State-owned agricultural development finance institution Land Bank has partnered with financial firms Avo Solar from Nedbank and Standard Bank Power Pulse as technical partners to support its Agro Energy Fund (AEF) clients to acquire alternative energy assets.

Farmers and agricultural businesses receive guidance and advice from qualified professionals throughout the process of applying for an AEF loan. This affords them an opportunity to invest in the future of their businesses in a safe and secure manner, the Land Bank says.

The AEF also provides farmers and agricultural businesses with the details of accredited alternative energy installers.

“This partnership with Nedbank and Standard Bank enables us to take full advantage of the onboarding and service provider vetting capabilities they have built. They bring the requisite depth and breadth of technical service providers to implement a programme of this magnitude,” says Land Bank CEO Themba Rikhotso.

The blended grant and debt funding AEF finance scheme was established to provide funding support for the agricultural industry to acquire alternative energy assets, and thereby reduce energy costs and alleviate the impact of power interruptions on operations.

“Applicants can receive the best possible advice and the best possible quote wherever they are located in the country. Technical understanding is a key ingredient to ensuring that clients get the right solution for their needs and why aggregators such as Avo Solar from Nedbank and Standard Bank Power Pulse are important in the AEF programme,” he says.

The scope of the funding is energy-intensive agricultural activities including irrigation, intensive agricultural production systems and on-farm cold chain-related activities.

“Through the services of these technical partners, clients can have their energy requirements mapped out to understand, for instance, the estimated costs and savings of a hybrid solar system over time. This provides invaluable insights for informed decision-making.

“The Lank Bank recognised the need for a high level of understanding by clients and sought the best technical partners to ensure they are well covered,” he notes.

Farmers face considerable financial pressures. However, the Lank Bank is confident that the AEF, especially owing to the grant funding component, will provide the much-needed reprieve to agricultural businesses on the total cost of energy.

“The fund will also play a key role in helping protect the financial viability of the sector and, therefore, also the livelihoods that the sector supports, as well as the national imperatives of food security and protecting our planet,” says Rikhotso.

Farmers and agricultural businesses need to be operating an agricultural business at the primary or secondary level. The fund will only consider applications to implement an energy efficiency project or to implement a project that offsets electricity from the grid through self-use renewable energy.

Alternatively, producers involved in energy-intensive farming enterprises, including on-farm cold chain-related activities, can also apply.

Further, the business needs to be able to demonstrate the capacity to use the energy requirements applied for, the Lank Bank says.

The AEF blended finance scheme works on the basis of a sliding scale, wherein, the smaller the size of the business, the higher the grant portion. It is open to all farmers and agricultural businesses. However, no debt takeovers, debt settlements or refinancing will be provided.