A recipe for disaster

SOME are worried that farm repossessions without compensation will lead to a shortage of mealies and cabbages. This is the least of our worries.

The repossession of farms will collapse the entire economy. South Africa is a G20 economy and comparisons with Zimbabwe are meaningless.

Local farms are not simply places which grow food or produce livestock. They are vital small businesses. I presume some are even incorporated.

As businesses, they have operating loans. I would guess that some have borrowed against their equity and have diversified by getting their sons and daughters to start other businesses.

Some may have used borrowed funds to invest in overseas markets or ventures, which is all perfectly legal.

I would hesitate to say that talk of repossession is accelerating this process. So repossessing these farms is simply going to de-collateralise the bank loans against them, unless the new owners are going to honour the loans – which, of course, they will not.

This is a recipe for collapsing the banking system and the whole economy. So the re al losers in this idea will be the banks, not the farmers. If that is the case, I am pretty sure that farm repossessions will not take place. Norman Goldstuck Milnerton