The obligation that the National Credit Amendment Bill will put on credit providers and debt counsellors to report the reckless granting of credit could have a negative impact on financing in agriculture. Theo Boshoff, the Manager of Legal Intelligence at Agbiz recently spoke on Grootplaas about this.

A new draft on credit legislation wants to place an obligation on all credit providers, to report any suspected past reckless granting of credit when they review a particular client’s risk profile. This may cause the producer’s personal and commercial debt to be combined. If a producer then wishes to enter into a personal credit agreement, the involved credit provider, who may not understand the factors of agricultural debt, can possibly see large amounts of agricultural debt as reckless lending and report it as such. Other credit providers are therefore not in a position to rate agricultural debt.

This can make credit access difficult for a producer and may have a big impact on input supply and production.

If you look at factors taken into account to determine the risk on consumer credit, credit providers will look at quarterly revenue as well as expenses. Agricultural credit is different in the sense that agricultural businesses will appoint agricultural economists to predict the possibility of a good season in terms of climate and prices. Finally, a risk estimate is made.

The National Credit Amendment Bill is currently being debated in parliament. -Elmarie Helberg, Grootplaas