RECAP transfer; Strengthening Relative Rights of People Working the Land: with Minister & Deputy Minister

Rural Development and Land Reform

14 June 2017
Chairperson: Ms P Ngwenya-Mabila (ANC) and Ms M Semenya (ANC)
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Meeting Summary

Documents handed out:
RECAP: Department of Rural Development and Land Reform (DRDLR) presentation [Document not provided to the public.]

Two Departments were due to give a progress report on the RECAP transfer from Department of Rural Development and Land Reform (DRDLR) to the Department of Agriculture, Forestry and Fisheries (DAFF). However, only DRDLR made a presentation on this post settlement support programme. DAFF noted that the transfer of the Recapitalization and Development Programme (RADP/RECAP) did not come with an accompanying budget. The Committee was disappointed that DAFF had not ensured a presentation document was made available prior to the meeting. A decision was then taken to host a meeting with the Presidency and National Treasury and Departments so that resources and budget could be fully sorted out.

DRDLR spoke on the Strengthening Relative Rights of People Working the Land Policy Framework which aimed to strengthen the relative rights of people living and working on farms. The model was that the state owned the underlying land. DRDLR signed lease agreements establishing a new company on top of the land for workers/farmers operating the business jointly. There was a twofold objective, one was tenure security and the second was to ensure that workers/farmers shared the profits that came from the land.

Members asked if this project had the potential for confused objectives; to what extent the State played a role in the process; how risk would be managed; if DRDLR was currently working with existing business models and liaising with business experts; and about the usefulness of Land Use Rights Certificates. The Chairperson said that the Committee was not happy with the Departments’ performance on Social Facilitation. DRDLR had to ensure that its performance was aligned to allocation and that some of the deliverables of the SRR Project were attended to.  A programme for public hearings in the provinces would be drawn up by the Committee, which would include the locations of the Strengthening Relative Rights (SRR) projects, so the Committee could include visits to these SRR projects as part of its oversight. 

Meeting report

Apologies were received from the two Deputy Ministers of Rural Development and Land Reform and the Minister of Agriculture, Forestry and Fisheries. The Deputy Minister of Agriculture, Forestry and Fisheries Minister attended and the Minister of Rural Development and Land Reform arrived later.

The Chairperson noted the decision to transfer the Recapitalisation and Development Programme (RECAP) from DRDLR to DAFF.  This joint meeting with the Portfolio Committee on Agriculture, Forestry and Fisheries
was called for all to come together and understand how far the process had gone to date.

The Chairperson said that after the February 2015 public hearings on the RECAP it became clear that there was some duplication in the work done with DAFF, especially with regard to post settlement support. A briefing had been received from the Department of Planning, Monitoring and Evaluation (DPME) who had also recommended that the RECAP should be moved from DRDLR to DAFF. It was a National Assembly resolution that RECAP be transferred to DAFF but the challenge was budget resources, in other words, it was an unfunded mandate. The Portfolio Committee on Rural Development appreciated the transfer of RECAP to DAFF, because it felt that post settlement support was the responsibility of DAFF.

RECAP was initiated by DRDLR in 2009, with implementation starting in 2010. The intention was to support land reform beneficiaries and to provide post settlement support since most of the farms that were redistributed or restituted were unproductive and in distress. DRDLR decided to initiate that programme to provide technical support, training and the transfer of skills through strategic partners. This included providing equipment and infrastructure to land reform beneficiaries. This was done in five phases. The first phase was 100% support, the second phase was 60% support, third was also 60% support, the fourth was 40% support and the last phase was 20% support.

This Committee had been informed that there was not a specific budget so it would be made clear from where the money for RECAP came so everyone involved would be of a similar mind. She handed over to DRDLR to present. DAFF would then make a presentation to indicate its readiness to take over RECAP.    

Recapitalization and Development Programme (RADP/RECAP): DRDLR briefing
DRDLR Acting Director-General, Ms Leona Archary, said that the presentation would provide an update as to the progress made so far and she handed over to Mr Zulu to proceed with the presentation.

