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R300m empowerment project launched in citrus industry

2nd December 2016

By: Anine Kilian

Contributing Editor Online

  

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The launch of a R300-million black economic empowerment project in the citrus-rich Sundays River valley, in the Eastern Cape, could have significant ramifications for the roll-out of similar empowerment deals around the country which, until now, have experienced very limited success, according to Sundays River Citrus Company (SRCC). 
 
The difference between the newly launched Ikamva Lethu empowerment project and other failed agricultural empowerment deals is the collective, long-term buy-in by both landowners and previously disadvantaged members of the community working on farms in the region, says the SRCC, which represents about 10% of South Africa’s citrus industry and around 45% of the citrus coming from the Sundays River valley.

Initiated by SRCC, the Ikamva Lethu project – Xhosa for ‘our future’ – is earmarked for about 700 ha of farmland in the area, which is part of a 1 200 ha tract of farmland that has been bought and registered by SRCC.
 
The first significant milestone of the project has been the recent allocation of a water licence by the provincial Department of Water and Sanitation, which has enabled the farm to draw 675 ha equivalent of water from the Sundays River Irrigation Scheme for the irrigation of citrus plantations.
 
An environmental impact assessment application for the development of the farmland – which is currently just bush – has now been submitted to the Department of Environmental Affairs and will determine the exact amount of land which will be cultivated. The project is expected to be authorised towards the end of 2017.  
  
“To put it into perspective, the valley is one of the major players in the [South African] citrus industry and there are about 150 citrus farms here covering around 12 000 ha in total,” says SRCC transformation and development director Ken Nieuwenhuizen.
 
He adds that the project’s impact on the growth of downstream industries – from transport and logistics to storage and packaging – is set to be significant.
 
Explaining the origins of the deal, Nieuwenhuizen explains that SRCC was guided by the National Development Plan (NDP).
 
“Ikamva Lethu is very broad-based; it’s about inclusivity and participation and will result in about 400 community members becoming shareholders and beneficiaries benefiting from the success of the project.”

Nieuwenhuizen explains that, in terms of the NDP, 20% of farming enterprises should be transferred to farm workers, with the farmer or landowner retaining ownership of half of the shares (10%).
 
“For us as SRCC, it is a way of being proactive within the empowerment and transformation field,” he says.
 
The Ikamva Lethu project is based on the premise that SRCC farmers wanting to empower their farmworkers can buy shares equivalent to up to 20% of their own farming enterprise, with half of these held by the farmer’s permanent workers in a trust.
 
“The workers will continue to work for the farmers on their [separate] farming operations, but will own 50% of the investment made in Ikamva Lethu,” said Nieuwenhuizen.
 
Also included in the deal are permanent SRCC packhouse workers.
 
The project is already provisionally fully subscribed, with over 35 farmers indicating their intent to buy shares in their employers’ farming operations.
 
This buy-in would, in turn, provide capital for the project roll-out, which requires irrigation pipes, orchards, buildings and farming equipment.
 
Through the programme, SRCC also plans to mentor and train empowerment shareholders to become board members or directors within the project as it is rolled out, says Nieuwenhuizen.
 
“Provisionally, the plan is that SRCC will have a 5.5% shareholding and will support the Ikamvu Lethu farming business, with 60% of the shares belonging to permanently employed and previously disadvantaged farmworkers living and working on farms in the valley, as well as the future Ikamva Lethu farmworkers and SRCC packhouse workers. The remaining 34.5% of shares will be held by participating citrus growers [farmers],” he concludes, adding that precise details are still being ironed out between stakeholders.
 

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Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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