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					         FINAL REPORT



ASSESSMENT OF AGRICULTURAL
LAND REFORM PROJECTS IN THE
       WESTERN CAPE



    AGRI-AFRICA CONSULTANTS

                for the

  WESTERN CAPE DEPARTMENT OF
         AGRICULTURE
        TENDER NO. 493-2004/2005




                                   NOVEMBER 2005
                                                      Table of Contents
List of Tables ............................................................................................................................. iv
List of Figures ............................................................................................................................ v
List of Appendices ..................................................................................................................... v
Executive Summary .................................................................................................................. vi
   Quantitative analysis .............................................................................................. vii
   Qualitative analysis ............................................................................................... viii
   General conclusion .................................................................................................. x
   Recommendations .................................................................................................. xi
1. Introduction ............................................................................................................................ 1
   1.1 Terms of reference ............................................................................................ 1
   1.2 Action steps ...................................................................................................... 2
2. Process of the investigation .................................................................................................... 5
   2.1 Research method .............................................................................................. 5
   2.2 The objectives and principles of land reform ..................................................... 7
   2.3 Formulation of a rating mechanism ................................................................... 9
   2.4 Narrative and status ........................................................................................ 13
   2.5 Empowerment and sustainability .................................................................... 17
      2.5.1 Management standards ............................................................................ 17
      2.5.2 Sustainability ............................................................................................ 18
      2.5.4 Empowerment .......................................................................................... 18
   2.6 Evaluation of the research method ................................................................. 20
      2.6.1 The project rating scorecard ..................................................................... 20
      2.6.2 The development progression model ....................................................... 23
      2.6.3 Synopsis of rating mechanisms ................................................................ 24
3. The performance of Western Cape land reform projects: a quantitative analysis ............... 25
   3.1 Financial contribution ...................................................................................... 25
   3.2 Control structure and group size ..................................................................... 27
   3.3 Control structure and project rating ................................................................. 29
   3.4 Operational constraints ................................................................................... 32
   3.5 Group dynamics .............................................................................................. 33
   3.6 Rating questionnaire response profile ............................................................. 35
      3.6.1 Macro ratings ............................................................................................ 35
      3.6.2 Micro ratings ............................................................................................. 41
4. The performance of Western Cape land reform projects: a qualitative analysis ................. 58
4. The performance of Western Cape land reform projects: a qualitative analysis ................. 58
   4.1 Introduction ..................................................................................................... 58
   4.2 Critical success indicators ............................................................................... 59
   4.3 Areas of concern ............................................................................................. 61
   4.4 Prevalent wisdom ............................................................................................ 63
   4.5 Consultants ..................................................................................................... 65
   4.6 CASP .............................................................................................................. 66
5. Recommendations ................................................................................................................ 68
   5.1 Introduction ..................................................................................................... 68
   5.2 Structure of the land reform programme ......................................................... 68
   5.3 Planning and facilitation .................................................................................. 69
   5.4 Project structure .............................................................................................. 70
   5.5 CASP .............................................................................................................. 71
   5.6 Clustering of projects ...................................................................................... 72
   5.7 Consultants ..................................................................................................... 72


                                                                                                                                             ii
   5.8 General Prognosis ......................................................................................... 73
6. Knowledge going forward .................................................................................................... 73
   6.1 Suggested rating mechanism .......................................................................... 73
   6.2 In depth investigation ...................................................................................... 75




                                                                                                                               iii
                                                        List of Tables
Table 1: Project rating questionnaire ....................................................................................... 12
Table 2: Basic project information ........................................................................................... 13
Table 3: Development Progression model - Outcomes, progression phases and reasons ........ 16
Table 4: Example - „Status report‟ ........................................................................................... 16
Table 5: Sensitivity analysis ..................................................................................................... 21
Table 6: Correlations between rating mechanisms .................................................................. 22
Table 7: Ratings of high and low road scenarios ..................................................................... 24
Table 8: Project profile by equity structure .............................................................................. 27
Table 9: Projects by number of participants and ownership structure ..................................... 28
Table 10: Beneficiary numbers by size category and ownership structure .............................. 29
Table 11: Percentage equity by size category and ownership structure ................................... 29
Table 12: Evaluation of different capital structures on project ratings* .................................. 30
Table 13: Evaluation of beneficiary group size on the project ratings ..................................... 31
Table 14: Perceived operational constraints............................................................................. 33
Table 15: Some characteristics of group behaviour ................................................................. 34
Table 16: Cooperation and sustainability ................................................................................. 34
Table 17: Achievability ............................................................................................................ 36
Table 18: Adding economic value ........................................................................................... 36
Table 19: Market, financial and production risk ...................................................................... 37
Table 20: Expected returns per beneficiary.............................................................................. 39
Table 21: Job creation .............................................................................................................. 40
Table 22: Female and youth beneficiaries................................................................................ 40
Table 23: Land access structures .............................................................................................. 41
Table 24: Access to credit/funding........................................................................................... 42
Table 25: Standard of fixed assets and movables .................................................................... 43
Table 26: Access to markets..................................................................................................... 44
Table 27: Time frame for benefits to be received .................................................................... 45
Table 28: Food security ............................................................................................................ 45
Table 29: Housing security ...................................................................................................... 46
Table 30: Social value/benefits ................................................................................................ 47
Table 31: Communication and alignment between stakeholders ............................................. 48
Table 32: Capacity development .............................................................................................. 49
Table 33: Transfer of responsibility ......................................................................................... 50
Table 34: Use of mentors ......................................................................................................... 51
Table 35: Responsibility commensurate with share ................................................................. 52
Table 36: Administration ......................................................................................................... 52
Table 37: Availability of technical services ............................................................................. 53
Table 38: Realistic expectations ............................................................................................... 54
Table 39: Tradability of investment ......................................................................................... 55
Table 40: Exit cost.................................................................................................................... 56
Table 41: Beneficiary share...................................................................................................... 57




                                                                                                                                       iv
                                                      List of Figures
Figure 1: A selection of variables affecting project status ......................................................... 6
Figure 2: The Development Progression Model ...................................................................... 15
Figure 3: Composition of the total value of the Land Reform Programme ............................. 26
Figure 4: Composition of beneficiary contribution .................................................................. 26
Figure 5: The tensions created by the policy imperatives ........................................................ 59



                                                  List of Appendices
Appendix 1: Survey list ............................................................................................................ 79
Appendix 2: Farms excluded from the analysis ....................................................................... 80
Appendix 3: Project rating questionnaire ................................................................................. 81
Appendix 4: Project information .............................................................................................. 83
Appendix 5: Project ratings: Proposed questions to include in a questionnaire ...................... 85




                                                                                                                                     v
                                  Executive Summary
Land reform is one of the most important national initiatives facing agriculture in South
Africa. With its focus both on the past (restitution) and the future (redistribution and tenure
reform), as well as on promoting social and economic equity together with productivity and a
strong economy, the programme straddles the great dichotomies of the South African
economy and society. The key outcome of a more just distribution of resources is expected to
be a strong and internationally competitive agriculture sector, while the key inputs have been
the substantial investments in human and financial resources by rural people, the state, and a
wide range of private sector and civil society organisations.

However, many land reform projects have not succeeded in developing an economic
performance that matches expectations. For this reason, the Western Cape Department of
Agriculture, collaborating with the Department of Land Affairs, called for tenders for an
appraisal of each of the land reform projects in the province. An important outcome would be
to develop methods for an in-depth evaluation of a smaller sample of land reform projects.

Terms of Reference
The Terms of Reference for this appraisal can be summarised as follows:

To conduct an appraisal and assessment of the status of all agrarian reform projects in the
Western Cape Province, in order to provide the Department of Agriculture and the
Department of Land Affairs with the following information on the overall performance of the
projects:

     Scoring each project on a 1 – 10 scale;
     Assess the implementation of the business plan activities;
     Assess the beneficiaries‟ perception of “success”;
     Evaluate institutional arrangements in the business plans and compare them to the
      current situation;
     Determine the training and support received from identified service providers;
     Assess the degree of beneficiaries‟ involvement in management decisions;
     Provide details of the problems currently experienced in terms of agricultural
      production and taking their business forward;
     Provide contact details of the “project leader” and group.

Based on the scan of each land reform project, formulate recommendations on a methodology
(or methodologies) for an in-depth evaluation for a sampled study, representative of districts,
project types and problem cases, where qualitative and quantitative parameters can be
measured and evaluated.

Action steps
As the successful contractor for this tender, Agri-Africa proposed the following action steps
to give effect to these terms of reference.

  1. Clarification of the national vision for land reform in terms of philosophy, process and
     intended outcomes in order to propose „criteria for success‟;
  2. Undertaking desk-top appraisals of project files
  3. Develop a scorecard based upon the desktop research and the „success criteria‟;
  4. Develop a questionnaire (structured/semi-structured) that will encompass the elements


                                                                                             vi
       set out in the terms of reference
  5.    Plan the field work and make appointments with all the stakeholders;
  6.    Appraisal visits by relevant members of the team to each project;
  7.    Structured interviews/discussions with service providers;
  8.    Draft report and verification of findings;
  9.    Develop methodologies and rationale for an in-depth qualitative and quantitative
       evaluation of a stratified representative sample of projects;

Process of investigation
The Department of Agriculture and the Department of Land Affairs appointed a steering
committee at whose meetings further clarity was obtained regarding the depth and extent of
the assignment. In particular it was accepted that all farms on the list would be studied
through the relevant files and visited but that the visits and interviews would be conducted on
a relatively superficial level. It was indicated that the current research would provide an
appropriate background for a future sample of in-depth case studies to be carried out later.

Research method
In giving effect to the Terms of Reference, this report provides a longer than usual description
and analysis of the research method followed. This is especially true of the development of
the project rating scorecard (to evaluate the programme overall), and the „Development
Progression Model‟ (to describe the development trajectory of each project from start to its
present situation). These aspects are discussed in Section 2 of the report. Section 3 deals with
the results of the quantitative analysis of the projects, and Section 4 with the results of the
qualitative analysis. This is followed by recommendations in Section 5, and future study
needs in section 6.

Quantitative analysis
The main findings from the survey analysis are:

      Financial contribution: The total indicated value of long term assets on the farms
       (based on business plans and subsequent discussion) is R380 million, which includes
       the capital input of the commercial farmers who are involved in share equity schemes
       and partnerships. Total commercial farmer equity is almost one third of the total capital
       invested. A further 21% consists of loans against the farm which are mainly bonded
       against the land. The 7% loans taken out by the beneficiaries have mostly been used to
       leverage up the LRAD grants, which, together with sweat capital, makes up 42%. Total
       debt is, therefore, about 30% of the total project funding, which would be an acceptable
       average level of indebtedness for an efficient commercial farming venture. Taken in
       the context of developmental capital (land reform) it is too high for comfort and is one
       important reason why some of the projects are failing.

      Control structure and group size: Commercial farmers and beneficiary partners in
       share equity schemes have invested more or less the same amount (R45m against
       R51m) although more projects are controlled by the farmers than the beneficiaries – in
       a ratio of 14:9. Also interesting, looking at the beneficiary investment alone, more has
       been invested in share schemes than full ownership schemes, notwithstanding that only
       30% of the projects visited are share equity schemes. More than 88% of the projects
       have a group size of over 21 beneficiaries, and more than 60% of the beneficiaries
       belong to groups of over 100 in total strength. The inability to control large groups and
       create the necessary alignment is one of the more toxic threats to project sustainability.


                                                                                              vii
     Control structure and project rating: The results (partially dependant on subjective
      ratings on the issues examined by interview) indicate virtually no difference between
      the share equity and full ownership schemes when the totalled survey scores are
      compared. There are important differences, however, when these two categories are
      compared under the overall sustainability and empowerment ratings as adjudged –
      share equity being high on sustainability (6.4) and low on empowerment (4.1) and full
      ownership being high on empowerment (7.1) and low on sustainability (4.9).
      Furthermore, the only type of land reform contributing simultaneously to higher scores
      on all rating systems is where small numbers of beneficiaries (one to five members per
      group) are involved with their own capital.

     Operational constraints: Interviewees, having been told that every business has its
      own set of constraints preventing the business from growing faster, were asked what
      factors were hindering their own project. The first and third most important, cash to
      operate the business and capital for development make up 45% of the perceived
      constraints. The second most important limitation is human capacity – being mainly
      technical, managerial and administrative skills. The fourth most powerful retardant is
      „government inefficiencies‟, mainly the lack of timeous delivery. Together, these four
      categories account for 75% of the total list. Lesser constraints include problems of co-
      operation within groups, and difficulties with commercial farmer partners.

     Group dynamics: There is a positive but not particularly high correlation between
      group dynamics and project performance. In other words, whilst a good cooperative
      behaviour pattern may help achieve sustainability it is, on its own, no guarantee for
      success. The reason why group behaviour has had such a negative influence on some
      farms is because each characteristic of good group synergy plays a vital role in good
      performance, and it only takes one weakness to undermine the group. It is not helpful,
      for instance to have excellent vision, meet regularly and keenly, have a common goal,
      etc. if the leadership is not effective.

     Progression modelling: An important conclusion to be reached as far as the
      progression model (future scenario analysis) versus survey ratings is concerned, is that
      they are mutually consistent. Together a picture is painted of a sample of nearly 100
      farms throughout the length and breadth of the Western Cape about half of which, if
      appropriately nurtured, should end up as being stable farming ventures. Others will at
      some stage either pass out of the system or need substantive refurbishment and
      intervention.

Qualitative analysis
The more important qualitative findings include: (a) critical success indicators, (b) areas of
concern, (c) observations on consulting input, and (d) impressions of the CASP.

The report highlights two important general characteristics of land reform projects in the
Western Cape, namely the great variability between projects and the tension that exists
amongst the policy imperatives that drive the land reform programme. The land reform
programme is driven by the political, economic and social agendas of the various participants
(in addition, of course, to private agendas). As a result, there are clear tensions between
political imperatives, mainly characterised by the drive for equity or fairness (manifested most



                                                                                            viii
obviously in the relatively small grants and relatively large beneficiary group sizes) as well as
a sense of urgency to reach the formal targets of the land reform programme. At the same
time, all participants would like to see a programme that is affordable and productive in the
sense used in this report.

During the course of the investigation it became evident that there are a number of qualitative
indicators whose presence is critical to the success of a project. These include issues such as:
    The prevalence of good faith
    Realistic expectations
    Communication is critical
    Leadership capacity
    Consistency in the alignment of project components
    Conservative financial philosophy
    Part time farming
    Mentoring

As a complement to these critical success factors, the investigators also identified a number of
key areas of concern in the course of the research:

      Cash shortages
      Group size
      Contra-land reform policy projects
      Asymmetry of project participants
      Capacity problems
      The accounting mindset
      Inability to delegate

The debate on land reform is filled with a wide variety of theories. This investigation has
considered the following:

      This investigation can neither confirm nor refute the theory that land reform has
       resulted in „artificially‟ higher land prices.
      Many projects are based on paternalistic overtures by white commercial farmers, often
       hampering real empowerment. On a positive note, the investigation did reveal that
       commercial farmers are stimulated to break away from past modes of management.
      Beneficiaries find difficulty combining the twin roles of worker and owner, especially
       when they are in an equity partnership with a farmer for whom they originally worked.
       The farmer also has problems with the dual role of employer and equity partner. In the
       worst cases this results in a continuation of paternalistic modes of management.
      Business plans are not always realistic in the assumptions and projections made and are
       written without considering risk sensitivity to reflect optimistic outcomes under ideal
       production circumstances.
      Co-ordination of services to emergent farms is important.
      Despite a positive rationale, the sweat capital concept is not contributing positively to
       the land reform programme – it is divisive and there is a high level of non-compliance..
       It should be replaced by a system where effort is rewarded only after it is given (say by
       an increased share in the farm).

It is clear that consultants fulfilled a critical role in projects. In this regard, the following


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observations are made:

      Many consultants are involved in land reform because they share the developmental
       empathy and important ideological underpinnings, which is reflected in their work.
       Sometimes ideologies result in preferred structural outcomes instead of the pursuit of
       alternative empowerment models.
      Consultants lack continuity in executing plans beyond grant approval. Consultants are
       also not held accountable for their work/proposals once the project is implemented and
       thus carry no risk for their plans.
      The general disposition surrounding land reform is one that inherently encourages
       consultants to produce positive business plans to attain a positive decision on the grant.
      Many business plans are compiled simply to enable submission for grants. There are
       several instances of „cut & paste‟ based on what worked before (in the sense of
       successful grant applications instead of successful projects).
      Most business plans do not conduct proper risk analysis nor do they make adequate
       provision for risk in their predictions.
      For several reasons, the projections and proposals made in business plans generally do
       not hold and some serious deviations are observed.
      A few prominent facilitators dominated earlier land reform projects, although this
       dominance has subsided more recently.

The introduction of CASP has brought much relief and revived optimism for many projects.
Some observations about CASP can be made in this context:

      The execution is subject to bureaucratic delays, the value of timing is not always
       appreciated;
      The support provided is often not flexible to specific needs;
      The capacity to administer the system may require attention;
      Delays in payments often cause severe cash-flow problems at farm level;
      It requires better integration with land reform – part of a holistic land reform package
       for instance;
      Matching CASP grants with credit can be important in financial leverage
      The period of dependency must be clarified and managed
      A clear exit strategy for CASP must be explained and implemented (see previous
       comments)
      The selection criteria and procedure for funds allocation and execution is often unclear
       to the role players.

General prognosis
The study took place at a time of difficult press coverage of the land reform process
(sometimes based on the more dramatic failures) and consequent low public perceptions. A
balanced prognosis on land reform would have to take into account that many of the failed
and failing projects were initiated without an adequate understanding of the dynamics
involved, or of the difficulties created by an industry characterised by low profitability and
high risk. It would also need to take account of the fact that, as the project scenarios are being
played out, the negative realities have generated a better understanding of what constitutes
failure and what corrective action is needed – especially in respect of the design and servicing
of the projects. Although there is still a great deal to be gained from the findings (see
recommendations below and commentary in the text) the overall impression is that project


                                                                                                x
success, already evident in a few projects, could start to become a more regular occurrence –
especially given the determination to succeed at both the beneficiary and administrative level.
Such a positive outcome will of course necessitate well placed and sensitive interventions and
efficient and co-ordinated structures to carry these out. Interestingly, the „progression model‟
(see above), which predicts a trajectory for each project towards either a sustainable or failed
future, indicates that almost half the projects are on a path to sustainability. Whether these
better-placed projects eventually achieve success, depends on maintaining their momentum,
receiving good support from the authorities, and in the risky agricultural context, benefiting
from a fair share of good fortune.

Recommendations
The study has highlighted a number of important areas that revolve around the structure of the
land reform programme itself, the structuring of specific projects, planning and facilitation
functions in the project preparation phase, dealing with CASP, the clustering of projects, and
the participation of consultants in projects. Initial recommendations are made in each of these
areas respectively. These recommendations should be tested in the more detailed investigation
to follow.

Structure of the land reform programme
Under the LRAD programme both the national Departments of Land Affairs and the
provincial Department of Agriculture are involved in the implementation of land reform. The
process around the application for grants under the programme, the appointment of
consultants, etc., is made under the initiative of DLA. The problem, as has become clear from
this research, is that too little expertise in the field of agriculture, both in terms of technical
and of economic and management aspects, is deployed in this phase.

By the time that agriculturalists get involved in any meaningful way, the business plan is
already drawn up, and experience shows that by this time there is pressure throughout the
system to get the business plan approved, with predictable results.

In the view of the study team, the ideal would be a land reform programme where:

      The Department of Land Affairs sets the guidelines in terms of overall policy on the
       number, types, and location of projects, as well as targets and time-frames;

      The provincial Department of Agriculture takes the initiative with project
       implementation from the first stage (i.e. project applications get made directly to the
       Department of Agriculture);

       The Department of Land Affairs stands in support of this process in terms of specific
       functions such as land transfers, etc.

This will also ensure that the provincial Department of Agriculture has a better idea of the
number and kind of post-settlement support that will be required, which will facilitate its own
planning and budgeting processes.

