Agri SA presentation on alternative approaches to 50/50 proposal. Presentation to DRDLR March 2015

Transcription

1 Agri SA presentation on alternative approaches to 50/50 proposal Presentation to DRDLR March 2015

2 Introduction and background Agri SA s 2014 Congress resolved to Develop & implement proposals & play a leading role in sustainable land reform. A holistic framework was adopted dealing with all aspects of rural development and land reform; Such proposals must: comply with the Constitution of South Africa; give full recognition to economic and market actualities; not necessarily be dependent on state support; while utilising the potential of private-public partnerships as far as possible. NDP framework

3 Introduction and background Land reform proposals must recognise the diversity of agriculture: Regional variances; Commodity branches; Size/scope of farming units, etc. (economic viability); one size fits all is not an option; A basket of alternative models should be structured on a case-by-case basis to foster buy-in from crucial stakeholders. Presentation of Proposals by Agri SA on 50/50 per agenda item

4 Financing of Land Reform through a Special Purpose Vehicle (SPV) Financing will be a critical component to any alternative proposal; Agri SA is engaging experts as well as other relevant stakeholders on the issue of financing land reform. Favour a one-stop-shop approach Partnership between Government and Private sector Investigating possibilities such as a credit guarantee fund and interest subsidies.

5 The Social Dimension Agri SA is specifically analysing past and existing contributions of the farming sector to social upliftment and improved livelihoods of farmworkers and rural people. Agri SA Congress mandated the development of socioeconomic standards and a social accord to facilitate this. Agri SA, through its Labour and Social Policy Committee, is actively engaging with relevant stakeholders regarding the social compact. This process is taking place under the guidance of the Deputy President of the Republic.

6 Idea Bank Projects: Alternatives to 50/50 proposal Best practice (models must be practical and sustainable) In these examples, farmers, government and communities have worked to implement tailor-made solutions to well defined and understood needs. Commodity and regional peculiarities must be respected in each case. Most examples point to a three-way partnership between the commercial farmer, the beneficiaries and a partner providing the financing.

7 Donovale/Silwanentuthuko KwaZulu-Natal The farm (840 ha) grows Citrus, Sugarcane and Avocados C:\a working folder\land\land worksop 17 march 2015\Presentations\Anthony\Donovale Farming Company - explainer video-hd.mp4

8 Joint venture Rhebokrand 1000 ha producer & worker share-milking scheme, Humansdorp, Eastern Cape Ownership of Rhebokrand: shared by the Workers Trust (52%); and (land and fixed assets are the property of the Workers Trust) the Dairy Trust (48%); (cows and movable assets belong to the Dairy Trust commercial farmers) Government grant funding plus loan by commercial farmers The workers successfully applied for grants and each received R Some R4,5 million was supplemented by Dairy Trust members, who each took out a loan of R to add to the financial strength of the trust.

9 Shareholders of Rhebokrand workers trust busy milking

10 Examples from the forestry sector Forestry South Africa (FSA), along with other relevant stakeholders have entered into the Forestry Sector Transformation Code. FSA has developed 5 different models uniquely tailored to the requirements of their industry, namely: 1. Beneficiary ownership of land and trees + a management contract with the previous owner; 2. Beneficiary ownership of land and trees + beneficiary management; 3. Beneficiary owns land: ex owner retains ownership of trees and pays beneficiary market-related rental for plantation areas; 4. Joint venture: beneficiary puts in land and ex owner puts in trees; and 5. Lease back with value share: ex owner leases back land from beneficiary and pays rental into a trust that is used to buy a value share in the ex owner s value chain.

11 Joint venture: Christiana Farm Regina in Christiana district purchased in 2006 funded by commercial farmer and employee trust jointly. Commercial farmer stood surety for loan to employee trust; Commercial farmer has 49% shareholding and employee trust 51%; The business generated around R3m in net profit in the 2014 financial year which saw permanent employees taking home up to four months salary in dividend income. Due to the successful operations of this model, three other farmers in the area have implemented the model. Resulting in approx. 110 beneficiaries. Successful Off-farm housing model in Christiana also implemented

12 Employee Shareholding Initiatives Eksteenskuil grape project: 103 permanent new jobs created. Funded by Jobs Fund. Dividend paid to workers in year 1 = R per worker-shareholder. Land is leased jointly by beneficiary trust and commercial farmer.

13 Employee Shareholding Initiatives Eksteenskuil grape project: 103 permanent new jobs created. Funded by Jobs Fund. Dividend paid to workers in year 1 = R per worker-shareholder. Land is leased jointly by beneficiary trust and commercial farmer. Mr Vincent Schwartz photographed at the newly planted 2014 vines.

14 Training and pre/post-settlement support Land Transfers: Sugar industry Dedicated Land Reform and Rural Development department created at the South African Sugar Association (SASA). CANEGROWERS provides farm business management support: business plans, farm budgets, cash flows and leadership and institutional support to local associations and grower organisations Sugar milling companies are Strategic Partners for RADP and provide farm and project support to developing farmers. The KwaShukela Training Centre provides a range of agricultural and industrial training courses to new growers.