Mr Bonginkosi Zulu, DRDLR Acting DDG: Land Redistribution and Development, outlined the rationale for the policy of which one of the key reasons was that the revitalisation of land reform and farms would lead to employment creation and opportunities for those in that community. The main policy intervention was to:
Provide comprehensive support to farmers which included infrastructure development, acquisition of production inputs, machinery, implements, and strategic partnerships with established farmers to link emerging/small scale farmers with the markets and ensure skill transfer.

In terms of delivery there were approximately 1 675 farms under the programme since 2009. This constituted 1 500 617 million hectares amounting to over R4.8 billion. They had secured approximately 772 strategic partnerships to provide technical, financial and infrastructure support to emerging farmers. Total RADP commitments numbered 228 amounting to R302.525 million (see document).

The Chairperson invited DAFF to do its presentation on RECAP.

Ms M Semenya (ANC), Chairperson of the Portfolio Committee of Agriculture, Forestry and Fisheries, said that since what was needed was merely confirmation of what had been stated by DRDLR, she felt that there was no need for a full presentation from DAFF.

DAFF Director-General, Mr Mzamo Mlengana, said that DAFF was in agreement with most of the matters raised by DRDLR except that there was a fundamental disagreement about the transfer of resources that went with the RECAP programme. The DAFF mandate was to create one million jobs by 2030 and 300 000 smallholder farmers had to be supported. The Presidency in his State of the Nation Address had asked that an additional 450 commercial black farmers be included. However, the budget for CASP (Comprehensive Agricultural Support Programme) was not in accordance with the key objectives of our nation, therefore DAFF would have liked DRDLR to allow the transfer of resources. DAFF requested DRDLR to come with the resources, and more importantly the competence because changes to those farms lay with DAFF.  So if one was talking about effective production, it lay with DAFF. Operation Phakisa for Agriculture, Land Reform and Rural Development had just been launched. However, CASP and Letsima were not talking to each other. It is DAFF’s belief that if RECAP was transferred with these resources, then it would be efficient. The suggestion from DAFF was: ‘Let’s not give farmers land, let’s give them farms’. All the inputs were being brought in by RECAP, but having said that, DRDLR should talk to that with specific reference to the lack of capacity and financial resources.

The Chairperson said it was the culture to submit the presentation before the meeting so the Committee could have time to read through it to be ready to engage. No presentation has been received from DAFF and she asked if the DG could shed some light on this.

The DG said there was no excuse for this. He apologised and said that DAFF did have copies of the presentation and these should have been given to the Committee.

Ms Semenya, Chairperson of the Portfolio Committee of Agriculture, Forestry and Fisheries, asked if DAFF could be allowed to still make a presentation to address the thorny issues raised. In the meantime copies of the presentation could be handed out to Members.

Mr E Nchabeleng (ANC) said that this situation was unfortunate because there was a culture that no document was discussed until Members had had enough time to peruse the document. DAFF was denying the Committee a chance to engage with the document. If there were not the current time constraints then he would have asked for this discussion to be moved to another day.

The Chairperson replied that Mr Nchabeleng was correct that if Members were not prepared to discuss without documents, the choice would be to suspend the meeting. However the DG had said that DAFF agreed with most issues and just wanted to add so it would not be a very big presentation.

Mr P Mnguni (ANC) suggested that one had to make a hard compromise. He had listened to the DG who spoken for less than a minute and spoke more like a politician. As the DG, whether deployee or not, he should have ensured that the necessary documentation to support this meeting was in place. What he had seen was the DAFF DG become a politician, and not an administrator ensuring the documentation was available. Ordinarily, he would have been taken to task big time! This was a joint briefing by departments handing over functions to each other and instead, they got a wide political statement. DRDLR had indicated in its presentation that it took from its own budget in order to put in place some post settlement support. Now when the DAFF DG says: ‘ok we take over the function but also give us the funds’, the DG’s statement was quite clumsy. ‘He is an intellectual and I am aspiring to be one so he can engage me’. In other words as one resolved the issue about farmers one closed down the scope of land reform all together. If one reads Prof Ben Cousins’ article on Monday, he lamented the slow pace of land transformation. CSIR said that it would take 140 years to transform land completely at the current pace. It was therefore strange to hear a leading official from DAFF say: ‘Give us those funds, we will do it for you’. He suggested a compromise that DAFF be allowed to present and they try to make do with the current arrangements.