Planning and facilitation
In the current process a lot of emphasis is placed on the planning of land reform projects, with
relatively little time spent on preparing the participants for these new challenges. Yet the
study indicates that successful projects are almost invariably characterised by synergetic


                                                                                                xi
alignment between the various stakeholders. Such alignment does not come automatically,
and takes time to achieve. When projects are so structured that to have to service a large debt
load almost from inception (as is often the case), it is too late to start working on achieving
alignment once the project has kicked off.

When projects are structured as at present, this means that a lot of strategic planning, process
facilitation, and skills transfer will have to be done before the inception of the project.
However, this is hardly ever possible. For this reason, it is necessary to also look at the
structuring of projects (see 5.4 below). Nevertheless, the recommendation is that there should
be more substantial investment in the necessary processes of strategic planning, process
facilitation, and skills transfer in order to ensure that:

      The elements of the strategic plan are matched with each other and consistent with
       needs, goals and resources.

      All participants are clear on their roles and responsibilities in the project – extending to
       the longer term;

      The steps required for the implementation of the project are properly synchronised;

      There is full alignment among all participants on the vision and objectives of the
       project;

      Training in the management of groups is included in the support to participants,
       especially at the leadership level;

      More emphasis is placed on projects with fewer beneficiaries.

Project structure
The central problem with virtually all land reform projects is the lack of capital. This arises
from the normal capital requirement for starting virtually any kind of new business; from the
fact that the beneficiaries of land reform by definition have no or limited capital of their own;
and from the fact that in agriculture a large proportion of the start-up capital is sunk into the
purchase of land.

Three instruments are intended by the state to address this problem: the LRAD grants, the
beneficiaries‟ own contribution, and borrowing from the Land Bank and other financial
institutions. However, this research has shown that none of these, individually or in some
combination, provide a satisfactory solution. The research has confirmed that many projects
end up with an untenable debt burden, which jeopardises their sustainability. Frustration with
this state of affairs has resulted in pressure for higher state grants and measures to decrease
the price of land. However, these measures address the symptoms of the problem and not its
cause, which lies in the very nature of agriculture.

To this end, it is recommended that ways be found of circumventing the need to sink such a
large proportion of the scarce capital in land from the inception of the new farming enterprise.
This will include measures such as:

      State purchase of land and the transfer of the land into some sort of state entity, where
       the ownership gets transferred to the beneficiaries over time as they pay for it out of


                                                                                                xii
       farming profits;

      The registration of long-term leases over land, where the state can use a proportion of
       the LRAD grants to subsidise the rental in the initial phases. This will also mean that
       such leases are recognised as contributing to land reform targets;

      The innovative use of other forms of „lease to purchase‟ instruments;

      Additional rewards for active members among the beneficiaries, e.g. by withholding a
       proportion of the shares at the start of the project in order to make additional shares
       available to the more active participants;

      Greater emphasis on encouraging part time farmers to get involved in the land reform
       programme;

      More active use of state, especially municipal, land in the land reform programme;

A key to these recommendations is the recognition that beneficiaries have to carry some, but
not all of the risk inherent in the new farming ventures. In this manner, the process will ensure
that farms go to those who are able to put it to best use in terms of achieving the goals of land
reform.

CASP
While this research has shown that CASP has brought many benefits, it also has a negative
side. This is mainly in terms of the mindset it creates amongst beneficiaries; turnover or gross
revenue from the farming activities becomes associated with profits, because CASP takes care
of many of the input costs. The problem here is, of course, that CASP is creating bad habits,
notwithstanding that many projects would not work without CASP. The recommendation,
therefore, is that a mechanism for the withdrawal of support under CASP should be built into
the business plan of each project. This will include a schedule for the withdrawal of benefits
as well as time-frames to achieve this.

Clustering of projects
The example of the Ceres farms shows the benefits that beneficiaries reap from regular
contact with beneficiaries from other projects. Such informal networks create a form of social
capital and bargaining presence that stands new farmers in good stead when they can combine
with their colleagues who have confronted problems similar to their own. Ideally, this would
mean that a greater effort should be made to ensure that land reform projects are clustered
together geographically. However, this is not always feasible. To this end, the
recommendation is that the state should consider innovative ways of building such networks
among beneficiaries. This could include further encouragement of grassroots farmers‟
organisations, facilitation (and possibly even funding) of participation in existing agricultural
shows, etc., and facilitation of cooperation with existing farmer representative organisations
such as NAFU and Agri-Western Cape.

Consultants
There are certain issues around the consultants involved in the land reform programme that
need to be addressed. Systemic problems include their continued accountability once a project
has been approved, the pressure to produce a positive business plan, and the fact that a
relatively small number of consultants dominate the business. At the project level, the major


                                                                                             xiii
problems include work quality, including inadequate risk analysis, and failure in the
predictions of business plans.

This is a sensitive area, and final recommendations will have to follow from the more detailed
analysis that will be possible in the next phase of the evaluation of the land reform
programme. Nevertheless, it is recommended that the rules whereby consultants are
appointed, including the skills requirements of consultants, the instructions they receive in the
formal brief of a project, should be revised. Far greater clarity is required regarding exactly
what their roles and responsibilities are on a project. At the same time, systems that ensure
better quality control over the work of consultants need to be put in place.

In depth investigation
More needs to be understood of the detailed mechanics actually operating on the farms; there
is a real sense in establishing well-defined models of failure and success to be used as
benchmarks for future projects, and indeed to help shape the future management of land
reform. A closer, more secure analysis of a few selected projects (as proposed in the terms of
reference) would therefore be highly desirable.

In considering the methodology, which is constructed around the experience gained from this
study, the assignment needs to examine the projects in respect of: a) design and preparation,
b) degree and quality of intervention/service, and c) operational characteristics.

To achieve this at the design and preparation phase the following tasks must be carried out:

      Evaluate the project design (business plan, institutional structures, contractual
       arrangements) in a holistic way seeking out weaknesses, strengths and imbalances
       specifically with regard to appropriateness, practicability, veracity, cash flow
       generation, risk analysis, and market analysis;

      Evaluate the structural arrangements under which the project will operate and be
       governed. Consider these from the point of view of project evolvement, empowerment,
       performance incentives, and conflict management;

      Evaluate the provisions for management and capacity development;

      Examine the farm valuation used and test for sensitivity and impartiality. Establish a
       productive value from the business plan and compare with a willing buyer/seller price;

      Assess the preparation for, and implementation of the project. This would include the
       recruitment and buy-in process and end with the installation of the new owners. The
       focus would be on the development of expectations and synergies.

Support and intervention activities will include:

      Determine what assumptions were made in the plan as regards outside intervention –
       by government, mentor, or industry bodies.

      Explore the activities and expectations regarding intervention as seen by the
       beneficiaries, and establish where possible, areas of concern and influence on the
       future. Important is to determine to what extent the philosophy of „self-help‟ or


                                                                                             xiv
      „matching effort‟ such as sweat capital impacts on the outcome.


Operational dynamics could be divided into two parts, actual farming operations (what is
farmed, how it is being farmed) and the human interactions (behaviour of the group, capacity
development, empowerment).

As regards the farming operation, the focus should be on an exploration of the current
strategic vision in relation to that which was planned, and assessing the reasons behind any
differences. Furthermore, the income statement and balance sheet aspects should also be
explored as far as practicable, and a view generated on financial performance. Administrative
systems should be described and verified. At the same time, marketing arrangements, logistics
and the exposure to market risk should be explored.

As regards group behaviour, the first step will be to outline developments within the group
since recruitment. Furthermore, group dynamics should be explored by establishing (where
they exist) the formal and informal leadership patterns; the interrelationships between the
more passive and more active members; the poverty and needs profile of the members;
members‟ current and future expectations; skills levels and needs; and social issues, etc.
Ultimately, it is important that reasons be found for synergies or failure.

It is not easy to discern clearly defined typological groups from which to select a
representative sample. Having visited nearly all the Western Cape projects, the consultants
have come up with the following framework and have selected farms which would be useful
case study research material. The rationale behind the selections is contained in the report.

The typologies considered are:

1. Entrepreneurial/family group farming – to illustrate the impact of very small groups
coupled with an entrepreneurial approach in the leadership. Suggested in the report - two
farms illustrating high risk and low risk strategies.

2. Full ownership, group influence dominant („tail wagging the dog‟) – to illustrate the impact
that group interrelationships can have on the project outcome. Two farms again selected to
illustrate high group commitment and disruptive group dynamics.

3. Full ownership, involved in high-tech and managerially intensive production – to illustrate
the impact of high management demand on the project outcome of group managed farms. One
farm selected.

4. Full ownership, strongly design-dependant – to illustrate the impact of project design and
preparation and of outside intervention on project outcome of group managed farms. Two
farms selected illustrating high synergy and low synergy.

5. Share equity, motivated by balance sheet considerations – to illustrate the problems and
influences of farmer‟s situation (and philosophy) in respect of initiating schemes through
balance sheet pressure. Two farms selected.

6. Share equity, motivated by a mutually rewarding framework – to illustrate the forces at
play when the share equity arrangement is mutually rewarding and undertaken in good faith


                                                                                            xv
and trust. One farm selected.

7, Subsistence (or semi subsistence) farming – to illustrate the attitudes and outcomes of
beneficiaries towards a subsistence, or food security style of farm. One farm selected.

8. Commonage farming – Although relatively little LRAD funding has been applied to
commonage projects, the potential for this type of project should be recognised. One farm
selected.

Knowledge going forward
Suggested rating mechanism
It is to be recognised that the bird‟s eye view construct of the study questionnaire has certain
shortcomings if it is to be used in a more dynamic, management-orientated context measuring,
say, the comparative progress of each project. An adapted new score card to suit these specific
needs (monitoring and management) was accordingly designed, and is presented together with
suggested weightings as an appendix in the report.

The construction of this new questionnaire was shaped by the several considerations. Firstly,
patterns of behaviour, value systems, operational priorities, design characteristics, expectation
levels and many other elements contributing to the success or failure of a project are now
better understood. As a result, questions can be framed more definitively and with greater
clarity - specifically, the classification and weighting of components which now more
accurately reflect their impact on the project performance.

Secondly, the questionnaire is simpler in both its questions and response options. To fulfil this
need, all questions simply seek either a „yes‟ or „no‟ or „neutral‟ response. An added
advantage is that the data capture is relatively simple and easy. The rating can therefore be
carried out by relatively inexperienced officials.

Thirdly, the mechanism is more dynamic, which means that the questions asked can be
repeated at intervals and progress measured. In conjunction with target setting and support
management the score card could become a useful monitoring tool.

Finally, whilst the issues being examined are essentially the same as those explored in the
status survey, they have been broken down and reclassified. From dealing with a regional
versus project perspective and a planning versus operational perspective, the questions now
score „sustainability‟, „empowerment‟ and „intervention‟ separately - all aimed at project level
activities.




                                                                                             xvi
1. Introduction


Agricultural land reform is one of South Africa‟s most important (and difficult) national
initiatives. With its focus both on the past (restitution) and the future (redistribution and
tenure reform), as well as on promoting social and economic equity together with productivity
and a strong economy, the programme straddles the great dichotomies of the South African
economy and society. The key outcome of a more just distribution of resources is expected to
be a strong and internationally competitive agriculture sector, able to support decent
livelihoods for all who rely on it. The key inputs have been the substantial investments in
human and financial resources by rural people, the state, and a wide range of private sector
and civil society organisations.


In many cases the hopes of the land reformists have not yet borne fruit. It is becoming clear
that many land reform projects have not succeeded in developing an economic performance
that matches expectations, nor have they necessarily resulted in poverty alleviation.
Specifically, projects often appear to have provided land without generating acceptable levels
of agricultural output and economic returns to the participants. Accordingly, questions are
being raised concerning sustainability.


With this as background, the Western Cape Department of Agriculture, Collaborating with the
department of Land Affairs, called for tenders for a scan/appraisal of each of the land reform
projects in the province with a view to developing a comprehensive set of recommendations
on, amongst other matters, methods for a further in-depth evaluation of a sample of land
reform projects where qualitative and quantitative parameters can be measured and evaluated.


1.1 Terms of reference


To this end, the Terms of Reference for this project stated the following goals:


“To conduct an appraisal and assessment of the status of agrarian reform projects in the
Western Cape Province, in order to provide the Department of Agriculture, specifically the
Farmer Support and Development Directorate, with the following information on the overall
performance of a list of 111 land reform projects:



                                                                                            1
     Scoring each project on a 1 – 10 scale;


     Assess the implementation of the business plan activities;


     Assess the beneficiaries‟ perception of “success”;


     Evaluate the institutional arrangements detailed in the business plans and the current
      situation;


     Determine the training and support received from identified service providers, e.g.,
      formal short courses, mentorship, and information/advice;


     Assess the degree of beneficiaries‟ involvement in management decisions;


     Provide details of the problems currently experienced by the projects and beneficiaries
      in terms of agricultural production and taking their business forward, specifically in
      terms of agricultural production, market access, legal aspects, transfers of shares to
      inheritors, dividends on investment, understanding the project details, group dynamics,
      support in general, etc;


     Provide contact details of the “project leader” and group.


Based on the scan of each land reform project, formulate recommendations on a methodology
(or methodologies) for an in-depth evaluation for a sampled study, representative of districts,
project types and problem cases, where qualitative and quantitative parameters can be
measured and evaluated.


1.2 Action steps


Agri-Africa proposed the following action steps to give effect to these terms of reference.


  1. As a first step, the clarification, in conjunction with the relevant government
      departments, of the national vision for land reform – in terms of philosophy, process



                                                                                              2
  and intended outcomes. The vision will be translated into various „criteria for success‟
  enabling projects to be described within a consistent framework and appropriately
  benchmarked. (The basic „criteria for success‟ will need ultimately to encompass all
  stakeholder perspectives.)


2. The undertaking of desk-top appraisals of projects, to gather background information
  relating to the beneficiaries, projects‟ business plans, projects‟ objectives, existing
  institutional structures, project implementation procedures, achievements and
  performance, and post-transfer support systems and any other relevant information.
  Development of a pro forma scorecard based upon the desktop research and the „success
  criteria‟ (established in the first step). Defining the components of a scorecard that is
  consistent, effective and appropriate is regarded as one of the key aspects of the study
  and will be considered very carefully by the consulting team in conjunction with
  stakeholders.


3. Develop a comprehensive list of issues to be probed in the investigation related to
  economic, social and institutional aspects;


4. Development of a questionnaire (structured/semi-structured) that will encompass the
  elements set out in the terms of reference and possible other issues deemed necessary
  given the consultants‟ expertise but upon consultation with the client. The extent to
  which the desktop assessment will provide relevant answers for the completion of the
  questionnaire, will provide the answer as to the number of projects that will have to be
  visited.


5. Planning the field work and making appointments with all the stakeholders;


6. Appraisal visits by relevant members of the team (for instance, the wine expert would
  not accompany the team to a project that has no wine grapes) to each project to
  complete the survey and to assess its status, activities, problems and positive elements;


7. Interviews with beneficiaries and key project leaders on a “workshop” basis;
8. Structured interviews/discussions with service providers;



                                                                                              3
   9. Draft report on and verification of findings;


   10. Develop methodologies and rationale for an in-depth qualitative and quantitative
      evaluation of a stratified representative sample of projects;


   11. Compilation of final report.


   12. The action steps above were to be taken in conjunction with a project steering
      committee with which the investigation would be discussed as it the project developed.


A steering committee was accordingly appointed by the Department of Agriculture and the
Department of Land Affairs - both being involved in the land reform programme and
interested in the assignment. At these meetings further clarity was obtained regarding the
depth and extent of the assignment in terms of the researchers engaging with the projects. In
particular it was accepted that all farms on the list would be studied through the relevant files
and also visited (except where beneficiaries could not be contacted or were not available) but
that the visits and interviews would be conducted on a scanning (broad-based) level. This
clarification answers point 4 in the action steps: “The extent to which the desktop assessment
… will provide the answer as to the number of projects that will have to be visited.” It was
indicated that the current research would provide an appropriate background for a future
sample of in-depth case studies to be carried out later. For similar reasons it was also agreed
that the technological level (advising technically on the project status) would need to be
general rather than specialist.


In giving effect to these Terms of Reference, this report provides a longer than usual
description and analysis of the research method followed. This is especially true of the
development of the project rating scorecard, and the Development Progression Model. These
aspects are discussed in Section 2 of the report. Section 3 deals with the results of the
quantitative analysis of the projects, and Section 4 with the results of the qualitative analysis.
This is followed by recommendation in Section 5.




                                                                                                4
2. Process of the investigation


2.1 Research method


The terms of reference of the study indicated that 111 farms would need to be considered –
being projects approved prior to 2004. This was based on an original list presented to the
consultants by the department. Early on in the survey, it transpired that some of the farms had
either not been approved or had been transferred out of the hands of the beneficiaries, and a
new list was presented after consultation between the departments of Agriculture and Land
Affairs. The new list contained 112 names, six of which (from the Ceres area) were grouped
under the single „Ceres - phase one‟ heading. Adding these to certain farms on which a study
of the file and business plan had already been done prior to the list review (e.g. Northridge,
Whitehall) 121 projects were addressed. (The full list is contained in Appendix 1.) Eventually
94 of the projects were assessed at both the desk study and visit phases and were able to be
included in a full analysis. The 27 that were not included were because they: were sold or
liquidated (9), had not started (8), were not visited for logistical reasons (7), were taken off
the list (2) or were not agricultural (1). (The names of these farms are given in Appendix 2).


The information derived from the sample and extracted from the desk study and interview
processes was captured and analysed. The results will be discussed later in this section.
Because of the wealth of information that can accumulate in a survey of this nature, it is
tempting to over-indulge in tabulation and analysis and lose track of relevance. Only those
findings and analyses that contribute to a better understanding of the programme will be
presented here.


First, it may be of value in interpreting the results to place the survey in perspective with
regard to the study requirements and the proposed action steps. As indicated above, the
consultants were specifically asked to generate an overview of the status and efficacy of land
reform in the Western Cape, based upon an assessment that was to be „wide‟ in its approach
rather than „deep.‟ To complement this lack of depth, one of the requirements of the
assignment was to select a sample, for later in-depth study, from the farms surveyed -
illustrating by way of case studies the influence of certain key drivers such as patterns of
behaviour, service provision, governance structures etc.



                                                                                                 5
Both the broadness of the mandate and the logistics issues around site visits meant that
interviews (and a brief inspection) would be limited to about an hour and a half each. During
the process of interview and discussion certain subjective judgements would need to be made
to be able to rate the various elements of each project to provide a composite score. With this
subjectivity some error in the analysed results is to be expected.


A further factor to take into account is the enormous variability of the survey farms. Figure 1
below underlines the multiplicity of factors impinging on any given project, making each
complex, and significantly different from the others. This makes it very difficult to classify
the farms into homogeneous clusters or typologies that allow intra-group comparison. It is not
possible, for instance, to define an average (standard) farm within a typology and derive from
it a meaningful benchmark for comparison. The variability or lack of a standard is
exacerbated by the deliberately demand-led policy of LRAD with its „flexible structure‟
approach - a major point of departure for land reform policy in the Western Cape.




                             Project status
                                sustainable
  Farm productiveness (size,            Group composition
water, climate, position etc.)          (rural, part time, culture)
               Infrastructure          Skills level
                    Movables           Leadership/management
    Logistical requirements            Market
  Capital (availability, type)         Institutional make up
                          Risk         Time
        Intervention strategy          Industry norms
       Structures, contracts           Needs, aspirations

                                    Failed



                 Figure 1: A selection of variables affecting project status


Whilst the downside of the virtually unclassifiable mix of land reform farms is the difficulty
in undertaking quantitative or normative analysis, there is an upside. It is that the high



                                                                                             6
variability of land reform farms offers a useful substrate from which to learn, qualitatively at
least, some valuable lessons.


2.2 The objectives and principles of land reform


In the introduction and review of the terms of reference it is indicated that this study will
broadly evaluate the application of the Land Redistribution for Agriculture Development
(LRAD) programme primarily from an „existing project‟ perspective. Within the wider
context of a more equitable distribution of land in South Africa, the LRAD programme is
geared specifically towards the redistribution of agricultural land that is not involved in the
restitution process. Some key principles and objectives in the application of LRAD are worth
considering as a preface to a description of the study methodology and analysis.


