Crisis funding for farmers

Government and the private sector have launched various measures to alleviate the impact of the COVID-19 pandemic on business and various industries. Glenneis Kriel reports.

Despite food production being deemed an essential service, many farming businesses have been negatively affected by measures aimed at curbing the coronavirus disease (COVID-19) pandemic.

According to Omri van Zyl, executive director of Agri SA, commodities associated with wine, beer, liquor, game ranching and fibre production were in full or partial lockdown, and producers were also unable to cash in on tourism opportunities, which for many has become an important income stream.

“And, of the businesses that can operate, many are adversely affected by the closure of fresh [produce] markets, street vendors and restaurants, as well as the impact of the poor economy on demand.”

GOVERNMENT FUNDING

Government has set up various funding schemes to support struggling businesses. The majority of agricultural businesses, however, will have difficulty benefitting from these initiatives, as most prioritise the health industry, to ensure the industry is able to cope with the anticipated impact of COVID-19 on health resources, as well as social services aimed at ensuring that people have enough money to buy food.

In addition, where other industries are accommodated, most of the application documents specify that priority will be given to previously disadvantaged individuals, with women, the youth and people with disabilities enjoying preference.

The COVID-19 Agricultural Disaster Support Fund for Smallholder and Communal Farmers, for example, targets smallholder and communal producers with a turnover of between R20 000 and R1 million per year, specifically the groups mentioned above, who produce either poultry, vegetables, fruit, livestock and winter crops.

Besides this, funding is based on a voucher system, limited to R50 000 per farming operation. Farmers do not receive cash, but vouchers to procure specified inputs, based on the crop they produce.

Applications for this support already closed on 22 April, but the National Emerging Red Meat Producers’ Organisation (NERPO) requested an extension, arguing that the lockdown made it difficult for producers to apply, as many did not have access to computers or the Internet, or required assistance with submitting documentation.

Producers who have lost income generated from tourism, could qualify for the COVID-19 Tourism Relief Fund, but this fund is also capped at R50 000.

Wiaan van der Linde, deputy president of the Wildlife Ranching Association of South Africa, said R50 000 would not alleviate the distress some game ranching businesses were experiencing, but it could be of significant assistance to smaller operations.

“It still is too early to quantify losses, but in 2016, Absa estimated that the industry contributed R20 billion to the economy annually. Roughly 75% of this is likely to disappear this season as a direct result of hunting and traveling restrictions alone.”

Van der Linde said he would have liked to see more support for farmers, but said the social relief measures would help to alleviate economic pressure. “The R500 billion, of which

R100 billion will go towards social relief schemes, will make a big difference in the lives of the recipients. Ten rand on the street to buy food and stimulate the economy is much better than R1 million in the bank. Farmers, especially food producers, will benefit indirectly.”

PRIVATE FUNDING

Of the privately managed funds, applications for the Sukuma Relief Programme, to which Johann Rupert donated

R1 billion have already closed. The programme reportedly received applications from over 10 000 businesses within the first four days after it was launched at the start of April.

Applications are still open for aid from the South African Future Trust employer relief fund, an independent trust set up by Nicky and Jonathan Oppenheimer, in partnership with the South African government. By 23 April, the trust had already approved interest-free loans to 5 764 small, micro and medium enterprises, amounting to R638 million.

Applications can be submitted through various South African banks. But as with the Sukuma Relief Programme, the fund is aimed at mitigating job losses, with payments being made directly to the employees of qualifying SMMEs.

Online retailer, Naked Wines, have pledged US$5million (about R94 million) to support winemakers affected by the pandemic’s disruption. The fund will be used to purchase stock that was previously destined for restaurants, tasting rooms and traditional retail stores, and the stock will then be diverted to its 500 000 ‘angel customers’ in the US, UK and Australia. The funding is available to

independent winemakers all over the world, with the opportunity to turn it into a permanent listing. For more information visit nakedwines.com/covidsupport.

BANKS

Producers can also approach their banks for additional relief. Dawie Maree, head of agriculture information and marketing at FNB, said banks could help in at least two ways: “We can either give a threemonth loan payment holiday, in which case interest would still be charged, or re-negotiate the length of the term. It is important to contact your banker as soon as possible to discuss the various options that would suit your business the best.”

He warned farmers to only make use of these options when really in need, since conditions could still become much tougher over the next few months. “The problem is that many agricultural businesses were already in financial dire straits before the lockdown, due to the drought and the foot-andmouth disease outbreaks.”

The Department of Agriculture, Land Reform and Rural Development has also allocated R100 million to the Land Bank to assist farmers in financial distress. To qualify, applicants need to be existing Land Bank development clients with an annual turnover not exceeding R10 million. The benefit is capped at R2 million per client.

Distressed accounts due to reasons other than COVID-19 and over-indebted customers, are excluded from this support, but account holders may apply using normal credit criteria.

WORKER COMPENSATION

The Unemployment Insurance Fund (UIF) has launched the COVID-19 temporary/employer relief scheme (C19 TERS) to enable businesses to pay employees who were temporarily laid-off due to the crisis. According to Jan Truter,