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AgriBEE target under fire

Published Apr 14, 2011


The AgriBEE target set by the Department of Trade and Industry (dti) that calls for 30 percent of the agricultural produce sold by retailers to be procured from previously disadvantaged producers has achieved little as white commercial farmers continue to dominate the sector.

The target, set by the dti in 2006, has been fiercely criticised by agricultural organisations claiming that it is “full of red tape” leaving black farmers at the margins of potentially lucrative markets.

Mike Mlengana, the president of the African Farmers’ Association of SA said black economic empowerment (BEE) in the agricultural sector was lying dormant as black farmers were still struggling. Only a limited number of farmers knew about AgriBEE and what the policy entailed.

Established farmers were not complying with AgriBEE because they were not given a reason to comply and the government had not contributed to the integration of emerging black farmers with white commercial farmers, he said.

Last month, the Department of Rural Development and Land Reform lifted the moratorium on Farm Equity Schemes (FES), which was imposed in 2009. The department said the moratorium had been lifted because it led to a lack of empowerment of beneficiaries and tenure security for farm workers, and poor working relations between managers and shareholders.

From the inception of FES in 2006 the government invested about R500 million in agribusinesses. According to the department, FES would allow farmworkers and entrepreneurs to obtain shares in farms and agribusinesses.

According to AgriSA, there are about 700 black commercial farmers in South Africa and the agricultural sector contributes close to 3 percent towards gross domestic product.

Mlengana said lifting the moratorium would have little effect because there was no involvement of black farmers except in the unions, and there was limited participation of black farmers in the growth of agribusiness. He criticised the department and argued that there was no uniform policy on the issuing of land, as it was only provided to individuals.

“As far as we are concerned, lifting the moratorium will have no impact, it makes no sense because black farmers are not even included on that level. Black farmers want to contribute to the economy, we should be supplying government institutions with food and we should be partnering with commercial farmers, but that is not happening,” he said.

Johan Pienaar, the deputy executive director of AgriSA, said he was concerned about the lack of an overarching BEE charter in the sector. The government had gazetted the charter in 2006, which should have been published as a code of good practice but had not.

The current benchmarks on AgriBEE were not acceptable, as the policy was making no progress. AgriSA had accepted the guidelines, and signed off on the charter but the organisation was not to be blamed that it had not been published, he said.

He believed that it was important to ensure that commercial farmers had good scorecards because it could affect the buying of their products, and people would be interested in firms that had good scorecards.

He argued that commercial white farmers had taken the initiative to assist black farmers in gaining market access, pointing out that organisations such as GrainSA and the Wool Growers Association in the Eastern Cape had contributed close to R200m towards AgriBEE-related initiatives.

“The Black Wool Growers Association was established, and much has been done in terms of share cropping and training. I sympathise with black farmers because the support provided by the government for production and market access leaves a lot to be desired.”

The AgriBEE scorecard weights ownership at 20 percent, management control at 10 percent, employment equity at 10 percent and preferential procurement at 20 percent, among its elements.

Diale Makgojwa, Standard Bank’s AgriBEE manager, said the lifting of the moratorium on FES had presented opportunities for banks to be involved in the transformation of agriculture, through providing finance to smallholder farmers and advice to established farmers seeking BEE partners.

He said BEE activity in the agricultural sector would increase because large-scale farmers would be pressured to comply with transformation requirements.

The AgriBEE policy included a target that called for 30 percent of agricultural produce sold by retailers to be procured from previously disadvantaged producers for them to gain market access.

“Large retailers are insisting on their suppliers being more compliant with BEE requirements and this was an opportunity for stakeholders in agriculture to play a constructive role in developing black entrepreneurs,” Makgojwa said.

Standard Bank was considering financing farmworker equity stakes in the Western Cape where “there is a huge appetite” among existing large-scale farmers to have black equity partners. He pointed out that the bank aimed to advance the R500m ring-fenced credit line it announced last year as part of its strategy to assist smallholder farmers. - Business Report

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