Saturday, December 3, 2022

Banks and farmers must hold hands to ensure agri-stability – COP27

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Nedbank’s Africa Head of Global Commodity Finance at Nedbank Corporate and Investment Banking, Zhann Meyer, talks to us about Adaptation and Agriculture Day at COP27. Meyer believes banks cannot only be good weather partners to our farmers; they need to run with them throughout the cycle. Meyer adds that banks and farmers need to hold hands to overcome the challenges facing agriculture and ensure that the agri sector stays stable and sustainable.

Excerpts from the interview with Zhann Meyer

World food crisis taking centre stage at COP27

It’s a critical topic in terms of the African continent. It is not only about climate change. What happened in the last years – apart from the fact that the commercial farming sector showed remarkable resilience – we were almost in the midst of a perfect storm. We are sitting in extremely inflationary pressures. These are talks of a global recession. There is the Ukraine-Russia war that increases input costs by more than 50% in some regions. So, from an agricultural perspective, it is important that commercial banks and providers of finance in the sector look at this sector very responsibly. We are sitting in a world where we know food production on the African continent needs to double. The last thing we can do is to approach this without taking into consideration that agriculture is the largest user of water and soil. We cannot neglect those resources. So, it is the responsibility of the financiers in the sector to make sure this food security issue is approached very responsibly and carefully.  

Supporting climate adaptation throughout the agricultural value chain 

If one looks at it from a simplistic angle, you could say the normal model of providing land against collateral for a loan cannot simply be enough anymore. We need to look at this loan provision as a different solution to the farmer as a whole. You talk about the supply chain, let us start with fertiliser. The correct use of fertiliser is critical in terms of soil preservation and soil moisture concentration. These are things banks traditionally have not looked at. We talk about mechanisation and the supply chain in terms of increasing the quality of the produce. Now, those are things that are not generally solved by commercial banks, and it’s normally looked at by the farmers saying that if you want to mechanise, it’s your problem. Give me collateral and I will make sure that problem is solved. 

One talks about logistics, and I am sure that’s something COP27 would also look at in terms of storage. The very sad and shocking statistic is that Africa loses 30% of its agricultural produce purely because we cannot store it, cannot transport it, cannot preserve it and we cannot export it due to the lack of logistics and lack of expertise. We need to look at the supply chain as a whole and the provision of markets, equally important. If a farmer does not see the delivery of his product getting a meaningful impact in terms of his economic progress, he is not going to grow the commodity. So if these traders come in and unscrupulously exploit small-scale farmers, that is something we definitely cannot play a role in, but it’s important that we are aware of those issues.  

See also:

  • Join the Conversation: Nedbank’s role as a leader in sustainable finance
  • Decarbonising SA’s building environment with Green building finance – COP27
  • Join the Conversation: Mobilising and implementing finance to address climate change

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