New lender in agricultural sector pops up

Agmerchant, a new agricultural lender for the SA market, has been launched with the view of providing custom financing solutions to the farming sector. Xxxxxx. – XXXCREDIT

Founded by Chris Venter, who has 30 years’ experience in financial services and agriculture, Agmerchant aims to provide the entire farming value chain with bespoke, digitised and long-term financial services solutions. Venter is a former CEO of agricultural services firm Afgri and has 14 years of merchant and investment banking experience.

Agmerchant is backed by two large commercial SA banks, though Venter declined to name them for “competitive reasons”. He is also in talks with a third bank about providing additional financial backing for its lending purposes.

“Our vision is to become a fully fledged commercial agri-lender offering the full range of financial productsw, fr:o2m2i.n8p4u1t tmo monthly accounts and insurance,” Venter said. “At the moment our main focus is on the big corporate agribusinesses.”

The SA agricultural sector has faced a liquidity crunch over the past two years since the state-owned Land Bank — which accounts for almost 30% of agricultural financing in the country — had to cease extending loans after it defaulted on its own debt in April 2020. While the Land Bank announced in October that it would resume lending via a blended finance scheme supported by the agriculture department, some private sector players have attempted to develop new lending solutions to support commercial farmers.

Venter said that many large farming operations have turned to commercial banks for loans. Some have opted for trade credit from seed and fertiliser suppliers. “It is essential that the industry is supported by a robust and focused commercial agricultural lender. We believe there is room for a financier that understands the cyclicality of the industry and can finance the flow of the commodity, rather than just relying on the strength of the balance sheet of the farmer.”