The Land Bank has become another basket case state-owned entity (SOE) facing a smothering cash-crunch — and it is eyeing SA’s deteriorating public finances for emergency assistance.
The SOE that extends loans to emerging and established farmers wants financial help from the government and existing lenders after it defaulted on some of its debt payment obligations.
That the Land Bank defaulted on the obligations to lenders of about R738-million, which matures before the end of April 2020, means that the SOE is facing serious cash-flow issues and cannot continue with its mandate of disbursing loans to farmers on a large scale.
The Land Bank, which estimates that it provides 28% of SA’s agricultural debt, has decided to make “limited” loan disbursements to the sector.
The bank had total assets amounting to R52.4-billion during its 2019 financial year, of which R44.5-billion comprised loans to farmers. Beyond lending, the Land Bank also provides insurance cover to farmers from risks such as natural disasters, fire, flooding and theft.
But the default on its debt obligations to unnamed lenders is a blow to the bank, which recently hired Ayanda Kanana as permanent CEO in February 2020 to stabilise an entity that doesn’t enjoy unfettered financial support from the government, unlike SAA and Eskom.
In January, the Land Bank was downgraded to junk status by Moody’s Investors Service, with the credit rating agency saying the bank has a declining quality of assets, as seen in the rise of its soured loans, which made the bank’s profile riskier than the general banking sector. The value of loan impairments (money that may never be collected from borrowers) reached R324.7-million in 2019, a nearly six-fold increase from R55.5-million in 2018.
The bank asks for help
The Land Bank says the Moody’s downgrade was the straw that broke its back. Now the Land Bank has asked for help from its lenders, including multilateral development finance institutions such as the World Bank and African Development Bank.
“[The] Land Bank is engaging with its funders to request for a debt standstill and deferral of settlements for a predetermined period to enable the bank to develop a business plan, restructure its balance sheet and negotiate a restructuring of its liabilities with funders,” the bank told Business Maverick on Tuesday 28 April.
The bank wants to raise up to R5-billion from lenders to meet its medium-term liquidity requirements, including an agreement for lenders to defer interest on their due debt.
“There is a general willingness by all parties to find solutions for the restoration of liquidity and sustainability of the bank.”
But before lenders agree to throw a lifeline to the Land Bank, some want the government to first make an undertaking to financially assist the bank.
Finance Minister Tito Mboweni is open to this, saying at a press conference on Friday 24 April:
“The Land Bank has come under severe stress… It is in trouble and our responsibility is to support the Land Bank.”
The support may come in the form of government guarantees that the Land Bank can use to solicit further funding from lenders. A guarantee is an agreement that the government or the fiscus would pay the Land Bank’s debt if it defaults on payments. In February, the National Treasury provided the Land Bank with government guarantees of R5.7-billion, but has only used R1.4-billion. The bank says it has requested further guarantees to support its fundraising efforts.
Land Bank’s debt instruments
The Land Bank has defaulted on two domestic medium-term note (DMTN) programmes that were launched in 2010 and 2017. The programmes are debt instruments used by a company – at its discretion – to fund operational activities. To raise money in the open market, a company would issue debt or notes to lenders with a promise of paying back the money with a fixed and floating interest rate at a later stage.
For its 2019 financial year, the Land Bank had outstanding debt or notes amounting to R13.4-billion under its DMTN programme. The default of some of the debt under the programme, which has occurred, can prompt all lenders to ask the Land Bank to immediately pay back all outstanding amounts (R13.4-billion).
It’s unclear if all outstanding amounts under its DMTN programme are guaranteed by the government, which will be forced to pay lenders R13.4-billion if the Land Bank defaults on all outstanding debt. Asked if the DMTN programme is backed by government guarantees, the bank says:
“We prefer not to publicly share this information at this time of the bank’s engagements with funders.”
Lenders could also opt to liquidate the Land Bank, which would spark a fire sale of the SOE’s assets, to recoup the money they are owed. The Land Bank confirmed to Business Maverick that not all noteholders (lenders) demanded the repayment of the money they are owed. BM
Image: Business Maverick
Article: Ray Mahlaka
A group of dedicated enthusiasts recently braved the fire ravaged landscape in central Queensland’s remote Bulburin rainforest to establish how Macadamia jansenii, a species as rare as the country’s Wollemi Pine, had fared during the blaze which left vast tracks of Australia in ashes following the worst bushfire season in living memory according to reports.
