Cash crop: Lawrence Mtsweni says the predicted price of maize won’t cover his input costs.
The Mtsweni family’s mealies stand tall. The stalks rise in green ranks on the left as you drive on to the farm they lease near Nigel in Gauteng.
It has the makings of a good crop, thanks to the recent rains, and the maize will be harvested towards the middle of the year, when the moisture has left the maize, says Lawrence Mtsweni, who runs the farm with his two daughters.
But this abundance is a double-edged sword.
He watches the grain prices daily, willing them to improve to ensure that the price per tonne will be enough to cover the input costs, such as the diesel and fertiliser that went into planting the crop.
After the hardships of the drought, a better harvest has driven the prices of white maize to lows not seen in more than two years.
This is just one of the difficulties Mtsweni faces. He talks of his experiences over a cup of tea in his study, accompanied by the occasional lowing of cattle in the background.
The family leases the small, 144-hectare farm from the state under the department of rural development and land reform’s proactive land acquisition strategy (Plas).
The farm’s previous owner, a practising attorney, did not himself plant the land and rented it out to his neighbours. He sold it to the state and the Mtswenis took occupation in 2006, but it has not been an easy ride, the 61-year-old says.
“As we entered into this farm, we had no implements, nothing to carry on,” he recalls. To get by, the family continued to sublease the land to a neighbour for a few years while steadily working to accumulate sheep and cattle.
At the same time, Mtsweni continued to work as a fundraiser for non-profit organisations, which he still does. He says farming is a seasonal business and “you need to bring in an income from somewhere else to sustain the farm”.
In about 2010, the family secured funding from the Land Bank. On a loan with interest of 4%, the family rented much-needed equipment and paid for seed but, without the necessary machinery, the profits were barely enough to get by.
But in 2011, a new lease was signed with the department, says Mtsweni. This five-year “probationary lease” was subject to the state recapitalising the farm with a grant and the farm’s subsequent performance.
He was required to submit a business plan based on the production of a commodity. He chose maize and beef, given that the farm is located at the foot of a hill and some of the land is rocky.
“There is quite a big chunk of land that I can’t plant and it’s only grass growing in between the rocks. So that left me with arable land of 60 hectares to plant.”
The funding is paid out in tranches according to a graduated scale: a farmer gets 100% of the funding in the first year, dropping to 80% in the second year and declining each subsequent year until the farm is financially viable.
But there are long delays in the process and it can take 18 months to two years to have applications approved. This means the cost of machinery such as tractors rises while applications are being processed, but the amounts applied for have not changed.
“You have to improvise, chop and change; you look at what are your essentials. You consider those, [and] you don’t buy everything,” Mtsweni says.
By the 2014-2015 financial year, the farm had finally received some grant money and been recapitalised with the necessary machinery. It was a good enough year for Mtsweni to be nominated for a GrainSA’s smallholder farmer of the year award.
During this time and using some of the proceeds from the business, the family built a small plant to process and package the meat from their cattle to sell to the nearby community.
Although he applied for R8-million over five years, he only received funding of R3-million for the first year before the money was stopped. The department couldn’t fund him for a second year because of backlogs caused by some farmers still having to receive their first year of funding, he says.
He had to source his own finance for the 2015-2016 planting year. In the Nigel area, the window to plant maize closes in late November and the crop is harvested the following year.
Using the machinery and assets on the farm as collateral, he applied for a production loan from a big commercial bank. But the bank pulled out at the last minute and gave him little explanation, despite negotiations progressing so far that Mtsweni already had a buyer for the maize – the agricultural services firm Afgri.
“The bank dropped me. I had nowhere to go to source a production loan,” he says.
This coincided with the recent drought and Mtsweni’s land lay dormant. “This killed me financially and otherwise. All that I had from the previous year went [down] the drain.”
They survived in part by selling their livestock and by processing meat to sell to locals.
After discussions with Afgri, Mtsweni secured a production loan to enable him to plant maize during the 2016 season, the results of which are waiting to be harvested.
Now it comes down to getting the “right” price for the grain. With the expectations of a bumper crop, the maize price for the June and July harvest period are expected to be about R1 839 and R1 860 a tonne per hectare respectively. Mtsweni’s yield may come in at about five tonnes a hectare, which will not cover the nearly R10 000 a hectare that it cost to plant.
Mtsweni says he is still in discussion with Afgri about what to do.
“These are sleepless nights” and farming can be “like a war”, he says.
His wife began work as a nursing sister in January to help keep the farm going.
The current lease, which was signed in May 2016 and runs for 30 years, comes with the option to buy the land from the state at the prevailing market rate.
But Mtsweni does not want to take out a bond for millions of rands at repayment terms he may not be able to afford. He is going to retire in the coming years and his daughters can take over from him. “They can decide,” he says.
He understands why the government has reverted to leasing land to emerging farmers rather than issuing title deeds. For those unable to persevere in a very tough environment, there is the temptation to sell the land or borrow against it, and farmers were taking “uncalculated risks”, he says.
“Government is only the ignition,” he says, pointing out the many skills a farmer needs to survive, ranging from financial and livestock management to being a mechanic.
Despite the difficulties, Mtsweni wants to expand the business and is applying to the department of agriculture for money to upgrade his meat-processing plant. He is also looking into renting a larger piece of land near Greylingstad, about 55km from Nigel, to help improve profits.
He is confident that the family’s business will grow when his daughters take over.
“They are taking care of things. There is nothing that I do they can’t do,” he says.
State leasing hamstrings beneficiaries
Recent research into changes in land redistribution has raised questions about the government’s policy shift towards leasing rather than awarding land to beneficiaries.
The findings of a paper by professors Ruth Hall, of the University of the Western Cape, and Thembela Kepe, of the University of Toronto, who investigated 11 projects in the Eastern Cape, revealed that in practice the policy undermines security of tenure and the beneficiaries have no documented land rights. In two cases where leases were in place, these were held with strategic partners who were established agribusinesses, while the beneficiaries were treated as employees and paid below minimum wages.
The report also found that the absence of secure land rights impedes production support.
Some state institutions refuse to deliver services or invest in the land while beneficiaries are not able to access credit, because financial institutions require some proof of their right to occupation, according to the researchers.
“As a result, emerging commercial farmers, including those who have capital from other sources, are being stymied in their farming operations,” they said.
Farmworkers also face increased uncertainty because all commercial operations cease when the state becomes the landowner and the cash incomes dry up.
Farmworkers, without the capital to invest and without leases and other recognised land rights, are therefore excluded from development opportunities, the researchers found.