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 _____________________________________