Mr P Maloyi (ANC) said he did not know how arrangements were done because this was a task team that consisted of persons from both departments and under normal circumstances a joint presentation would have been made on progress, instead of two separate presentations. DRDLR had covered most areas in its presentation and DAFF merely needed to highlight key issues from that presentation. He suggested DAFF make a presentation but not talk about what Rural Development had already raised, and speak to what had not been included in the DRDLR presentation, if anything.

Ms Elder Mtshiza, DAFF Chief Director: Comprehensive Agricultural Support Programme (CASP) agreed that there was indeed a task team established from the two departments. In the evaluation of the strategy, it looked at redesigning and overhauling farmer support programmes. This lead to Operation Phakisa. The task team had come up with an intervention to address misalignment and silos. This led to the proposal of a single support structure for farmers which had to focus on business development support, input, markets, skills and capacity building. The key was to unlock the challenges of finance and markets for all black farmers in South Africa.

Ms Semenya, Chairperson of the Portfolio Committee of Agriculture, Forestry and Fisheries, said that even though there were problems with getting the documentation, questions should be allowed. A more comprehensive meeting should be held when Members had read the presentation. The Presidency and National Treasury should be invited to that meeting. With Treasury at the meeting, resources and budgetary matters could then be fully sorted out.

Mr Mnguni appealed that Members be given time to read the presentations thoroughly and the meeting be reconvened with the Presidency and National Treasury.

Ms A Steyn (DA) said that she felt the situation was a mess. The documents had to be signed by the end of July. Parliament was going into recess in two weeks’ time and the two Departments could not be left to decide on final arrangements when there were farmers out there who did not even have security of tenure or money to pay for electricity. The Department taking over did not even have a list of farmers or farms that needed to be supported. What had been done in those five weeks since the launch of Operation Phakisa on Agriculture, Land Reform and Rural Development? The farmers were being put at risk.

The Chairperson (DAFF) asked members not to be despondent as the two Departments would work through this situation to ensure that the Phakisa that was launched was implemented.

Mr T Walters (DA) said that he did not have a problem with having a meeting with all the role players present to assist the Committee with its oversight function but what would happen if there was another joint Portfolio Committee meeting with the same misalignment?

The Chairperson said that it was clear that the only concern was the matter of resources; hence a meeting with National Treasury was very important. Cabinet had taken a decision which has to be implemented.  This Committee was going to monitor the implementation of the transfer. The two Departments would be working together in the process of transfer.

Deputy Minister of Agriculture, Forestry and Fisheries, Bheki Cele, said he had nothing to add except to apologise on behalf of the DG. At this level, things were more on the side of implementation.  

Minister of Rural Development and Land Reform, Gugile Nkwinti said that he was covered and did not need to make a further contribution to the discussion except to emphasise the need for the presence of National Treasury.

Ms Semenya, Chairperson of the Portfolio Committee of Agriculture, Forestry and Fisheries, said that a date had to be decided upon for the meeting. RECAP was a necessary programme. This meeting with the Presidency and National Treasury had to be armed with an Implementation Plan.

Strengthening Relative Rights of People Working the Land Policy Framework [SRR or 50:50]
Mr Bonginkosi Zulu, DRDLR Acting DDG: Land Redistribution and Development, outlined the Strengthening Relative Rights (SRR) Policy Framework. The core purpose of the SRR Policy Framework was to introduce measures to address land hunger, extreme land concentration, associated poverty and inequity by fostering asset and enterprise equity that introduce fundamental changes to land relations and factors of production. 

