557 farms to be repossessed

8 February 2009

Johannesburg - The Land Bank has instituted legal action against 557
land owners, half of them emerging farmers, for failing to repay their
loans, City Press reported on Sunday.

Of the 557 the bank had instituted legal action against by June 30 283
(51%) were emerging farmers and 274 (49%) commercial farmers.

Seven of the 13 farmers who already lost their farms this year were
newly-established.

Moves to repossess farms came after the bank lifted a moratorium on
non-paying loans last July. It was introduced in 2002 to help black
emerging farmers gain business skills while not having to pay off their
loans.

Land Bank chief Phakamani Hadebe was quoted as saying: "We have spoken
to farmers to try and restructure their loans, but they are struggling
to service their debt. When we lifted the moratorium our revenue
collection jumped from R40 million to R140 million a month.

Bank is losing millions

"Had we not lifted it the bank would have lost R1.2 billion a year."

President of the National African Farmers' Union Otto Mbangula said the
bank had to stop operating like a commercial bank.

Of the Land Bank's estimated R14.9 billion debt book, R3.9 billion was
from non-paying emerging farmers.

According to City Press, a farmer in Lichtenburg, North West,
65-year-old Joseph Phaedi, had to pay 20% interest on a R330 000 loan.

Hadebe defended the bank's interest rate, saying: "We are in the process
of reviewing our credit and pricing model, but it should be known that
the Land Bank obtains its funding from the capital markets and has to
pay market-related rates on the borrowed funds."

Agricultural Business Chamber head Dr John Purchase said only six
percent of Land Bank lenders were affected.

"We are in discussion with the bank to try and see how we can assist
struggling farmers and give them support.

"Our members can provide substantial post-settlement support that was
missing when loans were first issued."

- SAPA