Fahamu (Oxford)

1 May 2014

South Africa: Where There's Smoke There's Sure to Be Mirrors in Government's Farm Worker Policy

A proposed farm worker policy in South Africa is unlikely to offer any meaningful benefits to the workers. The primary demands of farm workers are not for equity in commercial farms, but for tenure security on farms, decent living conditions, improved wages, and access to land for their own use.

What is the future of farm workers in South Africa? From the experience of the past 20 years, it looks grim indeed. Nearly 1 million people were forcibly evicted from white-owned farms in the first ten years of democracy, and jobs were lost at an alarming rate. In the horticultural sector, workers were casualised, now only earning cash incomes for three or four months of the year, and for the rest of the time remaining without livelihoods, save for the meagre but essential contributions of social grants.

Farm workers are not important in national politics - or at least were not until recently. Both the ruling party and the opposition have largely ignored them, turning their attention instead to urban workers organized in trade unions, and the urban unemployed that are at the centre of 'service delivery protests'.

At the same time, the farm worker strike in De Doorns in 2012/13 and other expressions of defiance suggest that farm workers are a mobilized and politicized group in South African society.

Suddenly, a month ahead of national elections, government is talking to farmworkers.

A NEW POLICY

A policy document entitled 'Strengthening the Relative Rights of People Working the Land' was tabled at a consultative workshop on 31 March 2014 at OR Tambo Airport, with representatives of various stakeholder groups invited. It is billed as 'final policy proposals'.

The policy proposes what at first sight looks like dramatic changes to ownership structures on commercial farms.

Under the heading 'Combining share-equity with co-management', the policy proposes a system of equity sharing on commercial farms.

What is being proposed?

Each farm owner is to retain 50% ownership of the farm, and will cede 50% ownership to workers. Workers acquire equity shares in the farm depending on their length of service.

LAND OR EQUITY?

What does this mean, exactly? The policy states that 50% of the equity in the business will be compulsorily acquired by the state. At other points in the document, though, it conflates this with 'land'. There's a big difference! The equity of an operational farm is often many times that of the land. Either way, this will constitute an expropriation, for which, under the current Constitution, just and equitable compensation will need to be provided. Section 25 (on property rights) could be amended to remove the requirement for compensation, but this is unlikely, as government has been so concerned about business interests that it is yet to use its hard-won powers of expropriation with compensation to advance land reform. It is therefore safe to say that the policy assumes payment of compensation. A rough idea of the price tag of this expropriation is provided by the fact that the current market value of capital assets in agriculture is estimated to be in the region of R276 billion Rand - and capital infrastructure constitutes only a small part of the equity of many farms.[1]

WHO GETS THIS 50%?

The policy suggests than allocation of equity among workers should be on the basis of the duration of 'disciplined service.' The policy does not define what 'disciplined' service is.

Workers who have been employed for 10 years get 10% of the workers' half the business - ie. 5%, shared among however many of them there are. Those employed for 25 years get 25% of the workers' half - ie. 12.5%. Those employed for 50 years get 50% of the workers' half - ie. 25%.

Those workers who have worked for less than 10 years get nothing. The policy creates a powerful incentive for employers to retrench workers after nine years. Except, and here's more ambiguity, they will have 15% for 'household subsistence', which suggests again that the share is of the land, rather than equity in the business.

The distribution of shares takes no account of the number of workers. This means that workers on labour-intensive farms in the fruit and wine industries will end up with very little indeed, once equity is shared among hundreds of people, while those on field crop and livestock farms which might employ just three or four workers each, might end up with a windfall.

If there is one worker who has worked for 50 years on the farm (an unlikely scenario), she or he would get 50% of the shareholding for workers (ie. 25% of the entire business). If there are 20 workers who have worked for this long (even more unlikely), then each would get 5% of the workers' share, i.e. a quarter of one per cent. This means that the policy is likely to pit workers against each other. The fewer workers there are on a farm, the more there is for the ones who remain.

