Non-profit organisation, Vumelana Advisory Fund has facilitated the conclusion of a community private partnership (CPP) agreement between beneficiaries of the land reform programme Ebenhaeser Communal Private Association (CPA) and the largest producer of organic wine in South Africa Stellar Organics.
Stellar Organics is also the largest global producer of no-added-sulphur wines. The company exports 80 percent of its wines to Europe, Asian, African and North American markets and 20 percent is for the local market. The Ebenhaeser Community Property Association (CPA) owns ± 18,283 hectares of land near Vredendal in the Western Cape along the N7 which runs from Cape Town to Namibia. The tiny settlement of Papendorp is located on its land. This CPA is one of the biggest land claims in South Africa. The government has allocated R233m for the purchase of the farms, which include vineyards. The CPA has more than 652 beneficiary households.
The partnership between the Stellar Group and the Ebenhaeser CPA started informally in 2017 and was recently formalised through the Vumelana Advisory Fund, a non-profit organisation that helps beneficiaries of the land reform programme to develop their land in an effective and sustainable way, and is facilitated through community private partnerships.
The community has entered into a 20-year agreement with Stellar Organics and has a management contract in place for the group to buy its entire vineyard production at competitive rates. The provisions of the agreement allow it to be terminated at any time.
There were initially 44 farms up for restitution to the community. Thirteen have been transferred and are actively farmed; 9 are set to be transferred in April 2021 and the rest as soon as the present owners have harvested their final crop. This will make the Ebenhaeser CPA the biggest black-owned vineyard in the Olifants River area.
The CPP model
Community private partnerships (CPPs) are formations established between private parties and communities that acquire access to land under the land reform programme. Typically, the communities bring their land and labour and the private partner brings capital and skills to the partnership. CPP contracts are structured to ensure that the partners are able to meet their obligations and exercise their rights in a manner that supports the profitable operation of the business venture into which they enter.
While in a typical CPP agreement the community brings land and the investor brings financial resources and skills, in this instance instead of the conventional approach, the investor will be supporting the community in acquiring the knowledge and skills to be able to eventually produce wine and juice of quality for local and international markets themselves. They will be establishing the local and international relationships needed to sustain themselves in this sector.
Partnerships for land reform
Speaking about the conclusion of the CPP agreement with Stellar Organics, Madelein van Niekerk, chairperson of the Ebenhaeser CPA stresses that Vumelana does not do the farming for them, but enabled them to do it themselves through the partnership. “When we got back our land, we had no knowledge of farming, nor the capacity to undertake any activities on the land. Through the partnership we have been able to learn more about farming and risk management and this has been a critical component in ensuring that we don’t end up as another failed land reform story.”
The community currently produces grapes on 81 hectares of the land and 339 hectares are being used for seasonal vegetable farming by subsistence farmers. The community supplies the Stellar Group with grapes at competitive rates, which the group uses for its wines and fruit juices.
“We employ 18 permanent employees and 50 seasonal workers and have plans to expand as more land becomes available; but we can already see the difference in the community, as we are much better off than we were over the past five years before the investor support,” said Van Niekerk.
Through its partnership with the Stellar Group, the CPA has secured a deal to export pumpkins for the Netherlands market. This will take effect from December – the harvest season. Cash crops, which include tomatoes and beans, are being produced for the local market. Plans are under way for the community to set up a juice production operation in conjunction with Stellar in the middle of October 2020.
“A further boon this year is a planned R100 million water pipeline which will become operational in September to boost water security and enhance farm production,” Van Niekerk said. “Vegetable farming has enabled us to diversify and has been critical in assisting us in shouldering the current Covid-19 challenges with grape farming, especially the restrictions on wine supply – which is a hugely dependent on our produce.”
Commenting on this milestone, Peter Setou, Chief Executive of Vumelana said “This is proof that properly structured partnerships between private sector players and land owning communities can not only ensure productive use of restored land, but also address critical challenges facing communities such as skills, jobs and poverty.”
The private partner’s perspective of community private partnerships
The relationships with the Stellar Group were initially established in 2017, and formalised recently through the support of the Vumelana Advisory Fund. The Stellar Group has been supporting the community for the past two seasons; and has assisted in putting in place structures and policies for the community to farm their land; and in setting up governance structures to ensure that it follows proper legal procedures in its work.
On inception of the agreement, the Group invested R800 000 in supporting the community to get the harvest in, to pay electricity bills that had accumulated over time and to cover other operational costs. Out of that investment, the community was able to yield R2.3 million worth of harvest in its first harvest season.
“Our view is that the government has given the people back their land, and that’s critical, especially within the context of the country’s history,” said Willem Rossouw, managing director of Stellar Organics. “The community has water rights, and are now expected to work and create a life for themselves. However, if they do not have the skills and the knowledge to farm, they will fail. It’s not the sole responsibility of the government to give the people knowledge, it’s also the responsibility of those who have been farming that land to support and make sure that communities succeed, because if communities fail, we all fail. These partnerships should be driven through a non-greed approach, where we share skills and resources and knowledge to enable communities to stand on their feet and eventually be able to do what they need to do on their own.”
He pointed out that the businesses that benefit from the produce that farmers provide need to also play their part.
“Big businesses in the wine, food and beverage industries have a critical role to play in these CPP partnerships and within the entire value system, and if they are not doing anything, we need to call them out. We cannot have black farmers fail because of a lack of knowledge or resources, when we have other farmers and businesses in this country who possess those skills. Everyone needs to come to the party and make sure land reform succeeds. Put aside selfish agendas and be selfless in doing what needs to be done to get new land holders on the farms to succeed!” Rossouw said.
About Vumelana Advisory Fund
The Vumelana Advisory Fund (Vumelana) is a non-profit organisation that helps beneficiaries of land reform programmes to put their land to profitable use by establishing commercially viable partnerships between communities and investors. Vumelana was established in 2012 to support the establishment of commercially viable partnerships between investors and local community landowners to create jobs, income and skills. It aims, among other things, to demonstrate the value of Community Private Partnerships (CPPs) as a contributor to successful land reform. To date, Vumelana has facilitated 20 partnerships, putting approximately 68 800 hectares of land to productive use; assisting over 15 000 beneficiary households across the country.
Vumelana means to agree with one another, make a contract with one another, support one another.