The important objectives are:


      Increase access to state owned land by previously disadvantaged communities;
      Facilitate access to privately owned agricultural land;
      Improve nutrition and incomes of the rural poor engaging in farming activities;
      Overcome the legacy of previous racial discrimination and gender inequalities;
      Stimulate sustainable growth in the Cape.


The important principles are:


      The policy grant be able to be accessed for involvement at any level from subsistence
       farming to sophisticated corporate farming operations;
      Beneficiaries are required to make a contribution in kind or cash;
      The process is demand driven;
      The policy is flexible, accommodating various structures and grant amounts [grants
       depending on „own contribution‟];
      The department (DLA) will assist in project design [In conjunction with consultants
       and design agents];
      The Departments of Land Affairs and Agriculture as well as District Municipalities
       and relevant stakeholders will be involved in the approval and implementation phases



                                                                                              7
       [Notably through the District Assessment Committee (DAC)].


Underlying the general set of objectives and principles of LRAD and essential for its ultimate
success are two basic themes – sustainable development and black empowerment, both in the
specific context of farm land ownership. Of the two, practical considerations must place the
issue of sustainability at the forefront simply because failure at this level would negate any
further social and political value to be derived from the policy. Sustainability is a non
negotiable project requirement. Therefore, in designing a project scoring mechanism greatest
emphasis will be placed on sustainability. For a project to be sustainable it should:


“consist (or be scheduled to consist) of a resource base, including the human component,
which is capable of generating sufficient output to, at the very minimum, maintain the original
resource base plus offer some benefit to its owners”.


Recognising too the central importance of black empowerment in land reform policy, an
attempt is also made to examine this aspect. One of the problems concerning empowerment is
defining the concept. Bearing in mind that fuller discussion on the issue will be given later,
suffice for the present to point out that a suitable definition must go beyond the simple
concept of „empowerment is ownership‟; it needs to embrace also the freedom to exploit
ownership, within accepted norms, in ways that suit the owner‟s economic purpose. It follows
that a fully empowered project will require a balanced resource base governed by a suitable
institutional structure that does not impede business development. Distilling these thoughts, a
suitable and brief definition of empowerment for the purposes of this analysis would be:


   „The freedom of the landowner(s) to direct the activities on his(their) land along accepted
   farming principles‟.


By implication, if the owner decides to do nothing on his land, it must not be because he has
no other resources with which to farm it. If that were the case he would not be empowered.


A further point needs to be made regarding the objectives and principles of LRAD. It is to
appreciate that the LRAD programme is designed to meet a „macro‟ (national) need through
implementation at „micro‟ (project) level. For this reason the assessment mechanism is
designed to examine both levels separately, aware that certain components of successful


                                                                                             8
outcomes at these levels may possibly be in conflict with each other. An example would be: at
„macro‟ level, high overall numbers of beneficiaries are important to be able to contribute to a
speedier roll out, which in turn, could result in large numbers of beneficiaries per project.
Such a positive outcome at macro level could be in conflict with „micro‟ level performance -
large groups impeding efficient decision-making and undermining sustainability.


Finally, the assignment requires that a desk evaluation be performed before the visit
interview. The main information source is the original business plan. The predictions made in
the business plan can then be compared to the actual outcome as determined at the project
visit.


To sum up: the project evaluation is primarily focussed on agricultural sustainability at
project level, though it does account for the central issue of empowerment as specifically
defined. The study intention is to develop a two-by-two matrix where (a) the planning aspects
are compared with actual, and (b) the project contribution in the regional context (macro
level) is viewed against its contribution as a sustainable entity (micro level).


2.3 Formulation of a rating mechanism
In line with the above framework, a questionnaire (the basis for a score card) was designed to
consist of two parts – a first portion to examine the macro (national level) influences and a
lower portion which is intended to inform on the issues relevant at the micro or project level.
With some practical exceptions, each element of the questionnaire was examined in terms of
its status at both the planning stages and during the project visit, enabling a comparison to be
made between the plan and the outcome.


The questionnaire as originally presented to the client for comment prior to its being used, is
exhibited in Appendix 3. A summarised version illustrating the weightings in the different
categories is presented in table 1 below. In addition to the „score card‟ questionnaire is a
second questionnaire, designed to assimilate the underlying background information of each
farm, is shown in Appendix 4 and also presented in summary form in Table 2.


Before commenting directly on the tables it needs to be pointed out that the design of the
questionnaires was based on first principles and is a necessary first step in attempting to
measure the core foci of LRAD policy. In the practice of gathering the information, one or


                                                                                              9
two questions became irrelevant or superfluous (such as the percentage disabled) and have
been excluded from the questionnaire here presented, and the analysis. The weightings
applied in the final analysis have been retained as they were in line with the original rating
structure adopted by the study steering committee. Towards the end of the report a
recommended scorecard will be presented, updated from the experience gained from the
project visits and following discussion amongst the study team and with the steering
committee.


Importantly, the all-important qualitative findings of this study were generated directly as a
consequence of the structured pattern of discussions stimulated by the questions. These
combined with a physical „look‟ at each project farm enabled the consultants to evaluate
within certain constraints the sustainability and empowerment levels of each project. These
evaluations, as we shall see, form an integral part of the assessment.


A cursory glance at the questionnaire reveals the unavoidable need for subjective judgement.
To minimise the degree of possible error, especially in the ratings questionnaire (table 1) and
except in instances where the answer is one of a clearly defined set, choices are mainly
restricted to only three outcomes, „yes‟, „no‟ or „not clear/neutral response‟.


„Sidetracking‟ during the interview was often encouraged - the intention being to develop a
relaxed and neutral interview environment in order that some of the underlying nuances
would be revealed. Interviews began with the assurance that information received would not
alter or jeopardise the project. On several occasions, in fact, it was necessary to emphasise
that the interview team were without authority to introduce funds or other assistance into the
project – expectations having been raised simply in the making of an appointment. Where
possible a meeting was sought with as many of the trustees as possible. Sometimes, there
were only one or two present at the interview, in which case it was either the chairman of the
group or manager of the project, who was then asked specifically to speak on behalf of the
group as a whole. With the share equity schemes, in nearly all cases, an interview with the
commercial farming partner was undertaken.


Regarding financial information, it is important to note that the starting point for gathering
information was from the original forecasts outlined in the business plan. During interviews,
respondents were asked to confirm whether the information extracted from the business plan


                                                                                            10
fairly represented what actually happened at the time of project initiation. This information
was accordingly updated where it was felt to be valid. In share equity projects the financial
data was provided by the commercial partner – in all cases better versed than the beneficiaries
in such matters. No supporting documentation was examined – it being accepted that the
financial profile should not provide more than a broad and general perspective of size and
structure.




                                                                                            11
Table 1: Project rating questionnaire
Perspective   Categories         Weight   Component             Weight   Clarification                    Weight
              Positive                    Sustainability         40      Is the concept achievable?        10
              economic                    Added value            40      Will the project add value in     10
              impact (regional     25                                    terms of growth?
              context)                    Market, financial,             Has risk been assessed/built
                                          production risk         20     in?                                 5
Macro         Extent of                   Number of               40     Number based on official           20
              influence                   beneficiaries                  approval?
              (regional                   Income benefit per      40     Annual returns in Rand at          20
              context)             50     beneficiary                    maturity?
                                          Jobs added              20     Above existing, in terms of        10
                                                                         number of beneficiaries who
                                                                         will have contributed
              Empowerment          25     Gender                  50     % of total beneficiaries          12.5
              targets                     Youth                   50     % of total beneficiaries          12.5
                                          Access to land/         60     Nature of tenure and degree of     18
                                          fixed assets                   control over land use
                                          Access to funds         20     Is creditworthiness measured       6
              Resources            30                                    in terms of available credit?
                                          Infrastructure          5      Standard – includes roads,        1.5
                                                                         fences, water
                                          Movables                5      Standard of livestock,            1.5
                                                                         machinery
                                          Access to markets       10     Considered in business sense?      3
                                          Capacity/skills         20     Does it form part of the           6
                                          development                    programme?
                                          Transfer of             15     Is there a plan to transfer       4.5
                                          responsibility                 management responsibility?
                                          Mentoring/outside       20     Is it built into the plan?         6
                                          management
              Human Capital        30     Responsibility          15     Is it commensurate with           4.5
                                                                         ownership share?
                                          Control/ admin          15     Is it built in?                   4.5
Micro                                     Access to technical     15     Is it available/potentially       4.5
                                          services                       available?
                                          Acceptable time         10     When are benefits expected to      2
                                          frame                          accrue meaningfully?
                                          Food security           5      Does the project enhance food      1
                                                                         security?
                                          Housing security        10     Is it part of the programme?       2
              Social               20     Social                  25     Does the project result in         5
              parameters                  improvement                    improvement?
                                          Effective               30     Has communication between          6
                                          communication for              stakeholders aligned
                                          alignment                      beneficiaries?
                                          Realistic               20     Have/are expectations              4
                                          expectations                   appropriately tempered?
                                          Tradability             30     Is the benefit tradable and        5
              Investment/cont      20                                    transferable?
              ract                        Exit strategy           40     Can beneficiaries exit without     8
              characteristics                                            personal cost?
                                          Beneficiary group       30     What share of the total is         6
                                          share of total                 acquired for beneficiaries?
              Site assessment     100     Management             100
              – standard                  standard
              achieved            100     Sustainability         100
                                  100     Empowerment            100




                                                                                                                12
Table 2: Basic project information

           Categories              Components                                                                     Format                        Planning       Operation
                                   Number and project name                                                          51                                   Welgemeen
                                   Dominant enterprises                                                                                                   Dec Fruit
       Basic information           Total Ha                                                                                                                  246
                                   Ha 'special' (mainly irrigated)                                                                                        127 Irrig
                                   Nearest town                                                                                                            Ceres

                                   Type of project: What involvement structure is         Share equity, share cropping, housing/agric, full
       Project structure                                                                  ownership, joint ventures, lease,subdivision, co-        se                 se
                                   applied
                                                                                          operative, property association.
                                   Total value of project (all parties)                   Amount in Rand?                                       12194000       15794000
                                   Total debt against project (where there is a partner -
                                                                                          Amount in Rand? (If known)                                            3600000
                                   ie s/equity schemes)
                                   Total contribution of benefic to value of project (grant,
                                                                                             Amount in Rand?                                    9005482         9005482
                                   loan, sweat, cash)
                                   Total farmer donation(%)                               % of total equity
 Project capitalisation (Total) Total farmer loan (%)                                     % of total equity
(where unavailable on visit, b/plan Total farmer equity(%)                                % of total equity                                       26.1              26.1
         figures used)              Beneficiaries' contribution (grant)%                  % of total equity                                       49.9              49.9
                                   Beneficiaries' contribution (loan)%                    % of total equity                                       15.6              15.6
                                   Beneficiaries' contribution (labour)%                  % of total equity                                        8.4                8.4
                                   beneficiaries' contribution (assets/cash)%             % of total equity
                                   CASP Grant %                                           % of total equity
                                   Allocation of funds to land/fixed assets (%)           Percentage grant to land                                 86                 86
                                   Allocation of funds to other (%)                       Percentage grant to other                                14                 14

                                                                                          Land with improvements; land, improvements plus
                                   Value source: What kind of value underpins the
                                                                                          movables; part of a simple going concern; part of a     lipm                lipm
                                   grant money?
                                                                                          complex operating entity; other value
      Beneficiary capital
                                                                                          What share of the total is acquired for the
                                   group beneficiary share of total%                                                                               60                 60
                                                                                          beneficiaries as a group?
                                                                                          What share of the total is acquired for each
                                   individual beneficiary share of total%                                                                         0.34              0.34
                                                                                          beneficiary?
                                   first limitation                                                                                                                Capital
 Resource limitation (seen by                                                                  Which resource is most limiting to project
                                   second limitation                                                                                                           water cost
        beneficiary)                                                                                        furtherance
                                   third limitation
                                   Initiator of project                                   Farmer or beneficiary                                   both              both
                                                                                                                                                motivation     Motivation
                                   farmer - reason for involvement                        What does the farmer intend to achieve?
    Stakeholder motivation                                                                                                                      expansion      Expansion
                                                                                                                                                  work             income
                                   beneficiary - reason for involvement                   What does the beneficiary intend to achieve?
                                                                                                                                                 income
                                   Clarity of project objective                           clear, conflicting, muddled                                               clear
                                   Degree of internal alignment                           aligned, conflicting, disinterested                                      aligned
                                   Leadership style                                       autocratic, consultative, balanced                                  consultative
   Co-operative behaviour
                                   Leadership strength                                    strong, reasonable, weak                                             reasonable
                                   Frequency of meetings                                  weekly, monthly, annually, sporadic                                      monthly
                                   Attendance                                             keen, average, indifferent                                                keen




2.4 Narrative and status


Following each project visit, a ‘general narrative’ describing the more relevant and essential
issues around each project was compiled. These narratives appear in the „Project Profile‟
document (a combination of each project‟s „rating‟ and „basic information‟ schedule) which



                                                                                                                                                             13
forms a „volume two‟ addendum to this report. The narratives are contained in the rating
schedule and help set the scene for an understanding of the influences currently impacting on
the project.


In addition to the narrative is a ‘status report’, which forms part of the „basic information‟
schedule. The status report is based on the premise that each project follows a progression
pattern along the lines illustrated by the diagram in figure 1 – entitled the Development
Progression Model.


Experience would seem to indicate that following a short and critical period of initiation, or
„start‟ a given project is set upon a path leading ultimately to „success‟ via a „high road‟
progression or „failure‟ via a diametrically opposite „low road‟. In arriving at its destination
the project passes through certain phases, each of which, from a policy point of view, calls for
appropriate strategies and interventions. At any point the project could, with radical strategic
change or intervention, be launched again from „start‟ in a new direction. In practice, such
interference seems to be applied only once the situation has reached „failure point‟. Once an
existing project was restarted it would again follow one or other the high or low road
trajectories.


There are some important conceptual tools which the „development progression model‟ can
offer. Firstly, it underlines the importance of the planning and launching phase („start‟) of any
project. It is at this point that the most efficient way to a successful endpoint (organically, and
without intensive intervention) is established – the seeds of its future success or failure are
sown. It emphasises how crucial is proper evaluation, planning and preparation to the
outcome. Secondly, the model indicates at which point in the development trajectory the
project is and whether the prognosis is positive (high road) or negative (low road). Thirdly, it
enables or informs on remedial or supportive intervention to be applied in a way that is
consistent with the project‟s developmental status. This kind of understanding and subsequent
interpretation will lead to more effective intervention strategies.




                                                                                                14
Figure 2: The Development Progression Model

The experience of the interviewer(s) over the large range and variety of projects indicate(s)
that after the completion of a site visit/interview it is, by comparison with other subjectively
viewed aspects, relatively easy to identify the progression phase within a given project‟s
evolution. The resultant „status report‟ mentioned above, based on the progression concept,
could be updated from time to time to indicate each project‟s most recent standing in the
developmental progression. Also included in the status report in volume two of the report is
the key reasons for the project being at a particular position along its trajectory. The different
types of „key reasons‟, along with the „scenario outcomes‟ and „progression phases‟, are
presented in Table 3.

An important reminder in respect of the „status report‟ is that it excludes the aspect of
empowerment, concentrating on sustainability, because, for reasons given earlier,
sustainability underwrites successful land reform.


Put together, these offer a revealing thumbnail sketch of the status quo of each project, an
illustrative example of which is shown in Table 4. There are usually several key reasons for a
project being at the point it is along its progression. The „status report‟ limits the number of
key reasons to two, making it necessary in many cases to prioritise from a selection of reasons
– a refinement that is substantially more difficult than simply identifying a position along the
„progression trajectory‟. This difficulty must be recognised, along with the generally
subjective nature of the survey, when the status reports are consulted.


                                                                                               15
Contained in Table 3 is the total number of „reason categories‟ actually assessed within the
full survey. The lessons and implications arising from this information will be considered
later in this report. In the meantime the data make interesting reading and are an indication of
some of the forces at play. As mentioned, the sample eventually consisted of 94 farms;
altogether 185 „reasons‟ are given, confirming that in nearly all cases two reasons were
applied per farming project.

Table 3: Development Progression model - Outcomes, progression phases and reasons
Scenario       Progression        Key reason(s) contributing to           Projects
outcome        phase              situation                              involved
                                  state intervention                         4
                                             private intervention                                      3
neutral            Start/restart             land transfer                                             1
                                             just started                                              3
                                             strategic change                                          5
                                             positive management                                       26
                                             supporting partner                                        19
                   Synergetic/               state intervention                                        7
positive           advancing/
                   embedding/ stable         private intervention                                      6
                                             focused ownership                                         18
                                             committed leadership                                      2
                                             group conflict                                            17
                                             inappropriately managed                                   28
                                             cash/equipment/stock shortage                             13

                   Tenuous/declining/ negative partnership                                             2
negative           collapsing/        poor resources                                                   7
                   stagnant           bureaucracy                                                      3
                                             low margins                                               5
                                             debt burden                                               12
                                             production risk                                           4


Table 4: Example - ‘Status report’
Name of project                    Welgemeen
Direction of progress              Positive
State of progress                  Advancing
Reasons for situation              Supporting partner, positive management
Source: Extracted from the „information schedule‟ in the appendix and to be seen in conjunction with
development progression model – figure 2




                                                                                                            16
2.5 Empowerment and sustainability

Empowerment and sustainability have been mentioned briefly early on in the chapter. These
are central concepts in respect of land reform and need to be expanded on further –
specifically within this framework.


Politically, „reform‟ in South African land reform has to do principally with empowerment
being the underlying motive for land reform policy. But it needs, as said earlier, a sustainable
environment to succeed. Both factors need to be considered, separately as well as in
combination. To establish the validity of the scoring mechanisms and to correlate these
against broadly adjudged sustainability and empowerment ratings, the interviewers were
required to score (out of ten): the sustainability of the project; the management levels
applying to the project; and the degree of empowerment the project attains. The scores were
the result of the overall impression created by the project.


Clearly, to be able to apply such an overall rating, the concepts of management,
empowerment and sustainability need to be very clearly understood. The following brief
outline is how the interviewer(s) rationalised their individual project ratings.

2.5.1 Management standards

This is an overall impression based on the capacity of the individual(s) who are managing the
project on a day to day basis in respect of: (a) administrative skills and understanding (e.g.
able to read and comprehend business accounts); (b) technical skills and understanding; (c) a
feeling for human resources and worker motivation, (d) task allocation and leadership; (e)
physical assessment on site of ability to maintain good order within the resource base; (f)
assessment of the standing crops and enterprises (e.g. weeds etc). Judgement in respect of the
management standards must be „appropriate‟ insofar that it must be viewed against the
operating environment under which the manager(s) is expected to perform as well as take
cognisance of the complexity and size of the farm being managed. In other words the „horses
for courses‟ principle is to be applied.


Thus farms which have exhausted available capital resources without adding value and where
the activities have been reduced to a point of stagnation and where there is no commitment or
vision and insufficient skills to farm, would be rated one or zero out of ten. On the other hand,


                                                                                              17
where management is in control, the activities are programmed and the farm operates
inexorably towards a clear and workable vision, backed up with suitable administration and
technology, the farm would rate a nine or ten.


2.5.2 Sustainability

Rating sustainability implies a degree of prediction based on present knowledge. At some
foreseeable point in the future, given necessary interventions, the project should not only be
able to continue on its own merits but also offer an acceptable benefit/reward to its
beneficiaries. Sustainable projects are not static and must develop a resource base that does
not require to be reinforced by grant capital once properly developed. A project heading
towards sustainability must fulfil certain criteria: it must have motivated and competent
management (or at least a meaningful programme to develop it); it must have a balanced
resource base (or a guarantee that that will be provided); it must have synergy and alignment
within the group and between partners (contracts and structures should attest to this); it must
have confident strategies to deal with risk; and it must have clear vision.


Farms that are heading towards or which have reached the sort of group conflict that ends in
an impasse, or farms where the resource base is being eroded for whatever reason (e.g. a
fundamentally bad farm, losses etc) will get very low ratings – these are farms needing
corrective action rather than supportive intervention. On the other hand, where farms are
inherently or potentially profitable and where the key resources are harmoniously managed
and where there is synergy among role players and the business environment is promising,
such farms will rate highly. Importantly, a high level of sustainability requires more than good
management.

