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Picking the fruits of our labour: Equity-sharing schemes on wine farms in South Africa
Written by Milandré van Wyk (1) Wednesday, 14 July 2010 08:00

1994 ushered in an era of transformation and change in South Africa. The Freedom Charter of 1955 expressed the now ruling African National Congress’ (ANC) hope that “The land should belong to those who work it.”(2) Land reform and redistribution have been at the top of the democratic Government’s agenda, but has been implemented with more bark than bite. The Department of Land Affairs’ (DLA) new land redistribution policy introduced land acquisition grants to assist farms and their workers in transforming the agricultural sector in South Africa. These grants, together with farm worker equity-sharing schemes (FWES), constitute a combined effort by both the Government and the private sector to improve the lives of farm workers in South Africa.

Farm workers are among the most marginalised and impoverished groups in South Africa. In the Western Cape, every farm worker’s income further supports another five people’s livelihoods.(3) The average income of a farm worker is less than US$ 75-80 a month and has, on average, very low educational levels and nutritional status. Agriculture in South Africa is the largest sector with regards to providing employment with 640,000 permanent jobs and 300,000 seasonal, casual and contract jobs offered by commercial agriculture. (4)

Farm worker equity-sharing schemes

The majority of disadvantaged groups lack the financial resources to buy their own land. The land acquisition grant, provided by the DLA, offers individuals who earn less than US$ 185 a month a grant of US$ 2,000.(5) Notwithstanding the good intentions of this Governmental initiative, the grant does not suffice in assisting farm workers to purchase land. The idea equity-sharing schemes consequently originated as an initiative of the private sector. These schemes provide opportunities for farm workers to become beneficiaries of their employer’s farm whilst still earning a salary as an employee. Equity schemes therefore establish partnerships between farmers and workers which should advantage both parties involved. Redistribution grants, or land acquisition grants, can be used by workers to buy shares in the farm on which they are employed.      

Equity-sharing schemes have multifarious objectives, the most palpable of which is to ensure greater cash incomes to farm workers whilst providing them with a long-term capital asset and in the process shifting and transforming the nature of historically embedded power relations between farmers and workers.(6) Additional goals include the redistribution of wealth, empowerment of workers, improving the creditworthiness of workers, enhancing worker productivity and enabling ownership and control to be transferred to previously disadvantaged groups. The DLA’s policy objectives include equitable distribution of land ownership, the reduction of poverty, security of tenure and the empowerment of beneficiaries to improve their economic and social well-being.(7)

Equity-sharing schemes numbered 50 in South Africa in 1998 and have been on the increase ever since. Equity-sharing schemes do not benefit farm workers only, but also include other previously disadvantaged parties such as neighbouring rural communities. In South Africa, these schemes have primarily been implemented on wine farms (especially in the Western Cape), but have also been operating in the fruit, vegetables, olives, cut flowers, dairy and eco-tourism industries.(8)    

Fairtrade

Fairtrade Labelling Organisations International (FLO) aims to tackle poverty and empowering producers though trade. The Fairtrade label works to set international Fairtrade standards organise support for producers worldwide and promote trade justice internationally.(9) By labelling one’s product as a Fairtrade product, producers obtain a Fairtrade premium. The premium is paid on top of the agreed Fairtrade price and producers consequently use this premium to their own discretion. Typically, money earned from these premiums is used to invest in the education and healthcare of farm workers or their surrounding communities, or conversely, spent on farm improvements and processing facilities to improve the farm’s productivity. Central to the functioning of FLO is the democratic processes underlying its functioning. Producers are directly involved in the decision-making process and jointly own and manage FLO. They therefore have control over decisions concerning prices, premiums, standards and the overall strategy.(10) In order to become a certified product of Fairtrade, small farmer groups must have a democratic structure and transparent administration in place. This way, FLO obliges small producers to actively take part in democratic management, thereby nurturing active and empowered citizens.

In recent years, many wine farms have adopted equity-sharing schemes and empowerment projects whilst being certified producers of Fairtrade. Koopmanskloof in Stellenbosch is the biggest producer of Fairtrade wine in South Africa. Their 86 workers own 26% shares in the company as well 100% of their own farm, Vredehoek, whilst the Thandi label in Elgin, Western Cape was the first wine brand in the world to achieve Fairtrade accreditation.

