Keboes Fruit Farms
Raap en Skraap, Orange River, Northern Cape, South Africa
Grapes growing ©Howard Davies
Fairtrade fruit is sourced from South Africa to fill seasonal supply gaps. The produce is supplied by ‘empowerment farms’, innovative joint-enterprises between farm workers and commercial farms that enable disadvantaged farm workers to participate in the global economy as owners or co-owners of commercial fruit farms. In addition, the empowerment farm concept contributes to the government’s land redistribution programme.
Background to the Thandi Initiative and ‘Empowerment Farms’
Keboes Fruit Farms is a participant in the Thandi Initiative, a project of the Capespan Foundation which co-ordinates the social investment programmes of the Capespan Group, the largest exporter of fresh fruit from South Africa. Produce from empowerment farms is sold under the Thandi brand, a Xhosa word that means ‘we bring love’.
Since the end of apartheid in 1994 all South Africans have equal rights in law. But in practice, around 40% of the black population are unemployed, compared to 5% of whites, and the white minority owns 85% of agricultural land. In response, the South African Government introduced a land reform programme which aims to increase black ownership of agricultural land to 30% by 2015, a key component in their fight to tackle poverty and inequality. The Thandi Initiative is a partnership between landowners and workers that will not only redistribute land in line with the government’s programme, but will also enable established commercial resources and profits to be shared more equitably.
A number of white owners of large commercial farms are participating in the establishment of equity share schemes in partnership with employees, known as ‘empowerment farms’. They are joint enterprises in which black farm workers form a trust to purchase a 25% - 50% share in the farming company, often in partnership with third party investors.
The workers’ trusts are financed by government grants, which the workers could alternatively have used for individual house or land purchase. The trust members continue in their role as employees, and as shareholders in the farm company they now also elect representatives to the board to participate in strategic management decisions such as approving the budget, and will receive dividends as they become available. An alternative model is for the workers’ trust to purchase a plot of land from the commercial farm and establish their own fruit farm.
In both models, the white co-owners continue to share their agricultural expertise and commercial experience to ensure and develop the commercial viability of these businesses. Thandi Initiative producers have the benefit of being linked in to Capespan Group’s established marketing and distribution network that works on behalf of its growers to secure the best price. The Thandi Initiative is developing a process in which, over a period of years, workers’ trusts will be able to increase their shareholding and eventually have the option of buying out the other shareholding groups to become sole owners of the farm company.
Many of the government projects to hand over land to formerly disadvantaged groups have failed because the new owners initially lacked both commercial experience and access to capital and markets. Fruit production for export, in particular, is a very competitive market with extremely high quality standards and requires high capital investment. The empowerment farm concept is an alternative model of land redistribution that is contributing to the realisation of government targets.
Background to Keboes Fruit Farms and Karsten Farms
The huge Keboes Fruit Farms project was instigated by Piet Karsten of the Karsten Farms Group. Over the last 35 years Mr Karsten has developed his small family table grape business into the largest table grape producer in South Africa. It is now a 1000ha company with eight farm units. employing 800 permanent employees and 2,500 seasonal workers. In addition to grapes, Karsten Farms grow melons, dates, apples and pears for export to the UK and other European destinations. In 1992 the business became a shareholder company and 350 employees have taken up share options to become shareholders in the company.
The farm units are up to 300km apart, spread out along the Orange River near the Namibian border. It is a very arid, sparsely populated area on the edge of the Kalahari Desert dotted with huge sheep farms as well as fruit farms. With low rainfall of 150-250ml a year, the farms depend on irrigation provided by the Orange River. Both permanent and seasonal workers are recruited from five locations about 750 km east of the farms and most seasonal workers return to the farm each harvest season.
Keboes Fruit Farm
When Karsten Farms took the decision to expand and extend its supply to clients for longer periods of the season it was apparent that the best option was to establish a new farm company. This was also an ideal opportunity to increase the economic empowerment of its farm workers by enabling a group of up to 300 workers to set up a trust to purchase a significant share in the new company.
