Johann Kotze, CEO of AgriSA, welcomes the announcement by the minister of land reform & rural development, Mzwanele Nyhontso, that forensic audits are under way into farm equity schemes and alleged fronting and corruption by white farmers.
“If it’s true that there was corruption it’s a shame, because we will never have transformation and land distribution with corruption, it doesn’t matter who is involved,” Kotze says.
“It’s a strong allegation to say it’s white farmers. I went with the minister to Germany last year so I think I know the case he’s talking about. And it would be good to have a forensic [investigation] because the ANC were also involved.”
As for why farm equity schemes have not led to more transformation in commercial agriculture, “you need to go and look at success stories in South Africa where farm equity did work, and why did it work”.
One success story he cites is Du Toit Broers, a multibillion-rand, 100% family-owned fruit farming business established 130 years ago in the Western Cape, which has entered into partnership with employees through a workers’ trust.
“The Du Toit Broers understand cherries, they understand apples and pears,” Kotze says. “They know exactly when to plant, which direction, how high, because they’ve done it for generations. They understand the demographics, the climate, how far is the market, when will it be in the market.”
When the enterprise did its equity deal it did not change the value system that had made it so successful, he says.
“They cloned it into the business they did with their workers, a complete stand-alone business, managed and run by the workers themselves. So that farm and the way they operate is on exactly the same basis as any other farm in the Du Toit Group. And it works.
“We talk about ownership, but ownership is not about taking away from the business. You need to add on, you need to grow it,” Kotze says.
The workers have the same benefits on their farm as the rest of the Du Toit operation has, including access to the same markets. “They paid them a dividend from day one. When the business made a profit they shared it with the farm workers.”
Why hasn’t this farm equity model been replicated more widely?
The moment you come in as the government and you want to tell the farmer what to do, where to do it, how to do it, who to employ, it’s going to be a cock-up
— Johann Kotze
“Lack of trust,” Kotze says. “The moment you come in as the government and you want to tell the farmer what to do, where to do it, how to do it, who to employ, it’s going to be a cock-up. The terms and conditions imposed don’t support the business success story, the business values, and then farmers don’t want to participate.”
The government needs to put the money down and then back off and let farmers conduct their operation as a normal business.
“You can’t have government coming in and then they say ‘it’s a grant but we’ll give you another 50% in six months’ time’. Come six months they’re late. It’s eight months, nine months, 10 months. We can’t wait in agriculture.”
The main reason farm equity deals have failed is that farmers who joined were often desperate and battling.
“And now they get a deal from government and think the deal is going to work. It’s not going to work. You need to take a successful business and clone that business and grow it, on the same values and principles that made that business successful,” Kotze says.
“Why do we think if we bring capital from outside, even if it’s grants, that it’s going to work? We violate principles of success and then we think, well, the money is going to make it work. It’s not. Any deal you put on the table needs to be a deal that is viable and profitable and will have long-term success.”
Instead, the government has forced things through just for the sake of land ownership and ticking boxes, instead of making sure there is an economic growth principle embedded in what it does.
“South Africa is to a certain extent a world leader in producing fruits, grains, beef, whatever. And we can multiply that. There’s a massive opportunity. But you need to do it based on the right principles. And we’re not.
“A government can’t farm. They’re not farmers. It’s a specific specialist that farms successfully. To get into that business you need to be overcautious to make sure you’re going to be successful. You need to be bringing grant funding into this system to give people entry into this business.”
There’s a huge opportunity in South Africa to do transformation and land distribution on economic principles, says Kotze.
“If you just want to do land distribution for the sake of black ownership and there’s no profitability to it, then I want to understand how that is success. If success is to say ‘we’ve moved it up from 10% to 40%’, and that’s your success, so be it. But it doesn’t mean they’re going to be successful farmers.
“The only way to be a successful farmer and contribute to food security is to piggyback on successful farmers. And there are many successful black farmers in South Africa.”
Kotze says it’s not fronting and corruption by white farmers (“Show me the fronting and we’ll deal with it; show me the corruption, it needs to be dealt with”) that has prevented farm equity schemes from succeeding; it’s government bureaucracy, red tape and “massive lack of time management”.
“Unfortunately, you have two partnerships. You have this highly effective and profit-driven business, and now you bring government into the system where you want to plug it in and there’s a mismatch.”
The government says it needs more black farmers to be brought into formal value chains, but there are no shortcuts to make this happen, he says.
“None. Not even for people being in the business every day. We’ve politicised our problems so much into black and white that we can’t see the business any more. And if something goes wrong we go back to this black and white concept. It’s a business concept, it’s a story of success. It’s a story of years of investing back into a business and continue with that success.”
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