Fin24

Land Bank to repossess 557 farms

2009-08-02 13:13

Johannesburg - The Land Bank has instituted legal action against 557 landowners, half of them emerging farmers, for failing to repay their loans, City Press reported on Sunday.

Of the 557 the bank had instituted legal action against by June 30 283 (51%) were emerging farmers and 274 (49%) commercial farmers.

Seven of the 13 farmers who already lost their farms this year were newly-established.

Moves to repossess farms came after the bank lifted a moratorium on non-paying loans last July. It was introduced in 2002 to help black emerging farmers gain business skills while not having to pay off their loans.

Land Bank chief Phakamani Hadebe was quoted as saying: "We have spoken to farmers to try and restructure their loans, but they are struggling to service their debt. When we lifted the moratorium our revenue collection jumped from R40m to R140m a month.

"Had we not lifted it the bank would have lost R1.2bn a year."

President of the National African Farmers' Union Otto Mbangula said the bank had to stop operating like a commercial bank.

Of the Land Bank's estimated R14.9bn debt book, R3.9bn was from non-paying emerging farmers.

According to City Press, a farmer in Lichtenburg, North West, 65-year-old Joseph Phaedi, had to pay 20% interest on a R330 000 loan.

Hadebe defended the bank's interest rate, saying: "We are in the process of reviewing our credit and pricing model, but it should be known that the Land Bank obtains its funding from the capital markets and has to pay market-related rates on the borrowed funds."

Agricultural Business Chamber head Dr John Purchase said only six percent of Land Bank lenders were affected.

"We are in discussion with the bank to try and see how we can assist struggling farmers and give them support.

"Our members can provide substantial post-settlement support that was missing when loans were first issued."

- Sapa