AgriExpert- BEE News
Moratorium Lifted on Farm Equity Schemes
Department of Rural Development and Land Reform

Subject to certain conditions, government has agreed to lift the moratorium on farm equity schemes (FESs),
imposed in June 2009.

This announcement was made in a media statement following a FES review workshop at which
commercial farmers and farm share equity scheme partners agreed on the conditions concerned.

These are that:
- clear criteria should be set regarding: the selection of FES business projects and their beneficiaries;
- measuring the success and sustainability of a FES business project; and
- the motivation behind FES business partnerships;
- the role of the state should be clarified in the context of funding arrangements with other
stakeholders including the Land Bank, the Industrial Development Corporation (IDC) and Khula;
- all partners in a FES business project should be equal shareholders;
- the benefits derived from a FES business should be distributed proportionally amongst
shareholders, as determined by their input;
- government and commercial farmers should jointly provide training in technical and
management skills to FES beneficiaries;
- a “council of stakeholders” should be convened in which, amongst others, the departments
of agriculture, forestry and fisheries, water affairs and economic development should participate; - a working group should be formed to
determine the “best model” for securing the tenure of farm worker housing; and
- the terminology used to describe FES projects should be “derecialised”.

The workshop agreed that the merit of each existing FES business should be reviewed and assessed before any further funding is released.

According to a white paper on rural development, agrarian transformation and land reform released in November 2009, the FES is based on an equity shareholding arrangement between a farm worker and a farm owner, whereby the value of a government settlement/land acquisition grant invested in a commercial farming enterprise is held as an equity share by the farm worker concerned. The farm worker thus becomes a part owner of the farm on which he/she works, “sharing in its capital growth, profit and risks”.

The settlement/land acquisition grant is one of the grants and services offered by government in support of its land reform programme.

According to a grants and services policy document published in 2001 by the then department of land affairs, the purpose of the grant is to “improve land tenure security and to extend property ownership and/or access to land to the historically disadvantaged and the poor”.

The media statement announcing the lifting of the moratorium acknowledges that it was imposed because of concerns about the scheme’s effectiveness in meeting the strategic objective for which it was created.

Sabinet Cape Town Office.