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Friday, January 28, 2005 - Web posted at 7:48:50 GMT Agribank to slash farm prices CHRISTOF MALETSKYTHE Agricultural Bank of Namibia has put a moratorium on its Affirmative Action loan scheme in a bid to stabilise farm prices and to force upcoming black farmers to increase production. |
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Agribank Board Chairman Hans-Guenther Stier said yesterday that farm prices had got out of control, mainly because affirmative action farmers had access to large loans and were buying farms at inflated prices. Some prospective farmers apply for loans amounting to more than the value of the farms they buy and then pocket the difference. The Land Bank board has forwarded recommendations to Cabinet and sent back some of the new Affirmative Action loan scheme (AALS) applicants to renegotiate the prices of farms. "Some applicants got the price down by N$150 000 or N$200 000 and it raises the question about how the deals were done in the first place," said Stier. Government suspended its 35 per cent guarantee on the AALS in December last year. Farmers will now be expected to fork out 10 per cent of the purchase price to qualify for the scheme. Stier said they had found that the scheme had been neither sustainable nor affordable to a significant number of purchasers because the loan amount far exceeded the production value. Although the bulk of AALS farmers will only start paying back their loans from next year, Stier said they might struggle because of the huge amounts they were expected to pay. He said some of the farms had less production value than quoted when loans were applied for, while in other cases the valuation was based on full production. As an example, he said, some farmers have only 150 cattle on land that can carry 600 cattle and thus under-utilised the land to the extent that they will not be able to repay the loans. He said new board will look at whether the prospective farmer can sustain the operations, which include paying tax and the repayment of the loan. "Production is critical to the success of the scheme. We are putting a lot of emphasis on production. The national commercial production has gone down tremendously in the last 20 years," he said. He urged farmers to use the first three to four years that they do not repay loans to build up livestock and reserves. "We are talking facts here," he said. "The trouble starts when you start paying back the loan." Around 150 farms have been bought through the AALS at an estimated N$600 million over the past few years. The total amount in the loan book of the land bank stood at N$1,3 billion yesterday. Since its establishment in 1992, the AA loan scheme has been dogged by controversy, which led to it being suspended briefly from the last quarter of 2003 until first quarter of last year because of millions of dollars Government had owed in respect of interests. |
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