From BusinessDay today:
“RURAL Development and Land Reform Minister Gugile Nkwinti has pulled the plug on farm share equity schemes — probably the most commercially successful land-reform model in SA to date.
The department’s spokesman, Eddie Mohoebi, yesterday confirmed “a moratorium” on funding share equity schemes was in place, although no official announcement has been made yet.
The move is a blow to the government’s efforts to meet land-reform targets while keeping highly capitalised commercial farms productive at a time of rising food prices and budget constraints. The scheme lets workers pool state grants to buy stakes in farm enterprises, and has been responsible for success stories, including prestigious wine estates such as Spier, Beyerskloof, Nelson’s Creek, Backsberg and Mont du Toit, and fruit farms such as the Crispy Group in Ceres.
In the Western Cape’s winelands and fruit-growing districts, where most of the schemes are, the moratorium put projects worth an estimated R100m on hold. This at a time when government has pledged to bail out 283 insolvent black farmers, who owe the Land Bank R232m.
The Land Claims Commission told MPs this month 200 farms handed to claimants had collapsed, and R360m was needed to recapitalise them…..”
This is really stupid. We have been working on getting our Vrede en Lust black workers a 30% share of our Caseys’ Ridge farm in Elgin for more than 3 years. It is a fantastic piece of real-estate – amazing soils and location, plus the perfect climate for very high quality grapes.
We set up the Caseys’ Ridge business model for the BEE deal to be low-risk and ensure financial well-being. Caseys’s Ridge leases 2/3rds of its vineyards to Vrede en Lust, Rupert & Rothschild and La Motte. Blue chip customers. The farm earns income from the land leases and services rendered to the tennants – eg planting new vineyards and managing established vineyards. The leases are 20 year annuity income deals!
This model ensures a strong cash flow and reduces the amount of agricultural risk on the table. The farm can then take its own bet on 1/3rd or about 20Ha (50acres) of vineyard. The vines planted or schedules for its own vineyards include high demand cultivars such as cool climate Riesling, Pinot Noir, Pinot Grigio and Chenin Blanc.
We worked through the system with Land Affairs and were assigned some ‘consultants’ who clearly had never run any kind of business before. They blindly applied models from irrelevant farming businesses to this model. I had to personally re-do the models due to the complete mess in the consultant’s model.
All along we had our staff involved in the process, they met with the ‘consultants’ a few times and they had their hopes up! The staff were told the funding was approved. During one of the meetings the consultant told them he had a much better farm which they should be looking at. Sure he had some blue chip customers etc lined up too! Most likely a fat backhander somewhere.
Earlier this year we were told by the Western Cape LandAffairs that they did not have enough funds to fund the deal anymore and would not have any money available for such land transformation deals until 2011! They also told us that equity deals, such as ours, were frowned upon and out of favour. This is clearly hugely disappointing for our staff and ourselves.
The vast majority of land transformation deals have been a complete and unmitigated disaster. Why in the world would the government not help black farm workers do deals which are guaranteed to be sucessfull? Surely the goal is to help farm workers become profitable land owners?
What is the real agenda? Are the mainly coloured farm workers in the Western Cape being discriminated against?
In my humble opinion, the problem in government remains the same – get the right people in the right jobs! For the poor people of South Africa’s sake please get this right!!