Govt set to lift farm schemes moratorium

2010-11-14 23:10

Cape Town - Government is set to lift the moratorium on its farm equity schemes (FES), imposed in June last year, Rural Development and Land Reform Minister Gugile Nkwinti announced on Sunday.

The moratorium on the schemes, in which government has invested R500m since their inception in 1996, "will be lifted in January (next year)", he told journalists at a media briefing following a FES workshop in Cape Town.

"The reason we want to lift it, is it (FES) is a good scheme, but we have not managed it well," he said, responding to a question.

Nkwinti said a further amount of R900m, available in his department's current budget, was earmarked for getting FES back up and running. A similar amount - a quarter of baseline budget - would be made available in the next financial year.

"FES was a good policy, but it was badly implemented... we did not manage it well - both ourselves as government and the farmers," he said.


The FES is essentially a business arrangement that allows farm workers to obtain shares in agricultural operating companies or farms.

A study last year found that of the about 100 schemes started up, only nine had paid dividends to their members - and half of these were reinvested in the venture.

Nkwinti said he planned to meet white commercial farmers to discuss what mechanisms needed to be put in place to ensure the schemes' future.

In a speech delivered earlier at the workshop, he said that in many instances former owners "continue to retain their dominant positions as if nothing had changed".

Further, many farm workers still did not have secure tenure and many "may not even be aware that you are no longer only farm workers, but also shareholders in the business in which you work".


On the ratio of ownership, Nkwinti told journalists he liked Western Cape Premier Helen Zille's call for 50-50 equity share schemes.

At a farm workers summit in July this year, Zille told delegates such schemes were the most productive land reform model.

About 80 of the 100 farm equity schemes are located in the Western Cape.

According to a document distributed at the briefing, last year's moratorium was prompted, in part, by "the realisation that the contribution of these schemes to redistribution targets had been greatly exaggerated".

While equity and shareholding varied greatly, "in many case equity in the landholding entity was often as little as 9%, yet the total extent of hectarage of the land was claimed as redistributed".

Nkwinti said his department also planned to make greater use of FET colleges to train those involved in equity schemes. Such lack of training had been identified as one of the reasons for many of the schemes failing to operate properly, he said.

  • Boerseun - 2010-11-15 07:23

    Using a farmers taxes to pay to get workers to own shares in his own farm? That is a sick idea.

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