CC2019 (01) Mtombeni, S. Bove, D. and Thibane, T. (2019) An analysis of finance as a barrier to entry and expansion for emerging farmers

This is the first paper of a series of research papers that examines the barriers to entry and expansion facing emerging farmers in the South African agricultural sector. The significant barriers to entry and expansion that this series examines include access to finance, inputs and infrastructure and routes to market. This paper focuses on the barriers to accessing finance by emerging farmers in the agricultural sector. The paper provides an overview of the funding landscape and the different forms of funding provided by the South African government, Development Finance Institutions (DFIs) and the Land and Agricultural Development Bank to emerging farmers. The paper examines the mandate of these institutions as well as the funding requirements and the use of incumbent intermediaries in the funding models. The trends of financing are also analysed to determine if the funding allocation is where it is needed. The authors observe that most of the funding is directed to commercial farmers and therefore the funding initiatives examined are not reaching emerging farmers. Recommendations are made to facilitate the entry and participation of emerging farmers in the agricultural sector.