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The biggest threat to farmers and food security is rising farm debt

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Source: Sifiso Ntombela, Fin24, 15 July, photo credit: News24/Citypress

In the last six years, farm debt has grown by roughly R68 billion to reach R168.5 billion in 2018. This growing debt poses a great risk to the stability of food production and it requires urgent financial intervention to bring relief to farmers.

After South Africa joined the World Trade Organisation in 1995, it removed almost all forms of support and protection for farmers, except for milk and sugar ones.

Access to affordable credit is important for farmers’ prosperity and for the security of food supply in the country. 

Without affordable credit, farmers and agribusinesses will be compelled to downsize farming operations, reducing farm employment and food production. 

The country’s farm debt has been growing since the 1980s, raising the risk for food production and sustainability. 

Between 1980 and 1990, farm debt jumped from R3.8 billion to R15.9 billion, caused by instabilities in the country, price controls and market sanctions that existed in the country during that period. 

From 1996 to 2012, the growth on farm debt was relatively stable, recording an average growth rate of 7% per annum, boosted by positive farm incomes.

The positive farm incomes were largely supported by the opening of new profitable export markets in Europe and Asia, adoption of technology innovations on farms, and the promulgation of domestic market-friendly legislation such as the Marketing of Agricultural Product Act of 1996 and Land and Agricultural Development Bank Act of 2002.
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