Partnerships work in land reform

23 March 2021  

The partnership-driven model for land reform (the “Karaan Plan”) has been the most successful plan to create a class of profitable black farmers since it was introduced in 2013 and it is also being applied widely elsewhere in Africa.

It is the legacy of the late Prof. Mohammad Karaan, former dean of the Faculty of Agricultural Sciences and Acting Vice-principal of Stellenbosch University, who also was a member of the National Planning Commission and co-author of Chapter 6 of the National Development Plan, in which the framework of the partnership-driven model for land reform was set out.

During negotiations between AgriSA and the National Planning Commission at Stellenbosch in March 2013, agreement was reached on an interpretation and implementation plan for the Chapter 6 model, which became known as the Karaan Plan.

Notwithstanding strong criticism on the Karaan Plan from some of AgriSA’s largest affiliates, in December 2013 a mandate was given for AgriSA, together with TLU SA, AFASA, Land Bank, the Office of the Premier in Mpumalanga, the Department of Land Reform and Rural Development and several agricultural enterprises, to get involved in a pilot project in Mpumalanga.

The pilot project agreed upon by all participants was a citrus farm near Burgersfort, where LaeveldSitrus was the investor. Even though the rest of the process came along almost perfectly, the project was a failure because the department (therefore the state), never met its financial obligation and in spite of repeated undertakings, promises and commitments never as much as explained why the budgeted funds were not getting paid out.

Interested parties had divergent reactions: in AgriSA’s general council this was one of the main reasons why large affiliates turned their backs on the Karaan Plan. Prof. Karaan himself realised that senior officials in the department – in spite of unanimous endorsement of the plan at the ANC’s Mangaung policy conference in 2012 – did not want the plan to be implemented, because it would reduce the opportunities for nepotism and self-enrichment. He went looking for alternative funding sources within the framework of the European Union and its agencies and especially in Germany. Agri Limpopo, WRSA, Agbiz, AFASA and a number of cooperatives created an implementation committee and developed selection criteria, conducted project analyses and started implementing projects outside the obstructive role of the state.

Three of the first 106 projects failed between 2015 and 2018 (within three years), all three not having complied with the selection criteria agreed upon. However, the Witzenberg PALS project in Ceres, the Hoedspruit and Onderberg partnerships between BosveldSitrus (Komati Fruits) and land claimant communities and 86 partnership projects of Humansdorp Cooperative proved beyond all doubt that the Karaan Plan was more than yet another land reform theory.

From the first couple of projects, participating farmers learned important and often expensive lessons, such as the following:

It is easier to enter into a farming partnership with beneficiaries in the land redistribution programme than to work with beneficiaries in the land claims programme. In redistribution one works with individual families who are serious to make a success of the enterprise, but in land claims one more often deals with communities who share little interests or even values, and internal politics create suspicion in communal property associations, turning them into difficult partners. Yet, in most instances these associations own the land, and a title deed is more investor-friendly than the leases that beneficiaries in the redistribution programme are subjected to, with all the concomitant caprices of public servants who could easily kick off the lessee to make way for an MK veteran.

When the government gets involved, everything is slow and less efficient, paying bribes becomes a huge expenditure and chances of success diminish exponentially.

The banks have not come to the party yet. They will get involved when such a partnership has already been successful.

Financing a project through the Industrial Development Corporation or the Land Bank (when the Land Bank still had a presence in this field) means that in equal partnerships you have to accept less than 50% shareholding and benefit but you have to carry more than 50% of the responsibility, accountability and risk. The blind ideological drive in these institutions is astonishing and paralysing, and I have often chuckled during meetings of UN and EU agencies when our diplomats started stuttering and struggled to explain the logic, the poor achievements and the “unintended outcomes”.

The government is an extremely unreliable partner and an inefficient banker or financier, has a corrupt influence on the land reform process and must be kept out of the implementation plans as long as possible. From a commercial point of view, the most attractive dimensions of the Karaan Plan are the following:

- It maintains the market value of farms in land reform, which is important for the agricultural financing system in South Africa, for investor certainty and for the growth and competitiveness of the sector.

- Partners may choose one another and are not forced on one another. It removes cadre deployment, nepotism and political interference from the equation and create the opportunity for farmers to enter into partnerships with neighbours, workers and families from the local community.

- It creates an opportunity to interpret and implement transformation as sharing the growth in the agricultural sector and not as impoverishment by dividing the existing assets or enterprise values. By keeping what he has, a farmer may from this base share the broadening of his business interests in agriculture with beneficiaries in land reform, to the benefit of both.

- It brings certainty and stability, which is essential for the sector to grow.

In areas such as Limpopo, North West, Mpumalanga, KwaZulu-Natal and the Eastern Cape, where dominant proportions of commercial farms are either claimed or targeted for redistribution, individual farmers’ expansion potential and investment appetite are seriously hampered by the aggressive jargon of land reform and expropriation without compensation. This is harming the entire rural economy. The Karaan Plan offers farmers who find themselves in an ocean of land reform and investment uncertainties, an opportunity to consolidate on their own farms and grow with their partners on neighbouring farms.

Experience has taught that it takes more than one generation for a family farming enterprise to become profitable. For beneficiaries of land reform, it takes even longer, because in most cases they do not own the land on which they are farming and they do not have access to financing. The partnership plan puts such a new entrant to agriculture closer to the mainstream of profitable value chains from the first day because he may ride on the back of a partner who is there already.

This is why, in spite of opposition from the department and organised agriculture, this approach still is the most successful model for land reform. It is widely used by Agri All Africa to establish South African farmers elsewhere in Africa in partnerships with local small-scale farmers. There has never been a more appropriate time for the government (and in particular the Department of Agriculture, Land Reform and Rural Development) and for organised agriculture to reconsider the Karaan Plan.

By Dr Theo de Jager, Chairperson: Board of Directors, Saai