Land Reform: Case Studies In Kwazulu-Natal
Stockfarm|July 2021
Land reform in South Africa is complex. Land reform solutions are equally complex and within partnership and development models, this is no different – but there is hope. KwaZulu-Natal has several types of partnership models and the wide variation in farming systems, as well as their different needs, set each model up for different strengths and weaknesses.
John Flanagan, Kwanalu Land Desk

A single article is not enough to examine partnership models in detail, but if viewed through the lenses of continued and increasing agricultural investment, tangible benefits to participants, and maintained or improved livelihoods, two projects stand out. For the purposes of distinction, one will be called the 49:51 lease joint venture (JV), and the other the 50:50 state land partnership.

The 49:51 lease joint venture

The 49:51 lease JV was initiated by farming brothers in the early 2000s. They saw the opportunity to include their 60 permanent workers in the farm ownership model. The workers, through the SLAG/LRAD grants system, each received a portion of the money that was put into the pot as a down payment for purchasing the land on which the farm operates. The balance of the purchase cost was raised through debt finance from a commercial bank (the commercial farmers still had to sign surety for this debt).

The property was purchased in a vested trust where each worker had a 1/60th share. Because the project was seen as an economic development initiative, it was envisioned that over time participants would be allowed to buy and/or sell their share, with the farm maintained as a business operation and not a settlement farm.

The debt finance was repaid through a guaranteed long-term, transferable lease to the operating company on the farm. The operating company, previously owned by the farmer partners, donated 49% of the entity to the employee trust that had bought the land, thus they retained operational control but shared dividends and profits through this JV company.

There are a few key features that indicate how successful the model is, including that the recipients of the land have now paid off the farm, receive rental income that is distributed to the beneficiaries, and benefit from dividend payments when the farm makes a profit.

There are also obvious successes in that the beneficiaries have an opportunity to retain jobs, there is an increasing plane of income over time, as well as space for personal growth in management. The co-ownership of the business means that expansion, purchasing of an additional farm by the operating JV, planting of higher-value crops (avocado orchards) and lease of additional farms also benefit the beneficiaries.

A few key issues

There are a few key issues that have arisen from the model of a vested trust where, over time, beneficiary employees die, retire, are fired, and/or resign of their own accord. The first is that their benefit is not easily transferable due to the high cost of their share – this means that most of the other beneficiaries cannot ‘buy them out.

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