FINANCING AGRICULTURE - CHALLENGES TO FINANCIAL INSTITUTIONS

The agricultural sector is in a process of change. The sector is seen as one sector encompassing all farmers in South Africa. An inequitable approach was followed in the past in supporting the sector, especially regarding the provision of financial services. The needs and participants in the sector and the different financial institutions are discussed and the inequitable approach is reiterated. The challenges to the financial institutions servicing agriculture are highlighted, that is a change in approach towards agricultural policy, interest rates, transaction costs, regulations and financial services. Changes needed are proposed. It basically entails changing the mind-set of the institutions. In the targeting of services, the role of public sector institutions will also include a high priority servicing of the previously ignored farmers in the sector. In considering the whole agricultural sector, unco-ordinated an inequitable approaches of the past will be excluded. The challenge however is to redress the inequities of the past, while at the same time pursuing the goal of an equitable, efficient and sustainable agricultural sector