Publications
Partners
Water and land. In essence, these are the two things that the agricultural sector should hope to get clarity on in the Budget Speech, according to Nico Groenewald, Head of Agribusiness at Standard Bank.
“In 2018 agri-business had a record year in terms of exports and that resulted in a trade balance which was just south of $4 billion,” Groenewald says. However, against the backdrop of a market under pressure and climatic challenges like the draught, it has become quite a challenge for the agricultural sector to perform at the required levels within the borders of the country.
Groenewald says the current growth challenges that the agricultural sector faces stems from the broader restrictions to economic growth. “When you sit with subdued economic growth it eventually spills over into agriculture since the demand pull from consumers isn’t necessarily there to provide you with growth in local markets,” he explains.
Another highly anticipated topic in the agricultural sector would be policy around land reforms. In the State of the Nation (SONA) address this year, President Cyril Ramaphosa stated that through an accelerated programme of land reform, the government will work to expand agricultural output and promote economic inclusion. But what will the role of banks be?
The banks have a vested interest in what happens with the land in the agricultural environment because land is traditionally a form of collateral that can be taken to safeguard loans, Groenewald explains. “However, we made sure that through the various bodies we took part in all the discussions around how best we need to deal with land going forward and we are quite confident that agricultural production would not be adversely affected.”
Watch Nico Groenewald share more on the economic state of the agricultural sector in the South African in the video below:
This post is sponsored by Standard Bank produced by BrandStudio24 for Fin24.