Progress to date:
DRDLR signed a Memorandum of Understanding with the National Empowerment Fund to become the implementing agent for the programme. To date:
• 91 project proposals have been received,
• 5 were declined/withdrawn;
• 86 proposals are at different stages of implementation;  and
• 20 projects have been approved of which 15 have been implemented and transferred;
• Of the 15 farms transferred to the state, four farms were transferred in 2015/16: Eastern Cape (Birbury farm), Free State (Oatlands, Diamond and Kalkput farms). These totalled 2 600 hectares costing R36 million.
• In 2016/17, 10 of the 15 commercial farms were transferred:
- Eastern Cape (Klein Monden Rivier);
- KwaZulu Natal {Westcliff (Paard Fontein and Hoghton), Limpopo  (Dabchick);
- North West {Stars Away (Tweefontein 58, Willowpark 41, Olivenbult 61 and Stinkhoutboom  43)} ;
- Western Cape (Solms Delta and 803 Worcester).
These totalled 8 252 Hectares at the value of R56 million.
• In 2017/18 in Gauteng, one farm was transferred (Marolien) amounting to R31 million benefiting 105 beneficiaries at 65 hectares.
• There were 606 farm workers that benefited from acquisitions on 11 303 hectares at a cost of R 325 million.
• Lessons learnt from the Pilot:
- Additional capacity is required in the approval committees for these projects – i.e. agricultural economics, legal experts, farmers;
- Capacitation of the Workers Trust to participate in the NewCo Board;
- The Farm Workers Trust needs guidance on when, how much and when to draw dividends from the business enterprise. A dividend policy for NewCo is to be developed as part of Standard Operational Procedures for all the SRR projects (see document).

Mr Walters said that this was long overdue although the DA had some profound concerns with the original document. His understanding was that this was DRDLR’s attempt at testing the concept to learn from it. This should be an ongoing report that should reflect on the changing lessons over time.

DRDLR Acting DG, Ms Leona Archary, replied that the public comments the Department receives, DRDLR could take these forward in looking at the programme itself and in implementing the programme. She agreed that DRDLR was testing the concept. It had been piloting and rolling it out and was therefore learning and adjusting the models chosen as it went along.

Mr Walters said that he had concerns about the potential for confused objectives. He asked if it was aimed at being a successful business model or if it was about tenure security.

Ms Archary replied that the essence of this programme when it was in the previous state, how it looked and the policy, was about tenure security and still was. This was about the strengthening the relative right of workers living on farms, but the fundamental thing was that it could not only be about that, it also had to be about business engagement. Now one of the issues was that many people living and working on farms were working on commercial enterprises or there were a lot of agricultural enterprises being conducted on the farms. So it was twofold, one was that there was the beginning of a shift in that particular sector, so it had to be ensured that workers formed part of the business venture as well. So one did see the twofold objective, one was tenure security and the second was to ensure that the workers/farmers became part of the sharing of the profits that come from the land.

Mr Walters said that land ownership was still hazy. To what extent did the state play a role here? He asked how risk would be managed and which party took the risks.

Ms Archary replied that it should be remembered that the model was such that the state owned the underlying land. DRDLR was signing lease agreements establishing a NEWCO on top of the land for operating a business jointly. Here one was actually talking about risk sharing for a business enterprise where it was shared according to the equity held in that business.

Mr Walters said that not enough attention was given to working with business models.

Ms Archary said that DRDLR took note of current existing business models. It should be remembered that when it started out with these consultations, it did extensive consultation with the commercial agricultural sector as well as various commodity organisations even in developing what was the first model, so a lot was looked at such as current models of agribusiness and how they were doing it. DRDLR noted that there were many other models out there and they would also look at those models for strengthening the work that it was doing at the moment.

Mr Walters asked if DRDLR had sat down with business experts. He asked to what extent the Department of Small Business Development should be involved.

Ms Archary replied that in general the principle adopted in DRDLR was that because it had other components such as rural enterprise and industry development, it did a lot of work with the Department of Small Business Development, especially when it came to start-up businesses and the support that it required because they had the expertise. Also, DRDLR had been engaging extensively with Continuing Education for Africa (CEFA), and with the National Empowerment Fund (NEF) which then had the capacity around business development which DRDLR did not have. What DRDLR was doing was establishing a department team who were specialists in areas such as economics, agricultural economics and contract management so that they would work with NEF.

Mr Filtane asked why rental was not based on the outputs the enterprise generated rather than fixing it on the valuation.

Ms Archary replied that originally DRDLR was considering rental based on the profit or turnover of a particular entity, but this also became a problem as the entities or farmers themselves had been approaching DRDLR. This was difficult because one had to cover the property with the lease agreement when one started out hence in the consultation process a set standard of 2% was agreed upon. As that entity progressed well, this might then be changed. National Treasury had expressed agreement on this matter.

Mr Filtane asked about the security of tenure of farm workers and the DRDLR position on this. He asked what the criteria were for choosing the farms that benefitted from the programme.

