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GAME INDUSTRY TRENDS ANALYSIS 2024
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Lack Of Financing Hampers Regenerative Agriculture
Lack of financing hampers regenerative agriculture
By Glenneis Kriel | 22 January 2025 | 9:50 am
Financing for and investment in regenerative agriculture in South Africa are currently lagging behind what is happening in the rest of the world.
This was according to Andrew Ardington, founder of the Regenerative Agriculture Association of South Africa, who said that while farmer interest in regenerative agriculture had grown steadily over the past few years, the transition was being held back by a lack of financing solutions.
Speaking to Farmer’s Weekly, Ardington pointed out that it took time to realise the advantages of regenerative agriculture, such as a reduced environmental footprint, and increased climate and plant resilience. The switch also coincided with risks.
“With regenerative agriculture there is not a recipe for success that can be replicated on all farms. It takes time, hard work, a lot of research, and trial and error to find solutions that work,” Ardington said.
He pointed out that various commercial banks had launched “green financing solutions”, but terms for most of these solutions were still very much in line with those of traditional loans. Farmers are also still expected to carry all the risk involved with the switch.
Ardington added that efforts to raise finance to fund the transition from outside the local banking system had largely been unsuccessful until now.
In the meantime, various financing and funding solutions have become available in other parts of the world.
Global venture capital firm AgFunder reported that US-based Mad Capital launched a Perennial Fund II that targets US$50 million (about R940 million), while HeavyFinance announced a new
US$54 million (R1 billion) fund to support small- and medium-sized farmers in Europe through the regenerative transition in 2024.
Along with this, multiple funds and grants now also exist for regenerative agriculture projects. One example is natural asset manager Sustainable Land Management, which according to AgFunder has seen a 40% growth year-on-year across its different funds.
In the absence of finance, producers in South Africa might try to recuperate the higher risks and transition costs by charging premiums for their product.
Ardington, however, said this was difficult because of the small percentage of farmers who would be able to afford to pay premiums for these types of products, and the even smaller percentage of these farmers that would be seeking out these higher-value agricultural products.
“The problem is that prices do not reflect the true cost of production. People are paying cheap prices for cheap food, at the cost of their health and the environment. We need to move to a system where farmers are rewarded for looking after their water resources and the soil, and to produce healthy food,” he added.
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