Role of Private Sector in Agricultural Development

Submission to Portfolio Committee on Agriculture and Land Affairs (National Assembly)

Agri DEV, Agri SA. May 2003

Executive Summary

Agri SA has committed itself to the sector plan and launched it's development desk (Agri DEV) with a mandate of accelerating BEE in Agriculture.
To achieve these objectives, Agri DEV is mobilising individual farmers, farmers associations, commodity organisations and agri-businesses involved in the Agri SA family, to take co-responsibility for rural development and support
The role of the private sector will be to deliver through, amongst other initiatives, Public Private Partnerships with clear objectives and responsibilities. These partnerships will be structured within the framework of government policy and will be cost effective. The focus will be on the BEE client.

Introduction

The government and it's partners (Agri SA and NAFU ) are committed to sustainable land reform and rural development. This is pursued through a policy framework and programs that seeks to achieve, among other objectives, sustainable commercial black farmers who are active in and need to be supported by the commercial farming sector, including agri-business. This sector is represented within the family of organisations affiliated to Agri SA

There are two broad interventions that are required for these objectives to be met.

Pre transfer interventions to promote land reform and,
Post transfer interventions, to ensure farmer support and sustainable development..

The two interventions are linked and do not necessarily follow in the stated order. The focus is on the delivery of a successful sustainable farmer and not just the successful transfer of a piece of land in the land market or the successful training of a course in book keeping to a farmer.

These interventions take cognisance of the existence of a continuum of land reform and rural development initiatives, which include the livelihood strategies of the poorest sector in the country. Agri SA, while sensitive to the plight of the poor, focuses on their area of expertise - the commercial producing farmer. This submission is made with great respect and admiration for workers in the other parts of the continuum.

Stage setting – an analogy

There is a flowing stream that represents the functioning market for agricultural land, which also forms the resource base for food and fibre production. This stream is vital to the country because it impacts on the total agricultural and rural economy. If the stream were stopped or dammed up there would be chaos. The financial sector uses the flow and speed of the stream to create money supply for the agricultural economy through bonds and loans. The South African stream is estimated to be worth some R 57.4 billion.

The task of Agri –DEV (through the Agri SA network and members at grass roots level), is to assist emerging farmers to enter and stay in the flowing stream, by utilising government policy and private sector initiatives.

Current land reform initiatives often try to stop the stream. Others recognise the existence of the stream but are responsible for serious delays in launching the farmer into the stream. An example is delaying financial guarantees stipulated as a condition for sale or leasing agreements. The result of this action is that the sale agreement is legally cancelled which leaves a frustrated new farmer on the side of the stream. This frustrated farmer and others waiting in the wings, are our clients.

Adequate mechanisms are in place to assist projects that require removal from the stream. Restitution projects or large group settlement projects requiring a long planning time can be removed from the stream and worked on, only to be re-launched when ready. These mechanisms include expropriation, long option periods, lease options and developer or local government purchases. The same is however not true for entry into mainstream commercial farming.

What activities have been organised or embarked on?

Agri SA has been an active participant in formulating and implementing the Agricultural Sector Plan
.
Agri SA designed and implemented a dedicated development desk, Agri DEV, with objectives;

Agri DEV value system:
There is a political imperative that sustainable land reform should take place and create sustainable black farmers in South Africa
There is an economic imperative that black farmers become part of the commercial agricultural sector.
There is abundant expertise and knowledge within the commercial agri-business and farming sector, outside government departments
There is sound land reform policy and legislation in South Africa
There is a functioning land market operating in South Africa
The expertise within the agri-business sector is available as a function of the market. The cost of this expertise is factored into the pricing mechanism
There is a groundswell of support for the creation of sustainable commercial farmers

Development objective: A harmonious and sustainable agriculture sector that contributes to social stability, wealth creation, fair wealth distribution and food security in South Africa

Project objective:
To accelerate successful entry and ensure sustainable participation of new farmers (of black and brown origin) in the commercial agricultural sector in South Africa.

Project activity:
Agri SA through its affiliates, is supporting the emerging black commercial farmer to be an active participant in the commercial farming sector.

Some affiliates may make direct representations to parliament. Good examples of land reform and development initiatives can be found in the following subsectors of agriculture: sugar, timber, wool, grain, wine, deciduous fruit, citrus, cotton, red meat and tobacco. The objective is not to claim Agri SA as the definitive body for rural development, but to highlight the synergising and leadership role it is endeavouring to play.



What further inputs/programmes will your institution be involved in?

Agri DEV will be involved in the following;

Assist the Land Reform mechanism to deliver viable projects.
Create a culture of support for the client farmer amongst the commercial farming community, the Agri-business sector and the government departments relevant to the client farmer’s enterprises.

Activity 1: Assist Land Reform mechanism
.
The involvement of Agri DEV will be to facilitate support to the local project level by working through a detailed checklist. Agri DEV does not initiate a project. This means that there has been some activity and expectations in the initial stages that have to be understood.
Identification of willing individual farmers, commodity organisations, Agri-businesses and/or farmer associations, to become involved and participate in the various programmes.
Assist stakeholders who are willing to be accountable for the delivery and support of LRAD projects to pursue a Public Private Partnership with Government- An initiative is currently being facilitated by Agri DEV between Stock Owners Co-op and The Department Land Affairs. This document is available on request
Agri DEV with partners, for example, CDI,, FFD and Grain SA , will act as a sieve to rural development ideas and initiatives for Government
Identify current limitations to the implementation of LRAD
Make recommendations and lobby for improvement of the grant system within LRAD policy so that it enables applicants to finance commercial farming projects.
Develop alternative systems of finance required by LRAD applicants for acquisition access to land as well as production skills and inputs.

Activity 2 Provide support to the client farmer after transfer

Agri DEV will facilitate the following

Activities, post transfer – willing and responsible individuals and local structures must be identified to conduct the following;
Contact detail of client farmers who has obtained access to or transfer of land, to farmers association or district farmers union.
Understand and investigate the support the client farmer requires through a farm visit by technical expert and conduct a support assessment action plan. This will be the support agenda for the farmer.
The support agenda document will indicate relevant contacts, important regional dates and appointments arranged between client farmer and with relevant stakeholders.
Client farmer to be introduced to farmers of the area at a function e.g. a farmers association meeting, study group meeting or farmers day.
Introduction and contact with local Department of Agriculture extension for indications of what they can provide for client.
Introduce client farmer to relevant commodity organisation and Agri-businesses who have expressed support for the project. This list of supporters will be obtainable from Agri DEV
Introduction to relevant salespersons of agricultural inputs required by client farmer’s enterprise selection.
Link farmer with relevant marketing structure and person
Arrange follow up inspection by technical expert or agri-business salesperson or farmer association/district farmers union.

Where possible the introductions to stakeholders will be person to person facilitated by a district farmers association contact or local farmer identified through the local farmers association.

Other Sector's support

Agri DEV has despite the short notice period, received support from the following institutions for this submission. Some of these institutions will be submitting their own submission to the portfolio committee

Stock Owners Co Operative - Public Private Partnership Document available
Red Meat Producers and their development initiative NERPO support letter
National Wool Growers Association – Written submission available
Grain SA
Potatoes SA

Compiled by Agri DEV
Contact R.F. Dillon
012 322 6980 ext 242