In response to the crippling impact of load shedding on the country’s agricultural sector, the Department of Agriculture, Land Reform and Rural Development (DALRRD) has joined forces with the state-owned agricultural Land Bank to extend a crucial financial lifeline to struggling farmers. Load shedding, responsible for widespread power disruptions, has inflicted significant economic hardships, with millions in revenue losses and substantial agricultural produce wastage.
Hardest hit by the impact of load shedding
According to experts, those who are most negatively affected by the power outages are small and medium sized crop and chicken farmers. Crop farmers need consistent power supply to irrigate their crops while the latter rely on electricity to keep the chickens alive. A North-West Province-based chicken farmer, Herman Du Preez, said he is yet to recover from losing 40, 000 of his broiler chickens which suffocated due to power supply disruptions earlier this year.
Alternative energy sources
Called the Agro-Energy Fund (AEF) the R1.21 billion finance programme will also assist farmers to explore and acquire alternative energy sources or assets to limit the impact of the energy crisis on their daily operations. The Fund is aimed at small-scale farmers to large commercial agricultural entities. Priority will be given to intensive agricultural activities including, among others, irrigation, piggeries, poultry, intensive agricultural production systems and farm cold chain related functions.
The financial model also includes grants and loans, ranging between R500, 000 and R1.5-million. The DALRRD will contribute R500-million towards the grant aspect of the Fund, while the Land Bank will provide R710-million towards loans.
The structured Assistance
Small-scale farmers will qualify for financing in the form of a 70% grant and a 30% loan, with the grant set at a maximum of R500, 000. Medium-scale farmers will be eligible for a 50% grant and a 50% loan, capped at R1-million. Large-scale and mega commercial producers may apply for a 30% grant and a 70% loan, capped at R1.5-million.
In a joint media briefing last week, the Minister of DALRRD, Thoko Didiza and Thabi Nkosi, chair of the Land Bank Board, praised and welcomed the initiative. Said Didiza: “I must emphasise that the purpose of the AEF is to incentivise farmers to invest in alternative energy sources. This Fund will run parallel to other existing financial instruments designed to support farmers with production, farmer infrastructure, market and other aspects. Applications will be directed to the Land Bank and be subjected to approval guidelines of the Bank.”
Energy efficiency projects
“We are delighted to be in this partnership with the Department for the implementation of the AEF, which is important to provide energy security to ensure that farming continues uninterrupted even during load shedding hours and there will be extra energy stored through this funding. In addition, the Bank will also rollout its Green Finance product offering with a focus on financing solar panels, biogas and biomass plants. It is hoped this will result in the installation and commissioning of energy efficiency projects across the country to partially offset electricity usage from the grid,” Nkosi said. This could reduce the electricity bill of farms as they will no longer buy full units but use solar-generated energy.
Financial Impact of load shedding
In 2022, the recurring power outages had a substantial financial impact, as estimated by both farmers and industry experts, surpassing R200 million. These disruptions had a ripple effect on various sectors, particularly agriculture. Farmers were forced to scale back their planting efforts because food retailers couldn’t procure fresh produce in bulk, a direct consequence of the unreliable power supply. Furthermore, processing machinery, irrigation equipment, and other vital farm equipment remained idle during power interruptions. This financial support is seen as a crucial lifeline, poised to significantly bolster the productivity and profitability of the farming sector across the nation, mitigating the adverse impact of load shedding.
Interested farmers can apply for funding by visiting the Bank’s website on www.landbank.co.za or www.dalrrd.gov.za.
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