Equity deal to empower farm workers
November 22, 2009
By Wiseman Khuzwayo
The land reform programme has received a shot in the arm with the announcement that Futuregrowth Asset Management is to fund a 50 percent equity stake in a deal to empower farm workers.
With R25 million provided by Futuregrowth, the United Farmers' Fund Trust (UFF) will buy a shareholding from the existing shareholders of South African Fruits Exporters (Safe).
The new entity will be known as Safe Farm Ventures.
Safe works closely with the Comprehensive Rural Development Programme, which is part of the new Department of Rural Development and Land Reform.
It is meant to complement the land reform programme as an agrarian transformation whose key objective is to achieve vibrant, equitable and sustainable rural communities.
Safe is one of the most recognised names in the South African fruit industry. It manages its own production and takes care of the packing, cold storage, transport and other activities related to the export chain.
The Dutch Development Finance Company and Pincio Capital Corporate Finance established the UFF.
Earlier UFF investments, also backed by Futuregrowth, include CareCross and the Open Learning Group. CareCross is a health care company focusing on affordable heath care.
CareWorks, CareCross's HIV/Aids disease-management subsidiary, is involved in programmes at several Safe farms in the Eastern Cape. It trains farm workers, and tests and treats them for HIV/Aids.
The Open Learning Group is the largest private open distance-learning provider in South Africa. It offers tailor-made educational packages to UFF beneficiaries.
UFF chief executive Duncan Vink said: "The platform of partnerships and investments we created over the past three years with Futuregrowth to address transformation in the agricultural industry has enabled us to make our largest investment in a farm operation.
"We are very enthusiastic about the potential to accelerate the growth of Safe in this new partnership, particularly in the area of land redistribution and reform."
Futuregrowth portfolio manager James Howard said the Futuregrowth Infrastructure Development Bond and the Development Equity Fund had funded the purchase.
"This transaction ticks all the blocks for institutional clients seeking to invest in the development of the country. The benefits of this particular deal include sustainable and profitable land reform with a guaranteed minimum return to meet the fund's performance target."
There has been widespread criticism of the land restitution programme, particularly that it has been slow, and many of the projects have failed because beneficiaries were left to their own devices. The commission on land restitution is also struggling to settle a number of oustanding claims because its budget has declined from R3.3 billion to R1.9 billion a year.
Deputy Minister of Rural Development and Land Reform Joe Phaahla recently said the department was concerned about escalating land prices.
"It is interesting to note land prices skyrocket as soon as the government is the interested buyer. We share the view of AgriSA that there is collusion in the land market. This is not confined to land owners, but includes estate agents, valuers, land owners and corrupt government officials.
"As a sector, there is a need to co-operate in rooting out these practices as they compromise the integrity of the programme and the country's social stability."
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