2.5.4 Empowerment

Empowerment means the ability and freedom of the landowner(s) to direct the activities on
his (their) land towards achieving an acceptable farming future of their choice. Empowerment
within this definition must meet two types of criteria if it is to be rated highly. Firstly, the
structures, contracts, governance arrangements and their practical application must place the
control of the project firmly in the hands of the HDI beneficiaries. It is important to recognise
that the statutory aspect of empowerment, via contracts and institutions, is in many cases
tempered or altered by the realities of the situation. The consultants rating of empowerment is


                                                                                              18
based upon the practical application of control, which may differ from theoretical control by
statutory arrangement, and which could be influenced by, say, the dominant skills or position
of a commercial partner, or by the business realities of the market etc.


Secondly, there is the operational aspect of empowerment that can completely override any
institutional powers the beneficiary group may have. The „ability and freedom to direct‟ can
be curtailed by lack of cash and supplier credit, by group conflict, by a poorly resourced
project, or by a lack of basic skills, commitment and understanding. The allocation of an
overall rating of a project in empowerment terms must consider both aspects.


A smallholding owned by a family and farmed part time within the family‟s skills capacity
and where the family are committed to the way of life offered by the farm would receive a
high empowerment rating (and would incidentally also receive high ratings for sustainability
and management). A large project with high business dependency limiting the flexibility of
control of the beneficiaries would carry a lower empowerment rating. The lowest rating
would apply to farm businesses where large numbers of beneficiaries own a small share of a
share equity scheme and are unable to apply any form of influence on the business.


To add generally to the discussion on rating mechanisms, it should be mentioned that the
development of a „social index‟, based upon the perceived social benefit attributable by each
land reform project, was considered but eventually abandoned because it was not possible
within the survey constraints to make a meaningful assessment. However, questions were
asked in the interview, as to whether the beneficiary spokespeople speaking on behalf of the
group felt there had been an improvement to their social positions or their quality of life.
From the response (to be shown later), it could be said that in all but the most depressing
situations, and even though all but a very few had received no tangible benefit, the
beneficiaries were pleased they had become involved in land reform projects - citing usually
that there had been at the very minimum an uplifting of their social standing.


In addition to the „social benefit‟ aspect is some further information on group characteristics
contained in a „basic information‟ form (illustrated in Table 2). This section probes
cooperative issues such as leadership, alignment, group vision, attendance at meetings etc.
Whilst these are pivotal matters in land reform, it needs to be remembered that a conclusive
investigation in group dynamics is beyond the bounds of this study; the information is


                                                                                            19
relatively cursorily gleaned and can give little more than an indication of the impact of human
variables on cooperative behaviour. The question of the group dynamic variables as assessed
in this assignment is discussed further in section 3.


2.6 Evaluation of the research method


2.6.1 The project rating scorecard


To remind the reader concerning rating options, the basic rating mechanism used in the
questionnaire (Table 1 and Appendix 1) was constructed from first principles and consisted of
a „macro‟ (or regional) system and a „micro‟ (or project-based) system. Overlaying these were
a separate set of ratings, based on overall impressions and using the knowledge derived from
both the desk study and the interview/inspection process, which measured (a) management
standards, (b) sustainability scenarios, and (c) levels of empowerment. Finally, utilising the
development progression model proposed earlier, each project was allocated a „progression
status‟ – a point along a perceived route to success or failure. This last, determined at the data
capture stage, is also based upon an overall impression.


The robustness of the scoring method was tested, with the results presented in Table 5. Here
the average score of the whole sample for the macro and micro aspects respectively was
taken, and the weights of each of the elements both halved and doubled. The impact of this
change in the weight is then calculated as a percentage of the first column. The sensitivity
is simulated through the actual data captured; only the weightings are changed - one at a
time. The weights of items that are not specifically being tested are compensated for on a pro
rata basis, adding up to a total weight for all items of 1.00 (100%) for each of the macro and
micro categories. The results show that the scorecard is relatively insensitive to a change in
the weight of a single element – the largest percentage changes are under 10%


The results from the different components of the scorecard were then also compared with
each other to establish where correlations exist and whether these could be used for
meaningful evaluation given the potential for possible inaccuracy. Such inaccuracies could
arise from several sources - the zero-based development of a rating mechanism (i.e. no
benchmark from previous experience), the high variability within the farms visited, the
complexity of each enterprise, and the need to make subjective assessments. The correlating


                                                                                               20
process determines which of the rating mechanisms could be used to help manage the land
reform process and at what level of reliability.


Table 5: Sensitivity analysis
                                                                                         Percentage
                                                                                         changed if:
                             Aspect examined                                 weight
                                                                                      weight    weight
                                                                                      halved   doubled
Is the project concept fundamentally achievable (overall impression)?         0.10     -2.05     4.36
Will the project add general economic value in terms of growth?               0.10    -0.94      1.88
Has market risk been assessed?/ Is it a significant factor?                   0.02    -0.17      0.39
Has financial risk been assessed?/ Is it a significant factor?                0.02    -0.93      0.06
Has production risk been assessed?/ Is it a significant factor?               0.02    -0.97      0.20
Number of beneficiaries approved?                                             0.20    -0.92      4.51
Expected annual returns in Rand value at maturity? (per beneficiary)          0.20     0.23     -0.45
Likely jobs created over those existing, expressed per beneficiary
                                                                              0.10
contributing?                                                                          0.82     -1.64
Female beneficiaries expressed as % total beneficiaries?                      0.13    -1.15      2.30
Youth (18-35 years) expressed as % total beneficiaries?                       0.13     4.35     -8.70
                                                                              1.00
Nature of tenure and control of BEE component - degree of control over how
                                                                              0.18
land is used?                                                                         -3.32     6.60
Creditworthiness measured in terms of available credit - opinion where
                                                                              0.06
necessary?                                                                             0.29     -0.58
Standard of infrastructure - roads, fencing, water supply, housing, farm
                                                                              0.02
buildings - overall impression?                                                       -0.03      0.05
Standard of movables - Machinery, livestock etc?                              0.02     0.05     -0.10
Market issues - dealt with as a business component?                           0.03    -0.19      0.38
Was/is capacity building part of the programme?                               0.06     0.63     -1.27
Is there a specific plan to develop management capacity to transfer
                                                                              0.05
responsibility?                                                                        0.90     -1.79
Is mentoring built in to the plan/operation?                                  0.06     0.24     -0.47
Is decision making responsibility commensurate with share?                    0.05    -0.35      0.70
Is effective administration built in?                                         0.05     0.11     -0.23
Potential or existence of technical service                                   0.05    -0.78      1.56
When do benefits accrue meaningfully? (Expectation)                           0.02    -0.08      0.17
Does the project enhance food security?                                       0.01     0.26     -0.53
Is housing security included in the programme?                                0.02     0.68     -1.37
Does the project improve social standing?                                     0.05    -0.41      0.83
Has the communication between stakeholders aligned the beneficiaries?         0.06    -1.56      3.11
Have expectations been appropriately tempered?                                0.04     0.45     -0.90
Is the benefit tradable and transferable?                                     0.06     0.69     -1.38
Can beneficiaries exit without personal cost under worst case scenario?       0.08     3.02     -6.03
Share of ownership acquired for the group of beneficiaries?                   0.06    -1.00      2.00
                                                                              1.00




Correlations between comparable ratings were carried out on all the above rating systems, and
are summarised in Table 6 (perfect correlation gives an index of one and no correlation gives
an index of zero.)



                                                                                                   21
Table 6: Correlations between rating mechanisms
                                                                                      Correlation
Group examined                         Correlation between
                                                                                      coefficient
                                     Macro level vs. micro level (plan)                0.37 (low)
                                     Macro level vs. micro level (visit)               0.61 (fair)
Intra-survey correlations
                                     Planning vs. visit (macro-level)                  0.37 (low)
                                     Planning vs. visit (micro level)                   0.09 (nil)
                                     Micro survey vs. sustainability rating            0.63 (fair)
„Overall ratings‟ correlated against
                                     Micro survey vs. empowerment rating               0.44 (low)
survey
                                     Micro survey vs. management std rating            0.60 (fair)
                                     Sustainability vs. empowerment                     0.11 (nil)
Intra-overall ratings                Management vs. empowerment                        -0.05 (nil)
                                     Sustainability vs. management                    0.82 (high)


Regional vs. project level survey
The regional survey scorecard (macro) versus the project scorecard (micro) – with the
comparisons done at the planning and interview (operational) stages - produced correlation
coefficients at the planning stage of 0,37, and at the interview stage, when the project was
operational, of 0.61. This means that, especially in the planning stage, there is not much
correlation between the macro and micro levels. This is not surprising seeing that in some
cases regional land reform targets (gender, group size) are not in line with, in fact sometimes
even conflict with, project needs. There is little value to be derived from these correlations
although, as will be discussed later and based on experience, there is reason to consider a
single rating directed at project level but which incorporates some of the elements considered
at regional level.


Planning vs. interviews
The correlation coefficient comparing planning data with operational (interview) data is 0.36
for the macro survey and 0.09 for the project level survey. This shows a very loose
association at regional level and no association at all at project level. This in itself is a
surprising and meaningful finding, especially at project level. It simply says that what the plan
intended did not happen in practice. Nor did the opposite happen of that which was expected
(i.e. a negative correlation) – there is simply no linkage. This finding questions the value, not
of planning per se, which is extremely important, but of planning as it was allowed to take
place when the projects were initiated. More will be said on this subject later when the
involvement of consultants and planning generally is reviewed. It is also indirectly a
reflection of the supporting structures that were in place at that time.



                                                                                              22
Management, sustainability, and empowerment ratings vs. the interviews
These correlations allow a comparison to be made between the micro survey data and the
subjective 0 -10 ratings applied, post visit, to the various projects in respect of management
standards, sustainability index, and empowerment. The management and sustainability ratings
each indicate a loose but meaningful correlation with the micro level survey score, being 0.60
and 0.62 respectively. The empowerment rating is more loosely correlated at 0.44. All these
results support each other. The important message is that each can play a useful role in the
management and understanding of land reform as it is currently being implemented,
especially if the questionnaire and rating systems are more rigidly designed and exist within a
better understood framework – all of which the current experience has now made more
feasible. A further message is that the ratings are insufficiently reliable to be a sole source of
gauging the success or failure of a project, but rather as part of a multi-faceted approach to the
problem.


Overall subjective ratings correlated with each other
The results of cross correlations between the overall ratings are revealing and significant.
Empowerment with sustainability gives a correlation coefficient of 0.11, and empowerment
with management a coefficient of -0.05. One can conclude, within the constraints of
methodology and definitions, that empowerment is independent of both sustainability and
management. There is not a negative correlation (as some pessimists might believe), namely
that sustainability is reduced by empowerment. It simply shows that, under the present
realities, the two matters are not influenced by each other. On the other hand there is a close
correlation between sustainability and management - with a coefficient of 0.82. All these
correlations make sense. Whilst separating empowerment from management, the exercise
shows that management is one of the most important elements of sustainability – a case for
focussing more strongly on management imperatives to underscore sustainability, without
which true empowerment could not be achieved.


2.6.2 The development progression model


The above evaluation has created a broad-brush outline of the usefulness and worth of the
different rating mechanisms based on a 1 – 10 score. A model such as that proposed in the
previous section (figure 2), where farming projects are represented as following a progression



                                                                                               23
towards success or failure could also be used as an evaluative tool. (The model could, as has
been suggested, be used as a predictive tool to help intervene in the land reform programme).
Table 7 shows how the scoring systems perform against the high/low road scenarios.


To a useful extent the data confirm the conclusions reached earlier. Projects which were
expected to succeed received higher scores in terms of the survey „micro score‟ than those
which weren‟t and vice versa. The rating on empowerment was unchanged for both the
success and failure scenarios. Interestingly, of the 84 farms which had started out on their
trajectories about half were indicated as being en route to a sustainable future and about half
as probably heading to stagnation and restart or failure.

Table 7: Ratings of high and low road scenarios
Item                                                   On a progression to……
                                        success            failure        Started/restarted
Number of projects (total 94)             41                 43                  10
                                                           Score out of ten
Project survey score                          7.0            5.7
Overall management rating                     7.1            4.0
Sustainability rating                         7.0            4.0
Empowerment rating                            6.4            6.2


2.6.3 Synopsis of rating mechanisms

The important conclusion to be reached as far as the progression versus ratings analysis is
concerned, is that they are mutually reinforcing. Together a picture is painted of a sample of
nearly 100 farms throughout the length and breadth of the Western Cape about half of which,
if appropriately nurtured, should end up as being stable and successful farming ventures.
Others will at some stage either pass out of the system or need substantive refurbishment and
intervention. Within the sample is a huge variety of farms, farming systems, governance and
ownership structures which belie easy and comparable measurement. This makes it difficult to
classify and standardise the projects in an effort to aid and support the land reform
programme. Moreover, the high level of subjectivity that any rating system would require
further blurs successfully measuring performance. Notwithstanding these problems, it is
possible, in the consultants‟ view, to develop a scoring mechanism from the basic survey
design, using the experience derived from the present survey, and adapt this to measure
project performance. This must come with an appreciation that such mechanisms are an aid to
project evaluation and not an end in themselves.


                                                                                            24
3. The performance of Western Cape land reform projects: a quantitative analysis


Up to this point the report has concentrated on the design and veracity of the survey. It is now
possible to examine the various answers emerging from the exercise and to build up a more
detailed picture of the land reform programme in terms of the findings, particularly what is
taking place at project level. A good place to start is by looking at the bigger picture.


3.1 Financial contribution


One needs to start with the financial profile of the group of farms analysed. The information
from which the financial data is derived is a combination of the business plan or a subsequent
update where this was possible. The information given was usually verbal and no attempt was
made to check on this via any documentation. One should note, therefore, that the figures
indicated are probably understated because much of the information was based on the original
indicated values. It was felt that accuracy per se, because it would be difficult to ascertain and
because it would not contribute to a deeper understanding of the programme, should not be
insisted on - the important requirement being to establish a sense of proportion and priority.


The overall picture is shown in the diagram contained in Figure 3. The total value of R380
million includes the capital input of the commercial farmers who are involved in share equity
schemes and partnerships. It does not, however, include the considerable amount of working
capital absorbed by each farm, and which varies significantly by the season.


From the diagram it can be seen that the total commercial farmer equity is almost one third of
the total capital invested. A further 21% consists of loans against the farm (where both
partners are liable) and which are mainly bonded against the land. The 7% loans taken out by
the beneficiaries have mostly been used to leverage up the LRAD grants that are increased
(along a sliding scale) where beneficiaries provide matching funds – even if they do so
through loan facilities.


The 42% left over of the long term capital is grant funded plus non-debt contributions (which
include sweat capital) and constitutes the beneficiary equity based inputs. Importantly, the
total debt is about 30% of the total project funding. This could be regarded as an acceptable
average level of indebtedness (but only just) for an efficient commercial farming venture.


                                                                                                 25
Taken in the context of developmental capital (land reform) it is too high for comfort and is
one important reason why some of the projects are failing.




                         Total value - R380 million                             shared debt

                                                                                Farmer equity

                                                                                Beneficiary equity
                             7%                                 21%
                                                                                Beneficiary
                                                                                borrowings




      42%                                                                 30%



        Figure 3: Composition of the total value of the Land Reform Programme



              Total beneficiary contribution - R182
                             million                                           farmer donation
                                                                               grants
                                                                               loan (leveraging)
                        8%           3% 1%                                     sweat capital
                                                                               own capital

      16%




                                                                    72%




                     Figure 4: Composition of beneficiary contribution


The second chart, Figure 4, illustrates the profile of the beneficiaries‟ contribution. Of interest
is the fact that nearly three quarters of the beneficiary input is grant funding. Sixteen per cent


                                                                                                     26
is loan funding specifically used for grant leverage and a further eight per cent is a
contribution through „sweat capital‟ – i.e. the provision of a quantity of work to the project for
free. Importantly, the consultants have included this amount since there is a conditional
obligation for beneficiaries of LRAD grants to supply sweat capital as a „matching‟
contribution. This is in terms of an upfront agreement with the beneficiaries to commit to
sweat capital at some undefined time in the future – a kind of promise. Unfortunately, there
has been very little sweat capital actually „paid‟ and the exercise in nearly all cases has
become a paper one. There is also an amount of three per cent in assets (livestock or vehicles
mainly, seldom cash), which is contributed by beneficiaries.


3.2 Control structure and group size


To complete the broader profile, Tables 7 and 8 indicate the control structures and the profile
of the projects in terms of group size. These will be discussed later in the light of their scores.
The first, dealing with the control structures, is presented in Table 8.


A few interesting points arise from this table. Taken as whole, the commercial farmer and
beneficiary partners in the share equity schemes have invested more or less the same amount
(R45m against R51m) although more projects are controlled by the farmers than the
beneficiaries – in a ratio of 14:9. Also interesting, looking at the beneficiary investment alone,
more has been invested in share schemes than full ownership schemes, notwithstanding that
only 30% of the projects visited are share equity schemes. Finally, the total number of
beneficiaries involved in share equity schemes is slightly greater than those involved in full
ownership.

Table 8: Project profile by equity structure
                   Statutory         Value             Value
                                                                     Number of       Number of
                   control       beneficiary          farmer
                                                                      projects      beneficiaries
                   vested in     equity (Rm)        equity (Rm)
                   Farmer             45.8              94.9               14            1417
 Joint control
                   Equal share         4.1               3.5                4             297
 (share equity)
                   Beneficiary        51.9              15.2                9            1830
 Total     share
                                     101.8              113.6              27            3544
 equity
 Full ownership Beneficiary           86.1               0.0               67            3212


Further distinctions can be made from the tables below, which profile the projects on the basis


                                                                                                27
of project size, as measured by numbers of projects (Table 9), numbers of beneficiaries (Table
10) and percentage equity invested (Table 11). The tables also draw comparisons between
„share equity‟ and full „ownership farms‟.


Table 9 shows that most projects fall in the group sizes above 21 – more than 88% of the
projects fall into this category. As expected, there are more participants per project in the
share equity schemes – fully 96.2% of these have more than 21 participants, compared to
59.8% of the „full ownership‟ schemes. The predominance of groups of between 21 and 100
strong implies a majority of LRAD grants between R400 000 and R2 million. This, especially
at the high end of the scale, can be viewed as the minimum amount of capital needed to
become involved in profitable farming at the scale suggested by these numbers. By
implication, if the grant were to be doubled, the group size applying to obtain agricultural land
would probably halve.



Table 9: Projects by number of participants and ownership structure
                     Share equity           Full ownership             Total
                 Number         %        Number         %        Number                    %
 1 to 5              0           0          11         16.4         11                    11.7
 6 to 20             1          3.7         16         23.8         17                    18.0
 21 to 50            6         22.2         16         23.8         22                    23.4
 51 to 100           8         29.6         17         25.4         25                    26.6
 101 to 180          7         25.9          4          6.0         11                    11.7
 > 180               5         18.5          3          4.5          8                     8.5
 Total              27        100.0         67        100.0         94                   100.0


Looking at the numbers of beneficiaries per size category (Table 10) and at the last column in
particular which gives the relative number of participants within each category, it is notable
that over 60% of the beneficiaries belong to groups of over 100 in total strength, which is
(derived from the previous table) 20% of the total number of projects. Within the share equity
project grouping, well over half the beneficiaries belong to groups which are greater than 180
strong, whilst within the full ownership grouping just more than one third belong to the 51 to
100 strong groups. The tendency to find larger groups among the share equity schemes is in
line with expectation. It also makes better business sense because of the need for more rigid
structures and delegated responsibility which equity schemes provide and which help regulate
large groups. In fact, as will be seen later, the inability to control large groups and create the
necessary alignment is one of the more toxic threats to project sustainability.


                                                                                                 28
Table 10: Beneficiary numbers by size category and ownership structure
                     Share equity           Full ownership             Total
                 Number         %        Number         %        Number                    %
 1 to 5              0           0           45         1.4         45                     0.6
 6 to 20            120         3.3         235         7.3        355                     5.2
 21 to 50           212         5.8         446        13.9        658                     9.6
 51 to 100          552        15.2        1103        34.3       1655                    24.1
 101 to 180         846        23.2         427        13.3       1273                    18.6
 > 180             1914        52.5         956        29.8       2870                    41.9
 Total             3644       100.0        3212       100.0       6856                    100


Table 11 shows that the proportion of beneficiary equity investment in the different size
groupings and capital structures shadows the distribution of the number of beneficiaries. Of
relevance is that well over 75% of all beneficiary equity is invested in projects which have a
membership in excess of 50 individuals; over one third, in fact, being in the over 180 member
level. Almost half of the „full ownership‟ grouping is in the 51 to 100 group size category,
whilst in the „share equity‟ grouping 60% of the equity is invested in the 180+ membership
projects.


