June 7, 2016

Food insecurity becoming more and more real. More than 19 280 farms in SA for sale

The number of farms for sale in South Africa has jumped by 45% in the last 15 months, recent property data shows...
Johannesburg - At least 19 280 farms were on the market on May 27 this year compared with the 13 254 farms for sale on February 2 last year.
The data was obtained from the farm sales platform on Landbou.com, compiled by Property24.
Landbou.com did a survey last year to determine how many farms were on the market and on February 2 2015 there were a total of 13 254 units for sale. (This is not the full range of all farms on offer. This platform is used by agents who want to advertise here.)

MAP: The offers for sale per province are now:
(Total: 19 280)

Graphic: Fin24 (with iStock)
3461 farms for sale in the Western Cape alone...

Increase is understandable
Philip Theunissen, agricultural economist at Computus Financial Accountants in Bethlehem, said the increase in the supply of farms for sale was understandable.
"About three or four years ago you hardly heard of farms going for sale in our area. You only heard a farm had been sold, that’s how quickly they were snapped up. Now you at least hear this farmer and that farmer are selling.
"This season, the summer rainfall concludes on 31 August for most farmers. Production loans must then be paid off and the new lease payments are also payable in advance on 1 September. Many … bond instalments are also scheduled for 1 September.
"If there is no money to pay all these obligations on 1 September, you can expect more farms to flood the market. Two years ago, farmers were battling to ‘hire’ land in Bothaville, Wesselsbron and Viljoenskroon. Now people are struggling to even get an offer from a potential tenant.”
Theunissen said at play is economic affirmative action. "Land prices have been unrealistically high in the last few years. Something had to give, because we were far beyond the repayment ability of the soil.
“We were in a 'bubble' where people argued it will just get more expensive the next year to buy land and as a result farmers didn’t really look at the repayment ability as a benchmark.”

Farms sold for R27bn
Johann Bornman, chairperson of Agri Development Solutions, conducted an analysis from information from the Deeds Office of farms that were sold last year.
Farms sold for R27.6bn in one year
He said a total of 3 405 546 hectares were sold for a cumulative R27.6bn in the 12 months to 31 March 2016. This was for 4 394 transactions (i.e. land transactions greater than 20 ha).
Bornman said the cumulative effects of the drought are working through to the ground level, in terms of overflowing debt as well as from obtaining credit for production for the new season.
He predicts a clear structural shift in agriculture, fueled by the drought. "Bigger farmers and cluster groups play more prominent roles in the supply and production of food."