Field naturalist and retired sugarcane farmer, Keith Sarnadsky, a member of the inspection team to visit the park for the first time following a massive clean up operation which involved clearing fallen trees on the roads, said it appeared a low intensity fire was enough to kill the rare Macadamia jansenii. “Almost all of the small M. jansenii trees touched by the fire appeared to be dead. Some of the larger plants may have died due to their own stumps burning, although some suckers have appeared on some of the stumps, also, most of the dead plants didn’t appear to have an extremely hot fire burning around them,” Sarnadsky said.
The discovery of about 150 trees in 2018 had trebled Australia’s known population of M. jansenii, or the “Mj”, a species first recognised by the modern scientific community in 1992. Macadamia nut trees are indigenous to Australia have been harvested by Aboriginal Australians for thousands of years.
The rare M. jansenii are restricted to this one small catchment in the Bulburin National Park and was believed to hold the key to climate change resilience research in macadamia trees as they were able to survive hotter and drier conditions.
Sarnadsky who found the new trees over several expeditions in the spring of 2018, was also on the 1983 expedition when cane farmer Ray Jansen initially discovered the Macadamia jansenii species, the first new macadamia in 120 years.
Macadamia Conservation Trust executive officer, Denise Bond, said the existence of the new trees was unknown until the Foundation for Australia’s Most Endangered Species provided funding to allow Sarnadsky the opportunity to widen the search for the newly discovered sub-species.
“We were thrilled when Keith discovered these new trees to add to the tiny original population of 60 individuals, but that same year wildfire came within 10km of the habitat, and now our fears have been realised with the December 2019 fires burning at least a third of the new trees,” Bond said.
“We hoped they were safe, nestled in sub-tropical rainforest, but we have been proved wrong. Luckily, we have a small but dedicated team of traditional owners, the Gidarjil Rangers, amateur and professional botanists, researchers and park rangers who are passionate about protecting this endangered macadamia and the subtropical rainforest where they grow. We’re applying for funding to increase fire and weed management across the Bulburin landscape,” she said.
A conservation trust founding member, Ian McConachie said as the M. jansenii grew in an area much hotter than where commercial macadamias were produce, it was possible its genes could be used in the future to mitigate the effects of global warming on macadamia crops.
Leaf samples taken from the newly discovered M. jansenii are currently under analysis to establish how the genetic diversity of the population is distributed across its habitat. The 43 original trees have meanwhile been cloned, with new trees planted in botanic gardens across Australia as part of an “insurance population”.
The trust aims to learn more about the ecology and genetics of M. jansenii and preserve its genetic diversity in ex-situ plantings as well as increasing the range of its current habitat, particularly in anticipation of the impacts of climate change, Bond said
The Australian non-profit is the world’s only charity devoted to conserving macadamias and in a previous article published in The Macadamia, the trust made an appeal to South Africa’s macadamia farmers to support their work in protecting the world’s original wild macadamia trees.
Denise Bond can be contacted on her email at denise.bond@macadamias.org or visit wwwmacadamias.org.au.
A group of dedicated enthusiasts braved the fire ravaged landscape in central Queensland’s remote Bulburin rainforest on April 14 for the first time since the disaster to see how Macadamia jansenii, a species as rare as the country’s Wollemi Pine, had fared.
Field naturalist and retired sugarcane farmer, Keith Sarnadsky who was a member of the team allowed to inspect the fire damage for the first time after roads into the park were cleared of fallen trees said almost all of the small Mj trees touched by fire appeared to be dead.
“Some of the larger plants may have died due to their own stump burning, but some now have suckers appearing. Most of the dead plants didn’t appear to have had extremely hot fire around them,” Sarnadsky said.
The discovery of about 150 trees in 2018 had trebled the known population of Macadamia jansenii, or the “Mj”, a species first recognised by the modern scientific community in 1992. Sarnadsky who found the new trees over several expeditions in the spring of 2018, was also on the 1983 expedition when cane farmer Ray Jansen initially discovered the Macadamia jansenii species, the first new macadamia in 120 years.
Denise Bond, executive officer of MCT, said until FAME (the Foundation for Australia’s Most Endangered Species) funded any further searches for Macadamia jansenii in 2018, it was not even known that the new trees existed.
“We were thrilled when Keith discovered these new trees to add to the tiny original population of 60 individuals, but that same year wildfire came within 10km of the habitat, and now our fears have been realised with the December 2019 fires burning at least a third of the new trees,” Bond said.
