South African fruit marketer Capespan has announced the opening of a new financial entity, Capespan Capital, geared at financing producers through short-term and long-term needs.

The joint venture with Capital Harvest and Landbank will focus in on producers with export potential, explained Capespan Capital executive manager Pikkie Swart.

Although similar in many ways to traditional bank financing, Swart explained that Capespan's model will come with key differences directed at the needs of the agricultural sector.

"We will be able to provide finance just against the crop and take that crop as security. We will be able to go to the exporter,  make a decision with the exporter and take the crop as security for finance. That’s one of the big differences between us and the commercial bank in terms of crop finance," he said.

"In terms of your medium- and long-term finance, I think the biggest difference will be that we will look at the mix of your crop. If you’ve got a young crop that’s not in full production, we will take that part and try to give you a capital holiday on that portion so that you’ve got two or three years of leniency on repayment of capital until that crop is in full production."

Swart also highlighted the benefits of working through a smaller institution as an alternative for farmers that may not be satisfied with the offer from their bank.

"As a much smaller company, we think our turnaround time will be much quicker than what you would find in a corporate structure," he said.

"Another advantage would be through the Capespan expertise, we will have guys on the farm that can give us expert advice on the crop itself, which isn’t a luxury that a commercial bank would have."

Other aspects of Capespan Capital will include term loans, installment sales agreements and a revolving credit facility.

On the producer end, Swart said there will be a need for trust in the company's capabilities as a small institution.

"From the producer side, they have to have a very open mind firstly to be able to give their fruit as security, secondly to be at the quick turn-around time, to understand the business and that there’s ups and downs in the industry," he said.

He emphasized the work of the company's account managers to ensure that operations run smoothly on the ground.

At moment, Swart said Capespan Capital is working with 15 producers and that several more are in the works as potential new clients.

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