For every single entrepreneur who wants to start a business, the biggest question on their mind is where to find funding. The question remains the same regardless of the industry in which business owners operate. Thankfully, for individuals in the agri sector, there is specialised funding for agricultural start-ups.
When you start a business, you need to understand the difference between funding and financing. This is important because when you are looking for funding, you need to understand the terminology that funders and financiers use.
Financing, in short, is the capital that you receive to purchase or start a business. It is often received in the form of a loan and requires the applicant to repay the money with interest.
Funding, on the other hand, is obtained from non-financial institutions in the form of grants, funds or donations. It is used in accordance with the stipulations laid down in the grant. For instance, to reach a certain goal that is set by the government or institution that started the fund.
For the purpose of this article, we will look at Funding for Agricultural Start-Ups in the Form of Grants
Agro-processing Support Scheme
The Agro-Processing Support Scheme provides investment opportunities for businesses that fall in the agro-processing and agribusiness category. Through this fund, applicants can increase capacity, create employment opportunities, modernise their machinery and equipment and become more competitive and productive.
This type of funding is a cost-sharing grant that has a 20% to 30% cost-sharing to a maximum of R 20 million over a two-year investment period. It is presented by the Department of Trade, Industry and Competition (DTIC).
To apply, submit a completed application form and business plan with detailed agro-processing activities, budget plans and projected income statement and balance sheet, for at least three years for the project.
Any assets that are purchased before applying for the incentive will not qualify as part of the grant. Applications can be sent to APSSapplications@thedtic.gov.za.
AGRA
AGRA is a non-profit organisation that consists of role players from across the African continent. Its aim is to provide grants to governments, ministries, seed companies, not-for-profit organisations, agro-dealers, and other agricultural businesses whose agenda aligns with theirs.
All application forms must be e-mailed or submitted online at rfcn@agra.org. To find out if you qualify, you can find out more on the AGRA website.
Agribusiness Development Agency (ADA)
ADA is an agency that falls under the control of the KwaZulu-Natal Department of Agriculture and Rural Development (DARD). Its purpose is to facilitate a strong, transformed, diversified, dynamic, competitive and sustainable agro-processing industry in the province.
Gants available from ADA need to be above R 600 000 and cannot exceed R 4 000 000 per applicant.
The requirement for this fund is that you must be a registered legal entity in South Africa. The business also needs to be compliant with the regulating tax body and must therefore provide a valid Tax Clearance Certificate. Another qualifying criterion is that the business must either be involved in a new operation or in improving an existing one.
The Limpopo Economic Development Agency (LEDA)
LEDA is an agency that was developed by four other agencies. These include Trade and Investment Limpopo, Limpopo Business Support Agency, and Limpopo Agribusiness Development Corporation. It aims to facilitate trade and investment, the expansion of businesses or the acquisition thereof.
According to the Department of Agriculture, Forestry and Fisheries, if you are looking to apply, you need to meet the following criteria:
- Be a registered legal entity in South Africa in terms of the Companies Act.
- Be a taxpayer in good standing and must provide a valid Tax Clearance Certificate.
Applicants can receive between R 50 000 and R 10 million per investment.
The Northern Cape Economic Development Agency (NCEDA)
It was identified that the Northern Cape lacked support when it comes to the high costs of starting a business in the area. Yet, with more businesses, the province can benefit from economic growth and social equity.
Any individual in the agriculture and agro-processing value chains can apply for a grant from the
Comprehensive Agriculture Support Programme (CASP)
The CASP is grant funding aimed toward beneficiaries of land reform and producers who have acquired land through private means. Furthermore, these individuals need to be involved with value-adding enterprises, domestic markets or exports. The grant can be used to start, expand or improve any agricultural business.
Applicants should be black, Indian, Coloured or Chinese South Africans who are 18 years or older.
You can apply via the application form on the Department of Agriculture, Land Reform and Rural Development website, as they are responsible for administrating the grant.
AGRIBEE
The AgriBEE Fund supports black-owned agricultural enterprises to promote transformation in the sector. Under the fund, all businesses related to agriculture, whether it’s a farm or agro-processing business, are covered. The fund is under the management of the Department of Agriculture, Forestry and Fisheries. Grants are available from R 1 000 000 (with 10% applicant contribution) to R 5 000 000 (with 20% applicant contribution).
Export Marketing and Investment Assistance Scheme
The Export Marketing and Investment Assistance (EMIA) Scheme aims to develop new exporters and support existing ones. The Department of Trade, Industry and Competition has developed this to assist prospective businesses with identifying new markets, increasing their competitiveness and growing. This is done by providing funding for overseas expos such as the rental of exhibition space up to R 50 000, return economy-class airfare, interpretation fees, and marketing material. If successful, they support the company with patent registration in foreign markets of up to R100 000.
Aquaculture Development and Enhancement Programme (ADEP)
The ADEP is specifically developed for farmers and agro-processors operating in aquaculture and aquaponics. It is a 50% cost-sharing grant that is capped at R 20 million.
The ADEP is an incentive programme available to South African businesses as long as businesses engaged in primary, secondary and ancillary activities in both marine and freshwater classified under SIC 132. The grant can be used for expanding or starting a business.
To apply, you can contact ADEPcontact@thedti.gov.za.
Armed with information about funding for agricultural start-ups, you can now see your ideas come to life.
Discussion about this post