Local farmers have been caught off-guard and will feel the pinch as AgriBank hikes its interest rates for the first time since November 2013, Namibia Agricultural Union (NAU) chief executive officer designate Roellie Venter has exclusively said.
AgriBank CEO, Mr Sakaria Nghikembua, announced this past week that the bank had hiked interest rates with 50 basis points as from December the 1st, 2017.
The new interest rates are as follows: subsidized loans – 4% (from 4%); short term loans – 8% (from 7,5%); medium term loans – 8,75% (from 8,25%); long term loans – 8,5% (from 8%); NACP non-production loans – 7,5% (from 7%); NACP production loans – 4% (from 4%); post-resettlement support – 4% (from 4%); bush control loans – 6,5% (from 6%); arrears penalty – 2% (from 2%).
Roellie says the announcement came as quite of a shocker for farmers who are still struggling to come out of the effects of the previous crippling drought.
“It was very unexpected I must say. I saw the announcement and definitely farmers didn’t expect this, especially in the light where the bank of Namibia as well as the reserve bank of South Africa have kept interest rates on hold. It’s a surprise for farmers, they didn’t budget for this and they need to change the budgets now to accommodate this increase of 50 basis points,” he said.
After having beeng forced to reduce their herds due to the previous drought and now faced with the challenge of increasing them, it all means Namibian commercial farmers need a recovery period of five years, he said.
A slight cut of the repo rate by the bank of Namibia has seen a noted slow down in Private Sector Credit Extension (PSCE) and at the back of these high rates, governor Iipumbu Shiimi advised businesses to borrow more than households.
And although agriculture performance has been above board for this year due to good rains which have also seen inflation coming down, this by no means mean the year has been good for every commercial farmer.
“The rain which we received did not cover the whole country, yes we are very grateful for the areas which have received rains especially the western areas of the country but the southern parts, in the //Karas region and even parts of the Hardap region, they are now being struck by drought for the fifth year consecutively ,” he said.
Since 2013, these farmers have been under enormous pressure, they have been forced to further reduce their herds and the challenge is now to keep their livestock alive by buying fodder.
A recovery in weaner prices due to a reduced supply in the region and rising demand from South Africa also reduced some pressure off the farmers.
Venter said in spite of this, there are still enormous challenges in the local beef industry.
With Karas and Hardap still clamped by the grip of drought, the small stock sector has not been performing well either.
Roellie who has replaced Sakkie Coetzee and will be taking over NAU with effect from next year, also says challenges in the local cattle industry need to be addressed in the early new year.