TUESDAY, 1.00PM
SOME of South Africa’s 50 central farm co-operatives are likely to convert into companies as storage and other contracts provided by agricultural control boards are phased out by January. In a scheme similar to the the conversion of KWV into a company by December, the registrar of co-operatives, Louis du Toit, says that between 20 and 30 of SA’s central farm co-operatives have lodged applications to convert into companies.
SA’s primary and central co-ops have a combined annual turnover of about R23-billion. By converting into companies the co-ops will have easier access to funds for investment and diversification. Du Toit declined to name the applicants, but indications are that only a few co-ops will not convert. Some co-ops, such as Mpumalanga-based grain handler OTK have already listed on the Johannesburg Stock Exchange. More co-ops are expected to follow.
Some of the new companies are likely to rank among the largest firms in the country. The co-ops are not expected to face legal battles similar to those that plagued KWV, which was the only co-op with an industry regulatory function protected by statute. In that instance, Land and Agriculture Minister Derek Hanekom claimed that certain KWV assets belong to the state, but the matter was subsequently settled out of court, with KWV agreeing to pay R477-million to a new non-profit company responsible for management of the wine industry.
Hanekom says that each co-op conversion will be looked into on an individual basis. Some observers say that grain silos could be a potential target for claims by the state, because while government support for other co-ops has not been as extensive as for KWV, they have benefited from soft Land Bank loans and subsidies.