Sweet dreams have a bitter end

2018-04-22 00:03
Michael Mhlongo stands among the weeds and bit of sugarcane still left on the once thriving sugar cane farm in Mpumalanga PHOTO: Vinnidlamini

Michael Mhlongo stands among the weeds and bit of sugarcane still left on the once thriving sugar cane farm in Mpumalanga PHOTO: Vinnidlamini

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Seven black sugarcane growers who were once the toast of the crop in their villages, boasting of a partnership with a sugar company, now stand to lose the land and the business.

With two years remaining before the land was to be transferred into their names, they were told that their debt had ballooned to R27m.

Their situation surfaced after the Transvaal Suiker Beperk (TSB), their original partner, was acquired by RCL Foods Sugar and Milling for R4bn in 2013. But they don’t know how they got to owe so much, despite the years of successful farming and great yields on communal land in Nkomazi outside Malelane in Mpumalanga.

They were the beneficiaries of the Land Redistribution for Agricultural Development (LRAD) grant from the rural development and land reform department, which injected R3.3m into the initiative, and the farmers secured an additional R6m loan from a commercial bank to assist with irrigation infrastructure and other needs.

“Government sold us to these people. They put R3.3m and did not follow up to see that we were fine,” said Linah Mabaso. “We were used as surety and fronted for the benefit of this company.”

Mabaso is one of the three farmers who refuse to sign RCL’s proposed turnaround or rescue plan. Four of their business partners have since accepted the proposal, signed the document and walked off into the sunset.

But Mabaso, Smangele Magagula and Neli Ngomane said they plan to fight the giant sugar company to the bitter end.

“I’m not signing anything. We were producing and I even won the farmer of the year award twice. Since we were not getting dividends from the profits we made, they should have paid off the loan … we believe we produced enough to pay it off,” Mabaso said, adding that they were never shown financial documents about the profits and the servicing of the loan but they had faith in the management.

Magagula said: “We only earned R4 000 a month. The only extra money we got was the VAT we claimed from Sars [SA Revenue Services].”

At the time the partnership was established in 2005, it was hailed as one of the best land reform models for private companies to follow. The farmers left their villages to farm on about 260ha of the Siyathuthuka Sugar Estate belonging to TSB in Kaapmuiden and soon they were producing 135 tons of sugar a hectare, above the Mpumalanga average of 91 tons.

The company, the farmers told City Press this week, had promised them that ownership of the farms would be transferred to them after 15 years. City Press did not see the agreement the farmers signed with TSB; the farmers claimed they were not given copies. RCL Foods did not answer this question in its response but said it owned the land through its shareholding in Siyathuthuka.

RCL has proposed that each farmer vacate the land and continue producing sugarcane on their own. If they leave RCL will pay them a R7 500 stipend for the next 10 years. If they do not RCL will unilaterally sell the land to pay off “the debt”.

RCL’s chief legal officer Stephen Heath did not provide details of the rescue plan but said it had the blessing of the rural development and land affairs department.

“The individual growers were fully responsible for operational decisions and all operational expenses were approved by them. While we are unfortunately not at liberty to disclose further details regarding the financial situation of any of the growers, we do wish to point out that the financial difficulties facing the Siyathuthuka project were mainly driven by (a) historical debts incurred by the growers in their individual capacity and (b) declining cane yields,” Heath said.

The challenges were aggravated by a severe drought that resulted in declining revenues, he said. “The current debt levels have brought the viability of the Siyathuthuka project into question. We have been engaging the Siyathuthuka growers to find a solution that would avoid a situation where they put their continued participation in the project at risk due to their failure to meet their financial obligations,” Heath said.

He said LRAD projects were failing and the government had discontinued them. “[Siyathuthuka] is to be distinguished from our other land restitution projects which resulted in a transfer of approximately 12 000ha of [our] land to land-claim beneficiaries. Although the land-restitution projects are generally hailed as very successful, most LRAD projects have proved to be unsustainable and the LRAD programme has been discontinued,” he said.

Heath said RCL approached the rural development and land reform department for Recapitalisation and Development grants but it did not come to the party and the growers could not find a financier.

Mpumalanga department of rural development and land reform spokesperson Zithini Dlamini said RCL Foods was best placed to respond to the farmers’ concerns, but the LRAD grant was provided to assist them to buy shares.

“The agreement with the department was for them to register share block schemes which would translate into titles per individual grower,” Dlamini said, adding that the department had several meetings with RCL Foods and the matter was reported to Parliament’s portfolio committee on rural development and land reform and to the acting director-general Leona Archary.

Dlamini said Archary instructed RCL Foods to provide financial breakdowns of the project.

Read more on:    agriculture  |  land

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