Keboes Fruit Farms was therefore established 200 km west of Upington with a multimillion Rand investment funded by Karsten Farms Group (50% share), BMFI, a Black Empowerment Company (27%) and the Workers’ Trust (23%). The workers’ shares will be warehoused in a trust operated by the government-run Industrial Development Corporation for a period of 10 years during which time the members must pay for the shares registered to them. They will finance this by government land grants or through dividends received as shareholders. While some shareholders will be employed on the new farm, many will continue to work on other Karsten Farm Units but will receive a dividend from the Keboes project.
The first phase of 270ha of newly planted vineyards, with an output of around 3,700 tonnes of grapes, is now under production at Raap en Skraap. This will be increased to 500ha over the next four to five years with the planting of a further 130ha at Raap en Skraap followed by 100ha at Kanoneiland. The project will create 250 new permanent jobs as well as 920 seasonal jobs for seven months of the year.
The Keboes Farm management integrates Karsten Farms’ holistic approach to the welfare and development of its employees at all levels:
- effective technical skills training is provided in-house and by external training companies
- workers are encouraged to become actively involved in business issues
- life-skills training improves family relationships and social life as well as physical and mental health
- each farm has a health centre
- education is provided from crèche to secondary level, as well as adult literacy classes
- quality infrastructure is provided for housing, training, and sports facilities.
Farmers in South Africa are becoming increasingly marginalised. Some established farms have gone out of business as growers struggle with falling incomes caused by adverse exchange rates, high inflation rates in South Africa and falling fruit prices in Europe.
The Fairtrade pricing policy being piloted in the Thandi partnership guarantees a minimum price to cover sustainable costs of production that will give producers some certainty regarding their returns. In addition, these empowerment projects have the benefit of being linked in to Capespan’s established marketing and distribution network that works on behalf of its growers to secure above market prices. This partnership will help farmers to maintain a sustainable, long-term presence in global markets.
In addition to the minimum price, producer organisations receive a Fairtrade premium for social investment. Joint Bodies composed of elected worker representatives and managers have been established on the farms to decide in which social programmes the premium will be used. This is particularly relevant as a means of increasing the dialogue between management and workers and increasing worker participation in decision making as there is a limited tradition of trade union organisation in the South African agricultural sector.
Fairtrade and the UK table grape market
- Supermarkets specifically source grapes from the Southern Hemisphere to fill the winter/spring supply gap in order to offer year-round availability.
Protection for EU farmers
- The EU protects its fruit farmers by imposing escalating tariffs on imports from Southern Hemisphere countries during peak EU production and supply periods.
- South African grapes attract EU tariffs of up to 14.10% during the peak EU summer production period.
- On the other hand, the terms of the Trade Development and Co-operation Agreement (TDCA), which governs trade between the EU and South Africa, give EU-produced fruit tariff-free entry to South Africa. They therefore compete with local produce on a more level playing field than do South African exports to the EU.
- Spain and Greece supply 27% of the UK grapes market1 , while South African grapes, filling seasonal supply gaps, take a 22% share.
Trade for development
[ 1 ] Total grape market in 2001: 169,350 tonnes, import value £201,471 (Fresh Produce Deskbook 2003)
- The first Fairtrade fresh fruits from South Africa are sourced from ‘empowerment farms’ participating in Capespan Foundation’s Thandi Initiative in which black farm workers can apply for state grants to set up joint enterprises with white commercial farmers. The project is in line with the South African Government’s land redistribution programme which aims to increase black ownership of agricultural land to 30% by 2015. Other producer organisations are expected to be certified later.
- Produce from South Africa, having formed an important part of the consumer boycott in bringing down the apartheid regime, can now, through support of the FAIRTRADE Mark, provide an avenue for black empowerment.
- The post-apartheid South African Government specifically looked to trade with the EU to help stimulate development and tackle poverty. Fairtrade labelling of produce from empowerment farms will help ensure the benefits of trade go to black workers/shareholders.
Fairtrade Foundation 2004
Look for the FAIRTRADE Mark on products. It’s your guarantee that disavantaged farmers and workers in the developing world are getting a better deal.