RURAL Development and Land Reform Minister Gugile Nkwinti has pulled the plug on farm share equity schemes — probably the most commercially successful land-reform model in SA to date.
The department’s spokesman, Eddie Mohoebi, yesterday confirmed “a moratorium” on funding share equity schemes was in place, although no official announcement has been made yet.
The move is a blow to the government’s efforts to meet land-
reform targets while keeping highly capitalised commercial farms productive at a time of rising food prices and budget constraints. The scheme lets workers pool state grants to buy stakes in farm enterprises, and has been responsible for success stories, including prestigious wine estates such as Spier, Beyerskloof, Nelson’s Creek, Backsberg and Mont du Toit, and fruit farms such as the Crispy Group in Ceres.
In the Western Cape’s winelands and fruit-growing districts, where most of the schemes are, the moratorium put projects worth an estimated R100m on hold. This at a time when government has pledged to bail out 283 insolvent black farmers, who owe the Land Bank R232m.
The Land Claims Commission told MPs this month 200 farms handed to claimants had collapsed, and R360m was needed to recapitalise them.
Reasons for Nkwinti’s decision are not clear, but analysts think share equity schemes are politically unpalatable as they do not lead to immediate land transfers to black workers. The cash crunch at the department may have contributed.
The farm share equity scheme is typically used where land prices are out of the government’s reach, including export fruit farms in KwaZulu-Natal, Limpopo and Mpumalanga. Winelands farms go for up to R400 000/ha, excluding improvements, but grants are capped at R111 000 a person. Workers who want full ownership have to borrow heavily, risking failure.
The scheme initially came under fire for giving farmers cash injections without providing worker benefits, and eligibility rules were reformed. Workers generally own at least 50% of the business, only top farmers are chosen as partners, and they must exit after 10-20 years so workers or their offspring eventually get full ownership of the land and business.
Pretoria’s decision shocked provincial officials. “We can’t say to farm workers in the Western Cape: sorry, land prices are too high for government — go and farm in the Karoo,” said one official. “It’s very short-sighted.”
Consultant Louis Barkhuizen, who put together more than 50 big Western Cape worker-empowerment deals, said: “These were the only grants available, so this will have a hugely negative impact on empowerment in the wine and fruit industry.
“Everything has ground to a halt.”
hofstatters@bdfm.co.za