LAND REFORM CONFERENCE MAPS WAY FORWARD


Nondumiso Mlondo


Recently, the South African Farmers Development Association (SAFDA) held a two-day Land Reform Conference in Mpumalanga which was aimed at seeking appropriate solutions to the debt challenge facing most of land reform projects in the province. 




The theme of the conference revolved around making land reform work for beneficiary communities. The conference was attended by individual land reform farmers, communal institutions committee members, representatives of land reform projects/entities partners, sugar industry and sugar milling representatives and representatives of relevant government departments.


This conference looked at the following areas:

  1. To highlight challenges brought about by certain provisions of some of the currently standing contracts.
  2. To seek ways of achieving transfer of agricultural and business skills from partner to community.
  3. To deliberate and propose solutions on issues of licensing and access to water and electricity.
  4. To seek ways and means of enhancing land reform farmers’ participation on the agricultural value chain
  5. To seek solutions on dealing with some of the beneficiation issues often commonly raised by most beneficiary communities concerned groups.
  6. To seek appropriate solutions to challenges that come with some of the current post settlement models.


The sugar industry has seen in excess of 22% of cane land transferred from white to black hands. This accounts for 76,538 hectares of transferred land, which amounts to over 40% of area under cane. Government has spent over R2,3 billion in acquisition of restitution farms for over 231 communal property institutions (Trusts and CPAs). Various post settlement business models, which include among others: lease backs (39%), self-management (31%), joint ventures (29%) and co-management (1%), have being used to work the land. Despite the total of 40% industry land sitting in black hands, black small-scale and land reform farmers have only managed to contribute between 12%-15% of gross industry produce per annum. 






This demonstrates clearly that land transfer on its own without appropriate post settlement business models that are directed at ensuring that black farmers and restitution beneficiary communities will not translate to creating black farming communities. Even for the transferred land white farmers still work the land and profit from it. Most of beneficiary communities in the sugar industry are trapped in a downward spiral of indebtedness. 


There is mushrooming of beneficiary communities’ concerned groups due to perpetual failure of land holding entities to declare dividends to beneficiary communities. Current post settlement arrangements are not helping to create black farmers and benefit beneficiary communities. Transferred land is not productive, hence the need to revisit current post settlement models and to strengthen support for black farmers. 

Conference resolutions and actions:


Commission 1:  Joint Venture (JV) Agreements


Management of the Joint Venture Agreement

  1. Equality and balance in terms of the control and participation in the JV and at Exco level participation. SAFDA to bring in capacity building. Help to steer companies in the right direction.
  2. Review Joint Ventures
  3. Land deals – community must have access to the sale agreement, what was bought and what was paid for, 
  4. Workshops to understand the agreements
  5. Proposal to centralise support services into the Joint Ventures – because partners inflate costs, access to statements etc.
  6. Seconded staff must be used less, and local staff must be used more
  7. Strategy for Joint Ventures to reduce costs and attempts to increase revenues – e.g.  diversification and control the mill.


Actions:

  1. SAFDA to approach the Department of Agriculture, Land Reform and Rural Development to make available Agreements of Sale, Section 42d notices and valuation reports: clarity what was purchased (e.g. land with / excluding roots)
  2. SAFDA to bring in appropriate professional expertise to work with JVs on the ownership, management, and control of these entities:

  • Review of JV agreements / lease agreements
  • Ownership structure of the JVs
  • Equity and balance in terms of control and participation
  • Appointment of staff
  • Reducing operational costs
  • Centralise support services



Commission 2: Debt Challenges


To seek appropriate solutions to the debt challenge facing most of land reform projects, especially the Joint Ventures


  • Forensic audit of loans appointed by SAFDA
  • Restructuring of legitimate debt
  • Approach government to assist repaying loans
  • Review distribution of partnerships – should the communities have been given a bigger stake in the business
  • Engage SARS on behalf of the CPAs and Trusts for those who have big debt


Actions:


  1. SAFDA to approach the Department of Agriculture, Land Reform and Rural Development to conduct a forensic audit of the transactions of the JV including the loans
  2. SAFDA FMS to approach government to assist with production finance
  3. SAFDA to engage SARS on behalf of the CPAs and Trusts for those who have big debt.



Commission 3: Skills Development


Skills development to enable community members to occupy decision making positions in the JV operations


  1. Skills developments plans are only on paper and there is no M&E (Monitoring & Evaluation). Some JVs have no skills development plans
  2. Need skills audit in communities
  3. SAFDA to explore a M&E department
  4. Must be treated as equal partner at the boardroom table
  5. Also need some soft skills training


Actions:


  1. SAFDA facilitate training and provide ongoing mentorships to appointed directors and trustees
  2. SAFDA to assist in inducting members into the industry and building their leadership capacity
  3. SAFDA to explore a M&E department/capacity




Commission 4: Enterprise Development 


What is the involvement landholding entities / community the sugarcane production value chain?


  1. Need guides how to bring in new entrants
  2. Seed capital is needed – e.g.  lazy capital think about Akwandze and some proceeds from some JVs
  3. Need to get involved in growth of the value chain – milling
  4. Syndicate to assist with seed capital
  5. Set targets for enterprise development opportunities
  6. JV needs facilitation capital to support their members to become entrepreneurs
  7. Assess what other diversification opportunities exist e.g. pineapples, macadamias


Actions:


  1. JVs to prepare enterprise development plans and capacitate potential community contractors to participation in sugar cane production value chain
  2. SAFDA to assist with the establishment of community-based business entities for benefit from the enterprise opportunities 
  3. SAFDA to approach MEC for economic development with proposals/ business plans for sugarcane production enterprise development support 
  4. SAFDA FMS to assess other diversification opportunities exist e.g. pineapples, macadamias, tourism



Commission 5:  Governance 


Governance of the land holding & business entities and Community Development


  1. To negotiate where there is conflict with other 
  2. JV partners
  3. Need to maximize profit to increase dividends
  4. SAFDA to assist inducting members and capacity building
  5. Need a separation of powers in terms of trustees and those tasked to run the business to ensure that there is accountability
  6. Re-evaluation of the guidelines that are provided by government so that they are fair to all the trustees
  7. SAFDA needs to enter a space to develop business practices
  8. SAFDA to intervene in facilitating conflict resolutions 


Actions:


  1. SAFDA to establish mediation and conflict resolution facility (panel) to assist with both internal and external matters
  2. SAFDA to convene governance support session/s with Trusts/ CPA leadership;
  3. To set guidelines to assist communities in the appointment of Trustees to land holding entities and Directors to the business entities
  4. To guide the separation of powers in terms of trustees and those tasked to run the business to ensure that there is accountability
  5. To develop guidelines on beneficiation policy





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