Agri initiative boosts Eastern Cape rural economy

When a financially sound business strategy leads to broad, ground-level socioeconomic impact, particularly in one of South Africa’s most historically disenfranchised regions, the results are nothing short of remarkable.

The Centane and Mbashe Agricultural Initiative focuses on the development of a model for the profitable and sustainable farming of communally owned land. Since its inception in 2012, the initiative has cultivated more than 2 000 hectares of land across 34 villages in Eastern Cape, and distributed more than R18 million to participating community shareholders through fees and dividends.

These numbers don’t even take into account any new economic activity and job creation resulting from spin-off ventures being started by the community with the income they have received.

WIPHOLD started the initiative as a commercial venture in the knowledge that food security and sustainable economic empowerment go hand in hand.

“The initiative recognises the inherent potential of Eastern Cape’s vast tracts of arable land, and that the proper use of land resources in South Africa by small- scale farmers has the potential to play a significant role in enhancing food security, particularly in poor communities,” said Debra Marsden, WIPHOLD head of corporate affairs.

In 2014 WIPHOLD began injecting working capital loans into the initiative. It also set up WipEquipment, which provides the initiative with most of its mechanisation services. In 2015, Old Mutual and Nedbank came on board as partners and provided loans for working capital. The loans from all three parties are free of interest, with repayment scheduled to begin in 2020/21.

WIPHOLD runs the farming operation and community members help in ways such as erecting and maintaining fencing, guarding the fields, monitoring the crops and assisting with harvesting.

Participating landowners each receive ten 40kg bags of maize per season in the form of a land-use fee, and each project member receives dividend payments and training in areas such as basic bookkeeping, enterprise development, farming and equipment management. Thus far, the project has created 12 permanent and 31 temporary jobs.

But a profitable and growing business, sustainable economic upliftment and increasing food security are not the only upshots.

“Quantitative analysis does not take into account the social and psychological impact the project is having,” said Marsden. “Communities are engaging one another and are busy in a way that they never have been before, and, perhaps most importantly, are being treated with dignity and are developing a sense that their futures can be better than they had expected.”

Said one community member: “I used to work in Joburg and travel home past large [commercial] farms in Free State that went on as far as the eye could see. I never dreamt that this could happen here in Centane.” Another added: “We are employing our youth on the project and paying them a salary from our income so that they can see they don’t need to go to the city to look for a job.”

Another objective for WIPHOLD’s was to challenge financial and other agri- finance institutions to make finance more readily and easily accessible to small- scale and emerging farmers.

“The shift towards self-sustainability is gaining traction, with community members increasingly planting vegetable gardens in their back yards and appreciating the commercial nature of the venture – that there is a loan to be repaid,” said Marsden. “Some have said that their garden farming should provide food for their tables, which would allow their larger scale farming activities to become purely commercial.”

WIPHOLD has a 40% shareholding, with the remaining 60% held by community participants, and the company is working on a model to allow the initiative to become independent over time. One way this model might take effect is through pooling dividend payments to buy necessary plant and equipment instead of paying them out to individual participants, which would allow communities to start parallel enterprises to the maize initiative.

WIPHOLD is also working on a business plan to establish a wholesale co-op linked to the initiative, which would sell maize (bagged, semi-processed and perhaps eventually fully processed) as well as farming essentials such as chemicals, seeds and fertiliser.