Table 11: Percentage equity by size category and ownership structure
                                               Percentage of equity
Group size
                             Share equity         Full ownership                    Total
1 to 5                             0.0                   2.0                         2.0
6 to 20                            0.8                   9.1                         9.9
21 to 50                           1.7                   7.6                         9.3
51 to 100                          9.7                  20.6                        30.3
101 to 180                        10.1                   2.6                        12.7
> 180                             32.1                   3.7                        35.8
Total                             54.4                  45.6                         100


3.3 Control structure and project rating


All this tells nothing of the sustainability of the share equity versus full ownership categories,
nor indeed of the different membership strengths. An attempt to do this quantitatively, using
some of the scoring mechanisms discussed earlier will now be undertaken. Table 12 and
Table 13 throw some light on this issue. These tables provide an overview of the average
scores achieved in terms of the questionnaire „survey score‟ at micro level and the
sustainability and empowerment ratings that were allocated after the visit.




                                                                                                 29
The results, which have to be seen in the context of the earlier discussions on the validity of
the scoring systems, indicate virtually no difference between the share equity and full
ownership schemes when the survey scores are compared. There are important differences,
however, when these two categories are compared under the sustainability and empowerment
ratings – share equity being high on sustainability (6.4) and low on empowerment (4.1) and
full ownership being high on empowerment (7.1) and low on sustainability (4.9). The results
are consistent with the qualitative findings. The survey (questionnaire-based) rating shows
little difference between share equity and full ownership because it contains elements of both
empowerment and sustainability. As to sustainability, share equity schemes have several
advantages – these are: experienced management (correlating strongly with sustainability);
access to markets and supply lines; access to capital; and corporate-style arrangements which
help control group dissension. On the other hand, in many cases of share equity schemes, in
particular the older ones, operational and statutory control are vested in the commercial
partner, thereby substantially reducing the value of empowerment within a given project. The
influence of this can be seen when „farmer controlled‟ share equity schemes exhibiting an
empowerment index of 2.6 are compared with „equal share‟ and „beneficiary controlled‟
equity schemes with an empowerment index of 4.8 and 4.5 respectively. Furthermore, even
the beneficiary controlled equity schemes are less empowering that the full ownership
schemes. Because black empowerment is the central feature in land reform policy, one may
feel that share equity schemes are not appropriate. It is essential to understand that according
to the survey interpretation, full ownership carries with it a greater chance of failure. A
potentially appropriate arrangement (especially dealing with bigger groups) could be a share
equity scheme that builds in to the control structures pre-negotiated empowering targets, the
achievement of which could be made conditional to the allocation of certain grant and/or
other assistance funding.


Table 12: Evaluation of different capital structures on project ratings*
                            Number                           Average              Average
                                           Average
                               of                         sustainability        empowerment
                                       ‘survey’ score
                            projects                          score                score
SE - Farmer control            14             5.5               6.6                 2.6
SE - Equal share                4             7.0               7.5                 4.8
SE - Beneficiary control        9             7.2               6.0                 4.5
Average all SE                 27             6.3               6.4                 4.1
Full ownership                 67             6.4               4.9                 7.1
Note:* Scores out of 10




                                                                                             30
Table 13 compares different numbers of individuals within each project visited in terms of
their sustainability, empowerment and the survey questionnaire score.

Table 13: Evaluation of beneficiary group size on the project ratings
                                                              Average       Average
                   No.      Number of        Average
Group size                                                 sustainability empowerment
                projects beneficiaries ‘survey’ score
                                                                score        score
1 to 5             11             45            7.3              6.5          9.4
6 to 20            17            255            6.4              4.3          6.4
21 to 50           22            658            5.9              5.3          5.5
51 to 100          25           1655            6.4              5.4          5.8
101 to 180         11           1273            6.2              5.1          4.5
>180                8           2870            6.2              6.2          5.5



It is evident from these data that the only aspect of the land reform programme which
contributes simultaneously to higher scores on all rating systems is that small numbers of
beneficiaries (one to five members per group) give the best results. This is true for a number
of reasons. The first is relevant to the importance of entrepreneurship. In order for a small
group to become involved in farming, they will have to be able to contribute some of their
own cash and assets – these owners have to some extent already gained experience in creating
value and have something of their own to lose. In addition, small groups are typically from
one family and without problems of conflict. Small groups contain „fighting spirits‟ that are
usually committed to farming as a way of life and will do what it takes to stay on the land.
„Quality land reform‟ is typically underpinned with these kinds of mindsets.


The table also exhibits an interesting anomaly in having an unusually low sustainability rating
for groups that are six to twenty strong. There is an explanation for this. Such groups fall
between stools. They do not comprise only close family and, therefore, do not have the
alignment and commitment advantages of the very small groups. They are usually without
own resources and, because of the low grant levels available (as a smallish group), often have
to borrow in an attempt to rise to the level of commercial production. Sometimes this size of
group, with its limited funding, is channelled towards food security projects, but members are
often unable or unwilling to make the special effort that successful food security projects
require, especially if the project is a distance away from home. They are also too small to be
part of a share equity scheme and cannot take advantage of the more experienced
management that usually goes with such schemes. The result is that with additional borrowing



                                                                                            31
(to achieve commercial proportions) or because of a lack of group commitment the project
finds itself on the failure trajectory.


3.4 Operational constraints


A picture of the operational constraints affecting project development is essential to an
understanding of land reform in the Western Cape. Interviewees, having been told that every
business has its own set of constraints preventing the business from growing faster, were
asked what factors were hindering their own project. They were asked for up to three such
limitations and to prioritise these. The difference between a problem and an operational
constraint was explained. The results are contained in Table 14. It should be borne in mind
that the interviewees and not the consultants defined the constraints, though on occasions
suggestions of possible constraints were put to them. The discussion on this subject was
extremely revealing in qualitative terms - considerable latitude being given to those
interviewed to express their views and frustrations over all manner of issues. Some of these
matters raised will be considered later in the report.


When the data were gathered it was categorized originally into 34 different „limitations‟. To
make the analysis a little easier, these were condensed into the nine groups illustrated below.


The Table illustrates the needs as seen by the interviewees in order of importance. The first
and third most important, cash to operate the business and capital for development, both
involve funding and could have been grouped together (were it not necessary to distinguish
between operational and development needs). Together these make up 45% of the perceived
constraints. The second most important limitation is human capacity – being mainly technical,
managerial and administrative skills. The fourth most powerful retardant is what is here
termed „government inefficiencies‟. This has nothing to do with policy itself, but rather it is a
commentary on the perceived lack of timeous delivery. Numbers of interviewees argued that
substantial losses were incurred because decisions regarding developmental funding and
approvals were unnecessarily delayed.


The first four categories of constraining factors (capital and cash deficit, skills deficiency, and
government inefficiencies) together account for 75% of the total list. What is perhaps relevant
is that in all of these perceived bottlenecks, government is in a pivotal position to remedy – to


                                                                                                32
ease the constraints and hasten the reform process. Whilst the practical and financial
difficulties faced by the departments involved are understandable, the perception of the
beneficiaries is real and needs to be addressed.


Table 14: Perceived operational constraints
                                                   Highest       Secondary        Total (out of
 Constraints
                                                   priority       priority            186)
 Cash, stock, movables                                24             25                49
 Human capacity                                       36              6                42
 Capital for development, fixed assets                19             17                36
 Government inefficiencies                             7              7                14
 Business environment                                  7              6                13
 Farm resource limitations                             7              3                10
 Group problems                                        6              4                10
 Trust in partners                                     5              2                 7
 Production problems                                   4              1                 5


Intra-relational problems - problems of co-operation within groups – account for about six per
cent of the total number of restraining factors. This would seem to downplay an influence
regarded as seriously jeopardising land reform. It should be remembered, however, that the
beneficiary representatives were not asked to outline their problems, but rather factors
limiting production. Group conflict problems only emerge as a constraint when they actually
subvert the decision making process and have reached beyond the problem stage. It should not
be lost sight of in the final analysis too, that group relationship problems have the capacity to
become terminal – sometimes as a cause and sometimes as a symptom.


Only three percent of the projects visited regarded partnership difficulties (with commercial
partners) as actually hindering progress. Partnership difficulties include lack of transparency
and poor communication, which was cited by all share equity groups as a problem, but
seldom as a hindrance to growth. In fact, the lack of impact becomes more meaningful if it is
considered as a proportion of share equity schemes, being ten percent of such schemes, or
affecting 20 % of the total number of beneficiaries - share equity group sizes being much
larger than full ownership groups.

3.5 Group dynamics

Following the discussion on group size, it would be of value to examine some of the dynamics
and interrelationships that go to characterizing cooperative behaviour. This is illustrated in Table


                                                                                              33
15, which attempts to examine some of the impacts of certain characteristics on group synergies.

Table 15: Some characteristics of group behaviour
                              Probable negative       No substantial         Probable positive
Characteristics of group                                                                            Total
                                     impact                 impact                   impact
Clarity of vision             Conflicting     1    Little muddled      29   Clear              70    100
Alignment                     Disinterested   11   Conflicting         16   Aligned            72    100
Leadership style              Autocratic      31   Consultative        54   Balanced           15    100
Leadership strength           Weak            17   Reasonable          44   Strong             39    100
Meeting frequency at least    Long interval   27   Annual              3    Short interval     70    100
Attendance levels             Indifferent     26   Normal              25   Keen               49    100



Applying a score of between 0 and 2 (0 equals negative impact, 2 equals positive impact) a
rough „cooperative scorecard‟ can be obtained. This does not include the „leadership style‟
question that was posed in the questionnaire - it not being clear that any particular style was
more efficient than another in creating a well performing beneficiary group. Each project‟s
individual group profile scores were then correlated with both the operating scorecard and the
sustainability rating to give the correlation coefficients reported in Table 16.


Table 16: Cooperation and sustainability
                                                                                              Correlation
Cooperative profile score vs. operational score                                                  0.42
Cooperative profile score vs. sustainability rating                                              0.54

This indicates what one might expect – that there is a positive correlation with sustainable
performance, but this is not particularly high. In other words, whilst a good cooperative
behaviour pattern may help achieve sustainability it is, on its own, no guarantee for success.
The more holistic approach to land reform is once again underlined.


The allocation of a score for each category (e.g. clarity of vision) was only made after an
encompassing discussion had taken place. In general, the consultants gained the impression
that most (but not all) of the basic constituents of good cooperative behaviour were in fact
present on the majority of farms visited. An explanation as to why group behaviour, despite
the generally high „positive‟ ratings, has had such a negative influence on some farms is
because each characteristic plays a vital role in good performance, and it only takes one
weakness to undermine the group. It is not helpful, for instance to have excellent vision, meet
regularly and keenly, have a common goal, etc. if the leadership is not effective.


                                                                                                       34
An important observation can be made with regard to leadership style. With nearly all groups,
the interviewees indicated that leadership from within its own ranks, unless accompanied by a
high level of transparency, is not to be fully delegated to. As a result the preferred leadership
style is „highly consultative‟ which in turn can exacerbate the problems facing the business as
leaders try to find a compromise solution (committee style) to all decisions. Rifts over
decision making can develop amongst the members and the group becomes anarchical. As a
corollary it is difficult, though not impossible, to develop top management capacity from a
group of culturally homogenous rural beneficiaries. A pertinent observation made by one of
the worker trust committee members in the Langkloof is that she, a potentially skilled
administrator, would find it impossible, given her community, to be the „general manager‟ -
as she would face being ostracised and her authority resisted. The implementing process
should therefore include the necessary training and human development to fashion
cooperative behaviour to be able to accommodate this problem.


3.6 Rating questionnaire response profile


The qualitative discussion around these responses and some of the viewpoints associated with
them are summarised in the next section. In this last part of this section the rationale,
approach and results from each question are presented briefly. Nearly all the questions apply
to the project at both the planning (via desk top study) and operational (via interview) stages.


As explained earlier, the response profile is considered in two sections: a macro section
dealing with ratings around matters of policy formulation and implementation; and a micro
section dealing with the ratings aimed at the project level. The frequency tables expressing the
percentage responses per item indicate the weights and the subcategories that are shown in
Table 1 at the beginning of the report.


3.6.1 Macro ratings

Achievability
This question asks the researcher to indicate whether the project has practical and realistic
economic merit. At the planning stage it is based on business prospects, generated via a
comprehensive analysis undertaken by the consultant/facilitator, judged in terms of
technicalities, markets and resource mix. The question implied is: is this farm plan generally a



                                                                                              35
good proposition. The same question is asked again once the project is visited. The answer is
disassociated from extraneous factors introduced by the fact that the farm is a land reform,
government backed project and subject to service expectations linked thereto. The results are
presented in Table 17. It is important to note that there is a clear reduction in the achievability
rating once the project has been implemented. This result endorses the lack of correlation
between plan and practice as discussed earlier.


Table 17: Achievability
                       Is the project concept fundamentally achievable/acceptable?
                  Projects responding                             Plan                  Operation
Yes                                                               59.8                       48.4
No                                                                15.5                       26.3
Neutral/unknown/unclear                                           24.7                       25.3
Macro category:                                                            Economic impact
% weight- macro score                                                          10.0%



Adding value
The question, as asked of the interviewees, is intended to establish whether government
funding is being channelled into ventures that will add value nationally. The answer „no‟
would imply that the funds were simply used to transfer ownership and that no new
development was contemplated. The same question was asked at both the planning and
operational stages.


Table 18: Adding economic value
Will the project add value in the general economic sense in terms of growth?
Projects responding                                                 Plan                Operation
Yes                                                                 56.7                    46.3
No                                                                  29.9                    34.7
Neutral/unknown/unclear                                             13.4                    18.9
Macro category:                                                             Economic impact
% weight- macro score                                                           10.0%


The proportion of farms adding value to the economy is less when recorded at the visit stage –
i.e. once the project becomes operational - at which stage it is less than half the total number
of projects. The decrease in development activity is mainly because of cash or group induced
limitations. The overall percentage of projects adding value is, in the consultants‟ opinion,
rather low.




                                                                                                    36
Project Risk
The questions relating to risk were divided into three categories – market risk, financial risk,
and production risk. At the planning stage the intention is to query the thoroughness of the
business plan in analysing risk and expose the downside of each project in terms of the three
categories mentioned. Looking at the market, the researcher was asked to explore the general
supply and demand characteristics of the products produced, as well as to assess the specific
channels intended/used at the operational stage. The financial risk has to do with borrowings
and interest cover, and production risk questions the efficacy of the farm system (plan and
operation) in terms of the resource quality and the technical difficulties that could be
encountered (e.g. growing maize in a hail belt) (see Table 19).


Table 19: Market, financial and production risk

Has financial risk been assessed/built in?
Projects responding                                        Plan                Operation
Yes                                                        23.7                      39.6
No                                                         62.9                      38.5
Neutral/unknown/unclear                                    13.4                      21.9

Has market risk been assessed/built in?

Projects responding                                        Plan                Operation
Yes                                                         33.0                     34.7
No                                                          46.4                     29.5

Neutral/unknown/unclear                                     20.6                     35.8

Has - production risk been assessed/built in?
Projects responding                                         Plan                Operation
Yes                                                         20.6                     31.9
No                                                          56.7                     31.9
Neutral/unknown/unclear                                     22.7                     36.2
Macro category:                                                    Economic impact
% weight- macro score                                                    5%



The frequency of positive responses on market risk remains the same for both plan and
interview, with the „neutral‟ responses increasing at the expense of the negative responses
when plan and interview are compared. At operational level there would appear to have been
less concern about market risk. Interestingly, the commercial partners were more concerned
than the beneficiaries about market risk and the effect of prices on margins. This is probably


                                                                                             37
indicative of the commercial farmers being more informed in this area.


When it comes to financial risk, there is a marked decrease in the number of negative
responses between plan and actual. It must be remembered that some of the projects which
had failed under financial strain, notably three in the Dassenberg/Malmesbury area, were not
interviewed for practical reasons and so their input is not included. Nonetheless, there was in
many cases a reluctance to borrow, and even (contrary to plan) an inability to borrow, which
reduced the perceived risk of financial leverage. Many projects preferred to keep their
operations on hold whilst lobbying for more grant funding, despite cash shortages. The
potential of financial leverage to trigger a collapse should at all times be kept in mind.


As far as production risk is concerned, the pattern is similar to the above. The lack of
consideration of production risk as perceived in the plan was less of a factor at the operational
level, mainly because other issues and risks were seen to outweigh the kinds of risk associated
with production.


Expected returns
The objective in this question was to ascertain the level of expectations of the beneficiaries
and to establish whether there had been any change to these over time. At the planning stage
the expectations based on the forecasted cash flows were used, adjusted as 50% of the net
income to allow sufficient retention, and at the operational stage the actual expectations per
individual of the beneficiaries were obtained.


The results in Table 20 have to be seen in the context that the normal investment from LRAD
sources made on behalf of a beneficiary is R20 000; the returns to the beneficiary have to be
weighed in that light. To determine the income expectations for the project as a whole, the
amount will obviously need to be multiplied by the number of beneficiaries in that project. In
practice, not one of the non-equity share schemes had actually paid a dividend to its members
– nearly all of these schemes were, as indicated earlier, strapped by cash shortages.

It comes as some surprise that the differences between the planning and operational stages
show very little meaningful change. In other words, the experience of not receiving any
dividend has not reduced the expectations of the beneficiaries – there is still optimism around.
This finding is important and underlines the potential for regenerating enthusiasm into an



                                                                                              38
otherwise barren income landscape. CASP funding and the impact on the emerging farmers in
the Ceres area is a good example of this revived enthusiasm.

Table 20: Expected returns per beneficiary
Level of expected annual returns in Rand value at maturity?
Projects responding                                           Plan                    Operation
R0 to R500                                                    9.6                          8.5
R501 to R1000                                                 14.9                         20.7
R1001 to R2000                                                17.0                         13.4
R2001 to R5000                                                30.9                         24.4
R5001 to R10000                                               11.7                         11.0
R10001 to R20000                                              5.3                          8.5
>R20000                                                       10.6                         13.4
Macro category:                                                      Extent of influence
% weight- macro score                                                      20.0%



Jobs added
The adding of jobs has to do with the investment of funds for job creation. There is no
specific focus on this in the land reform policies, yet in the wider arena this is a potentially
important issue. Business planners were not asked to evaluate this aspect of a project, so in
most cases an informed estimate had to be made to quantify the degree of job creation which
had occurred – which would vary with the enterprises planned. It is important to note too that
the question refers to new jobs – implying that the LRAD investment, or at least part of it,
would be used to develop new job-creating enterprises.


Very few new jobs have in fact been created in the land reform programme in the Western
Cape. At both the planning and operational stages 50% of the projects have created less than 1
job per 10 beneficiaries. In around 40 % of cases there were virtually no new jobs created at
all. The implication is that most of the grant funds were applied to purchasing existing
activities (jobs already created) and little left over for new development. This is not a
desirable outcome in the greater context.




                                                                                                  39
Table 21: Job creation
Additional jobs over and above those existing, expressed per beneficiary contributing?

Projects responding                                                       Plan                  Operation
<0.010 per beneficiary                                                    42.7                        39.2
0.011 to 0.100 per beneficiary                                            12.5                        15.5
0.11 to 0.500 per beneficiary                                             28.1                        25.8
0.501 to 1.000 per beneficiary                                             8.3                        8.2
>1.001 per beneficiary                                                     8.3                        11.3
Macro category:                                                                  Extent of influence
% weight- macro score                                                                  10.0%



Involvement of females and youth
The involvement of young people and women is part of the policy focus of land reform, hence
it is part of the macro survey. Because the official recording of numbers of female
beneficiaries (as distinct from female headed households) and youth was not included in the
earlier land reform policy, the numbers were only recorded where the information was
available. This affects the sample size. The numbers of projects in which the extent of female
involvement is available is 83, and for youth involvement it is 30.


