Meet the partners of the Farmer Development Programme
The success of Grain SA’s farmer development programme (FDP) lies in not just one, but several great partnerships. The management team, development coordinators, mentors and study group leaders collaborate to ensure that developing farmers are reaching new heights. Without the support of the programme sponsors/funding partners – like standard bank – none of this would however be possible.
GOOD REASONS TO SUPPORT THE PROGRAMME
Standard Bank has partnered with Grain SA – as a partner of the Farmer Development Programme (FDP). The FDP’s ultimate objective is to contribute towards seeing a prosperous agricultural sector, while addressing food security and transformation of the sector. This is in line with the bank’s objective of inclusive banking and driving growth in the sector.
According to MC Loock, the senior manager Agribusiness of Commercial Banking at Standard Bank, it was an easy decision for Standard Bank to become involved in Grain SA’s FDP. The fact that Grain SA has access to a portfolio of smallholder farmers to whom they have provided technical support, where smallholder farmers have completed training courses and joined study groups, made this partnership inviting to the bank. What sweetened the deal was that Grain SA also has access to commercial farmers who can act as mentors for smaller farmers.
It also impressed Standard Bank that Grain SA was the implementation agent for a number of funds whereby they provided support in the purchase of inputs. ‘Grain SA has already been using the bank’s system to make payments to input suppliers,’ says MC. He adds that the bank had been looking for opportunities to share risk with input providers or other corporate funds such as AB InBev and PepsiCo, who are also partners of the FDP.
MC says the FDP was initially positioned as a ‘test and learning’ project over a three-year period within Standard Bank. ‘It went so well that the bank is now going to renew the project for another three years. It also established the model for our Agricultural Business Development Programme, according to which Standard Bank has earmarked R500 million to support the developing market,’ he adds.
KEY ASPECTS OF THE PARTNERSHIP
Track record: Through the programme the bank has a portfolio of developing farmers who were previously funded through other programmes. The bank provides production credit against the proven record of each farmer’s production history achieved on those programmes. Grain SA’s role is extremely important in verifying each farmer’s production history.
Technical support: Another key aspect is that the right production techniques are used. Soil fertility, soil preparation, the right cultivar choice, and plant density are some of the aspects that need attention. ‘Standard Bank relies on Grain SA's mentorship programme to ensure that the right things are done and that things are done correctly. Grain SA therefore gives creditworthiness to the project,’ MC shares.
OUTCOMES ARE IMPORTANT
Standard Bank hopes to see the following outcomes through its involvement in the programme:
- That small-scale farmers’ efforts will be thrown together for better bargaining power. The establishment of buying groups to negotiate lower input prices, or joint marketing and the negotiation of premiums for the provision of products through black economic empowerment.
- That a farmer who proves that he achieves good yields on a small scale will have the opportunity to expand his farming operation by planting more hectares.
- To assist farming operations to meet the minimum standards, e.g. to register for VAT or to have a set of financial statements prepared each year.
For Standard Bank, it is important to bring small farmers into the banking sector so that they have active bank accounts from which cross-selling of other related banking products can be done. ‘Eventually, we would like to see small farmers who have successfully completed the programme become independent clients of the bank,’ says MC.
A SUCCESSFUL TRIAL PERIOD LEADS TO MORE
‘The reasonable success of the programme serves as proof that it is possible to finance the developing agricultural market sustainably’, says MC. He adds that there are certain essential ‘ingredients’ that have to form part of this recipe for success.
For Standard Bank the programme now serves as a model according to which the bank wants to undertake the expansion of similar development projects in agriculture. The programme has also helped to teach bank employees who work with the small-scale farmers about the banking products offered to the market. ‘They also learned a little bit about the agricultural sector,’ adds MC.
Publication: February 2022
Author: PULA IMVULA EDITORIAL TEAM