With more than 150 years of providing financial services and support to the agriculture sector, South African financial institute Standard Bank remains at the forefront of agricultural development with key partnerships with major agricultural role players, aimed at creating a sustainable sector, and its range of specialised financial solutions adding value to farming enterprises and agribusinesses across the value chain.
Standard Bank South Africa Agribusiness head Nico Groenewald notes that, while the prospects for South African agriculture are positive, its potential will not be realised unless involved parties act collectively to remove obstacles to sustainability and create fresh revenue streams for primary and secondary agricultural operations.
“Agriculture has now entered a bullish longer-term growth phase. Commodity prices have been good and will remain firm going forward. Interest rates have also been favourable, with the dollar exchange rate supporting export initiatives,” he says, adding that farmers are encouraged to invest in productive assets, the relevant technological advancements, training and development, while selectively expanding their range of crops and livestock.
This will not only stimulate growth for the individual farmer but also across the entire value chain. It will also be an opportunity to make cutting-edge changes that will move farming operations into a new league.
Primary and secondary operations, such as production and processing respectively, need to improve the way in which it operates, Groenewald states.
He believes that technology, mechanisation, precision farming and better upstream and downstream integration will assist in ensuring that agriculture becomes more efficient and profitable.
This will subsequently ensure that farmers do not leave the sector, agriculture becomes an attractive business proposition and there is guaranteed food security for South Africa’s increasing population.
Standard Bank is determined to transform small-holder farmers into medium-sized enterprises, as it regards this transformation as being essential to addressing food security and stimulating economic growth.
“A profitable agriculture sector will not only create more jobs, but also better-paying jobs. Government, agribusinesses and other stakeholders all have a role to play in ensuring profitable farming. Further, innovation focused on productivity can also transform the sector from a labour perspective and provide farm workers and their communities with a better living,” Groenewald comments.
Financial institutions also need to provide cutting-edge funding solutions that will pro-actively help grow the sector and stay abreast of the obstacles and issues confronting the role players in agriculture, including government.
As one of the leading financial institutions in South Africa, Standard Bank is presenting a series of provincial roadshows in the country to ensure that those involved in agriculture are staying abreast of the challenges, and to engage major role players and sector leaders in discussions about generating growth in their regions.
The roadshows include conferences with industry influencers who discuss the opportunities and challenges in the agriculture sector from a national perspective. These conferences also highlight the innovative opportunities that those in the sector can use to their advantage to become more efficient.
They also serve to supplement the solution-seeking imbizos that Standard Bank hosts through the Standard Bank Centre for AgriLeadership and Business Development. These imbizos have provided valuable feedback for the National Planning Commission.
Standard Bank Gauteng business banking head Brian Busse says his department focuses on the importance of agriculture in Gauteng, and information shared, through the success of the roadshows, can foster agricultural growth in the province.
“Standard Bank remains an integral part of the business community and we have a special focus on providing business solutions for all markets. We regard agriculture as an opportunity for growth in Gauteng and are aiming to bolster our value proposition further in 2014, with a focus on value-added agribusiness solutions,” he states, adding that Standard Bank will appoint business managers to oversee the institution’s smaller agribusiness clients.
Groenewald notes that Standard Bank sees the opportunity to tap into the value-chain opportunities in agriculture.
“Agriculture has generally been regarded as a low profit-margin industry, but we can add to the bottom line through the value chain. The new players are the small-holder farmers and we want to facilitate their growth path. The sooner they are integrated into the value chain, the better,” he states.
Standard Bank business banking value chain optimisation head Marius le Roux states that agriculture can uplift and support the growth path of the country.
Meanwhile, Groenewald notes that skills and talent in agriculture are crucial and talent development needs to begin at a grassroots level. Agriculture needs to be made more attractive for the talent that is available in South Africa. He believes that agriculture is the flavour of the decade for South Africa.
Le Roux says a way to approach opportunities in a coordinated way and keep the focus on the value chain is needed.
He adds that the need to adopt and keep up with new technologies to stay ahead in the finance industry and provide efficient services for customers, including those in agriculture, are also important.
He predicts that, in the next five years, 80% of the Standard Bank’s customers will have access to online technology to do their banking and states that the bank is continually adapting to the new technologies that become available to provide better customer services, which will ultimately make agricultural business more efficient.
“Our function is to facilitate opportunities that are available either by providing capital support or financial knowledge. We can deal with agricultural issues through establishing partnerships with role players in the industry,” le Roux says.
Featured Dedicated Services for Agriculture
Agriculture is characterised by strong cyclical trends and Standard Bank offers structured advances and loans, which take the effects of these cycles into account.
Standard Bank has a solution to meet needs such as overdrafts, asset finance, medium-term loans and a business revolving credit plan or production loan.
Its expertise and dedicated agriculture division offers the following:
• Differentiated banking services, such as crop and livestock insurance, assurance products, commodities trading, wealth creation and estate planning;
• Structured advances and loans to finance the acquisition of property;
• The financing of equipment or fund operating expenses;
• Black economic empowerment to create an economically sustainable black business sector; and
• Information through the Bizconnect website and Finance & Farmer management manual.
Standard Bank’s sector specialists have in-depth knowledge of the agribusiness sector and its supply chain, with a particular focus on emerging markets.
Its dedicated relationship managers administer and coordinate access to all products, services and expertise throughout the bank to provide holistic financing solutions.
Standard Bank customises innovative solutions to meet specific needs of agriculture clients. The company’s extensive footprint across Africa and emerging markets worldwide enables it to facilitate financial solutions for agribusiness customers.
As a leading emerging-markets player, Standard Bank is determined to uphold its transformative role – not only in South Africa, but also in the continent’s agriculture sector, in partnership with other organisations and across all links of the agricultural value chain.
Standard Bank’s partnership approach with organisations across the agricultural value chain enables it to engage meaningfully beyond the bounds of traditional banking and produce results that are genuinely beneficial to all parties.
Financial institutions have typically avoided lending to small-holder farmers and the agriculture sector for several reasons, including the perceived high-risks by banks, farmers’ lack of usable collateral, the high costs associated with servicing remote clients and interrelated production risks, such as pests and diseases, unreliable rainfall and price volatility, as well as a lack of irrigation.
However, Standard Bank has funding models to finance small-holder farmers, which include risk-mitigating tools such as price-hedging instruments and crop insurance.
Innovative funding enables small-holder farmers to increase their opportunities to succeed and includes supporting farmers in all aspects, which involves the buying of direct inputs, such as seeds and fertiliser; structured mentorship; the quality control of produce and support in applying for credit.
“Standard Bank regards itself not only as a financier but also as an integral contributor to the development and transformation of the agricultural sector. Our commercial insight and capabilities can be game changers. We believe that it is important to bring together people and organisations that don’t often have a chance to engage with one another and have them work together. It calls for teamwork to enable a cutting-edge sector,” says Groenewald.