Chapter 10: Western Cape

THE WESTERN CAPE

This cape is a most stately thing, and the fairest Cape we saw in the whole circumference of the earth. - Sir Francis Drake, English seaman. (1540 – 1596)

Organised agriculture is extremely worried: it warns that an alarming 75% to 80% of all the government’s land reform agricultural projects for small holders end up as failures.
This pronouncement was made at Agri Wes-Kaap’s annual congress held at Goudini in the Western Cape in September 2003. The Transvaal Agricultural Union South Africa (TAU-SA) made the same announcement at its annual congress in Pretoria in August 2003. It named numerous examples of failed land transfers where beneficiaries did not maintain the farming operation received under the government’s land reform program, and issued a warning to the government to take note of what was happening to farm production in South Africa.

Personal representations by organized agriculture have been made to the government on a regular basis. The country cannot afford to lose more productive land when, in some parts of the country, natural attrition, poor farming conditions and other factors are reducing the number of viable farms. The Western Cape has experienced a number of serious setbacks which have exacerbated the position of agriculture in the region – the repercussions of the fruit farm liquidations over the past two years are still being felt. The Watervliet farm near Paarl, valued at R12,3 million four years ago, went for R2,7 million at an auction in July 2001. A number of other fruit farms were liquidated around the same time.

Reasons given were increased production costs, falling world prices for fruit, increased competition from other countries and an over-supply of fruit on world markets. Kromvlei, one of the largest fruit farms in the Western Cape’s Elgin district – about 80 km from Cape Town – went under the auctioneer’s hammer on 25 July 2001 to fetch “a disappointing” R11,7 million, according to auctioneer Leon Deacon. (1) He said they had hoped the farm would fetch at least R20 million, which is just over a third of the value of the farm in the mid nineties. The land alone was valued at more than R15 million.

Another factor which caused the shake-out in the fruit-growing industry was deregulation after the new government came to power. Farmers used to sell their produce through the Deciduous Fruit Board’s Unifruco – its marketing agent – but now they are on their own in a volatile market. The ripple effect of the low prices for these once- expensive farms is that banks usually re-value the farms in the nearby area on which they have lent money. Overnight a farmer can be rendered insolvent, said Auction Alliance MD Alon Kowen.(2)

At the Agri Wes-Kaap congress in September 2003, Mr. Pieter Strauss, deputy chairman of the Agri Klein-Karoo cooperative at Oudtshoorn referred to a report commissioned by Agri Klein-Karoo on the situation surrounding a government initiative called the Toekomsrust Smallholders Trust. Formed in 2001 with 47 members, each of whom received R20 000 as a government grant, the 30 ha Karoo farm Groenfontein, with 18 ha of fertile agricultural land, was purchased and carved up into 47 smallholdings.

R160 000 was spent on a tractor, a bakkie and agricultural tools. This left working capital of R200 000. Few of the farmers knew each other, and had no experience of operating such a cooperative venture. They had no individual title to their pieces of land, and their lack of responsibility soon created splits in this community. They had no knowledge of any kind of financial management or budgeting, no knowledge of managing farms and its manpower needs. None of them could add up costs or do calculations. Further, they were not pre-selected for their farming ability, or even their desire to farm. Of course the project failed. It was set up to fail. Of the 47, only 17 wanted to farm, while the others – with no incentive to succeed because they received everything for nothing – didn’t pull their weight.

The state brought in consultants who conceived three business plans at R100 000 each. Local farmers say the consultants came from up country and knew little about local conditions. One consultant’s report, for example, showed that he knew nothing about access to viable water supplies and other resources. Another business plan drawn up by the Land Bank did not contain medium- to long-term projections nor environmental sensitivity studies – only short-term projections.

Local farmers were prepared to do a business plan for the project free of charge, but the offer wasn’t taken up. Today, the farm, Groenfontein, is inoperative and the trust shareholders have disappeared. The report on this failure concluded that the government should not use land in its attempts to alleviate the problems of joblessness, food insecurity and poverty. Carving up valuable agricultural land should never be seen as a long-term solution for re-housing the poor. ANC politicians should stop issuing public, self-serving promises such as “within two years 7 000 new farmers can be settled in the Western Cape”. These statements create false expectations, says the report, and the land reform process will descend into utter chaos.

The government must stop appointing inexperienced city “consultants” without any agricultural knowledge or local conditions. The report recommends that the government appoint experienced agriculturalists from the regions in question. They have the hands-on knowledge and are willing to help, concluded the report.

Thembulethu

The 23 hectare property Thembulethu near George was a highly-productive, intensively planted vegetable farm using tunnel cultivation. Seven years ago it was purchased for R8 million and handed over to 15 recipients who then carved up smallholdings of 2.1/2 hectares each. The property had excellent soil and good ground water. After five years, things started to go wrong and the Department of Land Affairs refused to provide more funding for the operation. It is now inactive and the smallholders have left.

Elandskloof

In August 2002, The Sunday Times reported that the people who had received Elandskloof six years ago under a land claim transfer were “battling to prosper”.(3) In a rare instance of good journalistic follow up, the Times reporter highlighted the “hope and pain” of Aletta Titus “who is grumpy today. She may be standing on the very spot where she grew up, a beneficiary of South Africa’s first successful land claim, surrounded by lands that can easily earn R2 million profit from citrus a year – but six years after the claim was settled, she still does not have a proper house to call her own and the valley is severely underdeveloped”.

