The current situation at Landbank is dire and without immediate attention the situation could result in catastrophic outcomes for the commercial agricultural sector and South Africa as a whole.
In the previous financial year, ending 31 March 2020, Landbank reported a financial loss of R2.8 billion compared to a loss of R902 million in the previous financial year. This represents an increase in loss of 211% year on year. This is a crippling statistic and a bitter pill for all in the Agricultural sector to swallow.
Landbank currently provides approximately 28% of all production loans to the agricultural sector and currently farmers across South Africa owe the banks approximately R200 billion. The Current situation with Landbank will result in removing almost a third of the funds available to South African farmers, as Landbank will be forced to suspend all extensions on loans to the farmers.
In an interview with eNCA, Agri SA Executive Director Christo van der Rheede, commented on the fact that commercial farmers in South Africa essentially produce food on the back of debt. These borrowed funds are used to keep the farms operational until a return is generated from the produced goods. If a significant portion of these funds is removed from the equation, this could lead to a significant and serious impact on the production of food in South Africa.
Christo van der Rheede, further stated that a major concern is the lack of competency and control at Landbank as people were not doing their jobs as they were supposed to. More importantly, Treasury has failed to fulfil their oversight role as Government is the biggest shareholder of the Landbank.
Treasury has however stated that it will “not allow Landbank to fail” This comes after the Auditor General has already stated that the problems at Landbank have been known for some time and that Landbank would need a financial injection of R7 billion to remain operational and take control of the current situation.
Christo van der Rheede commented that changes would have to be made within the Landbank structure and that “heads must roll” especially when it comes to lack of controls, the lack of strategy to fill strategic positions, and a lack of overall governance and management. These are internal matters that must be addressed urgently.
If these issues are not resolved as a matter of urgency, it could result in massive financial losses for the commercial agricultural sector and the country as a whole in the not so distant future.