South Africa’s biggest federation of agricultural organisations, Agri-SA, has said that new draft regulations introducing racial quotas for water use licences place the country’s “tenuous food security at further risk”.
The draft regulations require farmers to have 25% to 75% black shareholding for their applications to succeed.
They were published for public comment by Water and Sanitation Minister Senzo Mchunu on 19 May, under the National Water Act.
The prescribed minimum black South African shareholding requirements of 25%, 50% or 75% for a water use licence to succeed depends on the volume of water abstracted or stored, or the area covered, in the case of commercial forest plantations.
Farmers who draw 250 000 to 500 000 cubic metres of water require 25% of black shareholding for their water use licence to be granted, while 50% black shareholding is stipulated to use more than 500 000 cubic metres. To draw more than a million cubic metres of water, 75% black shareholding is required.
Fatal consequences
Agri-SA legal and policy executive, Jansie Rabie, said while the federation fully appreciates the importance of achieving an inclusive and fairly representative agricultural sector, “the consequences that the draft regulations in their current form will have with respect to agriculture and food production in South Africa will be fatal, as it will essentially force the transfer of ownership of the ability to lawfully use water, commercial agriculture’s most crucial input factor.”
Focusing solely on ownership, to the exclusion of all other relevant factors, will “mean the loss, or partial loss, of water resources for numerous currently viable commercial farming enterprises”.
The department of water and sanitation has stood by its proposed new rules, saying there is a need to “ensure that there is transformation of water use allocations to address the disparities in access to water use from apartheid”.
Increasing poverty
Water governance expert Carin Bosman explained how the 1956 Water Act confined the use of water and the allocation of water only to white riparian landowners, which was mostly to white males.
“So, that’s why the National Water Act [of 1998] specifically says you have to address the results of past racial and gender discrimination because historically there was both racial and gender bias in the allocation of water rights.
“The Act provides the department with the mandate, as ‘public trustee’ of our nation’s water resources, to ensure that ‘water use is beneficial and efficient in the public interest’, and the public interest is that of all South Africans, including the poorest of the poor.
“Although the use of the simple, basic, procurement BEE tool or quota system in a regulation for applications for water use licences, may on paper create the impression that ‘wow, look, the government is going to address the discrimination in water allocation’, in reality, this tool will not at all address the results of either past racial or gender discrimination, and will not do anything to alleviate poverty.”
This, Bosman said, is a “huge disconnect”, and because the politicians in government do not really understand the plight of poor people in South Africa, what the draft regulation will in effect do, is increase poverty levels in the country.
“This regulation will increase poverty, it will increase hardship to a large number of people who are currently 100% dependent on agriculture for their livelihoods, and who cannot afford shares in a fruit factory. How on earth … which recipient of a R350 monthly grant will be able to become a shareholder in a large fruit farming operation? The only ones who will benefit are those tenderpreneurs who already have the millions of rands to buy a 25% or 50% share in, for example, an apple growing and processing company.”
The government also has this “warped perception” that many people have, of farmers in South Africa, “being a single white dude, with two tone shirts, khaki boots and khaki shorts. But agriculture in South Africa is way more bigger business.
“You’re talking about already multiple shareholders, international shareholders … Big corporate farming operations, have international investors, and they’re going to withdraw their investment.”
She cited how big fruit producers, for example, now can’t afford to bring in international investment or shareholding because that will mean they have to have reduced profits for their international shareholders.
“The international implications are huge. I already heard of a number of international investors who are placing their investments on hold because of the draft regulation, as they are worried that if the draft is promulgated, they won’t be able to get their licence for using water, and wont receive the benefits for investing in farming products in this country.”
Massive investments
Theo de Jager, chairperson of the board of the Southern African Agri Initiative, an agricultural interest network for farmers, said: “A dam costs you millions. Very often, a dam on the farm is more expensive than the farm itself. Many farmers invested in water storage facilities, but they still owe millions on it, every year they must pay off the loans for that.”
It is unclear whether the proposed regulations would mean that the black shareholders will also have to share in the debt that has been incurred on the storage of the water. It’s the same for the irrigation equipment, he said.
“The pivot on irrigation land is much more expensive than the land itself. The value is in the fact that you can put water on that land. Now the water will have a different shareholding. Farmers, if they knew this, would probably not have invested in the equipment.”
De Jager farms with avocados and macadamias and uses about 5 000 cubic litres of water per hectare a year, “which means that if I have more than 30ha of irrigated orchards, I will be forced to have a partner. But to farm with less than that actually makes me a smallholder farmer. We’re smallholders unless we’re prepared to be forced into a partnership”.
Most farmers in the commercial sector are family-owned businesses. “It’s a family farm. You inherit it from your dad, who inherited it from his dad, and you invest in it actually for the sake of your children. How do you BEE [black economic empowerment] a family?”
‘Devastating for the future’
Bennie van Zyl, general manager at commercial farmers union TLU SA, denounced the proposed regulations as “devastating for the future” and the most “short-sighted suggestion and proposal I’ve seen from any government in my life in the world”.
“This is not the way to do things so this government should go and rethink what they want South Africa to be when they’re finished with it,” he said. “I think we’ve come to a point in South Africa where the big question that now should be asked is, do we want to eat, do we want food on our tables?”