“We hoped they were safe, nestled in sub-tropical rainforest, but we have been proved wrong. Luckily, we have a small but dedicated team of traditional owners, the Gidarjil Rangers, amateur and professional botanists, researchers and park rangers who are passionate about protecting this endangered macadamia and the subtropical rainforest that sustains it. We’re applying for funding to increase fire and weed management across the Bulburin landscape.”
Ian McConachie, an MCT founding member, said as the Mj grows in an area that is much hotter than the commercial macadamias, it is likely to have genes that will be used in the future to mitigate the effects of global warming.
Leaf samples taken from the newly discovered Mj are currently being analysed to see how the genetic diversity of the population is distributed across its habitat. The 43 original trees have meanwhile been cloned, with new trees being grown in botanic gardens across Australia as part of an “insurance population”.
MCT aims to learn more about the ecology and genetics of Macadamia jansenii and preserve its genetic diversity in ex-situ plantings as well as increasing the range of its current habitat, particularly in anticipation of the impacts of climate change.
The Australian non-profit is the world’s only charity devoted to conserving macadamias.
Caption: New life brings hope after fires burn rare macadamias Image credit: Keith Sarnadsky
SABIO Chairman Adriaan du Toit has released the South African Bee Industry Organisation pollination pricing guidelines for 2020.
Subtropical Crops Pollination Guideline Price 2020
The Pollination guideline price has been published annually by the Western Cape Bee Industry Association (WCBA) for more than 20 years now and became an industry norm to understand and calculate guideline prices.
In its recent analysis the WCBA recommended a pollination fee of R980 (excluding VAT) per hive for a pollination period of 14 days specifically applicable to deciduous fruit pollination for the 2020 season. http://www.wcba.co.za pollination sub-tab
In their recommendation, the WCBA discussed several factors which influence the price that beekeepers are charging for pollination services. Extraordinary factors, such as the long-lasting drought experienced during the last five years has significantly affected both the availability of off-season bee forage and swarms harvested from nature. This in turn has affected the price at which swarms are made available for pollination services.
The cost of providing the service of pollination is affected by many factors such as:
· Preparing hives by cleaning;
· Repairing broken hives and baiting them to catch swarms;
· Permit costs for catch sites;
· Transport and labour to catch the swarms needed;
· Preparing the swarms for pollination by stimulation feeding;
· Movement of swarms onto and off the crops;
· Movement of swarms onto bee forage during off-season or artificially feeding to keep them from absconding;
· Loss of swarms due to Capensis infestation;
· Increased theft and vandalism over the last few years resulting in loss of swarms and hives;
· High transport and wage costs.
Together these have significantly increased the cost of Pollination Service provision.
It has to be remembered that providing an effective pollination service rarely results in a honey crop for the beekeeper. The resultant loss in a honey crop therefore has to be taken into consideration when setting price guidelines.
How do we need to understand this price guideline in terms of other crops, specifically subtropical crops? As discussed above, many factors do contribute or influence the cost of pollination upwards. Similarly, other factors should be considered when negotiating the final price which are reasonable to justify a downward adjustment. These could include site security, availability of companion forage, off-season availability of replenishing sites, integrated pest management and more. In line with the price guideline as set by the Western Cape Bee Association, which has been set at R980 excluding VAT for a period of 14 days, the following price guidelines are suggested:
· Blueberries: R980 per hive placing where six placings per season is practiced at 5 hives per ha.
· Blueberries open pollinated to be calculated at R700 per period of 21 days at 5 hives per ha.
· Avocados: R910 per period of 42 days at a recommended hive density of 4 hives per ha.
· Macadamias: R980 per period of 48 days at a recommended hive density of 4 hives per ha.
· Litchis: R655 per period of 28 days at a recommended hive density of 2 hives per ha.
· Mango: R1035 per period of 42 days at a recommended hive density of 2 hives per ha.
· Cherries: R980 per period of 21-28 days at a recommended hive density of 2 hives per ha.
This above price guideline represents an average 7% price increase.
The South African Bee Industry Organisation is committed to commission an independent study on these price guidelines before the next pollination season to better inform growers and pollinating beekeepers.
Regards
Adriaan du Toit
Chairman SABIO Board of Directors
Cell phone: 083 306 1446. Email: adriaandt@sabio.org.za
https://www.sabio.org.za/
