Keep your agricultural business flourishing with trade credit insurance
No matter where you fall in the supply chain, there’s no getting around just how tough it can be to own a business in agriculture. It can be enormously profitable too, of course, as agriculture, fishing and forestry contributed around 117.5 billion to South Africa’s GDP in 2023, but the agricultural business is so dependent on every other business in an all too precarious chain that stretches from plowed fields to the shelves of a local supermarket, that when one business fails, it seldom fails alone.
Whether your business involves the harvesting of summer fruit, running a dairy farm or supplying farming equipment, all it takes to sink even the sturdiest agricultural business is a rainy season with not enough rain, gradual soil erosion that no longer seems so gradual, or even just plain old governmental incompetence.
And this is just on the domestic front. Along with the basic international pressures of a weak currency and worldwide inflation (which has, fortunately, started to ease up in recent months, as reflected by consumer food inflation falling to 4.9% in March, the lowest since September 2020) South Africa is a major exporter of fruits and vegetables, vegetable oil, rice, and meat and its agricultural sector is therefore highly reliant on global market trends.
For a business sector that is as reliant on the health of other businesses as agriculture, where credit is often given both freely and urgently, it is of paramount importance to seize control of the day-to-day risks that come with running your business.
Just think, what would happen if one of your biggest customers or clients suddenly goes under or suffers a sudden financial blow, making them unable to pay back the hundreds of thousands, even millions of rands that they routinely pay in advance for your products.
Thankfully, there is a type of insurance that specifically deals with this exact problem. Trade credit insurance, very simply, provides protection against potential non-payment by customers, making sure that you still receive a payout if things go south.
A trade credit policy is a crucial investment that can save you from bad debt if and when the weather inevitably turns – giving you the peace of mind to focus on taking your business higher and further.
Credit Guarantee, a member of the Old Mutual Group, is South Africa’s leader in trade credit insurance, enabling businesses across all sectors to expand their operations and customer base without the risk of bad debt.
