One of the key challenges facing small and emerging farmers in South Africa is the lack of structured funding to meet the requirements of these farming entities. In order to overcome this funding need, the Pleiad Foundation is establishing an enterprise development fund that will invest directly into small and emerging farmers and rural food businesses.
The Pleiad Foundation, which launched its Limpopo pilot project (South Afria), based in the Mopani district, in
January 2011 has supported a group of more than 50 emerging and smallholder
farmers.
The Foundation is a not-for-profit
organisation that seeks to alleviate rural poverty through the development of
sustainable rural agri-business. The programme has the support of the United
Nation’s International Fund for Agricultural Development (IFAD), SEDA, Limpopo
Department of Agriculture and a broad range of major food retailers and food
processors
Pleiad Project Manager Siphamandla
Ndawonde said, “Through our innovative model of support, the Foundation is
delivering a range of essential skills and services, including: linking farmers
to food retailers and fresh produce markets, developing and facilitating supply
chain partnerships to ensure cost effective market access, assessing farm
potential and developing bankable business cases, providing investment
management support (pre and post investment), delivering technical and on-farm
management support, and providing training and capacity building.”
The tangible signs of success are shown in
numerous case studies. In the first case, Maruleng Farmers developed a business
to produce 10 hectares of tomatoes on behalf of a major South African retailer.
On the strength of the plan, the Pleiad
Foundation assisted in securing a production loan of R1.25m from a major South
African retailer in order to fund the input costs.
Said Ndawonde: “The project has had a
positive impact on employment in the area, with 48 jobs created and generating
approximately R4million in revenue for the farmers. For 2012 a business plan
has already been drafted to extend the project by 37 hectares producing five
different vegetable crops.”
Richard Parker, Project Director and
Trustee of the Pleiad Foundation, said, “We have already had interest from
potential funders for this project and we will be following it up in order to
secure the most effective financing for the project in 2012.”
A Stakeholders Investors Forum, which was
hosted by the Pleiad Foundation recently, generated significant interest and
was attended by more than 80 senior participants from around South Africa.
Pleiad’s Enterprise Development Fund seeks
to raise R200 million from local and international investor partners to
capitalise the Agriculture Enterprise Development Fund to help develop
sustainable small-scale farming in the Tzaneen area. Loans granted under the
auspices of the Pleiad Foundation range from small loans of less than
R400 000, to entrepreneurship loans ranging from R400 000 to R4m, and
business loans of R4 million and above. The development fund aims to repay
monies after 10 years with net return, create 8 700 direct new jobs, and
achieve this with minimum environmental betterment.
Participants at the Forum heard about the
challenges and successes of capacity building in an area where farm management
skills are highly variable, with an often low level of understanding of the
nature of production, supply-chain, and investment requirements stunts the
impetus to grow primary agricultural outputs thereby alleviating poverty.
Parker said, “The case studies and plans
for the pilot project going forward in Limpopo demonstrate the importance of sustainable
and accountable investment in small farming and development of critical areas
such as supply-chain management. In order to alleviate poverty and stem the
tide of climate change support for farming, and protecting food security is
essential.”
Fund Facts
Domicile
|
South
Africa
|
Target Cap
|
R200 million
|
Fund type
|
Close-ended
|
Focus
|
SME expansion and
turnaround
|
Target return
|
7%
|
Management Fee
|
25% excluding VAT
|
Performance Hurdle
|
12%
|
Commitment
|
7 years
|
Fund life
|
10 – 15 years
|
Minimum investment
|
R5 million
|
