 All roles lead to the property show brought to you by privateproperty.co.za. The show is happening on the 27th and 28th of August 2022. It will be taking place at the Santon Convention Center but also notes that you can participate virtually. Get your tickets now at thepropertyshow.co.za. Welcome to the Private Property Podcast. My name is Tumi and I hope you had a good day. Tonight we are talking the A to Z of agricultural property and what you need to know if that is what you are looking into going into. I'm talking to David Laurie tonight who is the agricultural specialist at Commercial Farmers for Sale. David, good evening and thank you so much for taking our time to talk to us tonight. Greetings to me and it's a pleasure. Thanks for having me on the show. Thank you so much. We are talking agricultural farming. It's quite a peculiar subject and something very, very different from the norm. So please take us through your journey in a nutshell how you started and how you got into agricultural property. So I was brought up on a farm in Zim and so that's where it all started. I was involved in business in Joburg for quite a few years and then I ventured out into farming. That's my passion and I really love the agricultural sector. And from that I got into agricultural farm sales and I also sell related equipment. So I do the whole turnkey thing if a client needs tractors, implements, livestock, trucks, whatever, I'll help them with the whole solution. And just take us through how the agricultural space looks in terms of property and buying land. How different is it as compared to other sectors in terms of residential property and commercial property? What are some of those unique things that exist when one is buying agricultural land? So buying a farm is basically like buying a business. The property, the farmland is the factory for one to have a better word and so your land is like your plant and then you've got the business on top of that. So it's not just a simple property transaction, it's a whole turnkey business that you're actually buying. So depending on what type of farm it is, you'll get a vegetable crop or you'll get cattle or you'll get maize or an orchard, whatever sort of farming type you want to go into. And apart from coming on to private property, using a portal like that to find land, what are some of the things one should do in order to prepare themselves when they're going in to buy a business like this as you mentioned or property like this? Is there any particular research that they need to do in terms of getting to understand the land and what it can produce? What are some of the advices that you could give around that? Look, different types of land are suited to different crops. You've also got the climate zones that you need to look at. For example, if you were looking at a cane farm, you need a lot of heat. You need large areas of land and it doesn't necessarily have to be flatland. I mean, if you look at the north and the south coasts of KwaZulu, those are mainly like hilly waste lands, but they're really good for cane. If you wanted to do avocados or nuts, up sort of Limpopa areas around Zanin or Pumalanga are suited for that. Then large parts of the Northwest province are more suited to mays and your sunflowers. And together with that, you've got cattle farming because the cattle go into the lands once the crops have been harvested and they eat all the fodder. And so maize and cattle farming basically go together. And then near your large sort of urban areas, you've got your veg production facilities. They need to be close to markets and easily accessible because you're transporting perishable goods. Sure. And let's talk about the process. You know, just a couple of episodes ago, we were talking about one, getting offered to purchases and what are some of the things that one needs to look at when they are signing off to buy purchases and offered to sell. So what are some of those things that they need to look into specifically when they are looking at that process? Any advice that you could give around those legalities? So look, basically I deal in the commercial sector, so that means you're buying farmland and a business. So you've got to go into the history of the business. You've got to look at the financial performance and do a proper analysis. There's also normally a lot of assets. So you've got to make sure that those assets that you're buying are in good condition and that they're properly valued. So valuations play a key role. And then you need business plans and projections and that sort of thing. Because banks obviously want to know that they're getting a proper return and it's a safe bet when they're backing someone going into a farm. And I was going to say typically like a commercial bank, they would look for like a 40% deposit. But like if you're operating the BE sector, it can be anything from 10% to 15%. And there's also some government institutions that are involved in the agri-sector. But their requirements have become a lot more stringent in the last couple of years. And looking at the agricultural property market right now, especially with all the dynamics that we are having in the country and even in the world with COVID-19, what are some of those things that we are seeing in the market now? How have things changed? Has there been any positive impact? And even challenges that you are now experiencing because of these unique circumstances? So I think with what COVID did for the agri-sector is make people realize the importance of food security. And a lot of businesses were in turmoil through COVID. But the bottom line is people still needed to eat and sustain themselves. So a lot of big businesses realized the importance of the agricultural sector. And just coming to this year with the war on the Ukraine and Russia. You know, there's a big fear currently about grain shortages and oil shortages and that. And again, that has been good for the South African agricultural sector, you know, because it seems like a more stable area to produce from. And yeah, so that's been positive. The negative thing, of course, has been the huge increase in the oil prices and your fertilizers, because your fertilizers that come off the crude price inputs are rocketing. But it's across the board, you know, there's not much we can do about that. So yeah. And where are we seeing it go, you know, with all of these things happening? What can one brace themselves up for if somebody's already in the market and somebody's already in agricultural farming or even property investing, you know, in terms of buildings, building homes and different estates that are even in farms. Where do we see it going in the next couple of months and even years? To me, I think, you know, from an African perspective, I think it's pretty good news. I think that people are seeing that Africa from, like, sort of as a more stable place to produce from. Another factor that has got a huge impact on agriculture at the moment is the global warming. I mean, we've got record high temperatures across Europe at the moment and that obviously affects the crop production and that kind of thing. So I don't think Africa is as badly affected from a global warming perspective as, let's say, Europe and North America and those more developed continents. So I think the outlook for Africa is good. Obviously, the political stability and being business-friendly is a big, big thing which international players look at and they, I think, need to sort out things and hopefully the government comes to the party on that. Sure. No, definitely. And hopefully things start looking up because, you know, Africa and South Africa, particularly, have so much potential when we're talking agriculture. So hopefully things do look up in that space. What advice would you have for somebody who is a potential investor? Someone is sitting at home. They are either just starting off or they are potentially looking at going into the space in the next couple of years. What advice would you give them, whether it be legal-wise, even how to manage these things and some of those things that are very, very pertinent and important when you're going into the space? Look, I think that the thing that's really, really key is for people that want to get into the sector is for them to understand that farming is actually hard work and you've got to have the passion for the industry as well. You know, so you've got to be prepared to roll up your sleeves and it's also a longer term kind of investment, you know, where you'll only start making money like between three and eight years, depending on what type of operation you're getting into. Another thing is it's quite capital intensive. There are a lot of costs involved. So your financial planning and having the capital to get through and make the thing work is really, really key as well. No, thank you so much for that. David, really, really great insights coming through there around to the agricultural land and I just really want to wrap the conversation up and ask you any last words before we let you go tonight. Look, to me, you know, if people want to get involved in the agri-sector, they're welcome to get in touch with me. I think that the market is pretty buoyant at the moment and the good business opportunities out there. So, yeah, I think that's it. Totally, thank you so much. You know, as you were talking, I was already hearing hard work makes the dream work. Thank you so much, David, for joining us to have a good evening. Thank you to me. Cheerios. And we have reached the end of tonight's episode where we're talking everything and anything you need to know about obtaining agricultural land, buying that form and starting your property investment journey. Thank you so much for joining us tonight. And remember to get your tickets for the property show at thepropertyshow.co.z. Have a good night.