To help productive farmers, both large and small, to overcome the disastrous effects of constant power outages the Dept of Agriculture, Land Reform & Rural Development (Dalrrd) and the Land Bank have stumped up R1,2 billion in a fund named the Agro Energy Fund (AEF).
R500-million of the money comes from Dalrrd’s budget for the current financial year, while the Land Bank has set aside the R750 million balance.
Farmers Large & Small
The AEF will assist smallholder farmers and large commercial producers to access alternative energy solutions for energy-intensive agricultural activities such as irrigation, intensive production systems and on-farm cold chain-related activities.
The Land Bank will provide loans for up to 70% relative to the grant portion of an alternative energy solution such as solar, biogas, anaerobic digesters and biomass for smallholder farmers, capped at R500 000, with medium-scale producers receiving up to 50% in terms of the grant-to-loan ratio, capped at R1-million.
Large-scale producers will receive up to 30% in loans relative to the grant portion, capped at R1.5-million.
Capital Equipment
The blended AEF facility is intended for use to buy capital equipment and infrastructure for alternative power generation.
To access the funding, entities and individuals need to be South African citizens, or registered in South Africa, and operate agricultural activities at the primary or secondary level.
Loan Criteria
Applicants must prove themselves able to repay the loans.
The loan criteria, therefore, include financial statements for the last financial year, a business plan to support the loan application, proof of land ownership or proof of access to the land and cash flow projections for the next 24 months.
The Land Bank will also need to see an expert report determining the energy requirement of the producer and showing the historical energy use of the producer, for which a three-month municipal electricity statement is acceptable.
The loans will typically be provided over a medium term, up to ten years.
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