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The Herald, 26 July, 1980
THE Agricultural Finance Corporation is owed $14 million by farmers who have skipped Zimbabwe and others who have suffered losses through drought.
Corporation lawyers are tracking down defaulters in foreign countries, the AFC deputy general manager, Mr Keith Evans, said yesterday.
“Some farmers have left the country with fairly large sums of unsettled debts,” he said in an interview.
Other farmers have been hit by drought and were not able to meet their loan repayments. This money would be recovered when farmers had better results, he said.
The AFC had to auction some farms to recover loans. “Some farmers have told us that they are leaving the country and we have been forced to auction their property to recover our loans,” he said.
“A few have merely fled the country without letting us know.”
Mr Evans said some of the debts were irrecoverable, but the AFC would recover some of the money through Government guarantees.
Despite these problems, the AFC had managed to sustain the industry in the commercial sector and provided jobs for a large labour force.
Mr Evans warned emerging farmers they could be misled when buying farms from established commercial farmers. The corporation had noted that a number of people had been sold farms at inflated prices and in some cases lost their deposits after failing to see through the deal.
“These people should seek advice on the value of farms possibly from experienced valuers, before signing any agreements.”
They should also ensure that the agreement had an “escape clause” to protect their interests in case the loan was not granted. A massive five-year credit expansion programme for peasant farmers involving $143 million is under consideration.
LESSONS FOR TODAY
When borrowers default on their loan repayments, it can have significant repercussions on farming operations. The impact is multifaceted and affects various aspects of the agricultural industry.
It can lead to a tightening of credit availability for other farmers in the community or region. Lenders may become more cautious and increase interest rates or impose stricter lending criteria, making it harder for farmers to secure financing for essential inputs such as seeds, fertilisers, equipment, and operational expenses.
When borrowers default, they not only face financial consequences but also disrupt their ability to invest in their farms. This can result in delayed purchases of necessary supplies, maintenance of equipment, or adoption of new technologies that could enhance productivity. As a result, farm profitability may decline, impacting the overall economic viability of the farm.
Businesses that rely on farmers’ spending may suffer due to reduced purchasing power. Additionally, if farms are foreclosed upon, it can contribute to rural depopulation as families are forced to relocate in search of alternative livelihoods.
Online Reporter