Discover the future of agricultural banking through insights shared by John Hudson, National Head of Agriculture at Nedbank Commercial Banking. Amid challenges like supply chain disruptions and geopolitical tensions, the South African agriculture sector has shown resilience, achieving record export levels. Hudson highlights Nedbank's role in promoting sustainable practices, offering affordable financing for climate resilience and raising awareness about the business case for sustainable farming. Learn more in the interview below, which is a part of our ‘Seeding success: Unveiling the future of Agri banking” series, focusing on understanding the unique challenges faced by farmers in different regions and how innovative approaches are being adopted to address these challenges.
Could you briefly provide insights into the agricultural banking landscape in your region, highlighting any unique challenges the industry has to cope with?
The South African agriculture sector is one of the few in SA that have thrived since the Covid-19 pandemic, because of high commodity prices and high export activity, with agricultural exports reaching a new record of $12.8 billion (R234 billion) in 2022. Despite the good run, the lingering impact of the pandemic (supply chain disruptions) and the Russia-Ukraine war have resulted in a very challenging operating environment for South African agriculture, with elevated risk and financial pressure. This is exacerbated by relentless electricity blackouts, higher interest rates, crumbling infrastructure, service delivery failures and global geopolitical tensions – all of which are pushing the sector to the brink. According to Statistics South Africa, agricultural output fell by a substantial 12.3% in the first quarter of 2023 and the latest Agbiz/IDC Agribusiness Confidence Index has recorded the lowest reading for the past two quarters since the second quarter of 2020.
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