AgriBEE charter scorecard fails to add up

The AgriBEE charter has finally been gazetted after nearly four years of extensive consultation, giving the agricultural sector a framework within which to adopt BEE. But much disappointment and confusion still exists around the scorecard which, according

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The AgriBEE charter has finally been gazetted after nearly four years of extensive consultation, giving the agricultural sector a framework within which to adopt BEE. But much disappointment and confusion still exists around the scorecard which, according to agricultural roleplayers, doesn’t align itself with the needs of the sector, or the generic Codes of Good Practice. David Steynberg reports.

Members of the AgriBEE Charter Steering Committee were shocked recently when they learned that the AgriBEE Sector Transformation Charter had been gazetted without them seeing the final document.

According to head of Santam’s agricultural business unit and the chairperson of the AgriBEE Charter Steering Committee, Dr Tobias Doyer, the weightings in the AgriBEE Charter scorecard are not aligned with the Department of Trade and Industry’s (DTI) generic BEE Codes of Good Practice. “Overall, we’re happy with the charter, but the codes disagree with the DTI’s generic codes,” said Doyer. “What are farmers supposed to do with these weightings when they will ultimately have to be changed?”

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According to the Sake Rapport on 30 March, DTI minister Mandisi Mpahlwa signed the final charter after previously agreeing to let the steering committee have its say before finalisation. “We don’t know why government decided to push it through at the final stages,” said Doyer. “It seems they choked just before the tryline.” Doyer has encouraged farmers to rather follow the generic codes prescribed by the DTI in February 2007.

Not in the clear yet
But before some 80% of South Africa’s farmers breathe a sigh of relief at being classified as exempted micro-enterprises (EMEs) in terms of the requirement that their turnover is less than million per year, director-general of agriculture Masiphula Mbongwa has confirmed that the figure may change. “We’re still waiting for the results of our baseline study to determine the cut-off amount,” he said while briefing the media at the official launch of the AgriBEE Sector Transformation Charter on 4 April. “We want farmers to take the lead and the council will follow.”

“I think it’s realistic to make R5 million the cut-off amount,” said Doyer. “It’s a good way to deal with in agriculture and it recognises the efforts farmers have already made towards empowerment.” Highlighting this point is a study conducted by Agri SA in which farming enterprises are shown to have contributed over R150 million over the past five years to empowerment initiatives. According to Johan Pienaar, Agri deputy executive director of economics and trade, the study dispels political perceptions that the agricultural sector is against transformation.

While most stakeholders and industry representatives believe that R5 million is a reasonable minimum amount to classify farms as qualifying small enterprises (QSEs), agriculture and land affairs minister Lulama Xingwana previously called for the turnover to be set at R1,5 million, which would have included a much larger number of the country’s farms.

According to the charter, EMEs, though exempt from implementing the scorecard, will still be encouraged to contribute to transformation in agriculture, specifically through skills development and corporate social investment. EMEs will be incentivised if they contribute to any of the seven pillars of the scorecard, with the exception of employment equity, thus earning them the status of a level three contributor to BEE. Farmers with a level three BEE contribution will get a 110% BEE procurement recognition level.

Legal implications
While the charter is classified under Section 12 of the Broad Based Black Economic Empowerment Act (53 of 2003), which means that farming enterprises are not yet legally bound by its requirements, Masiphula said government wanted to get it classified under Section 9, which would give it the same status as the DTI’s generic BEE Codes of Good Practice, making it legally binding.

“Presently, implementing the BEE scorecard is really the farmer’s choice as there are no legal implications for failing to adopt them,” said business process consultant Hamish McBain, who represents the agroprocessing industry on the steering committee. “But farmers would probably be forced to comply because of peer pressure from their buyers.”

Pienaar has expressed his disappointment that an older scorecard has been included in the charter, since it’s still a work in progress. “The scorecard the steering committee was previously working on was more compatible with agriculture,” said Pienaar. “Instead, they’ve reverted to older, outdated weightings.” Pienaar is also concerned that if farmers revert to the DTI’s generic BEE Codes of Good Practice now instead of the AgriBEE charter codes, they will have to revert back if it’s changed a month down the line.

“Because there can still be changes in the scorecard, farmers can use the DTI’s BEE Codes of Good Practice as a default,” said Masiphula, adding that many other businesses linked to agriculture wanted to move forward and have their BEE ratings scored. He encouraged farmers to get involved by implementing AgriBEE now to help to smooth over inconsistencies in the scorecard and make the transition of adopting the BEE codes easier.

The different enterprises

A qualifying small enterprise (QSE) becomes eligible for BEE compliance measurement in terms of the agricultural QSE scorecard by having a total annual revenue of over R5 million, but less than R35 million. A QSE, which includes ownership in its measurement, will have its ownership score (including bonus points) multiplied by 1,25. This only applies if the enterprise scores a minimum of 20 points (including bonus points) for ownership, before the application of this multiple. An exempted micro-enterprise (EME) qualifies for BEE compliance exemption because its five-year moving average turnover is less than R5 million. Because EMEs meet the principles of non-circumvention as defined in the Codes of Good Practice, they will be given a BEE recognition of level four, which gives them a BEE procurement recognition level of 100%.

Aussies lamb exports down

Australian lamb exports fell 16% in March to 11 887t, Australian Department of Agriculture data shows. Meat and Livestock Australia said contributing factors were tighter domestic lamb supplies, the strong Australian dollar and fewer shipments to the US, Middle East and EU. Demand for Australian lamb in the US was subdued in March, largely due to the US’s current economic climate and the strong Australian dollar keeping prices firm. As a result, exports to the for the month fell 34% year-on-year to 2 539t. Exports to the Middle East were down 5% to 1 774t, with shipments to the United Arab Emirates down 17% to 738t. Exports to Saudi Arabia rose 73% to 346t. Lamb exports to the EU were down 15% year-on-year to 824t, with volumes to the UK down 23% at 640t. – Alan Harman

NZ monetary policy may break farmers

New Zealand’s Geoff Evans, Federated Farmers’ branch president for the South Island’s Marlborough region, told a parliamentary committee that meat and wool farming is in a depression, and that government’s monetary policy will break the back of sheep farming unless there are urgent changes. Evans said it’s “madness” that while prices for lambs and wool are rising, the strengthening NZ dollar means farmers are getting less money. He wants the committee to look at the impact of the monetary policy on exporters and farming.

“The overvalued exchange rate is redistributing farmers’ income to the consumer,” he said, “and farmers and other exporters are involuntarily subsidising consumption in the domestic economy and going broke in the process.” “It’s clear that the myopic focus on inflation rather than the economy is the major cause of the monetary policy’s failure to maintain price stability or promote a sound financial system. If there’s no urgent action taken, meat and wool farming doesn’t have a future.” There were 38,6 million sheep in New Zealand last year, the lowest number since 1955. – Alan Harman