AGRIBANK and FBC are getting into the market to raise $20 million through agro bills so as to support agricultural activities in the impending 2017/18 summer cropping season.
The agro bills, which have a tenor of 270 to 360 days, have a Government guarantee, prescribed asset status, liquid asset status and tax exemption.
In a joint statement yesterday, FBC and Agribank said they were “grateful for the support they have always received from investors, including but not limited to pension and provident funds, insurance companies, life mutual, commercial banks and other institutions, as well as the investing public”.
Since 2010, the two financial institutions have raised a cumulative $65 million for agriculture as part of an ongoing business partnership.
The funding has been deployed to support sugar cane growing; agro processors; tobacco smallholder farming; macadamia growing; dairy farming; seed maize, wheat, soya and maize under the Brazil More Food Programme.
Through the agro bills funding, Agribank has been able to support a range of farming activities across the country such as the growing of cash crops and grains production.
In the Lowveld, Agribank has become the leading financier of smallholder sugarcane farmers and recently received an award, as recognition for that.
With respect to support for smallholder tobacco farmers, Agribank has collaborated with both the Tobacco Industry and Marketing Board (TIMB) and the Tobacco Research Board (TRB) to support the tobacco sub-sector.
The bank financed floating tray seedbeds as part of a partnership with TRB, and financed “rocket barns” and drip irrigation for smallholder farmers in partnership with TIMB.
This is part of an ongoing initiative to enhance tobacco production in the country, and consequently help in generating foreign currency.
While funding is generally seasonal, Agribank and FBC are exploring opportunities to secure medium and long-term funding, which is more suitable for capital and infrastructure development to augment existing seasonal financing.
The two banks say they have always been able to pay investors on maturity of the agro bills using proceeds from the various agricultural interventions.
Agribank, which was recently directed by Government to increase its support to agriculture, say it plans to expand support towards agriculture, with special focus on food security and foreign currency generation.
The interventions have helped farmers to increase production and productivity leading to growth in household incomes, and thereby contributing to poverty reduction.