Christo van der Rheede, CEO of South Africa's largest agricultural federation, Agri SA, says the government's recently published draft rules introducing black shareholding requirements for new water use licences have less to do with transformation than with next year's elections, and will be “devastating” for local food production.
“The agri sector has always been committed to transformation in the space of water rights, but you cannot just dish out rights to access water on a populist basis. They must be allocated to farmers who use the water rights effectively and efficiently for the purpose of food production.
“What we've seen in many areas where emerging farmers have received water rights is that they sell them back or lease them out to commercial farmers again.”
Van der Rheede says water & sanitation minister Senzo Mchunu, whose proposals for race-based water permits came as “a massive surprise”, should rather look at managing water in South Africa more effectively and efficiently.
“We've seen how the state has failed to implement their own water infrastructure plans because of corruption and incompetence. These were plans that would have benefited emerging farmers.”
There was a commitment in both the 2010 National Development Plan and the 2018 agriculture and agro-processing master plan — which the agriculture sector signed off on — to more irrigation “also for the sole use of emerging farmers”.
“The state was central to ensuring that happened.”
It is this kind of populist, short-term thinking that is costing the country dearly
— Christo van der Rheede
The question that needs to be asked is why government has failed to execute agreed irrigation plans with the money made available for that purpose, he says.
“But now we rather want to take a short cut and spring a surprise on the agriculture sector by saying if you irrigate 250ha you must have 35% black shareholding, or if you irrigate 500ha or more you must give 50% shareholding to black people, and your bigger entities that irrigate more than 1,000ha must give away 75% shareholding.”
Apart from the “transparent political opportunism” of the move it ignores the financial crisis facing the sector, mainly because of electricity blackouts.
“We've seen the impact of load-shedding, of increased input costs, labour costs, fertiliser costs, the cost of packaging and shipping, electricity costs and the cost of capital with interest rates going up by around 425 basis points since 2020.
“Now on top of all this you want farmers to give away 75% shareholding. The first question is who is going to fund that? Nobody in his right mind will give shareholding away for free.”
The department of water & sanitation gives no indication of how the proposed transfer of between 25% and 75% shareholding must happen, he says.
“The assumption is that somebody must pay this, but there's no way farmers are in a position to do that. All that happens is you de-collateralise the farming enterprise which will make it extremely difficult for a farmer to apply for a production loan.”
Without these loans there's no farming and no food production, which is why farmers currently owe banks around R220bn, he says.
“That's the kind of risk the farming sector takes on itself to produce food for this country.”
The government's contribution to food security is less than 1% of this, he says.
The government should be grateful there are still enough farmers prepared to take on this level of financial risk to realise section 27 of the constitution that all people must have access to food.
“Government takes food security completely for granted. The idea that we can just import food at our exchange rate ignores the exorbitant expense, not to mention the hundreds of thousands of jobs it will cost.”
The primary agricultural sector alone, not including the whole food production value chain, is responsible for 880,000 jobs.
Relying on food imports “will put the sector on a path of implosion that will lead to its eventual demise and crash the entire agriculture value chain from the input side to the retailers side”, he says.
If the state were serious about empowerment and building an inclusive agriculture sector it would “rather leverage the sector as opposed to destroying it”.
“How? Our agri sector sits with skills that can compare with the best in the world. We have more than 5,500 farmers on government-owned farms, a huge percentage of which are dysfunctional because the state doesn't have the capability to support these new farmers.”
This is where the agri sector's commodity organisations, which run highly successful programmes to support citrus, grape, grain, wool and other growers, could make a big difference, he says.
“It's about promoting sustainable partnerships between white farmers and black farmers, as opposed to trying to promote a parasitic relationship where all you want is for the white farmer to give away, as opposed to tapping into the expertise of the white commercial sector, and using that to advance black farmers.”
Instead of leveraging such skills, such proposals disincentivise those who may want to invest in agriculture.
“So you lose the person with the skills and passion we need in the agri sector.”
This is already happening, according to a study a couple of years ago showing that one out of five commercial farmers plans to leave because of factors “including irrational and absurd policy pronouncements that threaten their financial sustainability”.
“This is geared towards the election, there's no doubt about that. But it is this kind of populist, short-term thinking that is costing the country dearly.”
The department says between 75% and 98% of water set aside under existing water use allocations is in the hands of whites and this is untenable. Doesn't he agree?
“That's the reality, but water rights are being used by your white commercial farmers to produce food.”
He says the biggest problem is that the state has not focused on realising either the NDP or agriculture master plan that deal with what it needs to do to make more water available, and its management of water has been inefficient and ineffective.
“The reality is that very little money has been made available for water infrastructure development, and the money that has been made available has not been effectively spent. It has just disappeared over time into the pockets of corrupt people.”
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