As technology becomes increasingly important for cost-effective agricultural production, bankers and financiers must adapt to the changing needs of farmers. Gone are the days when financing solely involved buildings and equipment. Today, farmers require funding for the latest farming aids, such as drones and moisture sensors, as well as substantial investments in modern technology software platforms.
This was emphasized during the “Resilience during Times of Adversity” session at the Africa Agri Tech Conference and Exhibition in Pretoria. The session focused on Science and Technology, with Professor Andre Jooste from Stellenbosch University leading the discussion. Panel members included Loffie Brandt from ABSA Agribusiness and Dr. Albert Strever from Stellenbosch University.
Brandt explained that it’s challenging to incorporate the benefits of these latest farming aids into credit applications due to a lack of historical data. ABSA is working to test these aspects as it realizes that incorporating technology benefits into the funding mechanism for production financing and credit lending is essential.
Jooste highlighted the importance of banks and financiers becoming an integral part of these businesses to ensure sustainability during major changes in the farming environment. However, Brandt acknowledged that it is difficult for banking institutions to change long-established systems as they work within strict regulatory frameworks.
In addition to the financial challenges, farmers involved in high-value commodities such as macadamia nuts, berries, and avocado pears face cost pressures that have resulted in negative returns. Load shedding has also forced many farmers to use large generators, resulting in high operating costs. Selling prices for these commodities have fallen while production and logistics costs have risen, making it a tough business.
Despite these challenges, exciting developments are underway, such as the creation of cultivated meat made from animal cells. Mogale Meat CEO Dr. Paul Bartels is leading the way in this area, envisioning a future with compact production plants located in shipping containers near the markets for these products.
John Deere, one of the event sponsors, is also contributing to increasing efficiencies and cutting costs for the agricultural industry. They have set up joint ventures with smaller companies specializing in data and technology to add value to their products. For example, they have acquired Kenya-based Hello Farmer, a tractor-sharing application beneficial to smallholder farmers, which will be extended throughout Africa as food requirements increase.
Source of original article: Africa-Agri SA