Table 22: Female and youth beneficiaries
Female beneficiaries expressed as % total beneficiaries?

Projects responding                                         Plan                           Operation
0 to 20% females                                             11.5                              13.3
21 to 40% females                                            24.1                              27.7
41 to 60% females                                            52.9                              50.6
>60% females                                                 11.5                               8.4
Macro category:                                                 Gender empowerment targets
% weight- macro score                                                            12.5%
Youth (18-35 years) expressed as % total beneficiaries?
Projects responding                                             Plan                           Operation
0 to 20% youth                                                  16.2                             16.7
21 to 40% youth                                                 35.1                             33.3
41 to 60% youth                                                 40.5                             40.0
>60% youth                                                          8.1                          10.0
Macro category:                                                           Youth empowerment
% weight- macro score                                                             12.5%



The results (Table 22) indicate that where records are known (or can reasonably be


                                                                                                             40
estimated), the resultant tallies are consistent with the policy of including, in acceptable
numbers, women and the young in the ownership profiles of LRAD.


3.6.2 Micro ratings

Land ownership structure
The level of access of the „empowerees‟ to land is a key focal point in land reform policy, as
it reflects how, statutorily, decisions regarding the land are entrenched. The response
frequency is graded, by degree of statutory control, from non-controlling equity share holding
to full ownership. Included in the mix of structures is „leasehold‟ which is sited on the lower
part of the statutory control scale – i.e. relatively low control over the land. Naturally, the
security of control with lease does depend on the contractual arrangements; it is a low control
form of „leasehold‟ that is envisaged here.


Table 23: Land access structures
Nature of tenure and control of BEE component - degree of control over how land is used?

Projects responding                                  Plan           Operation         No. beneficiaries
Non-controlling equity share                         11.5              13.0                 1052
Leasehold or commonage                                1.0               2.2                  3
Interdependent JV or equal share                      6.3               6.5                 423
Controlling equity                                   10.4              10.9                 2159
Full ownership                                       70.8              67.4                 3179
Micro category;                                                     Resource access
% weight - project score                                                18.0%



The most telling point from Table 23 is that when looking at both the number of beneficiaries
and percentage of projects, more than 75% of projects are legally controlled by the
beneficiaries. The number of leasehold projects is almost completely insignificant.


Importantly, leasehold tenure can have many variations and is an area which lends itself to
further exploration; arguments on this approach as a development option will be presented
later in the report. At this point suffice to say that leasing, possibly with an option to purchase
and/or the refunding of fixed developments on the land on expiry, would raise the
empowering value of the leasehold structure significantly; it in fact opens important
structural possibilities for land reform initiatives in the more general sense (see later
discussions). In practice, the insignificant numbers of leasehold projects makes the distinction


                                                                                                     41
unimportant for the current review, especially in terms of the numbers of beneficiaries, which
are included in the table to add further proportion.


There is no value in comparing the planning profile of structures with the interview situation
because these are essentially similar, as expected.


Funds access
The question on funds access is directed at establishing creditworthiness on projects. The
creditworthiness is graded and scored - zero for completely non-creditworthy projects (grants
the only source of further funding) and ten for highly creditworthy projects (commercial loans
available for funding). From the business plan, creditworthiness was estimated based on the
strategy and projected cash flows; at the operational stage an assessment was made after
appropriate consultation with the beneficiary representatives. The percentage frequency, by
project, of the surveyed farms is presented in Table 24.


Table 24: Access to credit/funding
Creditworthiness measured in terms of available credit?
Projects responding                                           Plan                Operation
Grant                                                         28.1                     19.3
soft loans                                                    19.8                     20.5
mortgage                                                      12.5                     13.6
supplier credit                                               20.8                     25.0
commercial loans                                              18.8                     21.6
Micro category;                                                      Resource access
% weight- project score                                                   6.0%



The results show that there is a shift in the profile of creditworthiness taken at the planning
stage compared to that developed during the visit. The shift has been towards an increase in
the capacity of the projects as a whole to obtain credit (as perceived by the interview team).
There are two intrinsically linked explanations for this. On the one hand, the view taken by
the researchers may have underestimated the „bankability‟ of some of the projects at the
planning stage; and on the other, the lenders and suppliers may have been prepared to accept
greater risk, possibly in the interests of assisting the land reform programme. Importantly,
between seventy and eighty per cent of the projects have the ability to obtain outside finance
if they have not already done so. This does not make borrowing a practical option, however,



                                                                                              42
as risk is increased and future financing charges are often not covered.


Infrastructure and movables
Part of the ratings process has to include a view on the standard of assets with which the
project management has to work. To do this, both the infrastructure (fixed assets) and the
movables (machinery, livestock) were assessed. If the answer at planning level was not
available it was omitted unless the original state and availability of the assets could be
determined from the interviewees. Often, upon transfer, the standard of assets, movables
especially, was allegedly not as good as had been indicated when the farms were sold. The
condition of such movables would be marked as „good‟ at the planning stage but „poor‟ at the
operational stage.


Table 25: Standard of fixed assets and movables
               Infrastructure                                               Movables
 Standard of infrastructure - roads, fencing, water
                                                      Standard of movables - Machinery, livestock etc?
 supply, buildings?
 Projects responding           Plan      Operation    Projects responding              Plan     Operation
 None                           6.3          16.7     None                             21.9          22.9
 Poor                          12.5          19.8     Poor                             6.3           15.6
 Fair                          32.3          19.8     Fair                             27.1          25.0
 Good                          49.0          43.8     Good                             44.8          36.5
 Micro category;                Resource access       Micro category;                  Resource access
 % weight- project score              1.5%            % weight- project score                 1.5%



Both the movables and the fixed assets display a similar pattern when the plan is compared
with the actual – that their standard and usefulness was not what was planned for or expected
originally (Table 25). In some cases the infrastructure (fencing, shedding, water reticulation
etc.) which was assumed in the plan was not actually there when the interview was made. On
several occasions it was alleged that when livestock was included in the sale these turned out
to be non-existent or well beyond a productive age. This was a discernable pattern, in fact,
amongst the Karoo projects.


Market issues
Finding out whether a proper marketing strategy was built in to the farming plan and
operation is in line with the potential for marketing to make or break a project. At the
planning stage it revolved around whether the investigation had appropriately addressed the


                                                                                                     43
market, and at the interview stage whether marketing was regarded as a potentially restraining
factor on success.


Table 26: Access to markets
Market issues - dealt with/considered as a business component?
Projects responding                                              Plan                     Operation
No                                                               26.8                       14.6
Yes                                                              57.7                       53.1
Neutral/unknown/unclear                                          15.5                       32.3
Micro category;                                                         Resource access
% weight- project score                                                      3.0%



The results (Table 26) indicate that market access would seem to have been catered for
reasonably adequately. A large proportion of the business plans did not incorporate a
marketing strategy into their recommendations, as many of the marketing channels were seen
to be obvious, e.g. deciduous fruit via cooperative packers. At operational level, however,
where there had already been some experience of marketing, 85% of the projects said they
had adequate access to markets or were „neutral‟ as regards markets. The term „neutral‟ in the
interview context should be interpreted as „not a priority‟. A point made earlier, but worth
repeating, is that commercial farming partners nearly all expressed a concern on the
marketing front (product prices and rand value), deregulation having firmly delegated this
aspect of farming to farm level. Commercial farmers seem to have a more informed
understanding of the market place. An impression was gained that some, but not all, emerging
farmers operating in structured industries like fruit and wine, anticipate that the marketing
will be done for them and do not anticipate playing an active role nor are concerned.


When benefits accrue
The expectations of the beneficiaries in terms of when benefits (dividends) could have been
expected to accrue are important in creating the senses of achievement and security which is
looked for by most beneficiaries. It is important to understand that the difference between the
planning and operational stages is simply that future expectations in the plan are based on the
forecast cash flows of the consultant, whilst at operational level they are based upon
expectations, tempered by experience, of the beneficiaries. Both questions refer to the future.

A point made earlier provides background to these results: namely that no benefits have



                                                                                                      44
accrued to date amongst the full ownership projects, while to those involved in share equity
schemes the benefits, if any, have been disappointing. This has not created an abandonment of
hope, however. Instead, the time horizons for expecting benefits have simply extended – and
by even greater margins than originally (Error! Not a valid bookmark self-
reference.Error! Not a valid bookmark self-reference.).

Table 27: Time frame for benefits to be received
When are benefits expected to accrue meaningfully?
Projects responding                                       Plan                      Operation
More than 10 years                                        5.2                             6.7
Between 5 and 10 years                                    12.5                            23.3
Between 2 and 5 years                                     41.7                            48.9
Before one year                                           40.6                            21.1
Micro category;                                                  Social parameters
% weight- project score                                                  2.0%



The number of projects expecting results in the first year has halved, whilst the number
expecting benefits between five and ten years has doubled. Unfortunately, in a large number
of cases the disappointing delays have created almost insurmountable challenges for the
project leaders. In many instances leaders have been challenged by the uncommitted members
of the group, which has disrupted alignment and reduced synergies.


Food security
One of the cornerstones of the land reform initiative is to provide food security for poor
people. To record a positive response, the business plan need only imply that the project has
the potential to assist in providing food to its beneficiaries. At the visit stage a positive
outcome was recorded only if the farm actually enhanced members‟ food security status.


Table 28: Food security
Does the project enhance food security?
Projects responding                                          Plan                    Operation
No                                                           32.3                         58.3
Yes                                                          63.5                         16.7
Neutral/unknown/unclear                                         4.2                       25.0
Micro category;                                                       Social parameters
% weight- project score                                                     1.0%




                                                                                                 45
Table 28 clearly indicates that the possibility of enhancing the food security situation of
project members has not been followed - the percentage of „yes‟ responses being 64% where
the potential for food security enhancement (as intended in the plan) is present, versus 58%
„no‟ responses found during the visit, indicating that this potential does not exist or is not used
in practice. The message is that, certain projects aside, land reform in the Western Cape has
not created the large measure of food security for its beneficiaries that was hoped for.


Housing security
The question here is whether housing security is actually included in the project - not whether
the beneficiaries need or ask for it. The general tendency at policy level is to separate land
reform needs from the housing needs of rural communities – a major reason being the supply
of adequate services for very small rural settlements and the disproportionate cost thereof.
Also, there is the fear of indiscriminate and uncontrollable informal settlements taking the
place on agricultural land.


Table 29: Housing security
Is housing security included in the programme?
Projects responding                                            Plan                    Operation
No                                                              63.9                       70.8
Yes                                                             12.4                       12.5
Neutral/unknown/unclear                                         23.7                       16.7
Micro category;                                                        Social parameters
% weight- project score                                                      2.0%



The most generally expressed hope and even expectation of the majority of the beneficiaries
is that houses of their own will eventually emerge out of their involvement in farming – if
necessary through the accumulation of dividends (Table 29). This need is very real. The
longer there is a delay in receiving benefits, the further the prospect of receiving a house
recedes. Some share equity and joint venture projects have actually linked the housing needs
to the project structure by channelling profits over a period of time into the acquisition of
houses for the worker share holders. However, as matters stand at present, over 70% of the
projects do not have a direct involvement of housing in their programming.


Social benefits
The purpose of this aspect of the enquiry was to determine whether the beneficiaries thought
that they had benefited from the project in terms of social benefits or quality of life. In the


                                                                                                   46
absence of tangible benefits, the questioners accepted an improvement in status or a feeling of
achievement as a positive response. To most of the people interviewed, once the
disappointment of not achieving the expected results was taken out of the debate, the land
reform programme has provided a new and unique experience – that of part ownership in a
worthwhile and mainly appreciating asset (Table 30). A neutral response would have been
recorded where the interviewee responded with a shrug of the shoulders or the verbal
equivalent.


Table 30: Social value/benefits
Does the project improve social environment/quality of life?
Projects responding                                            Plan                  Operation
No                                                             2.1                        16.7
Yes                                                            89.7                       60.4
Neutral/unknown/unclear                                        8.2                        22.9
Micro category;                                                       Social parameters
% weight- project score                                                     5.0%



It is perhaps to be anticipated after an unexpected period of not receiving a tangible reward
that the social standing of the project beneficiaries would have decreased significantly from
the high levels at the beginning, when all were enthusiastic and committed. What is also
important is that the combination of „neutral‟ and „positive‟ responses still comprises well
over 80% of the projects beneficiaries interviewed. To add to this is the fact that when asked,
even the „doubtful‟ would not revert to their situation prior to the land acquisition


Alignment
In examining the very important issue of stakeholder alignment at the planning stage, a view
was taken of the effort and focus of the planners and consultants in facilitating the process.
Alignment is also a function of the number and quality of meetings, setting up regular
communication. Apart from meetings by the planners and consultants to obtain the necessary
commitment from would-be beneficiaries and develop structures and a trust deed, not much
time was devoted to communicating the actual farm plan and strategy (with its attendant risks
and downside) and the „rules of the game‟ to the beneficiaries. Later at the interview session,
the actual state of alignment was questioned. Because it was the leaders, one of whose tasks it
is to maintain group alignment, that were interviewed, it must be remembered that a certain
bias in favour of „good alignment‟ may exist. To mitigate this, full discussion on the matter



                                                                                                 47
was encouraged.
Table 31: Communication and alignment between stakeholders
How effectively has the communication between stakeholders aligned the beneficiaries?
Projects responding                                                Plan                 Operation
Very effectively                                                    1.0                       12.5
Fairly effectively                                                  8.3                       21.9
Partially effective                                                21.9                       34.4
Ineffective                                                        68.8                       31.3
Micro category;                                                           Social parameters
% weight- project score                                                         6.0%



The results (Table 31) show a pleasing improvement in the alignment/communication status
between the perception of the researchers that was created at the planning stage and what was
found at the operational stage. This was experienced across the board for all degrees of
alignment. One explanation is that once the project becomes operative, regular meetings are
held and those committed beneficiaries are regularly apprised of the situation. Nonetheless,
the higher than originally thought status of communication/alignment found in the operations
is still too low - with 65% of the projects being either partially effective or ineffective. It
should be added with respect to share equity schemes that whilst the alignment appears
reasonable within the group (where meetings are encouraged) transparency between the
farmer and the group is often seriously lacking.


Capacity and skills development
Capacity development is a critical factor in achieving project sustainability. To receive a
positive response at the planning stage of the questionnaire, the business plan should highlight
the skills needs and build in a programme for skills development. At the operational stage the
focus was on what had actually taken place or was at the very least in the pipeline. To a large
extent, the farming enterprises of the project dictate the skills needs with, say, extensive sheep
farming requiring considerably less skills than export fruit production. Management capacity
was regarded as being particularly important in assessing capacity needs.


On average, capacity development received more emphasis at the planning stage of the
project than once the project had become operational (Table 32). Fully positive responses
dropped from 45% at the planning stage to 34% when operational. Both of these levels are
extremely low when one considers the enormous significance of proper skills and



                                                                                                     48
management in the context of sustainability. The problem becomes more serious on the
remoter farms. Few of those interviewed admitted to being able to read a balance sheet and
understand the significance of management accounts, let alone keep books of account. When
asked about the courses being offered at Elsenburg, a common response was that, whilst
grateful for the opportunity afforded them by the college, much of what had been taught was
either too elementary or not suitably geared to their needs. They were also concerned at the
cost of transport to get to the courses. This poses difficult problems for Elsenburg but because
of the value of „appropriateness‟ of knowledge a solution is worth pursuing. As a corollary, it
should be mentioned that elected leaders of shareholder/owner groups would benefit greatly
from courses in group behavioural management (through understanding some of the dynamics
involved) and conflict resolution.


Table 32: Capacity development
Is/was capacity building part of the programme?
Projects responding                                          Plan                Operation
No                                                           25.8                   34.4
Yes                                                          45.4                   33.3
Neutral/unknown/unclear                                      28.9                   32.3
Micro category;                                                  Human development
% weight- project score                                                 6.0%




Transfer of responsibility
Taking and reacting correctly to responsibility is an essential element of long term
sustainability. The survey attempts to establish to what extent this requirement is anticipated
both when it was planned and when it was carried out. In projects with very small groups,
transferring responsibility is relatively easy because usually only family members are
involved and responsibility devolves automatically on the head of the family. For large groups
responsibility has to be taken on behalf of others and hence the need for leadership readiness
through training, mentorship and phased-in control. One of the problems that leaders who
take responsibility have to deal with is the entrenched culture of collective decision-making,
which, whilst democratic, can unnecessarily slow down an operation where groups are
unwieldy and large. Many more positive responses to the „responsibility question‟ are to be
found with smaller groups.




                                                                                             49
Table 33: Transfer of responsibility
Is there a specific plan to develop the capacity to transfer responsibility?

Projects responding                                                       Plan              Operation
No                                                                         46.4                42.7
Yes                                                                        27.8                19.8
Neutral/unknown/unclear                                                    25.8                37.5
Micro category;                                                                Human development
% weight- project score                                                              4.5%



The development of a responsibility „ethic‟ is low both at the planning and operational stages
(




Table 33). This is particularly so bearing in mind the rural, often worker-based backgrounds
of most of the beneficiaries. Management training, strategic support (where a good mentor
can be of major assistance), and (in share equity schemes) effective delegation, are all
ingredients which can generate the capacity to accept and competently apply responsibility.
Comparing the plan with the operation, it is slightly concerning that there are less positive
responses in the latter than the former.


Mentoring
Much debate takes place in land reform policy on the value of mentors. For this reason
mentorship comprises an important part of the survey. The question “is there a mentor?” is
easily understood and answered (although in many cases mentors have played an insignificant
or transient role). Once asked, however, the question usually leads to some interesting
discussions with the interviewees on the need for mentors, the substance of which will form
part of the qualitative review in the next chapter. For share equity schemes the mentor is
assumed to be the commercial partner. Where outside assistance was felt to be needed to
resolve possible problems (like. management contracts) with the commercial partner, these
givers of assistance were referred to in discussion as advisors. A mentor, in this context,
therefore means an experienced person offering technical and strategic support for day-to-day
farming operations.


At the planning stage, there are more projects where mentors are intended than once the



                                                                                                        50
operation is actually underway. The number of negative responses (“there is no mentor”)
remains about the same for plan and actual, but the positive responses decrease in the
operational mode from 60% to 49% giving way to neutral responses which meant that
mentoring had become insignificant in its influence in the farming operation. This is because
many of the planned mentorships were transient or ineffective adding little value to the
project. One reason for this was that several mentors believed they should be paid for their
services and ceased their support suggesting their mentor duties were too demanding. It was
also said in some cases that mentors had offered poor advice, and in others in the consultants
experience had acted unnecessarily paternalistically. However, in the majority of cases
mentors had added significant value to the project, especially in cases where a relationship of
genuine trust had been built up – as with many of the emergent farms in Ceres


Table 34: Use of mentors
Is mentoring or outside management built in to the plan or used?

Projects responding                                                Plan            Operation
No                                                                 35.1               33.3
Yes                                                                56.7               49.0
Neutral/unknown/unclear                                            8.2                17.7
Micro category;                                                       Human development
% weight- project score                                                     6.0%



Responsibility consistent with share
Once more emphasising that empowerment is a central issue in the land reform context, it was
felt that the survey should include a finding on responsibility and its consistency with the
shareholding. Where very small shareholdings are concerned a positive response would entail
only a small measure of real responsibility. (In practice, very small shareholdings in worker
equity schemes are little more than aids to worker motivation, worker gratification.) With a
high proportion of shares in beneficiary hands one would want to see them play a major role
in the decision making process before the project could be marked with a positive response. A
neutral response would indicate that the level of responsibility at decision-making level is
unclear within the survey constraints. In practice, all but a very few of the full ownership
projects have full responsibility consistent with share – some stagnant projects or projects
with highly paternalistic mentors will be outside this rule.


Overall there are pleasingly few projects where the level of responsibility is not


                                                                                               51
commensurate with share (Table 35). It must be born in mind, however, that as seen in an
earlier table, a high percentage of the projects are full ownership where the responsibility is
intrinsically highly commensurate with share. The negative responses are mainly on share
equity schemes, or on projects where there is dominating (albeit benevolent) involvement
from farmers who employ or did employ the workers and are assisting them, sometimes with
the farmer‟s own resources.


