Scope of VKB in Agricultural Development
VKB has established specialised Agricultural Development Divisions in its two respective focal regions, namely, Free State and Limpopo. Staffed with agricultural economists, technical agriculturalists and on-farm mentors, it has the experience and capacity to deliver superior development outcomes. VKB is involved through development programmes with 51 emerging commercial farmers (aggregate cultivated area 5000 ha) in the Free State, and 108 (aggregate cultivated area 250 ha) in Limpopo, where small scale farmers are prevalent. It has data of 140 developing farmers on its Frees State and 350 on its Limpopo database.

VKB’s contribution to developing farmers annually exceeds 3% of net profit after tax, making it a Level 1 contributor to Black Economic Empowerment (BEE) in terms of enterprise development criteria.

Training to equip upcoming farmers with modern farm management and technical skills remains a strong and efficient driver of VKB’s Enterprise Development strategy too. Between 2008 and 2014, VKB enrolled 170 developing farmers from Limpopo and the Free State through ITO Batho Pele training.

 

VKB in Developing Agriculture Project Management
VKB has accomplished experience and a clean track record in joint development initiatives. It recognizes the importance of stakeholders, and therefore co-operation with development bodies, government, organized agriculture and agribusinesses are always high on its development agenda.

VKB implements joint development projects at farm level and administers monetary support funding on behalf of the Grain Farmer Development Association (GFADA), Maize Trust, Winter Cereals Trust, Potatoes SA, Agricltural Research Counsil (ARC), Department of Agriculture and Rural Development (DARD Free State), Limpopo Development Agency (LEDA), National Youth Development Agency (NYDA) as well as the national Department of Rural Development and Land Reform (DRDLR), for which it has been appointed as Strategic Partner to participate in the Recapitalization and Development Program (RADP). In addition, VKB has formalised development linkages with various agribusinesses, as well as district municipalities through participation in the Agriparks initiatives of government.


Development of new Farmers
The services rendered by this division, are, inter alia -
• Identification of difficulties that are experienced, and recommendations
• General agronomic advice
• Advice on established pastures
• Agronomic planning
• Agricultural-economic studies (feasibility studies)
• Economic analyses and viability analyses
• Presentation of lectures en Farmers’ Days.


VKB Developing Agriculture Model
The development model of VKB is presented in the figure below:

Vision 2020
Development of emerging farmers of the VKB Group guided by its Vision 2020 - Leadership in the Development of Sustainable Commercial Farmers. This vision strives to expand and to provide leadership that is necessary for successful agricultural development with the focus on commercial farmers and sustainability. With sustainability it is meant that a farmer must be in a position to farm profitably, while meeting his social objectives and conserving the natural environment.

 

Motives of Farmer Development
The development initiative of VKB is motivated by its social responsibility and obligation to improve its future business environment. Overarching goals of this strategy is socio-economic development (through increased social capital, economic growth, job creation, stability, equitable distribution of income, food security) and conservation of natural resources.

 

Development Design
The development effort of VKB is designed to provide emerging farmers with an opportunity to farm on the one hand, and on the other to induce a developed farmer that will seize this opportunity.
In creating sustainable opportunities for developing farmers, VKB focuses on the following aspects:

  • To coordinate the development effort between various stakeholders in order to prevent a fragmented approach.
  • To mobilize resources from stakeholders as a prerequisite for success due to the capital intensity of farming development.
  • To assist farmers with a comprehensive package of support regarding mentorship, extension, training, finance, access to inputs and product markets.
  • To alleviate specific constraints of developing farmers regarding capital formation, literacy, soil status, economies of scale, management and mechanization capacity.

 

VKB End to End Business Support to Emerging Farmers
The end to end development programme of the VKB-group is designed to:

  • Assist farmers with a comprehensive package of support regarding mentorship, extension, training, finance, insurance, input procurement as well as pricing and marketing of farm products.
  • Alleviate specific constraints regarding capital formation, literacy, soil status, economies of scale, management and mechanization capacity.
  • Induce good business conduct, commitment, engagement and acceptance of full ownership and responsibility by farmers.

 

The following objectives and actions are pursued through this programme:

  1. Provide co-ordinated technical support conducive to optimal farming practises through training, extension services and mentorship:
    1. Employ full-time mentors in farming area to support farmers (regular farm visit to coach, support, advise and plan operations with farmer – take farmer’s goals, views, restrictions, etc. into account);
    2. Provide specialised technical extension and training services through our Farmer Development Section;
    3. Support farmers with maintenance and calibration of equipment;
    4. Evaluate and control physical farming activities and results.

  2. Provide agricultural economic support and training:
    1. Maize enterprise budget in co-operation with farmer;
    2. Budget control;
    3. Employ full-time person to establish farm management bureau;
    4. Train farmers in financial farm management;
    5. Farm financial control and reports;
    6. Evaluate financial results.

  3. Support farmers to access optimal and timely finance and insurance:
    1. Employ full-time credit manager to cater for special needs of developing farmers;
    2. Establish office in farming area to improve access;
    3. Support farmers to interpret VKB account statements;
    4. Support farmers to obtain finance;
    5. Support farmers to obtain multi-peril crop insurance;
    6. Evaluate finance and insurance results.

  4. Support farmers with optimal input acquisition:
    1. Role-player involvement and fair competition between input suppliers;
    2. Provide input supply infrastructure/logistics where needed;
    3. Support farmers with evaluation of quotations;
    4. Support farmer with inventory control system that is also linked to VKB’s technical and financial control systems to ensure that inputs acquired is utilized by farmers.

