Sheree Bega | 8 June 2023
South Africa’s biggest federation of agricultural organisations, Agri-SA, has said that new draft regulations introducing racial quotas for water use licences place the country’s “tenuous food security at further risk”.
The draft regulations require farmers to have 25% to 75% black shareholding for their applications to succeed.
They were published for public comment by Water and Sanitation Minister Senzo Mchunu on 19 May, under the National Water Act.
The prescribed minimum black South African shareholding requirements of 25%, 50% or 75% for a water use licence to succeed depends on the volume of water abstracted or stored, or the area covered, in the case of commercial forest plantations.
Farmers who draw 250 000 to 500 000 cubic metres of water require 25% of black shareholding for their water use licence to be granted, while 50% black shareholding is stipulated to use more than 500 000 cubic metres. To draw more than a million cubic metres of water, 75% black shareholding is required.
Fatal consequences
Agri-SA legal and policy executive, Jansie Rabie, said while the federation fully appreciates the importance of achieving an inclusive and fairly representative agricultural sector, “the consequences that the draft regulations in their current form will have with respect to agriculture and food production in South Africa will be fatal, as it will essentially force the transfer of ownership of the ability to lawfully use water, commercial agriculture’s most crucial input factor.”
Focusing solely on ownership, to the exclusion of all other relevant factors, will “mean the loss, or partial loss, of water resources for numerous currently viable commercial farming enterprises”.
The department of water and sanitation has stood by its proposed new rules, saying there is a need to “ensure that there is transformation of water use allocations to address the disparities in access to water use from apartheid”.
Massive investments
Theo de Jager, chairperson of the board of the Southern African Agri Initiative, an agricultural interest network for farmers, said: “A dam costs you millions. Very often, a dam on the farm is more expensive than the farm itself. Many farmers invested in water storage facilities, but they still owe millions on it, every year they must pay off the loans for that.”
It is unclear whether the proposed regulations would mean that the black shareholders will also have to share in the debt that has been incurred on the storage of the water. It’s the same for the irrigation equipment, he said.
“The pivot on irrigation land is much more expensive than the land itself. The value is in the fact that you can put water on that land. Now the water will have a different shareholding. Farmers, if they knew this, would probably not have invested in the equipment.”
De Jager farms with avocados and macadamias and uses about 5 000 cubic litres of water per hectare a year, “which means that if I have more than 30ha of irrigated orchards, I will be forced to have a partner. But to farm with less than that actually makes me a smallholder farmer. We’re smallholders unless we’re prepared to be forced into a partnership”.
Most farmers in the commercial sector are family-owned businesses. “It’s a family farm. You inherit it from your dad, who inherited it from his dad, and you invest in it actually for the sake of your children. How do you BEE [black economic empowerment] a family?”
‘Devastating for the future’
Bennie van Zyl, general manager at commercial farmers union TLU SA, denounced the proposed regulations as “devastating for the future” and the most “short-sighted suggestion and proposal I’ve seen from any government in my life in the world”.
“This is not the way to do things so this government should go and rethink what they want South Africa to be when they’re finished with it,” he said. “I think we’ve come to a point in South Africa where the big question that now should be asked is, do we want to eat, do we want food on our tables?”
The government’s policy of transformation and how it is applied is “an ideological approach and it should be an economical approach”. What concerns Van Zyl is “that we have a government that doesn’t understand the economics of success, they don’t understand the market forces …. If you don’t make a profit, you’ll go out of business.
“Who on earth can BEE in a family farm? Ninety-five percent of our farms are family farms. I’m a farmer, with my son, with my family, now I have to give ownership to someone else? It cannot work like that; it cannot be sustainable and it’s not for the benefit of the country.”
De Jager says the government faces a difficult election next year and “I think [the proposed regulations are] a blind populist move, something they will do to appease the rural voters”.
“Most of the cities have slipped out of the hands of the ruling party, their strongholds are really the deep rural areas, where the poorest of the poor people in South Africa live, and us, the farmers. And by doing something like this, they appease that part of the voter’s base but they haven’t thought through the process and the consequences.”
About 25% of total production of staple foods such as grain, wheat and maize and sunflowers for cooking oil, comes from irrigation. “It is the certain part of our production. The rest is rain-fed — that is the uncertain part of our production.”
Most of the jobs in agriculture are on irrigated land. “There’s no way you can do something like this without shaking the very foundations of our capacity to create jobs and to maintain jobs. And, in agriculture we create the jobs where we need it most — in the deep rural areas … for that portion of the population that will not find jobs elsewhere.”
Redress
The department said that among the purposes of the amendments is to effect reforms in relation to equitable allocation of water use. The National Water Act recognises that water is a natural resource that belongs to all people and should be allocated to all users equitably.
South Africa is among the 30 driest countries in the world with limited water resources, and the majority of the catchments are in deficit. It is estimated that 98% of water resources were already allocated by 2004, of which most allocations are through the recognition of old water use entitlements.
Comparative statistics drawn from issued water use licences to historically advantaged individuals and historically disadvantaged individuals since 1998 indicate that a total of 412 million cubic metres of water has been allocated among the two groups, it said.
Highly skewed
Of the 412 million cubic metres of water, 313 million cubic metres (75.93%) has been allocated to white people, while a “modest” 99 million cubic metres (24.07%) has been allocated to black people, the department said.
The same analysis for water allocated by means of existing lawful water use shows that a total of 5.83 billion cubic metres of water is allocated, where 5.74 billion cubic metres (98.54%) is allocated to white people and only 90 million cubic metres (1.46%) to black people.
“These statistics indicate that water allocations remain highly skewed towards the historically advantaged individual group. Hence, the department should make efforts to improve this situation,” the department said.
The revised regulations have introduced proposed thresholds of abstraction volumes of water against the level of black ownership in applications submitted for new water use allocations. “This is done to ensure that there is transformation of water use allocations, to address the disparities in access to water use from apartheid.”
Sandile Ndlungwane, the African Farmers’ Association of South Africa’s North West executive, told Farmer’s Weekly that his organisation supported the idea behind the proposal.
“We seriously need water reform in the country, as most of the water allocated to the agriculture sector is allocated to white farmers,” he said.
“I don’t think the intention is to take existing water rights away, but rather to ensure that the remaining water and new water that becomes available as new dams are built go towards transformation.”
Radical, sweeping
Marais de Vaal, AfriForum’s adviser for environmental affairs, said the government has a constitutional duty to manage and protect the country’s water resources in a sustainable manner.
“While South Africa is a water-scarce country, water infrastructure is crumbling across the country and we are heading for a crisis. Transformation is being used as a smokescreen behind which the [department of water and sanitation’s] failures hide.”
Agri-SA said the proposed regulations are seen as the department’s most “radical and sweeping effort to date” toward changing the demographics with respect to water use in the country, with the agricultural and forestry sectors appearing to be the “primary target”.
The agricultural sector accounts for about 60% of South Africa’s total water use and the proposed regulations exempt mining companies, the state and state-owned entities, as well as 100% black-owned entities.
“What the proposed regulations seek to achieve is to make BBBEE [broad-based black economic empowerment] the sole consideration for granting licences,” Rabie said, noting how water is the “most vital input for the sector” and if farmers lose the lawful use of this input, “the impact will be catastrophic”.
The proposed regulations are open for public comment until 18 July.
‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.