The government’s policy of transformation and how it is applied is “an ideological approach and it should be an economical approach”. What concerns Van Zyl is “that we have a government that doesn’t understand the economics of success, they don’t understand the market forces …. If you don’t make a profit, you’ll go out of business.
“Who on earth can BEE in a family farm? Ninety-five percent of our farms are family farms. I’m a farmer, with my son, with my family, now I have to give ownership to someone else? It cannot work like that; it cannot be sustainable and it’s not for the benefit of the country.”
De Jager says the government faces a difficult election next year and “I think [the proposed regulations are] a blind populist move, something they will do to appease the rural voters”.
“Most of the cities have slipped out of the hands of the ruling party, their strongholds are really the deep rural areas, where the poorest of the poor people in South Africa live, and us, the farmers. And by doing something like this, they appease that part of the voter’s base but they haven’t thought through the process and the consequences.”
About 25% of total production of staple foods such as grain, wheat and maize and sunflowers for cooking oil, comes from irrigation. “It is the certain part of our production. The rest is rain-fed — that is the uncertain part of our production.”
Most of the jobs in agriculture are on irrigated land. “There’s no way you can do something like this without shaking the very foundations of our capacity to create jobs and to maintain jobs. And, in agriculture we create the jobs where we need it most — in the deep rural areas … for that portion of the population that will not find jobs elsewhere.”
Redress
The department said that among the purposes of the amendments is to effect reforms in relation to equitable allocation of water use. The National Water Act recognises that water is a natural resource that belongs to all people and should be allocated to all users equitably.
South Africa is among the 30 driest countries in the world with limited water resources, and the majority of the catchments are in deficit. It is estimated that 98% of water resources were already allocated by 2004, of which most allocations are through the recognition of old water use entitlements.
Comparative statistics drawn from issued water use licences to historically advantaged individuals and historically disadvantaged individuals since 1998 indicate that a total of 412 million cubic metres of water has been allocated among the two groups, it said.
Highly skewed
Of the 412 million cubic metres of water, 313 million cubic metres (75.93%) has been allocated to white people, while a “modest” 99 million cubic metres (24.07%) has been allocated to black people, the department said.
The same analysis for water allocated by means of existing lawful water use shows that a total of 5.83 billion cubic metres of water is allocated, where 5.74 billion cubic metres (98.54%) is allocated to white people and only 90 million cubic metres (1.46%) to black people.
“These statistics indicate that water allocations remain highly skewed towards the historically advantaged individual group. Hence, the department should make efforts to improve this situation,” the department said.
The revised regulations have introduced proposed thresholds of abstraction volumes of water against the level of black ownership in applications submitted for new water use allocations. “This is done to ensure that there is transformation of water use allocations, to address the disparities in access to water use from apartheid.”
Sandile Ndlungwane, the African Farmers’ Association of South Africa’s North West executive, told Farmer’s Weekly that his organisation supported the idea behind the proposal.
“We seriously need water reform in the country, as most of the water allocated to the agriculture sector is allocated to white farmers,” he said.
“I don’t think the intention is to take existing water rights away, but rather to ensure that the remaining water and new water that becomes available as new dams are built go towards transformation.”
‘Not accurate’
But on the department’s statistics regarding the colour demographics of water users, Bosman said it “has no statistics to back that up”, because they only look at water uses operating with licences.
“There are however four types of authorisations to use water authorised under the Act, of which licensed water use is only one. Authorisation under Schedule One of the NWA is for small uses, like domestic boreholes, or swimming pools, then there is authorisation as existing lawful use – those people who used before 1998 can continue with those uses if they remain unchanged.
“Then there are water uses authorised under general authorisations in which the department can give a general authorisation to authorise the use of water in certain areas for certain groups of people.”
This, she said, is an excellent tool “to use to say well, if you are a black farmer and you use this amount of water in this area, you don’t even have to apply for a licence, you are authorised, but the department has never used the general authorisations to redress the results of past racial and gender discrimination … And they have no idea how many black people are using water under the current general authorisations, because they simply do not keep those statistics.”
Crude, poorly formulated
Bosman told of how one of her clients, a white male pig farmer in Limpopo, only employs black women in his piggery “because he said he doesn’t want men to work with his piglets – the women are kind and soft with his little baby piggies”.
For the children of his female employees, who want to study agricultural engineering, he gives full bursaries, and “there’s evidence of what he’s doing, we have affidavits of a number of black people who studied with bursaries from him, who are now agricultural engineers.
“He gives the seed of his big stock of boars to up and coming black pig farmers and runs workshops for them and he gives that seed for free and helps them to establish their own piggeries.”
The farmer is taking active steps to address the results of past racial and gender discrimination, she said. “However, when I assisted him with his water use licence application, these measures were not even considered by the department, because they only use the crude procurement tool to determine this, and his BEE level is 4.
“You simply cannot use the crude and poorly formulated procurement BEE levels or a quota system as a tool to determine how a water user is redressing the results of past racial and gender discrimination, you have to bring a large number of other factors, which the department is apparently ignoring.
South Africa has intelligent people in the country. “We must develop an intelligent mechanism to determine how we can redress the results of past racial and gender discrimination, and the BEE procurement tool or a simple quota system is not it and will not lead to either poverty alleviation or to the beneficial and efficient use of water in the public interest. Let’s not enact exploitative policies to create poverty and entrench it.”
The proposed regulations are open for public comment until 18 July.