  5. Support farmers to market their produce:
    1. Provide market information;
    2. Access to existing marketing infrastructure;
    3. Strategic pricing throughout season;
    4. Support with harvesting and product delivery;
    5. Control system to eliminate delivery risk to institutions and farmers.

  6. Support farmers to engage in good and ethical business conduct.

  7. Implementation of exit strategy wherein skills, decision-making, and responsibility is gradually transferred to farmers until they are weaned from special development measures and grants.

 

Finance of Developing Farmers by VKB
VKB is an authorized Financial Services Supplier (FDV 4813) and an authorized Credit Supplier (NCRCP 477). Finance to developing farmers is based on VKB’s company finance policy, but the specific circumstances of developing farmers are taken into account to ensure access to finance as part of the development support system. Constraints that are addressed include high transaction cost, illiteracy, communication barriers, insufficient knowledge and lack of collateral.

Recently, VKB and Land Bank embarked on a joint development finance initiative through which VKB will have access to a Wholesale Finance Facility from Land Bank. This will result in the roll-out of favourable interest rates, finance payment terms and mentorship to developing farmers.

A variety of competitive and suitable financing products are available to farmers, namely:

  • Production loans
  • Monthly accounts (payable 30 days after date of statement)
  • Moveable asset acquisition finance (four-year term for new equipment and three-year term for second-hand equipment)
  • Contract growth financing (multi-risk insurance).

One of the most serious impediments of developing farmers is insufficient collateral, exaggerated by the fact that many developing farmers do not own land. To finance farmers under these circumstances takes special commitment and VKB does this by:

  • Acceptance of higher than normal risk than would be allowed under its normal finance policy (i.e. outside policy finance is approved where financial feasibility plays a more important role relative to security/collateral);
  • Incorporation of farmers in contract-grow programs where the crop serve as the only collateral. Here support to ensure optimum agricultural practices, marketing and off-take agreements play an important role to ensure viability.
  • Over the past 5 years it was consistently found that a shortfall materializes between the insured value of the crop and finance requirements. VKB carried the financial risk of this shortfall, which typically amounted to between R2 million and R4 million per annum.

Other special measures to improve access of developing farmers to finance at VKB include:

  • A dedicated credit manager to cater for the specific needs of developing farmers and to communicate with them in their language. This entails visits to farms and farming areas, special assistance with application for finance and all aspects regarding finance communication (explanation of finance principles, account management and interpretation of statements, contractual requirements, etc.);
  • Systems to link technical/field personnel with the credit and commercial departments to co-ordinate planning and control of finance through a budget control system;
  • Specialist agricultural economic support aiming to assist farmers with financial management (including planning and budget control).

 

Advantage of VKB Discount Incentives to Farmers
As stated above, shareholders (farmer members) share in the whole of VKB’s wealth by receiving discount incentives. Discount incentives are allocated from profit made by the VKB Group through its various business activities, and should not be confused with normal trade promotional discounts. The majority of profit made is distributed to shareholders in this way. In 2014 R185 million was allocated to producers, of which over R1 million went to emerging farmers. Corresponding figures for 2013, 2012 and 2011 amounted to R150 million, R115 million and R125 million respectively. This advantage constitutes the core of VKB’s value position to all prospective clients. It is applicable to developing farmers from the onset as they become VKB shareholders, since they receive discount incentives in exactly the same way and magnitude as large scale or established commercial farmers.

Discount incentive to a particular farmer is based on his level of grain delivery, grain marketing, procurement, insurance, finance and investment deposits at VKB. A percentage of discount incentives is made available in cash (normally 10%), while the balance is redeemable in future (normally after 15 years) or in the event of death of a shareholder. In this way an asset accumulates in the name of the farmer. It is not only an important source of loan collateral, but it is also a source of future income (or “pension”) for farmers.

 

Contact Details – Free State Region

Piet Potgieter

MANAGER DEVELOPING AGRICULTURE

Tel:

087 358 8834

Email:

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Sosie Matla

AGRICULTURAL ECONOMIST

Tel:

087 358 8584

Email:

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Anche Schepers

AGRICULTURAL ECONOMIST

Tel:

087 358 8601

Email:

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Ronney Tshabalala

AGRICULTURIST

Tel:

087 358 8836

Email:

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JT Prinsloo

AGRICULTURIST

Tel:

087 358 8572

Email:

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Lavinia Mpholo

AGRICULTURIST SUPPORTING OFFICER

Tel:

087 358 8346

Email:

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Pieter de Wet

AGRONOMIST

Tel:

087 358 8593

Email:

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Bertus Cordier

MENTOR: EASTERN REGION

Tel:

082 789 2557

Email:

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Francois Crause

MENTOR: WESTERN REGION

Tel:

083 244 8454

Email:

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Contact Details – Limpopo Region

Braam Crots

MANAGER DEVELOPING AGRICULTURE

Tel:

014 719 9002

Email:

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Prozzy Ravelle

EXTENTION OFFICER

Tel:

083 642 4932

Email:

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Kgabo Mooka

EXTENTION OFFICER

Tel:

o828051668

Email:

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Agronomic Services – Free State Region

Robert Steynberg

Tel:

087 358 8348

Email:

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Pieter de Wet

Tel:

087 358 8593

Email:

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