Landbank R97 million in the red

Henry

The Landbank is still failing despite the R7 billion bailout that was allocated to it during the 2021 national budget.

This week, the treasury tabled a report on state expenditure for the third quarter (October to December 2023) to parliament’s appropriations committee.

This report indicates that the Landbank is also producing miso after miso when it comes to repaying debts.

R6.5 billion of the R7 billion bailout that the Landbank received in 2021 was used to repay guaranteed creditors.

Yet this struggling state institution, which has been in default on its debt obligations since 2020 and is subject to recapitalization by the state, recorded a net loss of R97 million against a budgeted profit of R99.4 million at the end of last year.

The report further shows that the Landbank generated a net interest income of R454 million – R196 million less than the budget of R650 million, and R87 million less than the previous year’s amount of R541 million.

Bennie van Zyl, general manager of TLU SA, says it is very important for South African farmers that the Landbank gets back on its feet so that the bank can guide farmers with understanding through droughts and crop failures, among other things.

“The Landbank was established precisely to bridge economic volatility in agriculture.

“Farmers need financing for input costs – such as seed, fertilizer and diesel before planting time – which they pay back later when they receive their returns. However, the Landbank is not able to do this for farmers at this stage, which means farmers are dependent on other banks for financing.”

Van Zyl says that so-called normal commercial banks are not that flexible when it comes to the repayment of loans by farmers.

“The Landbank must therefore actually establish a unique product for agriculture to help farmers to remain in production despite all the fluctuations in agriculture, such as wildfires, drought and disease.”

Van Zyl says it now appears that the government has an ideological connection with the Landbank.

“I think the state expects the bank to help it achieve its ideological targets in exchange for the bailouts.”

The Landbank is not the only state institution struggling to get out of debt despite bailouts of billions of rand.

RNews reported earlier this week that Eskom, which will receive a massive bailout of R254 billion over three years, recorded a loss of R7.5 billion in the third quarter after tax.

Transnet, which received a guarantee facility of R47 billion, was unable to meet its debt obligations of R14 billion by the end of the financial year, and Sapo, which is currently in business rescue, has a net loss of R976.6 million suffered in the third quarter.