Table 35: Responsibility commensurate with share
Is decision making responsibility commensurate with share?

Projects responding                                          Plan                Operation
No                                                           6.2                 21.9
Yes                                                          71.1                63.5
Neutral/unknown/unclear                                      22.7                14.6
Micro category;                                              Human development
% weight- project score                                      4.5%



Administration and administrative control
The principle here has to do with knowing how and where the farm business stands. This
entails having a grip on the financial aspects of the business with a feel for budgeting and
forecasting. Obviously the requirement differs with the size and complexity of the farming
unit. At the planning stage a positive response would be entered if the business plan had
allowed for bookkeeping and administration in its proposal. At the operational stage it was
simply necessary to determine what kind of record keeping and financial management was in
place. If the answer was indeterminate or a barely adequate attempt at administration was
made a neutral response was entered. The same applied if the interviewees indicated that
bookkeeping was carried out, but on further questioning had little concept of the implications
of this service.


Table 36: Administration
Is effective administration built in or applied?
Projects responding                                                 Plan                Operation
No                                                                  17.5                  21.9
Yes                                                                 35.1                  41.7
Neutral/unknown/unclear                                             47.4                  36.5
Micro category;                                                       Human development
% weight- project score                                                     4.5%



                                                                                                    52
In general there was a higher level of administration being done on the farms than would have
been predicted by the desk study of the business plans and files (Table 36). In many projects,
however, there were no records kept at all. The percentage of neutral responses indicates the
lack of clarity regarding administrative matters and the lack of skills in financial aspects.
Overall a higher standard of administration should be attained than currently exists if the land
reform programme is to be successful.


An important point needs to be understood which will impact on the future. On many of the
full ownership farms the leaders and managers regard turnover in the same light as profit.
There is little recognition of and planning for costs. The fact that CASP and other grant funds
are being applied to assist these farms will tend to exaggerate the perception that costs don‟t
count – confirming the importance of financial training.


Technical services
Because of the general lack of technical expertise amongst the beneficiary farmers, it was felt
that this aspect should also be studied in the survey. The question asked and then discussed
was whether technical services were available to the project being visited – i.e. if technical
information was needed, could it be found? A neutral response meant “I don‟t know…” or
“Maybe.” Importantly, interviewees were asked to distinguish between the grant funding role
of CASP and the simple availability of technical information.


Table 37: Availability of technical services
Potential or existence of technical service
Projects responding                                             Plan              Operation
None                                                             1.0                 8.5
Available                                                       85.6                 72.3
Neutral/unknown/unclear                                         13.4                 19.1
Micro category;                                                    Human development
% weight- project score                                                   4.5%



The results indicate overwhelmingly that technical services are available if seriously needed
from local farmers, industry sources, marketers and government extension (Table 37). The
recent expansion in capacity of the latter is being experienced positively by the emerging
farmers. The situation with the Ceres farms is a positive case in point. However, participants



                                                                                              53
were generally disappointed in the frequency with which technical services were provided by
government, feeling in some cases that government experts should fill what would almost
amount to a mentor role in their operations.


Realistic expectations
The excitement of acquiring a share in farmland for communities who have been prevented
from previously doing so is to be expected. Unfortunately, the difficulties of generating
dividends out of agricultural activities have not been fully appreciated – even (in the early
stages) by the Department of Land Affairs whose job it is to roll out the land reform
programme. An attempt was therefore made to establish to what extent expectations had been
tempered to realistic levels. At the planning level the consultants tried to gauge, by inference,
whether an attempt had been made to communicate the downside risk of the ventures being
proposed to the beneficiaries. During the subsequent visit the beneficiaries were questioned as
to the nature of their present expectations and through discussion an effort was made to
establish whether these were realistic. A neutral response implied that the level of expectation
in relation to the farming activities could not be established reliably. Many interviewees
initially indicated they had no expectations but on being pressed finally attached a value. The
results are shown in Table 38.


Table 38: Realistic expectations
Have/are expectations been appropriately tempered?
Projects responding                                            Plan                 Operation
No                                                             40.2                       30.5
Yes                                                            25.8                       30.5
Neutral/unknown/unclear                                        34.0                       38.9
Micro category;                                                       Social parameters
% weight- project score                                                     4.0%



Between the plan and the operation there is a shift towards realism in the expectations of the
beneficiaries. However, this shift is not as great as might have been expected – 40% „no‟
becomes 30%, and 26% „yes‟ becomes 30%. The issue gets to the heart of the land reform
problem - that agricultural margins are so narrow in relation to risk that only the most
capable farmers can generate wealth. However, these wealthy farmers become role models
and the emerging farmers hold to the expectation that they too will become wealthy from the
farms they have acquired. It is well that optimism still prevails, but for emerging farmers to



                                                                                                 54
remain farming, expectations should be pitched so that disappointment does not remain the
norm. Or else the temptation to throw in the towel will prevail.

Tradable benefit
The LRAD grants are specifically made for land reform. The degree to which the investment
in land, made on behalf of the beneficiaries of land reform, is (or should be) tradable will play
a large part in determining the kind of dynamic and evolutionary process that successful land
reform needs. Tradability as an ingredient in the policy mix is the net result of the structures
in place, the deeds and contracts negotiated, the availability of funds, and the market value of
the investment at the time of selling. For the purpose of this quantitative overview it is
necessary to know that the response recorded by the interviewer follows discussion with the
beneficiaries on the practicalities of trading. “How would you sell your share if you needed to
get out?” – promotes the discussion. The response option „tradable with difficulty‟, by far the
most common option, simply means that funds, buyers or both would need to be found often,
and usually under difficult or onerous conditions.


Table 39: Tradability of investment
Is the benefit tradable and transferable?
Projects responding                                       Plan                    Operation
Not tradable                                              19.6                       20.8
Tradable with difficulty                                  64.9                       61.5
Easily tradable                                           15.5                       17.7
Micro category;                                             Investment characteristics
% weight- project score                                               6.0%



There is not a great deal of difference in the response profile between the plan and the
operation (Table 39). As mentioned, most of the responses fall under the „tradable with
difficulty‟ response option. An important point is that nearly all the beneficiary trust deeds
allow the trust to buy in shares from departing beneficiaries thereby increasing the slices of
the cake to those remaining. To do this the trust must have funds and be willing to buy. In
some cases the farmer partner has lent money to the trust for this purpose or indeed has
bought out the beneficiary directly. In virtually no cases are the shares available to potentially
new buyers unless they are directly involved in the farm and have been approved by the
trustees. Inevitably shares are sold into a difficult buyers market. In some cases, generating a
„easily tradable‟ response in the survey, the farmer partner underwrites the share at a pre-



                                                                                               55
negotiated price or via a predetermined formula. Significantly, on many projects the more
committed members of the beneficiary group are keen to buy out the non-committed members
– specifically directing trustees (committed, of course) to reserving funds for this purpose.
Bearing in mind that reducing the numbers of beneficiaries will help stabilise the programme,
this kind of thinking should be promoted.
Exit cost
The purpose of looking at exit arrangements comes from the perceived need for a safety net.
The question specifically looks at the worst-case scenarios of land reform projects. In
practice, nearly all the beneficiaries have very little means of their own and therefore, it could
be surmised, little to lose from project collapse. Unfortunately the access to a land reform
grant cannot be repeated. Any recipient would lose this right once exhausted. It is for this
reason that most of the responses recorded would indicate that there is a cost to failure, losing
what one has been given - even in cases of dire poverty.


A positive response would be registered in cases where the underlying asset comfortably
exceeds liabilities or where the asset has near-guaranteed sustainable performance. Situations
in between would rate a „neutral‟ response. The results are shown in Table 40.


Table 40: Exit cost
Can beneficiaries exit without personal cost under worst-case scenario?
Projects responding                                            Plan                     Operation
No                                                             67.0                           69.8
Yes                                                            14.4                           8.3
Neutral/unknown/unclear                                        18.6                           21.9
Micro category;                                                  Investment characteristics
% weight- project score                                                    8.0%



There is little to add beyond what is discussed above and what the table portrays. The
possibility of losing any further right to land reform remains the worst-case loss. There is,
however, a valid argument that going into a farming venture with something to lose (outside
of your own possessions) lends the sense of urgency and incentive to make it a success.


Beneficiary share
Based on the equity invested, including from commercial partners,




                                                                                                     56
Table 41 indicates the percentage of projects that fall into different levels of ownership. It is
not necessary to discuss the table further since a similar table has already been discussed in
the earlier part of this chapter. Because it was part of the ratings mechanism, it is included
below.




Table 41: Beneficiary share
What share of the total is acquired for the group of beneficiaries?
Projects responding                                              Plan                       Operation
O to 10%                                                          4.1                              4.4
11% to 24%                                                        3.1                              3.3
25% to 49%                                                        6.2                              6.6
0.5                                                               5.2                              5.5
51% to 75%                                                        8.2                              8.8
75% to 99%                                                        1.0                              1.1
1.0                                                              72.2                          70.3
Micro category;                                                       Investment characteristics
% weight- project score                                                         6.0%




                                                                                                         57
4. The performance of Western Cape land reform projects: a qualitative analysis


4.1 Introduction


The results reported thus far show clearly that there is much to be learnt from in land reform
practice, including the fact that it is extremely complex, involving several aspects of the
political, social, economic and technical domains, the mix of which will ultimately determine
the success or failure of each project and policy. In this regard, the report has highlighted one
important general characteristic of the land reform projects in the Western Cape which has
had a major impact on the research process, and which will impact on the recommendations
made below regarding the second phase of the research. This characteristic is, of course, the
great variability between projects.


A second aspect is the tension that exists within the policy imperatives that drive the land
reform programme. State policies often pose conflicting objectives: the argument is that these
can be resolved during the process of programme and project implementation. For this reason,
programme participants, which include beneficiaries and implementers, should continuously
be made aware of this potential for conflict. In the case of the land reform programme, this is
illustrated in Figure 5.


The land reform programme is driven by the political, economic and social agendas of the
various participants (in addition, of course, to private agendas). As a result, there are clear
tensions between the political imperatives, mainly characterised by the drive for equity or
fairness (manifested most obviously in the relatively small grants and relatively large
beneficiary group sizes) as well as a sense of urgency to reach the formal targets of the land
reform programme as a whole. At the same time, all participants would like to see a
programme that is affordable and productive in the sense used in this report.


These tensions are often what catch the public eye: differences of opinion between
commercial farmers and agrarian specialists, tensions between agriculturalists and land reform
agencies, etc. Yet this research has confirmed once again that the tensions between equity and
urgency and between affordability and productivity can be as great, if not greater. For
example, equality of opportunity implies that beneficiaries have the skills to be able to exploit
opportunities, but skills transfer and capacity building generally takes time, and is often a


                                                                                              58
multigenerational process. If the land reform programme were to concentrate only on those
who have the necessary skills, what then happens to equity? At the same time, it is obvious
that one of the most important weaknesses of the land reform programme manifests in the
high debt loads that beneficiaries are meant to carry: yet more state grants imply a less
affordable programme. The list of examples of potential conflicts between these policy
imperatives is long.




              Political                                        Economic
            imperatives                                       imperatives


                  Equity                                 Affordability




           Urgency                                       Productivity



                                  Social imperatives


                 Figure 5: The tensions created by the policy imperatives



The more important findings are reported below and include: (a) critical success indicators,
(b) areas of concern, (c) observations on consulting input, and (d) impressions of the CASP.


4.2 Critical success indicators


During the course of the investigation it became evident that there are a number of qualitative
indicators whose presence is critical to the success of a project. These include issues such as:


                                                                                               59
   The prevalence of good faith: The existence of goodwill and good faith at the
    inception of projects is a key indicator of further success. This goodwill often translates
    into positive motivations and intentions. Projects that are underpinned by good
    intentions, particularly in respect of the ownership and management arrangements, can
    clearly be discerned from others, and appear to be more successful.


   Realistic expectations: The majority of beneficiaries in the projects studied are now
    realistic about the time horizons within which benefits are expected to accrue. Where,
    as was often the case, the expectations are heightened initially, these have since
    generally altered to realistic levels. The time horizon of expectations is also longer than
    might be expected of lower income people. Beneficiaries have come to recognise that
    patience is a requirement in agriculture, most likely based on practical experience
    tempered in the minority of cases by the information contained in the more
    conservative business plans. This oft-encountered sense of realism and continuing
    optimism (following upon hard experience) at the leadership level is contrary to the
    expectations of the researchers.


   Communication is critical: Projects that exhibit superior communications amongst
    project stakeholders, and especially between beneficiaries and other stakeholders,
    appear to be more successful and synergetic and are better able to deal with business
    risks and the complexities that inevitably manifest themselves in group situations. The
    opposite is also true – where there is poor communication there is a lack of trust and a
    breakdown in the morale of the beneficiaries together leading to group impasses.


   Leadership capacity: Determined leadership is a critical factor for success. Where
    leadership (formal and informal) is influential, is reasonably well conversant with
    agriculture, is realistic about its peculiarities, and is based on a clear understanding of
    the meaning of profit, the potential for project success is greatly enhanced. Although
    leadership is not necessarily the same thing as management, the two are linked and as
    was pointed out earlier, there is a very strong correlation between management and
    sustainability.




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      Consistency in the alignment of project components: Projects are more successful
       when capacities, interests, farming technologies, funding profiles, ownership
       structures, and service provision are better aligned and matched. This matching is a
       function of planning, communication, understanding, realism, and clarity of vision. An
       example of mismatching is where shareholders who are also workers are expected to
       make critical decisions regarding labour management.


       The concept of an alignment of components (avoiding a mismatch), seemingly a „catch
       all‟, is extremely important. Checking inconsistencies before a project begins may save
       a great deal of intervention later. The intention should be to minimise intervention by
       designing projects to be self-propelling as far as possible, something which requires
       consistency and balance.


      Conservative financial philosophy: Debt and prudent financial management are
       critical to the success of land reform projects. Projects that exhibit caution and careful
       management of these aspects have a greater chance of survival than those that appear
       over-borrowed and less diligent.


      Part time farmers: Those beneficiaries who farm part time and who are not heavily
       dependant on the farm are less likely to jeopardise its future and are able to pay for the
       seasonal and day to day expenses, which they are then motivated to recoup through the
       activities on the farm. They are in it for the way of life and not simply to receive a free
       asset.


      Mentoring: The findings support the view that competent mentors can add value both
       in a catalytic sense (to get things started) and as ongoing supportive advisors. There is,
       however, the important proviso of good faith, that the mentor must be keen and willing
       to offer assistance in an almost altruistic way.


4.3 Areas of concern


As a complement to these critical success factors, the investigators also identified a number of
key areas of concern in the course of the research:



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   Cash shortages: The survey has indicated that virtually all projects are cash strapped
    due to delays in payments, inadequate grants or loans. In some cases projects have
    ceased to operate as a result. The participants claimed that the policy of not assisting
    with day to day running costs (e.g. outside labour and diesel) is making it nearly
    impossible to farm.


   Group size: Large groups are more prone to problems of collective action, including
    misalignment of interests, passive participation, rivalry and other complexities. Within
    each group is an active or committed component which the consultants have found is
    usually about 15% of the total. These are often the initiators of the project and certainly
    have the interests of the farm at heart. Conflicts that occur usually occur between the
    passive and active components. The passive component of large groups is the most
    likely to lobby for the sale of the property in order to release the locked in cash rather
    than wait indefinitely for investment returns. Furthermore, land ownership is not only
    motivated by the need for land as a farming asset, but also for security of tenure,
    housing and a wealth asset that can be transferred to the family. Within a group,
    individual needs are often extremely variable and often conflicting, and these problems
    are exacerbated within larger groups.


    It should be added that very little has been done in the area of conflict resolution (and
    more importantly) conflict prevention.


   Contra-land reform policy projects: There are specific projects where large grants
    have been made with minimal land transfer. These projects fall more naturally into the
    broader BEE domain, and their role in land reform needs clarification. However, such
    clarification will probably have to wait until the AgriBEE programme is in
    implementation.


   Asymmetry of project participants: There is considerable asymmetry in the
    competence levels and degree of commitment of shareholders, leadership and partners,
    especially amongst the share equity groups. There is little evidence as yet that
    competence levels are being meaningfully improved through training, extension, or



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      mentorship.


     Capacity problems: Not many of the project leaders were confident in the
      management of their farms. Very few could read financial accounts or understood the
      implications of record keeping and good management. Many had not had proper
      experience in commercial farming with little technical knowledge and had been left for
      long periods without advice or assistance. In recent times the Department of
      Agriculture has increased its capacity to provide these necessities, but in some
      instances it arrived too little and too late.


     The accounting mindset: An interesting item that has emerged from the discussions is
      that the concept of profit is synonymous with turnover. This is partially because the
      many of the inputs are now funded by CASP grants making profit seem more like
      turnover. The tendency is not to reserve income for the payment of future expenses. It
      is essential that the service providers anticipate the possible problems of the
      participants overestimating the capacity of their farms to generate true profits – it will
      be important to prepare each project for the day when CASP will no longer be
      provided.


     An inability to delegate: Most of the beneficiary groups are unable to delegate with
      comfort to an individual from their own community ranks. The result is that often the
      smallest decision has to be made in a committee environment. The effect is to abrogate
      responsibility on the one hand and, on the other, to delay or postpone difficult and
      important decisions. In severe cases it can lead to division and even the cessation of
      activity.


4.4 Prevalent wisdom


The debate on land reform is filled with a wide variety of (conspiracy?) theories. This
investigation has considered some of these:


     Land prices are inflated beyond ‘production’ or ‘business’ value: There is
      sufficient evidence that land reform has created additional demand for land in the



                                                                                             63
    Western Cape, and is destined to increase land prices. This confirms an active and
    responsive market, but does NOT mean that land prices are „inflated‟ beyond market
    prices. Thus, this investigation can neither confirm nor refute this theory of the effect
    of the programme. A resultant concern however, is that much of the state grants are
    sunk into land acquisition with too little left for development – a factor that has been
    detrimental to many projects and has detrimental implications as far as the intention to
    „add value through land reform‟ is concerned.


   Paternalism: Many projects and especially equity schemes are commenced based on
    paternalistic overtures by white commercial farmers over their workers. This
    paternalism often results in dependency and domination by the commercial farmers and
    hampers real empowerment. On a positive note, the investigation did reveal that
    farmers are stimulated to break away from past modes of management.


   Combining the roles of shareholder and worker: Workers at many of the projects
    where they participate as land reform beneficiaries find difficulty combining the twin
    roles of worker and owner, especially when they are in an equity partnership with the
    farmer on a farm originally owned by him. The farmer also has problems with the dual
    role of employer and equity partner. In the worst cases this results in a continuation of
    paternalistic modes of management.


   Over-optimistic business plans: Business plans are not always realistic in the
    assumptions and projections made and are written without considering risk sensitivity
    to reflect optimistic outcomes under ideal production circumstances. The lack of
    correlation observed between the initial business plans and reality support this notion.


   Co-ordination of services to emergent Farms: The situation in Ceres bears mention
    insofar that it is a microcosm of what is happening elsewhere in the Western Cape in
    land reform. The original development in Ceres was stimulated by the subsidising by
    the Department of Water Affairs of irrigation water for emergent farms falling under
    the costly Koekedou water scheme. Many of the commercial farms were sold as land
    reform projects because the commercial farmers could not afford the water. The result
    was a concentration of farms which attracted the attention of all the service providers



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       and encouraged the local white farmers to assist with meaningful mentorship. There is
       a coordination centre (which assists in conflict management) on the outskirts of the
       town and all courses in farm management and technology are given on this site and in
       terms of assessed needs. From being a basket case scenario previously, the Ceres farms
       (those that are not beyond rescue) are moving forward successfully and the morale has
       turned around significantly.


      Sweat capital. As discussed elsewhere, the concept of sweat capital has its roots in the
       concept that motivation to succeed is enhanced where physical effort is put „on the
       line‟. The condition to receiving an LRAD grant is that a promise to put in „free‟ effort
       on the project is made upfront. There is no way of calling up the promise, however,
       since the LRAD grant is paid before the sweat capital is provided. The result is that
       some of the committed members pay their „sweat capital‟ and the passive members do
       not - and group conflict is the predictable result. It would be considerably better for the
       sweat capital provided by a member to earn increased participation in ownership after
       the effort has been given than to be obliged to call up a promise, however binding.


