STOEP TALK: A price on the land

As reported previously on Toverview, after farming on Hanglip Farm for 50 years, I’ve had to accept the reality of retirement. All our children are pursuing urban careers, and traditional succession from one family generation to the next will not be possible. As a result — like many other farmers throughout the country, throughout the ages, but especially in more recent times—Les and I have been faced with very difficult decisions about the future of the farm.

Many factors are involved – history, heritage, family tradition, commercial considerations, land reform, the protection and preservation of farmland, and its appropriate and sustainable future use. All these factors have to be considered, and balanced against one another.

We are raising them here because they are of enduring interest not only to ourselves, but also to a broader community of farmers and other rural dwellers. As such, they are among the issues which Toverview – as a project for developing new models of rural communication – is committed to explore. We firmly believe that, if we all  examine them in our specific circumstances, and in collaboration with others, this will greatly benefit our rural communities as well as our environment.

Importantly, one realises once again that land is not just a commodity, and farming not just a commercial exercise. In the words of a friend, a knowledgeable and experienced sheep farmer, we really are ‘stewards’, or custodians, charged with caring for the land in the course of our tenure, and equally with passing on this stewardship in a responsible way to the next generation.

Recently, Les and I visited a friend who farms with sheep in the southern Free State, in grassland area very similar to ours, and discussed these issues with him at some length. After our visit, he sent us the following thoughts.

About interest rates and leases:

First, I’m pleased to hear about the steps you have taken in respect of the current lease, as I think they are wise under present conditions. Die boere kry swaar met die hoë rente en al die ander laste. Since 2020, interest rates have increased by 4 percent, from 8 per cent in 2020 to 12% last year, which is substantial. For example, Eight percent interest on R20 million amounts to R1 600 000 a year, and 12% interest to R2 400 000 a year. Having said that, Interest rates will probably come down shortly, and the wool price is in an upward trend. En dan skep die boere weer moed!

About farmland prices:

Almost all farm prices are higher than the productive value of the land at the time of purchase. As a result, it is almost never possible to farm out the interest that one would have to pay if the farm was bought with a 100 percent loan. Buyers usually assume that it will indeed become possible to farm out the interest in the longer term – that is, they hope inflation will pay off their debt. Obviously, in periods of falling interest rates and rising product prices, they become much more optimistic. But they tend to have very short memories.

Factors influencing buyers:

There are many factors which determine what buyers are prepared to pay for land. For instance, it would depend on how much capital he has, thereby reducing the amount he needs to borrow, and making the interest more manageable.  It would also depend on his perception of how much he can make out of the land. It could also depend on whether his wife likes the farmhouse !

A decision about Hanglip Farm

Thus far the message from our valued friend. Following a previous request to all interested parties to submit proposals for either leasing or purchasing Hanglip Farm, a decision about its future is due to be taken on 8 May 2024. This process involves its own stories of wheels and deals, hearsasy and tastealls, in stoep talks and veld talks, from many rooms with many views. This is just one perspective — more will follow …

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