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Johannesburg - The Land Bank and the African Development Bank have entered into a R1bn funding agreement to help emerging and commercial farmers get finance.
"The challenges facing emerging farmers can be mainly attributed to the gap in agricultural funding caused by rapid regulatory and market changes over the past two decades," the Land Bank said in a statement on Wednesday.
The loan includes a two-year grace period on repayment.
"Borrowing in [the] agricultural sector requires a grace period... until the project or farm starts generating cash flow to service the debt and to this end the emerging farmers will benefit from the two-year grace period," CEO Phakamani Hadebe said.
"Since this bond is priced competitively, the commercial farmers also stand to benefit and ultimately it is the South African consumers who will benefit."
The loan would be repaid over 15 years. He said the bank aimed to balance its development mandate and the business imperative of running a sustainable agricultural finance institution.
"The facility therefore goes a long way in mitigating risks associated with financing few farmers," Hadebe said.
