Best institutional practices for farmworker and community equity-sharing schemes in South Africa.
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Date
2003
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Abstract
Farmworker equity-share schemes were initiated by the private sector in the Western
Cape region of South Africa in the early 1990's as a method of redistributing farm assets
to land reform beneficiaries while maintaining the viability of commercial farming
operations. This study set out to identify the institutional characteristics of successful
farmworker equity-share schemes in South Africa, and to discern a set of best
institutional practices that will likely promote the success of future equity-share schemes.
A detailed study of nine commercial farming ventures involving partnerships with
farmworkers was undertaken in the Western Cape during November 2001 to explore
relationships between their institutional arrangements, worker empowerment,
management quality and performance.
Farmworker equity-share schemes (FWES) have received both positive and negative
publicity. This thesis adds to the debate surrounding these land reform projects by
comparing the results of case studies conducted by the Surplus People's Project in 1998
with more recent (2001) case studies. The latter suggest that many of the concerns raised
by the Surplus People's Project, such as beneficiaries' participation and expectations,
power relations between management and worker-shareholders, skills transfer and labour
relations, have been addressed. The dissertation also highlights those issues that remain
areas of concern, for example, beneficiaries' tenure security, literacy levels amongst
worker shareholders, skill and wage differences between men and women, and exit
procedures.
A cluster analysis of variables measuring four constructs of a successful farmworker
equity-share scheme, viz. sound institutional arrangements, effective worker
empowerment, competent management and good performance, revealed positive
relationships between these constructs. Best institutional practices identified by the
analysis suggest that farmworker equity-share schemes should be operated as (or like) a
company with voting and benefit rights proportional to individual shareholdings, but with
restrictions on certain share transactions to prevent free-riding by non-workers and the
loss of creditworthiness through sudden outflows of equity and managerial expertise.
However, this positive relationship between best institutional practices and enterprise
performance is dependent on effective worker empowerment (e.g. skills transfer and
gender representation), good governance (e.g. external auditing) and competent
management (e.g. schemes to reward worker performance and to resolve disputes).
From a policy perspective it is recommended that public land reform grants should be
awarded only to beneficiaries of FWES that have been co-financed by a bank or reputable
investor as this ensures a thorough financial assessment of the project, and only to
projects that can demonstrate a history of good labour relations. It is also recommended
that the Department of Land Affairs should consider extending its grants to regular but
seasonal farmworkers who wish to participate in an established project. While
farmworker equity-share schemes may not provide all of the answers to land reform they
have an important role to play in redistributing wealth and de-racialising commercial
agriculture in South Africa.
Description
Thesis (M.Agric.Mgt.)-University of Natal, Pietermaritzburg, 2003.
Keywords
Rural development--South Africa., Agricultural development projects--Western Cape., Agricultural labourers--Western Cape--Economic conditions., Land reform--South Africa., Agriculture--South Africa., Theses--Agricultural economics.