Cedric Mboyisa

Retired sugarcane farmer Jimmy Lonsdale, who has made a name for himself as a rural development pundit, was invited to speak at the United Nations Economic Commission for Africa Conference Centre on 27 February – 1 March 2019 in Addis Ababa (Ethiopia) on the subject of “Eradicating Rural Poverty to Implement the 2030 Agenda for Sustainable Development”.

In the introduction of his eight-page paper titled “Gaps and Challenges To Mobilising The Private Sector To Fight Rural Poverty” he states, “Rural development generally involves getting people whose families have lived in a deprivation trap for generations and who consequently have adverse mental dispositions to obtain finance for fencing and provision of drinking water for stock, plant the correct populations at the right time and spray chemicals at the right time, year after year”.

The South African Sugar Journal (SASJ) had a frank and wide-ranging interview with Lonsdale. He hails the sugar industry for always having been at the forefront of rural development. He embarked on a rural development drive in 2000 by starting a community bank through Finasol at Mfekayi. He has written numerous papers at Congress of SA Society for Agricultural Extension, SASI Agronomists Association and SASTA, many of them focusing on the subject of rural development.

SASJ: What is your diagnosis of the current state of rural development in South Africa (SA)?

JL: The people who should be driving rural development, the State, the private sector and commercial farmers are busy pointing fingers at one another instead of combining their skills and finances to get the job done. A top level workshop should be arranged to break down barriers and induce a paradigm shift in all these sectors. They need to understand that successful rural development will impact on everybody and will have a huge knock on effect on the economy.

SASJ: What do you think is the best strategy or solution when it comes to rural development in SA?

JL: What I call equity share has tremendous potential in rural development. It involves partners putting equity into an enterprise and sharing the profits in proportion to the equity. Equity can be held in land, an enterprise or crop but in an agricultural enterprise the land owner includes the value of the land. It is very important to retain trust in these circumstances and a trusted bookkeeper who gives regular feedback to all parties should be employed. The equity share can provide a way for emerging farmers to own enterprises as they can use profits to buy more equity and even end up owning it but getting increased proportion of profits every year. By the same token the commercial farmer gets out with his original investment, or with capital gains, plus his share of the profits over the years.

There are huge areas of land purchased by the State in the land reform programme which are not being farmed to potential and the quickest way to increase production is to get unused farms to produce. Some of the reasons are that there is conflict among the beneficiaries in which case conflict resolution is one solution. Another solution is to split the land between adversaries which has good prospects as some people will fail and can sell to the successful people allowing them to grow.

Another reason for vacant land is that it is leased by the State to emerging farmers who are unable to get loans and who have no proper guidance. This is also true of Ngonyama Trust areas. In all these situations the best strategy is for the land owner, the State, to replace capital items so the land can be developed by an arrangement, like equity share, between lessees or land owners and the private sector.

Another factor which would assist greatly is for commercial farmers associations to have an approachable liaison person dedicated to assisting emerging farmers. Emerging farmers should be briefed that this service is available and they should contact him. He can then decide what assistance is required and contact commercial farmers for contract services or equity share investments.

Commercial farmers’ wives can play a role by establishing enterprises employing locals or by assisting locals to sell their produce.

Because of Ubuntu, the community must always be considered as a unit. Individuals will always have to contribute and successful farmers and businessmen who fail to feed into the system can be brought down to the level of others. More important than this is that ideally communities should start a stokvel to which everybody contributes to save for development of their community, pumps, schools or a clinic.

SASJ: How important is the sugar industry to rural development?

JL: The sugar industry could help engineer the above changes and take a lead by educating commercial farmers in how they can contribute and earn revenue. They could make a huge difference in the attitude of farmers on both sides of the political spectrum.

The sugar industry has been a leader in rural development but appears to have reached an impasse and the industry should recognise the role of the community in individuals’ lives and play a bigger role. If they encouraged communities to set up a stokvel as described above and addressed the mental disposition of people who have lived for generations in the deprivation trap, called ‘learned helplessness’, they could generate some momentum. A sign on the roadsides recently reads… “the government is full of promises; we are not waiting, we are carrying on”. This is a huge milestone for the rural development of that community and these are the entrepreneurs who should get all the support that can be provided. 

