National Standard intends to launch a Agri Business Private Debt Impact Fund by the end of 2023 aimed at supporting small-scale farmers in line with the Fund’s impact investing objectives. Research has shown that small-scale agriculture has the potential to provide both self-employment and rural employment for low-skilled and semi-skilled workers. This would assist in reducing unemployment, poverty and inequality that faces the South African society.

However, there is limited success in sustainable small scale agriculture activities due to a number of barriers that include:

• Funding constraints
• Lack of farming knowledge and skills as well as business knowledge and skills
• Infrastructure constraints, both agriculture and transport
• Poor locations far from markets, worsened by geographic barriers
• Lack of access to commercial input and produce markets
• Poor climatic conditions, including poor topography and soil conditions, in some areas.

The Fund’s impact objective will be to reduce unemployment, poverty and unemployment in South Africa by growing sustainable Small, Medium and Micro Enterprises (SMMEs) through providing debt financing to agricultural projects and businesses involved in the agricultural value chain. To secure funding, projects will need to go through rigorous assessments including sight visits, stress testing of project cash flows and reasonability checks, ensuring that funding can be provided to projects which are most likely to create sustainable jobs.

The Fund will aim to allocate capital to activities that support the following interventions across the agricultural value chain:

• Coordination
  • Support mixed farming production models across all provinces
  • Centralise the coordination and management of all stages of the value chain, from procurement of inputs, to production, to processing & packaging to the marketing of the produce in the local and world markets.
• Knowledge and Skills
  • Provide on-going agriculture training and technical support services through training programmes as well as accessing available Government initiated training programmes.
  • Provide on-going business management support.
  • Training and Technical Assistance
  • Ensure targeted training and technical assistance on a continuous and more sustainable basis.
  • Ensure costs of training and technical support are taken as a normal way of doing business on an ongoing basis.
• Access to input markets
  • Develop input market relationships to secure inputs at cost-effective prices.
  • Establish nurseries within the farming areas.
• Access to Funding
  • Access grants in to complement debt funding from the Fund.
  • Improve access to other private sector funding in a coordinated manner through strategic partnerships with co-funders, including development finance institutions such as Landbank and other Government-owned finance institutions.
  • Devise innovative funding and insurance models targeted at small-scale farmers.
• On-farm infrastructure
  • Projects must own individual or centralised infrastructure that includes irrigation equipment, tractors, storage rooms, cold rooms, packaging and processing facilities.
  • Partner with large-scale commercial farmers to use their existing supply chains to provide the infrastructure.
• Transport and Logistics
  • Project must own the transport and logistics services that must be operated centrally.
  • Partner with Government to provide road infrastructure where required in certain farming areas.
  • Target farms that are located close to the markets for perishable products.
  • Process and package products for increased shelf life.
• Access to produce markets
  • Access existing markets with major retailers locally and overseas.
  • Facilitate offtake agreements from major retailers
  • Continuously investigate new markets working with relevant industry bodies such as National Agricultural Marketing Council and AgriSA.
• Regulatory compliance
  • Ensure high standards of produce through efficient production and agro-processing & packaging.
  • Ensure Good Agricultural Practices (GAP) and Sanitary and Phytosanitary (SPS) certification.
  • Ensure any regulatory requirements are met at a project level
• Technological barriers
  • Partner with research institutions such as NAMC, AgriSA and local Universities to ensure access to and rapid dissemination of information on new technological advances and market developments.
• Sustainability
  • Constantly identify and address issues that create bottlenecks along the value chain.
  • Ensure a coordinated approach where all the various elements in the agri business value chain are centralised and coordinated by experienced parties for sustainability.
• Ensure achievement of expected outcomes

Ensure the following outcomes and benefits to small scale farmers materialise from the above interventions:

• • Improved knowledge and skills among small-scale farmers.
  • Greater bargaining power in buying inputs.
  • Improved production efficiency and lower costs.
  • Improved access to finance.
  • Improved logistics and transport networks.
  • Improved product quality and quantity.
  • Reduction in waste and pilferage of the product
  • Improved access to local and export markets.
  • Improved market competitiveness and bargaining power in the produce market.
  • Improved access to information and technological developments.
  • Improved revenue and profitability.
  • More productive use of land.
    Job creation, poverty reduction and improved quality of life in rural areas.
  • Accelerated socio-economic development in the rural areas.
  • Sustainable agribusinesses for small scale farmers
  • Ownership of infrastructure