15 Farmer and farm worker development at SASA Convene 4 land reform workshops a year in Mpumalanga and KwaZulu-Natal: orientation to the industry, knowledge transfer, empowerment

16 Northern Cape training programme New farmers in the Northern Cape receiving training

17 Social contributions: Hantam Community Education Trust: Colesburg A few farmers wives started a play-school in a disused farm building 24 years ago. Today it is an educational complex comprising an early learning centre, primary school, intermediate school, administrative centre, library, computer room, school hall, living quarters for teachers, and other facilities. Serves farmworkers on 30 farms in a radius of 30 km. The Trust also administers a community health care and health education programme; a youth development progamme, and a bursary programme.

18 Hantam Community Trust

19 Hantam Community Trust

20 Steps to follow for successful projects In compiling Agri SA s idea bank, a number of critical steps for success have been identified that are present in existing, successful land reform initiatives. These steps are tabulated below

21 Practical Steps STEP 1 Consultation (what do workers and farmers need). Idea bank of tested, successful models is consulted for guidelines. Identify Farm Worker needs through worker -employer dialogue. Risks and rewards are assessed by all parties involved, achieve a clear understanding thereof. Identify farm business expansion enablers that can meet farm worker needs.

22 STEP 2 Shared ownership of Business, Housing or Education facilities sourced from the idea banks are aligned to worker needs and business growth. All affected parties gain a clear understanding of the implications of possible scenarios that may be pursued from lessons learned in shared ownership models in South Africa. In same cases workers may seek to pursue joint ownership models. However, there is no avoidance of shared risks. If therefore the individual business case is unable to sustain shared ownership, there should be no forced shared ownership.

23 STEP 3 Pursue enablers identified in STEP 1 by means of an expansion plan, in consultation with the AgriSA, government functionaries and financial institutions. Farm Worker communities and their employers pursue joint business, housing or education ventures that enhance worker livelihoods, build on worker skills and grow worker networks. In cases of intensive farming with large workforces and limited access to land, businesses may pursue non core enterprises. Examples may be vegetable market gardening, the sale of wood or the supported livestock farming in labour sender areas, that enable seasonal workers to return to viable livelihoods in the off season.

24 STEP 4 Set expansion targets, raise funding for these on an enterprise by enterprise basis and set development targets to be met to meet requirements established in STEP1. Land leasing and land ownership will both be considered. Finance institutions and government may consider models such as viable credit guarantee schemes in order to implement the range of available, tested, successful models hosted by the idea bank. (If agreed to by credit providers and government, this approach will be more affordable to government, farmers and to banks.) Credit guarantees should allow government resources to assist more enterprises while encouraging sensible lending at affordable rates. Farm workers should receive the opportunity to learn to work within the realities of the agricultural commercial sector, but with effective mechanisms in place to curtail risk. Credit guarantees can be the incentive for shared ownership models, housing programmes or education programmes and non-core business enterprises owned by workers on or off farm. District Land Committees will be afforded the opportunity to pursue all potential business and land shareholding deals if they have viable credit guarantee agreements. Participating commercial farmers will be granted B-BBEE points in the respective code categories that they pursue and will thereby have no further land reform obligation, other than the improvement in their B-BBEE score.

25 Conclusion Agri SA, its affiliates and farmers are ready to Participate in appropriate tested models with real benefits for all participants whilst ensuring continued food security. Contribute to the living and working conditions of farmworkers through e.g. better education, skills training, tenure security, provident funds, access to affordable healthcare and safe transport. These should be dealt with in a social accord. The requirement for this is a stable policy environment, the NDP framework, access to affordable and streamlined financing options. NB. This can only be done within a holistic framework, where all aspects of land reform and rural development (restitution, redistribution, tenure reform, financing and socio-economic aspects of livelihoods) are addressed.

26 Agri SA calls on Government to: Conclusion recognise and acknowledge the commitment and good faith of Agri SA in turn, undertake to fulfil its own crucial role in facilitating Land Reform and Rural Development through inter alia : Investigate special financing options Provide incentives, financial or otherwise, for voluntary participation Budgeting adequately for these financial requirements Provide suitably qualified, capable and motivated staff, from a wide variety of necessary disciplines, with decision making capabilities, to facilitate and underpin the process

27 Agri SA calls on Government to: Conclusion recognise and acknowledge the commitment and good faith of Agri SA in turn, undertake to fulfil its own crucial role in facilitating Land Reform and Rural Development through inter alia : Investigate special financing options Provide incentives, financial or otherwise, for voluntary participation Budgeting adequately for these financial requirements Provide suitably qualified, capable and motivated staff, from a wide variety of necessary disciplines, with decision making capabilities, to facilitate and underpin the process

28 Agri SA Proposal Unrestricted voluntary range of options Menu of financing and risk aversion products Policy certainty/ guarantees going forward?

29 Thank you!