An anecdote which illustrates a typical mental disposition is a project that was successful the first year but in the second the farmer did not plant. When asked why, he said he was okay and didn’t need to plant that year. The industry could also encourage agricultural services to set up local sale points. A useful mechanism for this is a franchise in which a local agent could use the suppliers name and products, paying an annual fee for it.   

Young people from rural areas consider farming a recipe for poverty and need to be encouraged by some sort of support like the industry taking an equity share in their business. In this way the industry can recover funds for future use and set young people up. Their success could then be encouragement for others. Young people have an impact on bad mental dispositions.

Community banks could serve a useful purpose as they enable communities to use their own money locally. One was established by Finasol many years ago and was based on the principle that small scale growers harvested one field a year and could deposit the funds they did not immediately need at the bank. They were paid interest and the bank would lend the money to people they knew and charge interest to cover their costs. The bank became very successful at one stage when the local schools, because of robberies of school fees from teachers, had children deposit fees at the bank which gave them receipts to show the teachers. Perhaps commercial banks could have a look at the principle. 

SASJ: Your take on the role of the agricultural sector as a whole with regards to rural development in the country.

JL:    To encourage State departments involved in rural development to:

  1. Make use of the private sector
  2. Combine forces with the private sector eg paying for capital expenditure required to make the land viable and leaving development to the private sector
  3. Focus on business plans allowing emerging farmers to get loans. There will hopefully be many of these and provision should be made for this
  4. To make special provision for lessees to get loans by ensuring repayment to banks          
  5. Encourage State departments to research unused farm land and advertise with investors
  6. To advertise for investors to use the available agricultural land and list them
  7. To provide bookkeeping facilities to emerging farmers
  8. To encourage the State to assist farm workers to buy equity from commercial farmers.

To contact organised agriculture to:

  1. Educate commercial farmers on how to assist rural development and earn revenue
  2. Encourage farmers’ spouses to start businesses in their area
  3. Encourage farmers’ associations to have an approachable person to assist emerging farmers and to improve the socio-economic situation locally
  4. Employ educated young people for training. There is an organisation called Future Farmers who organise this and pay half the wage for a two year contract
  5. Make farmers aware of the benefits of selling  equity to workers as this could reduce fears of losing a farm by expropriation without compensation and may result in increased productivity
  6. Marginal farmers will require more farm land in future and can go into equity share with their community
  7. Encourage commercial farmers to mentor emerging farmers.

SASJ: Do you think the current debate regarding expropriation of land without compensation could work against the agenda of rural development?

JL: This will lead to a hardening of the mindsets on both the State side and commercial farmers side which will not contribute at all because what will be essential for rapid rural development is that these two sides work together. Diplomacy will be important.

On the other hand, it might make some commercial farmers realise they need to be part of the solution and not part of the problem and take steps to contribute.

SASJ: How should the public and private sectors be handling the above-mentioned matter?

JL: By ensuring more contact and discussion than has been the practice.

SASJ: What would you say is the right way to deal with the critical issue of land reform properly in South Africa?

JL: As you say this is essential for SA’s future and I would organise a workshop between State and organised agriculture to devise the best way to utilise the available funds but this will be a long term project. While this is under way, I would appeal to commercial farmers to assist resource poor farmers to develop. We have too few black farmers. This can be done by contracting basic services or assisting by helping provide equity. This is already happening and many farmers are already involved. We need more of them to participate. The quickest way is to use State land reform projects which have failed and put in the capital items needed to get investors to develop.

SASJ: What is the key message you will deliver at the conference in Addis Ababa?

JL: To set up programmes to encourage the State to involve the private sector, enabling them to get more done with the funds available. To suggest methods of getting the private sector to invest in rural development and earn returns. 

SASJ: What future do you envisage for South Africa in terms of rural development and land reform?

JL: Unless state departments alter their approach to working with the private sector and commercial farmers keep pointing fingers at state failures, I don’t see anything happening. It will be the same old same old repeating itself ad infinitum. The only hope is that attitudes change and that the State and private sector work together and set goals together.

Cedric Mboyisa

Cedric is the Communications & Media Manager, External Affairs, South African Sugar Association.