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Thandi blazes trail for cooperative land reform model

Ronnie Morris, Business Report , 25th January 2004.

Cape Town - A successful model for land reform developed in the Western Cape has been replicated in two other provinces and is being studied by US and Russian observers.

This model, called the Thandi model after a farm in Elgin where black farm workers took ownership of a wine and fruit business, is regarded as a world first, according to land reform consultant Johan Hamman.

The wheels were set in motion when retired neurosurgeon and wine farmer Paul Cluver donated 100ha of land to 134 farm workers. A further 100ha was leased from former parastatal forestry company Safcol at a nominal rate.

The workers planted 16ha of this land with apples, 12ha with pears and 4ha with plums, while grapes were cultivated on 14ha.

The Thandi wine brand name is already well established in the UK where supermarket groups Tesco and Sainsbury's pay premium prices.

The brand has also been extended to fruit sourced from five empowerment initiatives - Sun Orange and Misgund Landgoed in the Eastern Cape, Keboes Fruit Farms in the Northern Cape and Thandi Farm and Erfdeel in the Western Cape. The fruit is marketed and distributed overseas by Capespan.

When the government's land reform programme, which aimed to put poor people onto productive farmland, started in the mid-1990s, Hamman says it quickly became clear the price of farmland in the Western Cape meant that a grant of R16 000 a person would buy virtually nothing unless the Thandi example was followed.

Another stumbling block is that the wine and fruit industries are capital and management intensive. For example, the start-up cost of farming 100ha is about R100 000.

In the early 1990s there were two models of land reform, Hamman says. The World Bank held the view that small farms were the most efficient.

A contrary view was that economies of scale were needed in export-oriented markets and modern legal institutions such as companies and trusts should be adopted, developed and adapted to empower poor people, rather than cooperatives.

The Thandi model of cooperative farming alongside an equity share scheme was developed where farmers invested in a project with their former employees, who would get the benefit of management expertise.

Hamman says this method of bringing workers into ownership of a business is so novel that it has attracted interest from the US and Russia, which have sent observers to the Western Cape to study the model.

It has been replicated in the Northern and Eastern Cape and is seen as the dominant land reform model in the Western Cape.

Hamman says land reform is needed in South Africa for sound economic and political reasons. It leads to stability in the agricultural industry and increased volumes for South African products overseas.

"You create stability by giving all stakeholders a real interest in the industry," he says.

"The nature of South Africa's land reform will be shaped by our economic principles and our constitution, not some back-to-the-land mythological reason."

Business Report 2004.