AgriSA 'extremely concerned' about Land Bank downgrading and downward spiral for financing
"The fact of the matter is that we think this junk status issue is going to impact on potential investors in South Africa as a whole if this is the start of junk status for the whole country's economy."
AgriSA has responded to the down-grading of the Land Bank's credit status to junk, saying it's extremely concerned about the impact on the economy as a whole.
Pierre Vercueil, Agri SA Deputy President says its "disconcerting news."
"It's going to have a negative influence on agriculture and it looks like it's the start of a downward spiral as far as financing is concerned," says Vercueil.
Earlier, economist Davie Roodt explained that the junk status will force the Land Bank to lend money at higher interest rates and that those interest rates would, in turn, affect its customers.
ALSO READ: Land Bank downgrade to junk status possibly only the beginning: Economist
Vercueil says while the Land Bank is generally considered to be a commercial lender, they provide financing to agricultural service providers that offer farmers a range of loans, including short-term loans like so-called harvest loans.
"The fact of the matter is that we think this junk status issue is going to impact on potential investors in South Africa as a whole if this is the start of junk status for the whole country's economy."
Vercueil adds: "We are extremely worried about this because we won't have economic grown in this manner."
He says new farmers, in particular, will feel the effect of the downgrade, pointing out: "Apart from seasonable loans, [they also need] also long terms loans to acquire land and to be able to become commercial farmers over a period of time."
Vercueil says AgriSA will monitor the impact of the downgrade in order to determine how best to assist farmers going forward in raising financing for agricultural purposes.