For the Bank to deliver, it needs to identify, quantify, measure, monitor and report on the socioeconomic impact of its lending activities
Products and Services
For more than 90 years, the Land Bank has been the bank of choice for the South African farming community – and is still the only bank specifically specialising in agricultural finance solutions. Among its product are the following:
Mortgage Loans
The Land Bank has a wide and growing range of products and financial services for commercial, developing, large and small scale farmers, and the agricultural business sector. These include mortgage loans to well-established commercial farmers or agri-businesses that own fixed agricultural property and want to buy land, consolidate their debts, and or other purposes linked to agriculture.
Special Mortgage Bonds for Farmers who:
- Were previously denied the right to buy land
- Have the potential to become successful farmers
- Own land in towns or cities can get Special Mortgage Bonds
- Are historically disadvantaged and are first time buyers of agricultural land
Medium Term Loans
Medium-term loans are in the form of cash credit accounts. The Land Bank aligns the clients’ financing need strictly with and according to their agricultural needs. The following products are offered to suit agricultural investment:
Installment Sale Finance
This credit finance provides an option for farmers who want to buy movable farming assets and equipment. The goods financed constitute the primary security, and the Land Bank remains the titleholder of such goods until such time they are fully paid.
Installment Sale Finance (Livestock)
The facility offers clients an opportunity to purchase large breeding livestock (e.g. bulls, cows). The latest animal identification technology to micro chip the animals is also offered.
Establishment Loan
The Land Bank provides establishment loans to farmers for perennial crops. These loans are typically used for establishing sugar cane plantations, citrus and deciduous fruit orchards, timber plantations and vineyards for table and wine grapes. An individual farmer or group or any legal entity may access this type of loan.
- Farming equipment
- Implements
- Farming vehicles
- Livestock (cattle, goats, sheep, pigs and poultry)
- Improvement of structures or any other loose farming assets
- Irrigation systems
Short term (seasonal) loans
Short-term loans are tailored to meet important financing needs in the agricultural production cycle including the provision of advances for crop intakes, production requirements, production credit and other related services that includes the handling, manufacturing, packing, processing, storage, transport and marketing of agricultural products.
For more information about financing from the Land Bank:
Email: info@landbank.co.za