Mr Zulu replied that in the State of the Nation Address, DRDLR was asked to have 50 pilots by 2019. Commercial farmers were asked to bring proposals to DRDLR. This was how these proposals were acquired. After this, DRDLR developed screening criteria. Certain proposals were declined because they did not meet the criteria.

Mr Filtane asked about policy and if the Committee had this policy.

Ms Archary replied that the necessary documentation had been submitted – this was the Policy Framework and presentation.

Ms T Mbabama (DA) said she was wary of a top down solution with people on the ground because this never worked.

Ms Archary replied that this could be dealt with on two levels. There was extensive consultation as a Department with the agricultural sector itself about things such as organisations, farmers, commercial farmers  and there had also been engagement with farm workers from a tenure perspective not only on this but for other DRDLR legislation as well. So at a district level Labour Tenant/Farm Dweller Forums had been established where there was further engagement on the entire Department’s policies as well as issues that were coming out of this. One could not say at the moment whether this was working 100%. DRDLR emphasised the importance of facilitation on each and every project as there was engagement before the transaction was itself structured. DRDLR had been consulting on all policy initiatives as it moved forward.

Ms Mbabama asked if DRDLR was absolutely sure that it had worked this out properly with the actual farmers themselves and the farm labourers. She was concerned about whether this was what farmers actually wanted.

Ms Mbabama said that she was not comfortable with Land Use Rights Certificates. She asked what this meant.

Mr Nchabeleng also asked for clarity about Land Use Rights Certificates.

Ms Archary explained how it worked with restituted farms. It should be remembered firstly that restituted land was transferred to the claimant community in full title. In this case they could agree to enter into a partnership with the private sector or a strategic partner because they owned the full title anyway. This happened all the time; however it did not happen through this policy. This policy was about strengthening the relative rights of people living and working on farms. Restitution continued to operate with strategic partners if they wanted to engage with big business.

Mr Zulu replied that this was the current model that was being proposed in the policy framework. The Land Use Rights Certificate would also be published at the Deeds Office through a notarial deed. This did give security of tenure to a certain extent to farm dwellers and farm workers because they could use that Land Use Rights Certificate to enter into a business transaction. This certificate was specifically allocated because the land currently in the pilot phase was owned by the state 100%. So a different type of a title deed would be created which would indicate the co-ownership of this particular piece of land for implementation of progress. This was what the Deeds Office was currently working on. This meant that there would be a Title Deed to secure tenure rather than a Land Use Rights Certificate.

Mr Nchabaleng said that he was still concerned about the policy. He asked how this would work.  He asked what happened if someone wanted to invest money in a farm.

Mr Zulu replied that share cropping was within the labour tenant programme, and here land was transferred to labour tenants in terms of the Labour Tenant Act. But for that, if they wanted to bring in private sector partners, DRDLR could assist them in doing that. However this particular model was a little bit different because the underlying land was land purchased and held by the state and then the farm occupiers and current farm owners came together in a partnership on that very same property.

The Chairperson asked if DRDLR had the capacity to monitor this 50:50 Project.

Ms Archary replied that DRDLR did have the capacity because of the technical capabilities that were needed for these types of transactions. DRDLR was working with NEF at the moment to assist with the monitoring and evaluation aspects of these business transactions. This was within the expertise of DRDLR at the moment going forward. DRDLR also added some of those functions to its own component.

Mr Zulu replied that DRDLR was establishing a Monitoring and Evaluation Unit which would attract the necessary skills and expertise which could assist the Department to run and manage the programme together with the agencies that were going to be appointed. It was expanding the scope beyond the NEF to help with the packaging and de-structuring. The packaging had to come with legal experts to address what Mr Walters had spoken about such as company law experts.

The Chairperson said that the Committee was not happy with Department’s performance on Social Facilitation. DRDLR had to ensure that its performance was aligned to its allocation and it had to ensure that some of the deliverables of the SRR Project were attended to.  The Committee would hold public hearings in the provinces. This programme of public hearings had to include the locations of the SRR projects, so that the Committee could include visits to the SRR projects as part of its oversight.  This draft public hearings programme had to be circulated to all so that the SRR projects could be identified for the Committee visits.

The minutes of 7 June 2017 were adopted.

The meeting was adjourned.

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