The Agricultural Business Chamber (ABC), represented by Mr Ben Lombard (EXCO member) and Dr John Purchase (CEO), met with Mr Phakamani Hadebe, CEO of the Land Bank, and senior members of the Land Bank’s Executive on Thursday, 13 August 2009. The ABC and its members are major stakeholders in the business of the Land Bank as its members are the single biggest client base of the Land Bank. Given the turmoil experienced by the bank in recent years, as well as media reports regarding farm repossessions and changing mandates, it was critically important to engage with the Land Bank Executive on their turnaround strategy and strategic issues in this regard that could impact on the business of ABC members.
After introductory remarks, the following most pertinent points emerged from the explanations of respective positions:
· The Land Bank recognizes that there should be greater separation between the management and reporting of its commercial mandate, which is still a very important part of its total mandate, and its development mandate focussed on the financing of PDI’s in the agriculture sector.
· The Land Bank recognizes that the necessary farming and/or business support needs to be provided to clients in especially its development mandate in order to manage its risk. Service level agreements (SLA’s) need to be concluded by Land Bank with competent service providers, such as agribusinesses whose core business it is to provide such services within a business environment. If managed correctly, this would enable a very necessary turnaround on its non-performing loans book. The Land Bank will engage with agribusinesses and service providers on a one-on-one basis to explore opportunities on a case by case basis.
· The ABC recognizes the critical role that the Land Bank needs to play in financing both the commercial and developing agricultural sectors of the country, in line with the recommendations of the Strauss Commission (1997).
· The Land Bank and ABC recognize that partnerships and cooperation are essential to grow the agricultural sector and to allow new entrants into the sector.
· The ABC also raised concerns on a possible future credit crunch due to the capping policy of the Land Bank, as commodity prices and especially input costs could surge substantially with economic recovery from the current global recession. This would create a much larger demand for production credit per production unit.
The sense of the ABC is that the Land Bank faces major challenges in playing and fulfilling its rightful and important role in agriculture in South Africa, but that the necessary vision and will of the Land Bank’s Executive is there to turn the Land Bank around and to perform accordingly.