A NEW CONVERT TO EQUITY SHARING

The proposal itself appears to represent the personal views of Minister of Rural Development and Land Reform, Gugile Nkwinti himself, with phrases like "As I see it..." and so on.

The Minister seems to have overcome his dim view of equity sharing. Shortly after taking office in 2009, he placed a moratorium on all farm worker equity share schemes, arguing that:

'farmers in farm equity schemes do not part with their land -- they receive financial injections into their enterprises -- while farm dwellers' lives, on the other hand, seem to remain ordinarily the same, with insignificant dividends being paid to farm dwellers many years after the share equity scheme was signed. Who is benefitting? Can this be reduced to "political unpalatability". Not for the millions of rural dwellers!'

The moratorium was based on the findings of a study commissioned by the Department (never made publicly available) which indicated that on equity schemes 'tenure security had not been completely or effectively addressed, as some beneficiaries remained faced with the spectre of eviction' and that 'of the 88 FES [farm equity share] projects implemented between 1996 and 2008, only nine have declared dividends'. The few workers who did receive an income from dividends got between R200 and R2000 per year - very little compared to the cost of the projects.

Two years later, the Minister lifted the moratorium, but no changes were put in place to fix the problems identified.

Now, this problematic model is being advocated as the primary, or even the sole, form of land reform and worker empowerment in agriculture. Why?

Is share equity the right model anyway?

The policy does not offer any useful benefit to workers. A 50% share in the equity of the farm, divided among workers, means nothing if (1) workers are not able to outvote the farmer as shareholders (2) workers are unable to sell their shares.

Share equity schemes have worked in a few cases. The model can work if it is accompanied by carefully designed interventions in organizational development, worker empowerment and so on. The best share equity schemes in the wine industry (Stellar Organics,, Thandi, and Solms Delta to mention some well known examples) spent millions of Rands on this. If done well, it can lead to many workers bettering their position within the organization of the farm and entering into middle management; and it can increase vocational and educational opportunities for their children. But this requires careful design and lots of money. The handful of successes involved very substantial private investment alongside public funds.

Share equity 'by fiat', as contained in this recent proposed policy, would reproduce the worst aspects of the most meaningless share equity schemes of the past. In those schemes, land reform and other public funds were spent in ways that ensured that owners essentially got injections of capital into their farms in exchange for giving workers bits of paper. This will be what happens if the policy is implemented: because farmers will have to be compensated, billions of Rands will be spent on expropriating equity from owners - but all these public funds will earn workers very little.

A BUREAUCRAT ON EVERY FARM?

The 50% compensation funds from government will go into an 'Investment and Development Fund' to be jointly managed by all shareholders. And state officials will sit as ex-officio members of the management of the fund. One official per farm. Effectively managing such workers' funds is an enormously complex job. Not only will it require significant expertise not only in financial and legal matters, but it will also require an understanding of labour relations and issues relevant to farm management. It is safe to say that the Department does not have the capacity to do this even on one farm in every district - never mind every farm in the land.

A second problematic issue is contained in the notion that, for as long as it can, this fund should pay out workers who wish to leave. Given the difference between 10% equity in a commercial farm and the current minimum wage, one would expect that all long-serving workers will immediately resign and leave the farm, quickly depleting this fund.

MORE CONDITIONS ON FARM WORKERS' TENURE

The most dangerous aspect of these policy proposals is their insistence that black families who live on white-owned farms should only be allowed to stay there if they can abide by certain 'duties and responsibilities'. For a long time, commercial farmers have objected to the Extension of Security of Tenure Act (ESTA), arguing that farm workers and their families should not have rights to stay on farms.

Now, this policy proposes that workers and their families living on farms should not have rights to live where they are, but rather should earn their tenure by performing a set of 'duties and responsibilities'. The Minister seems to opine that 'there does not seem to be any sort of duty and responsibility placed on the worker-dweller to play their role in ensuring that their right of tenure of the land is earned' (DRDLR 2014: 12).

