Corné says that the current rate of return is one of the best ever, which should lead to a lot of investment.
The South African Reserve Bank’s (SARB) Monetary Policy COmmittee announced on 27 January that the repo rate would be increased by another 25 basis points to four percent, bringing the prime lending rate to 7.5 percent.
Senwes CFO Corné Kruger believes that this latest increase should curb inflation, which could hold more benefits than disadvantages for South African agriculture in the long term.
He told Farmer’s Weekly that the South African agriculture sector had experienced a high price cycle during the previous season, which had led to an influx of cash. “Due to this, the sector was able to decrease its debt levels. When looking at the five-year average rate of return in both primary and secondary agriculture, the current situation is one of the best ever, and therefore we should see a lot of investment.”
However, Corné warned that there was still a lot of uncertainty on the market due to the recent widespread excessive rainfall. “Expenditure on agricultural equipment can also be affected by uncertainties, while the rapid rise in input costs will also add to the uncertainty.”
