Farmers from across the country are meeting on Wednesday (August 17) to strategize against what they see as ill-conceived debt collection measures by the Land Bank.
Allegedly, this is being done to save the finances of the state-owned bank, which is suffering from difficulties after years of mismanagement. In the process, the bank is allegedly abandoning its unique mandate in light of industry-related volatility.
Read: South Africa’s Land Bank aims to resolve debt by end of September
The Land Bank denied this in a statement and said that the first priority is always to help debtors, and liquidation or sequestration is the last option.
The South African Agricultural Initiative (Saai), which organized the meeting, disagrees.
Hundreds were driven out of business
Saai chairman Dr. Theo de Jaeger says the organization is aware of 150 farmers who are currently undergoing such processes, and another 300 who have already been terminated over the past few years.
He says the bank’s behavior could bring agriculture in South Africa to its knees and affect food security.
He is also concerned about the impact on the economy of rural towns as job losses follow.
He says the crux of the problem is that farmers are being driven out of business with relatively small amounts of debt and despite the fact that the value of their assets far exceeds their liabilities.
Lawyers, liquidators and auctioneers appointed by the bank are humiliating farmers and their families to the point where they are traumatized and some are even considering suicide, Moneyweb has learned.
A month ago, Saai submitted a request under the Promotion of Access to Information Act (PAIA) to the Land Bank to obtain details of the general ledger of debtors, all subpoenas issued and all enforcement orders issued by debtors on behalf of the bank.
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Saai is now calling for an immediate suspension of such legal action “until a proper independent investigation into the violations, motives and modus operandi is completed, and to allow those farmers who are liquidated and seized for debt up to a portion of their net asset value. to save their livelihoods, their businesses and their dignity,” says De Jager.
Enough is enough Facebook page.
Karel van der Merwe, a farmer from Van Wixvlei in the Northern Cape who was also a victim, has set up a Facebook page called “Genoeg is Genoeg” (Enough) where farmers can share their experiences.
“The syndicates of liquidators should be investigated for all their work over the past 20 years. They should be targeted personally and held personally accountable for the fraud. This requires a special unit,” he says on this platform.
Coys Harmon of Zirust, a colleague of the victim whose R14 million farming business was liquidated due to overdue debts of R4 million, says on the Facebook page that lawyers, defenders, liquidators and auctioneers – “also called jackals, wolves, hyenas and vultures” – see it’s like a business opportunity that they approach in a coordinated way.
Read: Rising input costs could mean South African farmers plant fewer plants
Why is there no way to save the business for farmers?
Van der Merwe applied to the court to amend the Insolvency Act to extend business rescue to trusts and individuals, as it is currently limited to companies. This eliminated many agricultural enterprises.
Agricultural organization TAU SA has applied to join the legal proceedings as a friend of the court – and is also helping several farmers who are now at risk of losing everything, according to chief executive Benny van Zyl.
Van Zyl adds that financing agriculture is different from financing other industries, pointing out that the Land Bank was established to fulfill this unique role.
According to De Jaeger: “When agribusinesses managed the Land Bank’s receivables books, bad debt was in some cases well below 1%. These institutions are well versed in agricultural finance, have good relationships with farmers, have the capacity to manage and administer these loans, have disaster risk reduction mechanisms and a constructive vision of the value chain.”
That changed in September 2020, he said. “The Land Bank took away most of its book under suspicious circumstances where none of the above happened, leaving disaster and destruction in its wake,” he claims.
The auditor general qualified the financial statements of the Land Bank in 2021 due to, among other things, doubts about its ability to continue as a going concern.
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Audit problems at the Land Bank worried bondholders
The Land Bank is responsible…
The Land Bank’s executive manager of strategy and communications, Sidney Sawney, said in a statement that an investigation it launched in July – following “previous media reports of a similar nature” – found no evidence that it had acted illegally, unethically or engaged in inappropriate or illegal practices or actions in any case involving the bank and its customers.
He says the bank’s debt collection and asset enforcement activities “are always done through appropriate legal processes.”
This is done in the interests of maintaining the financial sustainability of the bank to ensure the effectiveness of the Land Bank “for all farmers”.
Saundy says Land Bank customers are encouraged to contact the bank if they are having trouble meeting their loan repayment obligations to ensure that an assessment of possible solutions can be made “to avoid the need” for the bank to resort to legal proceedings.
According to him, the bank uses a number of “forbearance solutions” to restructure customer loans and restore them from default.
“The primary purpose of these forbearance measures is to help customers avoid default and/or to prevent troubled customers from defaulting on their loan repayment obligations. These measures should provide sustainable solutions to avoid losses for both the customer and the bank, or to keep losses to a minimum.”
