The Department of Rural Development and Land Reform will review the viability of all farms as part of its groundbreaking project to ensure farmworkers own a stake in the business they work for.
This follows the department’s recent announcement that it would take ownership of the Solms-Delta Wine Estate in Franschhoek to help secure the jobs of workers who recently acquired 45% of the business and land. Despite intervention by the department, including financial support for the business, the project had continued to operate at a loss.
The department purchased an equity stake in the business in 2016 on behalf of farmworkers following an agreement with the owners.
This was through the National Empowerment Fund and framework on strengthening the relative rights of people working the land, commonly known as the 50/50 policy.
The 50/50 policy assists mainly farmworkers and farm dwellers to secure permanent tenure on the properties where they work or live as well as acquire economic interests in agricultural land and businesses in which they work.
It meant farmworkers and farm dwellers shared ownership with wine farmers Mark Solms (Zandvliet-Delta Farming) and Richard Astor (Lubeck-Delta).
But the project continued to operate at a loss, the department said.
This was due to a number of things, including poor wine sales both locally and internationally, under-resourced teams, and inefficiencies in the running of the hospitality business.
In addition to this the department will also secure the property as the land owner. At a meeting held yesterday, the department's chief financial officer, Rendani Sadiki, said a team had been sent to address workers at the farm.
The challenges that had arisen have forced the department to cease the continued funding of Solms-Delta in its present form, a move which was likely to lead to the liquidation of the business by the business rescue practitioner, she said.
“Soon after we bought (the equity stake), in the farm we realised this was not the right buy,” she said.
After the purchase, it was indicated to the department that the business faced being placed under business rescue.
The department was then asked for an additional R9 million to keep the business afloat, and later additional funding was requested again.
Sadiki said there would be no job losses. “We want to assure the community that what we need to do is best for them and their livelihoods.”
The department had undertaken to initiate a turnaround strategy and a restructuring of the operations at the Solms-Delta Wine estate, she said.
“All the other (farms) we have bought, we will be reviewing the viability of them After Solms Delta,” she said. New acquisitions have also been put on hold.
The business rescue practitioner at PriceWaterhouseCoopers (PwC) did not respond to request for comment by deadline.