BOSVELD GROUP HOLDINGS
The National Development Plan IN ACTION
or
NOT??
CONTENTS
The NDP recommendations (Chapter 6) Reasons for commercial farmers to
contribute/participate The NAMC process Pillars of successful land reform Successful projects: Bosveld Group Conclusion
NDP – A FARMERS OBSERVATION
What needs to be done Agricultural development based on land reform, employment
creation …….. Expansion of irrigated agriculture and dry land production,
…… beginning with smallholder farms.
Agriculture Potential to create 1 million new jobs by 2030. Expand irrigated agriculture. Convert under-used land in communal areas and land reform
projects into commercial production. Pick and support commercial agriculture sectors and regions
with highest potential for growth and employment. Support job creation up and downstream. Develop strategies to give new entrants access to product
value chains and support from better resourced players.
NDP – A FARMERS OBSERVATION
Security of tenure. State funding. Post settlement support - Land Bank. Potential “winners” – Citrus. Trade-offs and risks:
Tenure security for black farmers; Government spending to small-scale farmers
will not be increased. Additional water and the efficient use thereof. Potential to grow jobs through growth of large-
scale commercial farmers limited.
NDP – A FARMERS OBSERVATIONS
Recommendations:
Increase investment in water resource and irrigation infrastructure. Invest substantially in providing innovative market linkages for
small-scale farmers … Preferential procurement mechanisms for new entrants…. Create tenure security for communal farmers … Investigate different forms of financing and vesting of private
property rights to land reform beneficiaries that does not hamper beneficiaries with high debt burden….
Greater support for innovative public-private partnerships …..that result in new growth, and new job opportunities.
Increase and refocus investment in research and development for the agricultural sector – train new extension officers…
Improve and extend skills development and training. Investigate the location of extension and other agricultural services.
Who and how??
NDP – A FARMERS OBSERVATIONS
Proposed Model
Enable more rapid transfer of land, without distorting markets and business confidence;
Ensure sustainable production, ensure that human capabilities precede land transfer;
Establish institutional arrangements to monitor land markets against undue opportunism, corruption and speculation;
Bring land transfer targets in line with fiscal and economic realities to ensure that land is successfully transferred.;
Offer white commercial farmers and industry bodies opportunities to significantly contribute …..;
Form district land committees, …… identify 20% of commercial agricultural land in district;
State pay 50%, participating farmers make shortfall up by cash or in kind contributions.
Participating farmers protected from losing their land and gain BEE status.
WHY PARTICIPATE??
Contribution to building of the Nation; Compliance to laws? Protection against loss of land/land claims? Gaining of BEE status? Cheaper financing? Expansion of business – advantages of scale; Recognition? Retention of at least 50%; Loosening up of own capital for further
investment; Economic sense
NAMC PROCESS
On instruction of NPC; Technical Committee to establish a model to
accelerate successful land reform; First meeting - January 2014; Representatives of:
NPC, Department of Rural Development, Department of Agriculture, Department of Rural Development and Land
administration of Mpumalanga, Land Bank, Farmers Unions such as AgriSA, AFASA and Nerpo, and Commercial Agriculture.
NAMC PROCESS
Technical committee objectives: Focus on Mpumalanga, but also roll out the project to other
provinces; Formulate proposal on composition of district committees; Identify farms for the project, transfer of land in a short time at a fair
value; Establish a method of determining market valuations of farms; Draft guidelines on identifying beneficiaries; Identify beneficiaries with the help of AFASA and other organisations; Identify partners/mentors; Investigate possible funding structures
State grant system; Landbank to develop proposed product (mortgage product);
Start at buying a first farm, and to streamline the process of acquisition, pre-settlement support as well as post-settlement support;
Implement and measure success/profitability of beneficiaries, wealth creation, job creation and poverty alleviation;
Report back in 6 months;
TECHNICAL COMMITTEE PROGRESS
Objective Achieved
Proposal on composition of district committees March 2014
Identify farms for the project 7 Feb 2014
Establish a method of determining market valuations of farms March 2014
Draft guidelines on identifying beneficiaries May 2014
Identify beneficiaries
Identify partners/mentors 26 Feb 2014
Investigate possible funding structures State grant system Landbank product
???26 Feb 2014
Buy a first farm 7 August 2014
Streamline process of acquisition pre-settlement support post-settlement support transfer of land
Implement and measure success/profitability of beneficiaries wealth creation job creation poverty alleviation
Report back in 6 months;
PILLARS OF SUCCESSFUL LAND REFORM
Transfer of Land/shareholding; Equality between shareholders; Operational efficiency; Sustainable production; Reasonable price; Choice of partners; Broad base empowerment; Commercial farmer involvement; Access to markets and value chains Human capacity; Funding; Grants; Success/profitability of beneficiaries; Wealth creation/poverty alleviation; Job creation.
MABETE SITRUS PTY LTD (2005)
Bosveld Sitrus
69.8%
LRADSTD Bank
Workers trust25,2%
Morua Trust
5%
Mabete Sitrus
MABETE SITRUS - PILLARSTransfer of Land/shareholding; 58%/42% - 69%/31%
Land owner and operational company
Equality between shareholders; Equal representation on Board of DirectorsEqual contribution to shareholders loansEqual risk
Operational efficiency; Workers stay workersOperational management by commercial farmer
Sustainable production; No interruption
Reasonable price; Yes, seller remain a partner
Choice of partners; Commercial farmer had the choice
Broad base empowerment; Yes, 128 employees
Commercial farmer involvement; Yes, as partner and manager
Access to markets and value-chain Part of the bigger Bosveld Group
Human capacity; Ongoing training on all levels
Funding; State, commercial bank and commercial farmer
Grants; Limited access
Success/profitability of beneficiaries; Own shares, capital growth with growth of company valueDividends
Wealth creation/poverty alleviation; Yes, shares can be inherited by heirsShareholders loans can be paid back
Job creation; Retained employmentRecruitment firstly from beneficiaries
RICHMOND KOPANO FARMING PTY LTD
Richmond Kopano Farming
Bosveld Sitrus100%
Richmond 605 KT
Moletele CPA
RICHMOND KOPANO - PILLARS
Transfer of Land/shareholding; Community is land ownerOperational company leases the farm
Equality between shareholders; Equal representation on Board of DirectorsEqual contribution to shareholders loansEqual risk
Operational efficiency; Workers stay workersOperational management by commercial farmer
Sustainable production; No interruption
Reasonable price; Yes, willing seller, willing buyer
Choice of partners; Contractual agreement between 2 willing parties
Broad base empowerment; Moletele Community
Access to markets and value-chain Part of the bigger Bosveld Group
Commercial farmer involvement; Yes, as shareholder and operational manager
Human capacity; Ongoing training on all levels
Funding; Land – stateOperational – shareholders and commercial bankNo recapitalization funding
Grants; Limited access
Success/profitability of beneficiaries; Wealth creation/poverty alleviation;
Own land, shares in operational company - capital growth Fixed and variable leaseDividends
Job creation; Retained employmentRecruitment firstly from beneficiaries
CONCLUSION
NDP – good intentions, not specific enough; NAMC project have ticked most boxes; Unresolved issues;
State funding; Landbank mandate; District committees; Election of beneficiaries/partners;
No golden bullet; Willingness amongst commercial farmers; Many examples of successful projects, initiated
without force or threats – economic sense.
THANK YOU
_____________________________________Doing what we can best
Trusting our partners for the rest _____________________________________