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Special Report by Jana du Toit
Apart from land reform and scorecard positioning, the BEE Advisory Service facilitates empowerment through viability studies, project evaluation and specialised advice. Where necessary the service also uses independent specialists in the field to carry out some of the business plans and analyses on behalf of the Advisory Service and refers producers to the relevant bodies. “So many organisations are engaged in land reform and BEE, each in its own way. Our goal is to be a one stop service – a central contact for producers when they become involved in the process.” Get your scorecard “The good news is that we receive lots of queries from producers and cellars who want to have their BEE scorecard drawn up,” says Peet. The wine industry currently uses a BEE scorecard contained in the “Codes of Best Practice” issued by the Department of Trade and Industry in 2004. It is a general framework aimed at empowerment across the broad spectrum of industry sectors in South Africa. Although a BEE scorecard has been drawn up for the wine industry, it is not yet being implemented. The Transformation Charter for the Wine Industry, which includes a scorecard, was drawn up by the Wine Charter Steering Committee, and approved by all role players, and has been with the Minister of Agriculture for approval since July 2007. The Department of Trade and Industry scorecard consists of seven elements, each weighted differently, namely Ownership, Management, Equal Employment, Skills Development, Preferential Procurement, Entrepreneurial Development and Socio-economic Development. Not everyone has to draw up a scorecard. Businesses with an annual turnover of less than R5 million do not require a scorecard. Businesses with a turnover of between R5 and R35 million have to comply with four of the seven elements, and those with an annual turnover above R35 million have to comply with all seven elements. It is not yet possible to benefit from an element such as Preferential Procurement, which depends on the entire wine industry value chain having a BEE score. This means that producers score points by dealing with other businesses which also have a BEE score. This may include suppliers, as well as cellars to whom producers supply grapes and wine. This is to the benefit of both parties. “It is therefore a priority for everybody to draw up a simple, initial scorecard. Our experts then draw up a five year plan indicating which steps the producer might take to improve his score. The process is constantly finetuned,” says Peet.
“BEE is one thing ... land reform is an entirely different ball game, and it is also critically important for producers to become involved,” says Peet. Unlike the implementation of a BEE scorecard, there is a specific cut-off date for land reform, namely that 30% of all agricultural land has to be transferred to previously disadvantaged people by 2014. Although exact figures regarding the progress are unknown, plans are under way to create a database into which all land reform projects will be fed. “The closing date for submission of business plans to the Department of Land Affairs for the funding of land reform projects is the end of April and producers who want to be involved must hurry up!” urges Peet, adding that producers will have to be pro-active with regard to land reform. According to him land reform may take place in one of two ways. Firstly the producer opts to evaluate the business value and form a workers’ trust, which then purchases a percentage interest in the concern from the producer. The producer therefore relinquishes a part of his business, including shareholding and profit sharing. On the other hand the workers’ trust might purchase a farm in the vicinity. The workers trust enjoys ownership and the producer may purchase a share in the business and manage it together with the members of the trust. By so doing no ownership is relinquished, the producer expands his business interests, and in exchange he invests his time and management expertise in the business. Various funding options are available from commercial sources as well as the Department of Land Affairs and in some instances the producer prefers to finance the loan himself, to be paid back out of future profits. Mentorship contributes to success Apart from facilitating land reform projects and drawing up BEE scorecards, the Advisory Service focuses on the establishment of mentorships within the wine industry. “Someone who studied agriculture and returns to his family farm immediately has access to years of information and knowledge of that specific farm. A new entrant to an unknown farm does not have this expertise and information.” This dilemma, combined with the failure rate of land reform projects that were implemented without an aftercare programme, motivated Peet to do an MBA with his research highlighting the importance of mentorships as a contributing factor to successful projects. A mentor may be the previous owner, a producer in the vicinity who knows the farm well or someone who knows the industry well and knows what to look for. “The BEE Advisory Service is in the process of obtaining funding to establish a training farm where labourers who show potential may be sent by producers.” Both practical and formal training in various disciplines within agriculture are envisaged, including production, financial and personnel management, marketing, viticulture, etc. Upon completion of the training the students may be commended to the Department of Land Affairs as promising candidates for ownership of a farm, in collaboration with a mentorship programme. “The Department has the funding, but not the capacity to execute projects; whereas the industry has the capacity, but lacks funding. Consequently we are working ever more closely with both the Department and commercial funding bodies for the benefit of our producers.” Funding for mentorship programmes by the Department of Agriculture is managed by the SA Wine Council. A mentorship structure is already in place and exists of a provincial coordinator, trained master mentors in each region (such as Peet) and a group of mentors – typically producers or persons who have the required expertise regarding agriculture in a specific region, and who have completed a mentorship programme. Get involved NOW! Peet leaves the most important tip for last: “The faster we become involved and manage the process ourselves, the better for the industry, rather than the Government coming and saying ‘you haven’t done anything, now we are getting involved.’ It is easier to tackle the issue pro-actively in a way that benefits you, rather than having someone tell you how to do it.” He adds that success when becoming involved in empowerment depends furthermore on government buy-in and support (capital and/or industry support), as well as producers being positive about playing a supportive role to the benefit of the industry in the long run, “so that the goals which have been set by the government may be met, thereby absorbing the pressure”. Contact Peet on tel (021) 807-3304 or talk to the board member or viticultural consultant in your area if you want to become involved. Experts in this field regularly talk about the practical implementation of empowerment at the Winetech/VinPro Information days and Farmers’ days. Here’s How VinPro members or interested parties who want to become involved in land reform or BEE (whether they want to draw up a scorecard, launch a project, etc) can contact Peet directly on tel (021) 807-3304 or email visserp@vinpro.co.za. Depending on the specific requirements, he will do a viability study/project evaluation, give advice and support, follow up projects, and where necessary refer to the relevant experts and funding bodies.
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