POLICIES - Agriculture: Cost Increases in Agriculture

18.3 - Cost Increases in Agriculture
The ACDP is concerned with the price and cost increases in agriculture, as this translates directly into higher living costs for all South Africans.
In searching for the complex factors that helps one to derive a reason for this increase, the following is to be noted:
• The total outstanding agricultural debt rose from R2 004m to Rl9 396m over the past 20 years - an average increase of 12% per year.
• The distribution of the debt burden is also important. In 1994 the ratio of debt to assets was estimated at 0 for 27% of farmers - i.e. 27% of farmers had no debt. For 20% of farming enterprises the ratio was below 10%; for 23% of farmers it stood at between 10% and 30%; for some 15% it was between 30% and 50%, with a further 15% worse than 50%.
It therefore appears that farmers are now paying the price of having benefited from subsidies for so long.
In retrospect, it is unfair that they are being penalised by having to take loans at commercial rates when the levels have been artificially maintained through loans by institutions like the Land Bank for so long.
Currently more than a third of all financing of agricultural activity is done through commercial banks charging commercial rates.
The ACDP feels that markets should not be contrived artificially through subsidy schemes and the like but we understand the plight of the farmers - some 15 % of them have debts in excess of 50 % of their asset base.

http://www.acdp.org.za/index.php?page=policy1