Financial advice for farmers
South Africa is a rich and diverse country with a vibrant cultural diversity and a spectacular range of vegetation types, biodiversity, climates and soil types – farming activities range from intensive crop production to cattle ranching in the bushveld and sheep farming in the more arid regions, yet our farmers are faced with daily challenges which threaten their yields and their livelihoods – so how do they protect their lands, their legacies for future generations?
Being a conventional farmer in South Africa is one of the toughest jobs around. Not only do they have to deal with whatever Mother Nature throws at them, they must also overcome the ever-changing and challenging political, social and economic factors targeting them on a continuous basis, rising costs, land expropriation, external factors such as the oil price and the exchange rate, increased competition from cheap and subsidised imports and restricted natural resources – to name a few.
So how do they protect their legacy to ensure that their lands are sound, that they have sufficient cover in trying times to build wealth and nurture the future for themselves and for their children? Despite looking at new ways to sustain crops and livestock, and adopting traditional means of building wealth – ‘money-under-the-mattress’, pension funds, insurance or just getting by on a day-to-day basis and hoping for the best (like decent rainfall) – it is simply not enough.
Brandon Ruddle, Financial Associate at Northern Cross Wealth Management, says that farmers have to be thinking ahead, to be pro-active and consider taking more risks to protect what is theirs for future generations. “By diversifying one’s portfolio and looking offshore, investors are able to build a safety net with nominal risk. A portfolio can be diversified across different currencies, invested into different countries/continents or invested into different sectors such as technology, healthcare, energy, etc.”
He adds that South Africans wishing to invest abroad can do so with their Foreign Investment Allowance as prescribed by the South African Reserve Bank (SARB) which permits individuals to transfer up to R10 million out of South Africa annually – these funds can be invested into offshore investment portfolios, property, bank accounts or other investments.
Benjamin Graham, Warren Buffet’s mentor, said, “Diversification is an established tenet of conservative investment” – casting that safety-net and diversifying a portion of your assets off-shore in a more stable country with a more secure currency could be the solution to growing your wealth and creating longevity and security in this unpredictable industry.