This is a strange way for the Minister to talk. It harks back to the sentimental and romantic notions enshrined in old-style farm paternalism - a world view according to which the farmer would protect workers like his own children, as long as they were dutiful and loyal servants. It is a way of speaking that even Agri_SA has abandoned.

What could explain the Minister's relapse into sentimental rhetoric? It could be an attempt to get commercial farmers to support the policy, pandering to the long-standing objections to tenure rights. That's not likely to work. ESTA already involves a set of rights and duties for both owners and occupiers, and commercial farmers have been reluctant to embrace that vision, seeing in it only a threat to their managerial authority.

The policy even suggests that land rights management committees, including state bureaucrats, will decide who stays and who goes - apparently forgetting that no eviction is legal without a court order. This produces opaque passages in the proposal:

'If the farm-dweller had completed ten years of service, and had earned tenancy rights, the LRMC has to take this into account if it determines that the farm-dweller had to leave the land.'

This provision would be disastrous, and represents a step backwards from the promise of tenure security made in the Constitution of 1996 and in ESTA in 1997.

HOW COULD THESE PROPOSALS BE PUT INTO PRACTICE?

We understand the sentiment behind this policy: many white farm owners benefited over many decades from state support in the form of direct and indirect subsidies, and the super-exploitation of black labour, enabling them to achieve impressive profits. There must be a political and social solution that allows a fair distribution of wealth derived from agriculture. This policy is not that solution.

Which farmer would choose to extend employment to any worker beyond 10 years if this would entail a 5% loss of equity? Which would extend employment beyond 25 years if this would entail a 12.5% loss of equity? Which would extend employment beyond 50 years if this would entail a 25% loss of equity?

The obvious outcome of this policy, should it be enforced, would be a further round of pre-emptive retrenchments.

For the state, it will require expropriation and compensation of 50% of the equity of all commercial farms. As we have pointed out above, even a conservative estimation of the price tag involves an amount of hundreds of billions of Rands

This is an illogical policy. It is also mathematically inept. While couched in apparently 'radical' language concerning the appropriation of labour power and exploitation of workers in order to justify a problematic model, it seems to offer workers very little. It extends state control over both workers and farmers, and instead of creating clear rights for workers, makes their benefits contingent on vague and paternalistic language.

LISTEN TO FARM WORKER DEMANDS INSTEAD

Rather than promoting his own model, the Minister should rather engage with farm worker organisations on the basis of their demands which have already been submitted to him [see Land, Race & Nation declaration for instance]. Their primary demands are not for equity in commercial farms, but for tenure security on farms, decent living conditions, improved wages, and access to land for their own use. On the latter, the Minister could prioritise farm workers in the land redistribution programme, instead of doling out farms to urban businessmen, as currently seems to be the case (based on very limited field research and interviews). The Eastern Cape's incomplete database shows only 17 of 228 farms bought by government for redistribution went to former farm workers.

POLICY FOR THE SAKE OF POLICY?

In the past year, 14 new land policies and draft laws have been published, of which this is just one. What do they add up to? Last year, a parliamentary committee on the centenary of the 1913 Natives Land Act called on the Department of Rural Development and Land Reform to draw up a new White Paper on Land Policy to clarify the new policy direction. It has not done so.

There is a new type of policy emerging in South Africa. It bears no relation to lessons from the past nor prospects of successful implementation in the future. These are spurious policies, never intended to be implemented, and appealing to an audience too angry to care about questions of feasibility and impact.

Ruth Hall and Andries du Toit are Professors at the Institute for Poverty, Land and Agrarian Studies (PLAAS) at the University of the Western Cape, South Africa.

END NOTE

[1] Department of Agriculture (2013) Economic Review of the South African Agriculture (Pretoria: DAFF) p.7.

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