Feeding growth: Transforming seasonal agricultural finance into scalable opportunity

The agricultural sector is exposed and impacted by a persistent credit mismatch, where farmers typically receive payment only once per harvest, perhaps once or twice a year, while their suppliers expect payment within 30 days, as is the case in any other industry.

This is a serious disconnect that often leaves the farmer scrambling mid-season, trying to secure financing just to settle their obligation so that they can purchase additional critical inputs like fertiliser or chemicals. If they cannot settle their last invoice, the supplier will generally not dispatch new stock, leaving farmers vulnerable to pests that destroy their crops and with no chemicals to fight back.

Gareth Joubert, Managing Director at Hollard Trade Credit, notes that a few years ago, the failure of certain financial institutions left many farmers without access to seasonal credit facilities. This opened the door for new-look financing opportunities to step in to provide some support to established farmers with a positive credit track record, which was helpful.

“But we went a step further; we built an agricultural financing product through an insurance lens.
Here’s the key difference: a bank sees default as failure, while an insurer sees claims as proof of value. When we pay out, we don’t hide it; we highlight it, because it shows the need for protection,” says Joubert.

“So, our product enables farmers to engage with a specific financier or partner who will finance their direct input costs like seed, fertiliser, fuel and chemicals as required throughout the season, with the additional trade credit insurance security. The farmer is then required to settle their debt at harvest time, from their proceeds, or other available funds.

“In the last year alone, we mobilised approximately R1.2 billion in seasonal debt to support South African farmers.”

Joubert notes that what makes this solution so effective and distinct is the underwriting philosophy. It is disciplined, transparent and deliberately structured. Some clients initially perceive it as rigid, but that very precision is what has attracted institutional capital.

“Our model de-risks eligible farmers cash flows during planting and growing cycles by providing the settlement of their inputs upfront, such as chemicals, seeds, fuel and fertiliser, with their repayment triggered post-harvest. This is backed by an insurance risk paper from Hollard, which guarantees payment to financiers. As a result, banks are willing to step in with financing because their risk exposure is effectively offloaded,” he explains.

“In practice, the farmer exposure to the bank’s balance sheet reduces substantially, and Hollard becomes the counterparty. That unlocks capital flow and widens the bank’s lending scope, turning what was previously a bottleneck into a platform for growth.”