The farm Elandskloof is situated in the beautiful Elandskloof valley of the Cedarberg mountains, two hours north of Cape Town. Commented the Times: “Despite a six-year process that has seen more than 332 000 ha of land handed over at a purchase price of R377 million – often with the assistance of neighbouring white farmers – land restitution has often been dogged by community in-fighting, state uncertainty, red tape and a critical lack of skills”.(4)

Elandskloof was a guinea pig on which the government’s developing policy was tested, and the people are having trouble making this project viable. There is still no electricity in Aletta’s tin shack, the school is a ruin, and most of the fertile valley lands are unused. Continues the Sunday Times: “In 1996, the mood was totally different as the then Land Affairs Minister Derek Hanekom celebrated the return of the land that the around 600 people had been evicted from in 1961.” Not many of the families moved back to Elandskloof, and there was no community spirit among those who did. The National Land Commission said at the time that the restitution process had not satisfied the country’s land hunger. To date, nothing further has happened at Elandskloof, and this example of haphazard land reform was included in the Toekomsrust Project report.

Northridge

Northridge Farm in Ceres was placed under provisional liquidation in June 2003. Plans were being made to try and salvage the 1 500 ha farm with its 148 inhabitants. The farm is believed to owe creditors, including the Land Bank, R4,5 million.(5) This was another example of the joyous handover and the sad failure. In November 2002, the Sunday Times showed farm “boss” Niklaas Syster leaning on a glamorous car he had purchased. “A year ago, fruit packer Niklaas Syster stared poverty in the eye. Today he’s got a new house, a fancy car and he’s boss on the farm where he once toiled”.(6) At the time of the report, the farm was being held up as an example of a successful land reform project. The farm had purportedly just made a profit of R2 million. Land Affairs Minister Thoko Didiza handed over R1 000 cheques to each of the workers after the profit announcement.

A year before, the workers had approached the Department of Land Affairs and the Land Bank and managed to raise R4,6 million to buy the farm which was struggling and in the process of liquidation. Various employees then took over the farm. Herman Martin, the mechanic, became the director of finance and administration, while Syster was reported as earning R7 000 a month, and “lives in a three-bedroomed house on the farm and drives a luxury German car”.(7)
Fast forward to April 2003. A consultant was called in. Mr. Kevin Wustefeld-Jansens “has been providing the skills training and development required by the workers.”(8) It was soon discovered that the skills needed to run this type of operation were lacking.

A firm called Thomas International conducted some aptitude tests and the consultant was told “that he could not appoint anyone on the farm to a management position because the workers had an inadequate number concept, poor visual perception and insufficient management profiles”. (9) They advised him to appoint people “from outside”. A local attorney involved in black empowerment initiatives said at the time that “empowerment farms need a visionary mentor – someone with exceptional people skills, knowledge and drive. Preferably the consultant should be directly involved with the business for a good few years”.(10) Translated, this means someone to run the operation on a day to day basis, as commercial farm owners do.

Fast forward to June 2003. Northridge is placed under provisional liquidation. Paul Onrust, chairman of the Northbridge Community Board said there had been “internal problems with the management of the farm”. Local ABSA bank risk manager Pieter de Beer said he was aware that a forensic audit had been called for by external consultants. Four months later, the liquidators are still trying to sort out the mess. (11) Meanwhile, 150 people are looking for jobs as only three of the original 153 employees have been kept on to help the auditors.

The story of these failed farms is beginning to sound like a scratched and annoying ancient record. As with so many other failed projects, a combination of poor management, ludicrous expectations and the Department of Land Affairs’ lack of serious follow up has resulted in an expensive failure for the taxpayers, loss of agricultural production and export currency, loss of taxation to the South African fiscus and a ruined farm which may never be resuscitated. Local farmers say the farm laborers were left to manage a failing farm, planted with old orchards and apple types no longer popular in the market – without the necessary support and expertise.(12)

The government has admitted that it did not monitor the project properly. “The largest mistake in this project was to assume that the project was doing well, based on what the beneficiaries and a consultant maintained”, the Department of Land Affairs told Noseweek.(13) All of these people, of course, had a vested interest in keeping the project alive, because they were being handsomely remunerated from it. The role of expensive consultants comes into question, and is a matter of great concern to organized agriculture. Some comments made to our researchers about these city slickers are unprintable. Mr. Kevin Wustefeld-Janssens received R3 000 a day, while his partner Gavin Wright received R12 000 month as the bookkeeper. (We thought Mr. Herman Martin was the financial whiz kid at the farm!)

The ongoing tale of these two consultants’ eventual takeover of the management of the farm makes gripping reading. Suffice it to say they ruled the roost, even buying more farms to “soak up” employees. In April 2003, at the time of the Farmer’s Weekly article where nothing seemed to be amiss, it is now revealed that the labor was only receiving R100 a week. After Easter, the model land reform project collapsed completely. According to Noseweek, the two consultants sold the extra farm they had bought with Northridge’s money, and made a profit of R600 000. This money has been retained by the liquidators.

The consultants have packed up and gone back to the city, while creditors line up to try and salvage some of their money. Herman Martin, the financial man, is now being sued for debt which he incurred on behalf of the farm (up to R200 000). Absa alone is owed in the region of R6 million, according to Noseweek. At last call, the government was searching for new investors in the farm.

Conclusion

Millions have been poured into agricultural training in the Western Cape. In September 2002, it was announced that the “ANC/NNP coalition government in the Western Cape” is to start training more than 7 000 people from disadvantaged backgrounds as farmers over the next few years”.(13) This will increase the existing number of farmers in the province to 11 000, the report says.

In May 2003, a further R24 million was set aside by the Western Cape provincial government for agricultural training. (14) And in November 2003, it was announced that a R2,6 million training center for emerging farmers has opened in George.(15) The sub-heading to one newspaper report says “NNP gives support to fast-track responsible land reform”. There doesn’t seem to be too much of that around. Perhaps political parties should concentrate on irresponsible land reform, as a starter.