The cases of Thandi, New Beginnings and Solms-Delta

The Thandi (Xhosa for ‘nurturing love’) wine label evolved as a partnership between the South African Forestry Company Limited (SAFCOL), a state forestry owner, members of the Lebanon community in Elgin, a local winegrower, and an Anglican social development body. Workers on the Thandi wine farm bought shares in the enterprise using their government housing subsidies. Vinfruco also has a stake in the export marketing of Thandi wines and provides mentorship to the workers. In 2004, SAFCOL handed over their shares to the remaining beneficiaries of the Thandi project. “Three trusts with different functions were created in order to govern the project in regard to business matters and community development. While one trust aims to improve the socio-economic conditions of all dwellers of the Lebanon village and De Rust village, another one only serves the 147 people who actually invested government land grants into the project. Through the trusts about 60% of Thandi is today owned by the workers”.(11) In addition to skills transfer, the Thandi project endeavours to improve the health, welfare, educational and recreational services for the local community surrounding the wine farm. The community is actively involved at all stages during the wine making process. The profits of Fairtrade premiums have been invested in a crèche for farm workers’ children as well as basic adult education.(12) Established in 1995, initially only to provide forestry and fruit operations to sustain the local community, the Thandi label has become so successful that it received a gold medal at the International Wine Challenge in London. Thandi has become a frontrunner in the application of equity-sharing schemes and the consequent empowerment of workers and many South African wine labels have started to follow suit.                                                                                                                            

New Beginnings was the first black-owned wine-producing farm in South Africa. Similar to Thandi wines, wine farm workers combined their land acquisition grants to replant vineyards allocated to them by the farm owner of Nelson’s Creek. In the case of New Beginnings, the farm owner extended the use of his cellar, production facilities and his expertise to the workers in order to produce the special label wines. Sales profits are ploughed back into improving the housing facilities of workers as well as investing in workers’ education and other community projects. The farm worker community established a legal entity, the communal property association (CPA) through which they would manage their property as a community. New Beginnings produces and exports three types of wine to Europe, the USA and Japan.(13)

Solms-Delta Pty (Ltd) was an innovative empowerment project which constituted of three adjoining farms’ workers gaining ownership of one 76ha farm. Two of the farms in Franschhoek are owned by individuals while the third is owned by the Wijn de Caab Trust. The beneficiaries of the Trust are previously disadvantaged groups and employees on the farms. The Trust employs a full-time social worker who ensures that education (both to the farm workers and their children), medical services, housing benefits, counselling, transportation, recreational facilities and other needs of the workers and the community are addressed. The farm workers of Solms Delta boast with their own brass band, walking club, rugby team and basketball team on the farm. 

Think before you drink

Farm worker equity-sharing schemes have been around for more fifteen years. Many farms, particularly wine farms in South Africa, have adopted the concept of joint ownership with their workers as an endeavour to improve workers’ quality of life. There are several adaptations of this model. With the assistance of the Government’s land acquisition grants and the empowering role of the Fairtrade label, many farms have been able to make fruitful successes out of these schemes. It is important to not only be concerned with terroir, colour or tannins when you purchase your next bottle of wine, but to be aware of the sweat, blood and tears that fill our glasses. It is after all, only in the hands of the consumer that small farm producers and community-owned labels can flourish and that these equity-sharing ventures receive the support they deserve.

NOTES:

(1) Milandré van Wyk is an External Consultant for Consultancy Africa Intelligence’s Eyes on Africa Series ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ). 
(2) Hammon, J. & Ewert, J. 1999. “A historical irony in the making? State, private sector and land reform in the South African wine industry.” in Development Southern Africa, Vol. 16(3).
(3) Hall, R., Kleinbooi, K. & Mvambo, M. 2001. “What land reform has meant and could mean to farm workers in South Africa. Theme: Farm Workers and Land Reform in Southern Africa.” Centre for Rural Legal Studies. Paper presented at the SARPN conference on Land Reform and Poverty Alleviation in Southern Africa, Pretoria, 4 - 5 June 2001.
(4) Ibid.
(5) Hammon, J. & Ewert, J. 1999. “A historical irony in the making? State, private sector and land reform in the South African wine industry.” in Development Southern Africa, Vol. 16(3):3.
(6) Ibid.
(7) Gray, B. C., Lyne, M. C. & Ferrer, S. R. D. 2004. “Measuring the Performance of Equity-Share Schemes in South African Agriculture: A Focus on Financial Criteria.” in Agrekom, Vol. 43(3):378. 
(8) Ibid.
(9) What we do. http://www.fairtrade.net.
(10) Benefits of Fairtrade. http://www.fairtrade.net.
(11) Schweitzer, E. 2008. “How Black Farm Workers become Land and Business Owners: Actors, Resources, Contexts and Outcomes of Black Empowerment Projects in the South African Wine Industry.” in Stichproben. Wiener Zeitschrift für kritische Afrikastudien, Vol 15(8):42.
(12) Social Responsibility. http://www.thandiwines.com.
(13) Schweitzer, E. 2008. “How Black Farm Workers become Land and Business Owners: Actors, Resources, Contexts and Outcomes of Black Empowerment Projects in the South African Wine Industry.” in Stichproben. Wiener Zeitschrift für Kritische Afrikastudien, Vol 15(8):41.

 

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