ENGINEERING NEWS / 08 OCTOBER 2020 - 15.44 / SIMON LIEDKE
President Cyril Ramaphosa has highlighted access to agricultural land for subsistence farming and commercial production as a national priority, stating that the transformation of patterns of ownership “are fundamental in addressing not only food security, but also historical injustices”.
In his weekly newsletter, this week issued on October 5, the President explained that the South African agricultural sector played an essential role in the economy, and that it currently contributed 5.3% to total formal employment.
Owing to the impact of the Covid-19 pandemic, South Africa’s economy suffered a significant contraction during April, May and June, with gross domestic product (GDP) having fallen by 16% between the first and second quarters.
However, while nearly all other sectors of the economy registered significant drops in output, Ramaphosa said “agriculture bucked the trend”, noting that there had been an increase in maize exports and rising international demand for citrus fruit and pecan nuts, helping the industry grow by 15.1%.
The figures suggested that there was clearly further growth potential in the sector and access to land for new farmers was critical, the President noted, emphasising that “development in this area must be coupled with long-term farmer support, which includes financial and business management training”.
The President referred to a Jobs Fund project, which started in 2015, as an example of the transformation of land ownership and the inclusion of black farmers into a mainstream agricultural value chain.
He mentioned Eve Brand Farms, a producer and exporter of pome fruit whose majority shareholding was the Letabakop Workers’ Trust and which had always focused on broad-based black economic empowerment (BBBEE) commercial fruit farming in the Langkloof area of the Eastern Cape.
“It was, therefore, a natural progression for it to acquire a defunct BBBEE farm (Sanddrift), consisting of 73 ha of severely neglected orchards and very basic but dilapidated infrastructure, as a mechanism to expand its operations and improve the asset shareholding of the existing Workers Trust by developing 91 ha of new orchards to increase the company’s scale and improve its economic viability,” he explained.
Sanddrift is now a fully developed apple and pear farm with newly installed physical infrastructure, including roads, offices, stores and residences, well-designed water storage and irrigation infrastructure and 91 ha of biological assets with a projected life of between 10 and 15 years.
“All of these assets provide the foundation on which long-term sustainability can be built alongside dedicated and professional management of the enterprise.”
However, he lamented that “the hard truth” was that, to develop a fruit farm, was “a complicated and capital-intensive business” and that people were often not aware that they were required to invest substantially and that returns would not immediately be received.
When it comes to worker empowerment schemes, the mere transfer of ownership and the appointment to senior executive positions is but the beginning of a long and back-breaking road for the beneficiaries, the President added, noting that “their challenges are many not least of which is to master business and management skills, understanding local and export markets as well as taking a long term view on the returns they are likely to make”.
With the increase in the asset base of the enterprise, the value of shares held by the beneficiaries of the Workers Trust had increased from R15 062 in 2005 to R171 178 per beneficiary at the end of the 2019 financial year.
Unfortunately, the number of active beneficiaries had declined, and of the original 241 employees who were registered as beneficiaries in 2005, only 66 remained active at the end of 2019. The decline is the result of deaths, resignations, termination of service and members going absent-without-leave.
The Letabakop Workers’ Trust was working towards buying out inactive beneficiaries and this was placing a strain on the company, which the President cited as a “critical move” that would stimulate growth by allowing the enterprise to increase hectares and dividends for the current beneficiaries, who are actively working to make the farm a success.
Jobs Fund head Najwah Allie-Edries reiterated the importance of implementing agricultural interventions that sustainably empower beneficiaries, noting that “land distribution and transformation in the agriculture value chain is a long-term process that has to be carefully nurtured to bear fruit. We need to invest in and support beneficiaries over the long term to ensure that we build resilience and sustainability in the enterprises we support”.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER