Many farmers have adopted a wait-and-see approach to Black Economic Empowerment, hoping it will go away, or waiting for a better time to participate. At the recent Overberg Indaba, Dries Coetsee, MD of Aid Agri, gave reasons why farmers should now get off the fence and become involved.
The farming community at large only really became aware of Black Economic Empowerment in 2004 when Thoko Didiza, then minister of agriculture, made some serious public threats to industry if it did not transform. The whole farming community became unsettled, imagining that a Zimbabwe-type fate awaited them. The charter as it was then, in combination with the minister’s remarks, seemed to suggest that the transferral of land would be a prerequisite for empowerment.
As a result many farms were sold, with farmers reasoning that they would be forced to sell their land anyway. Others bought farms with black partners in an effort to comply with BEE and avoid losing their land. These drastic actions turned out to be premature; the charter was later changed and it turned out that land ownership was not a prerequisite, but only one of the many ways in which farmers could practise empowerment.
It is now much clearer what farmers can expect from AgriBEE, and many of the perceived threats have fallen away. AgriBEE no longer is the much-feared monster, but actually more manageable than many other factors – such as climatic conditions, oil prices and the exchange rate – affecting the sustainability of farmers.
Negative attitudes outdated
Unfortunately, many farmers’ first encounters with the idea of AgriBEE were negative and this has affected their attitude. There are various reasons why these farmers are reluctant to participate. Firstly, they are afraid of making the same mistakes as the first farmers who initiated empowerment projects. They realise that pursuing empowerment in the wrong way can actually impoverish people and they are therefore waiting to see if there are better models to copy.
Farmers also hesitate because they focus on the letter of the charter and not the spirit and underlying rationale. The main objective of the charter is to empower people, not to punish them for non-compliance or to make life difficult for certain population groups.
Then again, farmers have negative perceptions of AgriBEE because they are uninformed, or they reason that they do not do business with government and are therefore not obliged to take part. These farmers will have a rude awakening, as BEE will not go away and pressure to comply will continue to rise.
The wise farmer will become involved as soon as possible – delay will result in huge pressure, leading to poor decisions. Rather create a sound empowerment plan while you can than make a desperate attempt when your back is against the wall and you have few options left. The guidelines for empowerment mean that farmers and businesses will be able to implement some of the practices, such as selling farm shares, without making drastic changes or fatal mistakes.
In fact many farmers and businesses already comply with several points on the AgriBEE scorecard, but unfortunately this compliance has not been placed in a framework and measured. Farmers should therefore audit their businesses to identify their current BEE status and then develop a plan to take it to the desired level. Farmers should also investigate suitable retirement and funeral plans, as the AgriBEE charter makes provision for these under socioeconomic development. Don’t wait for government to establish the national savings fund, then you won’t be forced to participate in this scheme in the future.
Markets under threat
Yet another reason to become involved in BEE is the increased pressure on industry to comply. Buyers also have to practise empowerment, and increased pressure from them will mean farmers’ BEE status can have a direct impact on their markets. If the farmer refuses to become BEE compliant then buyers might terminate future sales – catastrophic for any producer. Parmalat already offers a bonus on top of the milk price to suppliers with a certain BEE status. Producers who started the process early now enjoy an advantage over those who waited. Many other companies will provide incentives like this in future. In addition the Code of Good Practices, which forms the basis for all industry charters and therefore also for the AgriBEE charter, was published in the Government Gazette of 9 February 2007.
Therefore, when the charter is published, differences between it and the Code of Good Practices are likely to be minimal. The Agri scorecard also compares well with most of the scorecard of the published code. All in all, producers no longer have any reason not to act. – Glenneis Erasmus |fw
