AgriBEE – why would you bother?

A farmers' union has asked me to present a course on the AgriBEE Code. In conducting my research I could not fathom why any entity involved in agricultural would want to pay any attention to the AgriBEE scorecard. It's rather like paying your TV licence because it's the right thing to do but otherwise there is no other perceived benefit. The real issue with agricultural land is that of land restitution and the AgriBEE Code attempts to offer some sort of incentive to agricultural land owners to become part of this process. The only incentive offered being BEE points under the ownership scorecard. Government has committed to a number of initiatives to facilitate ownership under the code – all of which are stated land reform outcomes and land reform is still awaiting the finalisation of the Land Reform Green Paper. Most of the ownership aspect of the AgriBEE code does depend on the finalisation of the land reform legislative process.

• Contribute to increasing access and acquisition of agricultural land by Black People, through its existing programmes;
• Proactively acquire suitable agricultural land that comes onto the market for land redistribution
• Use above mentioned land and agricultural land that reverts to the state through foreclosure of indebted farmers, for redistribution, including through long lease arrangements (e.g. 99 year lease)
• Promote sustainable management and use of natural resources
• Finalise the land restitution process (it must be noted that the draft said this was to be done by 2008 – the code leaves this deadline open)
• Encourage the development of a land lease and land rental market
• Promote the consolidation and tenure on traditional community land in terms of relevant acts that support communal land
• Secure the ownership, access and tenure rights of Black Designated Groups through the registration of old order rights or new order rights into freehold ownership.

Returning to my earlier argument that, other than land redistribution there is little reason to implement a BEE scorecard within an agricultural environment. Implementation of BEE cannot be enforced without a procurement process driving it. It is because of the preferential procurement element that all BEE scorecards exist. The principle is simple – a large corporate asks its suppliers for a BEE scorecard because this has an impact in their own preferential procurement scorecard; the supplier asks its suppliers and so you get further down the chain. BEE has succeeded because of this process and this is without any assistance from the government. Agricultural produce, like all consumer goods should in theory fit in with this model. The retail sector is not the fastest adopter of BEE because there is less pressure on them to comply. The average customer is not concerned about the BEE status of their favourite retail store (although I think Jimmy Manyi might be), they purchase for a variety of reasons that are unrelated to BEE status. It is very likely that agricultural products are going to follow the same process. Pick 'n Pay is not going to quibble about the BEE status of a carrot supplier, they are going to buy because the stock is available and the price is right. Similarly, Tiger Brands is not going to prioritise baked bean suppliers on the basis of BEE status because it might possibly impact on the quality and price of the product which will result in me not buying a tin of Koo baked beans. The code does make a pathetic attempt at creating preferential procurement urgency by claiming that government will

• Align their procurement practices with AgriBEE when procuring goods and services from the agricultural Sector
• Provide Black People and QSEs preferred supplier status in the procurement of goods and services;
• Identify, prioritise and target Black entrepreneurs and Enterprises which contribute to broad-based BEE when awarding tenders and contracts to entities in the private sector; and
• Utilise all legislative and other measures available to it, including preferential procurement, to influence the attainment of broad-based BEE objectives

Of the four drivers only 1 and 4 carry any weight. In fact number 4 is a repeat of number 1. Numbers 2 and 3 lack the constitutional and legislative muscle to enforce. As it stands at the moment government is not permitted to prioritise classes of suppliers for their procurement. The success of the uptake of AgriBEE will therefore depend entirely on government as a consumer in this model. I suspect that this is not enough to sway farmers to implement any form of BEE in their organisations.

However – we are not out of the woods completely. A trend is starting to emerge within government legislative circles where BEE scorecards are going to be required when certain licences are allocated. This has been threatened in the allocation of liquor licences. There is nothing stopping the Department of Water Affairs from insisting on BEE compliance in the allocation of water licences.  In the absence of such a driver it is likely that uptake of AgriBEE is going to be very slow.

Comments

[Andrew]

Water use licensing is undertaken by DWA. The current demise of DWA is not unlike that of DAFF though....but it is a different minister....