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Diversification holds key to sustained agricultural production – Stanbic

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Stanbic Head of Agribusiness Leon Kotze listens to a customer

Leading agriculture sector lender Stanbic Bank, says agricultural diversification holds the key to sustained production.

Stanbic Head of Agribusiness Leon Kotze, this week headed north to Kitwe to address agricultural producers at the 2017 CBM-TECH and CAMINEX, the Copperbelt Province’s premier mining, agriculture and trade exhibition, where he made a presentation on “Key fundamentals of finance and farm management”.

Kotze said Stanbic had been having a lot of conversations with its customers in the agriculture sector around diversification.

“It is important that farmers also look at their cash flows and gauge the right time to invest in the diversification of their businesses and to ensure that their crops don’t suffer,” he said.

He emphasised the need for farmers to measure and monitor the lifecycles of their commodities and the various strategies they could apply to ensure their businesses remained sustainable in the face of external shocks.

Kotze said farmers needed to consider several things as they diversified their production, including making informed decisions using production data and records as well as maximising their management capability.

He said that over the last ten years, the agriculture sector in Zambia had been maturing, evidenced by above-average production of major crops such as wheat, soybeans and maize. However, diversification would ensure they hedged against price shocks.

The last few years have seen Zambia’s agriculture belt shifting northwards to the Copperbelt’s rural towns such as Mpongwe, as well as parts of North-Western Province that are enjoying appreciable amounts of rain. The Southern and Eastern province belts have suffered lower production due to lower rainfall patterns.

Kotze said Stanbic’s confidence in the industry had also grown over the last ten years, with farmers improving their loan repayments. He said statistics showed that from 2007 to 2009, non-performing loans in the agriculture sector were quite high at above 30 percent for all bank funding that was channelled to the agricultural sector. But between 2010 and 2013 the sector rebounded with improved production and better prices, which saw non-performing loans come down to levels of 10 percent.

“We take a long-term view on investments that our customers make in the agriculture sector. Whenever we fund we make sure that our assumptions are based on very realistic long-term assumptions,” Kotze said.

In 2016 Stanbic was declared the ‘Best Agribusiness Bank in Zambia’ by the Global Banking and Finance Review following the bank’s investment of US$200 million in the local agriculture sector.

Stanbic offers agricultural loans of varying terms to clients engaged in the farming of staple as well as cash crops, horticulture, plantations, poultry, animal husbandry, dairy, seeds and warehousing. The bank also finances the supply of a wide range of agri-input products like seeds, fertilizers, pesticides, micro nutrients and irrigation equipment. The bank’s support also extends to transportation, storage and processing of food and other agri commodities.

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