4.5 Consultants


It is clear that consultants fulfilled a critical role in projects. Perusing the business plans of all
the projects has allowed the researchers to become familiar with the preparation of business
plans for facilitation. In this regard, the following observations are made:


      Ideology driven: The researchers‟ general experience is that many consultants are
       involved in land reform because they share the developmental empathy and important
       ideological underpinnings which is reflected in their work. It appears that ideologies
       (e.g. worker empowerment, equity sharing, group empowerment, etc) have led to
       preferred structural outcomes instead of the pursuit of alternative empowerment
       models.


      Lack of continuity: Consultants lack continuity in executing plans beyond grant
       approval, whilst many plans really result from their inventiveness or pragmatism in
       preparing the business plans. Consultants are also not held accountable for their
       work/proposals once the project is implemented and thus carry no risk for their plans.


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     Pressure to produce a positive business plan: At all levels the general disposition
      surrounding land reform is one that inherently encourages consultants to produce
      positive business plans to attain a positive decision on the grant. Business plans are
      therefore not entirely objective due to this tendency to induce optimism and subdue
      realities.


     Work quality: Many business plans are compiled simply to enable submission for
      grants. There are too many cases where the quality of work can be vastly improved.
      There are many instances of „cut & paste‟ based on what worked before (in the sense of
      successful grant applications instead of successful projects).


     Inadequate risk analysis: Most business plans do not conduct proper risk analysis nor
      do they make adequate provision for risk in their predictions.


     Failure in business plan predictions: For several reasons, the projections and
      proposals made in business plans generally do not hold and some serious deviations are
      observed. This occurs despite the fact that beneficiaries are well acquainted with the
      business plans.


     Dominant facilitators/consultants: A few prominent facilitators dominated earlier
      land reform projects, although this dominance has subsided more recently. Their
      modus operandi and style is a feature of the earlier projects – compiled at a time when
      general expectations regarding land reform were often heightened. In recent years more
      facilitators (with BEE credentials) have become involved, but many lack a sound
      knowledge and insight into agriculture – adding thereby to the lack of authenticity in
      the planning process.


4.6 CASP


The introduction of the Comprehensive Agricultural Support Programme (CASP) has brought
much relief and revived optimism for many projects. Some observations about CASP can be
made in this context:



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(i)     The execution is subject to bureaucratic delays, the value of timing is not always
        appreciated;
(ii)    The support provided is often not flexible to specific needs;
(iii)   The capacity to administer the system may require attention;
(iv)    Delays in payments often cause severe cash-flow problems at farm level;
(v)     It requires better integration with land reform – part of a holistic land reform
        package for instance;
(vi)    Matching CASP grants with credit can be important in financial leverage
(vii)   The period of dependency must be clarified and managed
(viii) A clear exit strategy for CASP must be explained and implemented (see previous
        comments)
(ix)    The selection criteria and procedure for funds allocation and execution is often
        unclear to the role players.




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5. Recommendations

5.1 Introduction
Apart from an analytical overview of the status of the land reform programme in the Western
Cape, the research has highlighted a number of important areas that revolve around the
structure of the land reform programme itself, the functioning of specific projects, planning
and facilitation functions in the project preparation phase, dealing with CASP, the clustering
of projects, and the participation of consultants in projects. In this section, initial
recommendations are made in each of these areas respectively - recommendations which
should be tested in a the more detailed investigation to follow. To fulfil the latter requirement
this section also contains recommendations regarding the methodology, and project selection
for a more in-depth evaluation of a sample of land reform projects.


5.2 Structure of the land reform programme


Under the LRAD programme both the national Departments of Land Affairs and the
provincial Department of Agriculture are involved in the implementation of land reform.
However, the initiative in the first phase of a land redistribution project lies with the
Department of Land Affairs. The process around the application for grants under the
programme, the appointment of consultants, etc., is made under the initiative of DLA. The
problem, as has become clear from this research, is that too little expertise in the field of
agriculture, both in terms of technical and of economic and management aspects, is deployed
in this phase.


By the time that agriculturalists get involved in any meaningful way, the business plan is
already drawn up, and experience shows that by this time there is pressure throughout the
system to get the business plan approved, with predictable results.


In the view of the researchers, the ideal would be a land reform programme where:


      The Department of Land Affairs (in consultation with the DoA) sets the guidelines in
       terms of overall policy on the number, types, and location of projects, as well as targets
       and time-frames;



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       The provincial Department of Agriculture takes the initiative with project
        implementation from the first stage (i.e. project applications are made directly to the
        Department of Agriculture);


       The Department of Land Affairs stands in support of this process in terms of specific
        functions such as land transfers, etc.


This will also ensure that the provincial Department of Agriculture has a better idea of the
number and kind of post-settlement support that will be required, which will facilitate its own
planning and budgeting processes.


5.3 Planning and facilitation


In the current process a lot of emphasis is placed on the planning of land reform projects, with
relatively little time spent on preparing the participants for these new challenges. Yet the
research would indicate that successful projects are almost invariably characterised by
alignment between the various stakeholders. Such alignment does not come automatically,
and takes time to achieve. When projects are so structured that they have to service a large
debt load almost from inception (as is often the case), it is too late to start working on
achieving alignment once the project has kicked off.


When projects are structured as at present, this means that much of the strategic planning,
process facilitation, and skills transfer should ideally be done before the inception of the
project. However, this is seldom possible. For this reason, it is necessary to also look at the
structuring of projects (see 5.4 below). Nevertheless, the recommendation is that there should
be more substantial investment in the necessary processes of strategic planning, process
facilitation, and skills transfer at the very least to ensure that:


       The elements of the strategic plan are matched with each other and consistent with
        needs, goals and resources;


       All participants are clear on their roles and responsibilities in the project;




                                                                                             69
      The steps required for the implementation of the project are properly synchronised;


      There is full alignment among all participants on the vision and objectives of the
       project;


      Training in the management of groups and group behaviour is included in the support
       to participants, especially at the leadership level;


      More emphasis is placed on projects with fewer beneficiaries.


      Share equity schemes be constructed and negotiated in such a way that control,
       statutorily and practically, is programmed in a predetermined manner along with skills
       transfer.


5.4 Project structure

The central problem with virtually all land reform projects is the lack of capital. This arises
from the normal capital requirement for starting virtually any kind of new business; from the
fact that the beneficiaries of land reform by definition have no or limited capital of their own;
and from the fact that in agriculture a large proportion of the start-up capital is sunk into the
purchase of land.


Three instruments are intended by the state to address this problem: the LRAD grants, the
beneficiaries‟ own contribution, and borrowing from the Land Bank and other financial
institutions. However, this research has shown that none of these, individually or in some
combination, provide a satisfactory solution. The research has confirmed that many projects
end up with an untenable debt burden, which jeopardises their sustainability. Frustration with
this state of affairs has resulted in pressure for higher state grants and measures to decrease
the price of land. However, these measures address the symptoms of the problem and not its
cause, which lies in the very nature of agriculture.


To this end, it is recommended that ways be found of circumventing the need to sink such a
large proportion of the scarce capital in land at the inception of a new farming enterprise. This
will include measures such as:


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      State purchase of land and the transfer of the land into some sort of state entity, where
       the ownership gets transferred to the beneficiaries over time as they pay for it out of
       farming profits;


      The registration of long-term leases over land, where the state can use a proportion of
       the LRAD grants to subsidise the rental in the initial phases. This will also mean that
       such leases are recognised as contributing to land reform targets;


      The innovative use of other forms of „lease to purchase‟ instruments;


      Additional rewards for active members among the beneficiaries, e.g. by withholding a
       proportion of the shares at the start of the project in order to make additional shares
       available to the more active and committed participants (such an arrangement could
       replace the sweat capital system currently in place);


      Greater emphasis on encouraging part time farmers to get involved in the land reform
       programme;


      More active use of state, especially municipal, land in the land reform programme;


A key to these recommendations is the recognition that beneficiaries have to carry some, but
not all of the risk inherent in the new farming ventures. In this manner, the process will ensure
that farms goes to those who are able to put it to best use in terms of achieving the goals of
land reform.


5.5 CASP

While this research has shown that CASP has brought many benefits, it also has a negative
side. This is mainly in terms of the mindset it creates amongst beneficiaries: turnover or gross
revenue from the farming activities becomes associated with profits, because CASP takes care
of all the input costs. The problem here is, of course, that CASP is creating bad habits, but
that many projects would not work without CASP. The recommendation, therefore, is that a
mechanism for the withdrawal of support under CASP should be built into the business plan
of each project and clearly appreciated by the beneficiaries. This will include a schedule for


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the withdrawal of benefits as well as the time-frames to achieve this, accompanied by training
in cost monitoring.


5.6 Clustering of projects

The example of the Ceres farms shows the benefits that beneficiaries are able to reap from
regular contact with beneficiaries from other projects. Such informal networks create a form
of social capital that stands new farmers in good stead when they can learn from their
colleagues who have confronted problems similar to their own. It also assists their bargaining
capability. Ideally, this would mean that a greater effort should be made to ensure that land
reform projects are clustered together geographically. However, this is not always feasible. To
this end, the recommendation is that the state should consider innovative ways of building
such networks among beneficiaries. This could include further encouragement of grassroots
farmers‟ organisations, facilitation (and possibly even funding) of participation in existing
agricultural shows, etc., and facilitation of cooperation with existing farmer representative
organisations such as NAFU and Agri-Western Cape.

5.7 Consultants


As mentioned earlier, the research indicates that there are a number of issues around the
consultants involved in the land reform programme that need to be addressed. Systemic
problems include their continued accountability once a project has been approved, the
pressure to produce a positive business plan, and the fact that a relatively small number of
consultants dominate the business. At the project level, the problems include work quality,
including inadequate risk analysis, and failure in the predictions of business plans.


This is a sensitive area, and final recommendations will have to follow from the more detailed
analysis that will be possible in the next phase of the evaluation of the land reform
programme. Nevertheless, it is recommended that the rules whereby consultants are
appointed, including the skills requirements of consultants, the instructions they receive in the
formal brief of a project, should be revised. Far greater clarity is required regarding exactly
what their roles and responsibilities are on a project (including facilitation and moulding
expectations) and the importance of evaluating the downside of a given project should be
stressed. At the same time, performance based systems that encourage better quality control



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over the work of consultants need to be put in place.

5.8 General Prognosis

To conclude the chapter on recommendations, it may be of value to offer a condensed view of
the direction the land reform process is taking. The study took place at a time of unfavourable
press coverage and consequent low public perceptions, exacerbated by some of the more
dramatic project failures. At this juncture, a balanced prognosis on the application of policy
would have to recognize the newness of the policy and the history of land misappropriation
from which it had sprung. Many of the failed and failing projects were initiated without an
adequate understanding of the dynamics involved, or of the difficulties created by an industry
characterised by low profitability and high risk. It would also need to take account of the fact
that, as the various project scenarios are presently being played out, the negative realities to
have surfaced have generated a better understanding of what constitutes failure and what
corrective action is needed – especially in respect of the design and servicing of the projects.
Although, as we have seen, there is still a great deal to be gained from the findings (see
recommendations below and commentary in the text) the overall impression is that project
success, already evident in a few projects, should start to become a regular occurrence –
especially given the determination to succeed at both the beneficiary and administrative level.
But importantly, such a positive outcome will require well placed and sensitive interventions
and efficient and co-ordinated structures to carry these out. Interestingly, the „progression
model‟ (discussed earlier), which predicts a trajectory for each project towards either a
sustainable or failed future, indicates contrary to many expectations that almost half the
projects are on a path towards sustainability. Whether these (better-placed) projects eventually
achieve success, will depend on maintaining their momentum, receiving appropriate support
from the authorities, and in the risky agricultural context, benefiting from a fair share of good
fortune.



6. Knowledge going forward


To complete the report, there are two aspects which will take the study forward in terms of the
generation of knowledge.


6.1 Suggested rating mechanism


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The rationale behind the rating mechanisms used in this study is discussed in detail in the
earlier sections of this report. To repeat briefly, the study required an overview of the status of
land reform in the Western Cape in its entirety, that this would be best achieved by examining
the land reform programme from both a regional and project perspective. It was also felt
essential to draw comparisons between the design parameters and the operating situations of
the different projects and to do this using a broad brush approach. The survey questionnaire,
generated as it was from first principles, was framed with these principles in view. It was
recognised, however, that this approach had its shortcomings making it difficult to use the
system as a rating mechanism in a more dynamic, management-orientated context measuring,
say, the comparative progress of each project. An adapted new score card to suit these
dynamic needs was accordingly designed, and is presented in Appendix 5.


The construction of the new score card was shaped by the following considerations. Firstly, it
should be able to take advantage of the wealth of experience and comprehension that the
survey has created. Patterns of behaviour, value systems, operational priorities, design
characteristics, expectation levels and many other elements contributing to the success or
failure of a project are now better understood. Questions can be framed more definitively as a
result. And, what is perhaps more important is that with greater understanding, the
classification and weighting of components can more closely reflect the level of sensitivity on
the project outcomes. (These can, of course, be altered now or in the future in keeping with
changes in policy and emphases - the questionnaire is in flexible format.)


Secondly, the questionnaire should be simpler in its questions and response options. To fulfil
this need, the framing of the questions are such that they all seek either a „yes‟ or „no‟ or
„neutral‟ response. An added advantage is that the data capture is relatively simple and easy.
The rating can therefore be done and managed by relatively inexperienced officials.


Thirdly, the mechanism is more dynamic, which means that the questions asked can be
repeated each year and progress measured. In conjunction with target setting and support
management the score card could be a very useful monitoring tool.


Finally, whilst the issues being examined are essentially the same as those originally used in
the status survey, they have been broken down and regrouped. From dealing with a regional


                                                                                                74
versus project perspective and a planning versus operational perspective, the questions now
score „sustainability‟, „empowerment‟ and „intervention‟ separately. Also there is no in depth
examination of the planning process so all questions are aimed at „operating project‟ level;
planning features sparingly and only in regard to its possible influence on the outcome.

6.2 In depth investigation

Whilst a number of lessons have been learned from the study, the picture is far from
complete. More needs to be understood of the detailed mechanics actually operating on the
farms; there is a real value in establishing well-defined models of failure and success to be
used as benchmarks for future projects, and indeed to help shape the future management of
land reform. A closer, more secure analysis of a few selected projects is desirable, which is
exactly what is asked for in the terms of reference (see introduction) – that a list of farms,
illustrative and representative of the various typologies, be compiled for close examination
and that an appropriate investigative methodology be designed for this purpose.


Let us consider first the methodology, which is constructed around the experience gained
from this study. In each case the assignment needs to examine the projects in respect of: a)
design and preparation, b) degree and quality of intervention/service, and c) operational
characteristics. These three components will obviously need to be broken up. The following
are recommended study guidelines applying to both desktop and on site research.


Preparation and design
The following tasks must be carried out:


     Evaluate the project design (business plan, institutional structures, contractual
      arrangements) in a holistic way seeking out weaknesses, strengths and imbalances
      specifically with regard to appropriateness, practicability, veracity, cash flow
      generation, risk analysis, and market analysis;
     Evaluate the structural arrangements under which the project will operate and be
      governed. Consider these from the point of view of project evolvement, empowerment,
      performance incentives, and conflict management;


     Evaluate the provisions for management and capacity development;



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      Examine the farm valuation used and test for sensitivity and impartiality. Establish a
       productive value from the business plan and compare with a willing buyer/seller price;


      Assess the preparation for, and implementation of the project. This would include the
       recruitment and buy-in process and end with the installation of the new owners. The
       focus would be on the development of expectations and synergies in relation to the
       strategic imperatives.


Most of this will be desktop research. However, much of the conceptual „shaping‟ will be
influenced by an on-site visit. It will be necessary to consult some of the government officials
involved in the project, as well as any mentors, advisors that may have been involved.


Support and intervention
In this case the activities will include:


      Determine what assumptions were made in the plan as regards outside intervention –
       by government, mentor, or industry bodies.


      Explore the activities and expectations regarding intervention as seen by the
       beneficiaries, and establish where possible, areas of concern and influence on the
       future. Important is to determine to what extent the philosophy of „self-help‟ or
       „matching effort‟ such as sweat capital impacts on the outcome.


Most of this information will be obtained from the site visits and through consultation with
the government stakeholders.

Operational dynamics
This could be divided into two parts, actual farming operations (what is farmed, how it is
being farmed) and the human interactions (behaviour of the group, capacity development,
empowerment).


As regards the farming operation, the focus should be on an exploration of the current
strategic vision in relation to that which was planned, and assessing the reasons behind any
differences. Furthermore, the income statement and balance sheet aspects should also be



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explored as far as practicable, and a view generated on financial performance. Administrative
systems should be described and verified. At the same time, marketing arrangements, logistics
and the exposure to market risk should be explored.


As regards group behaviour, the first step will be to outline developments within the group
since recruitment. Furthermore, group dynamics should be explored by establishing (where
they exist) the formal and informal leadership patterns; the interrelationships between the
more passive and more active members; the poverty and needs profile of the members;
members‟ current and future expectations; skills levels and needs; and social issues, etc.
Ultimately, it is important that reasons be found for synergies or failure.


To be able to undertake the investigation of the operational dynamics it will be necessary to
consult with groups and individuals in a comprehensive way.


Selection of project farms
The initial comments in this report refer to the extreme variability that exists within the group
of farms examined in the Western Cape. It is not easy to discern clearly defined typological
groups from which to select a representative sample. It depends, in fact on what is wanted.
Having visited nearly all the Western Cape projects, the consultants have come up with the
following framework for the selection of farms for useful case study research:


1. Entrepreneurial farmers – to illustrate the impact of very small groups coupled with an
entrepreneurial approach in the leadership. Suggest two farms illustrating high risk and low
risk strategies.


2. Full ownership, group influence dominant („tail wagging the dog‟) – to illustrate the impact
that group interrelationships can have on the project outcome. Suggest two farms.


3. Full ownership, involved in high-tech and managerially intensive production – to illustrate
the impact of high management demand on the project outcome of „group managed‟ farms.


4. Full ownership, strongly design-dependant – to illustrate the impact of project design and
preparation and of outside intervention on project outcome of group managed farms.




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5. Share equity, motivated by balance sheet considerations – to illustrate the problems and
influences of farmer‟s situation (and philosophy) in respect of initiating schemes through
balance sheet pressure.


6. Share equity, motivated by a mutually rewarding framework – to illustrate the forces at
play when the share equity arrangement is mutually rewarding and undertaken in good faith
and trust.


7, Subsistence (or semi-subsistence) farming – to illustrate the attitudes and outcomes of
beneficiaries towards a subsistence, or food security style of farm.


8. Commonage       - to illustrate and explore the opportunities and problems inherent in
municipality owned land.




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Appendix 1: Survey list
   Survey                                      Survey
                            Project Name                            Project Name
  Reference                                   Reference
               1   Fair Valley                         65   Die Kop/le Roux
               2   Bouwland                            66   Great Brak
               3   Helderberg Vineyards                67   Dysselsdorp SE
               4   Khula                               68   Melkhoutfontein
               6   Cape Olives                         69   Mossel Bay African Farmers
               7   Nelson's Creek                      70   Steyn Family Elim Trust
               9   Kaapschon                           71   Thembalethu
              10   Sonop                               73   Africa Flowers
              11   Williams family                     74   Toekomsrus
              13   Lemoenshoek                         75   Pacaltsdorp
              14   Klein Begin (Swellendam)            76   Blommetjieskloof
              15   Klipfontein                         77   Appelkloof A
              16   Geelbeksvlei                        79   Kapank
              17   Kweekvlei                           80   Simunye
              18   Gelukshoop                          81   Van Wyksdorp SF
              19   Deo Valente 2                       82   Kango Wine Co-op
              21   Goudmyn                             86   Voorsieningslaagte
              22   Henque                              87   Beaufort West Small Farmers
              23   Kliprivier                          88   Leeugamka
              25   Swellendam SF                       91   Robbenson Family Trust
              28   Trevor's Boerdery                   92   Rietkuil
              29   Dampies Boerdery                    93   Ngondo Mono
              30   Bestershoop                         94   Griekwa Ratelgat
              31   De Heuwel                           95   Long Tom Trust
              32   Stukkieswit                         96   Klaaste Family
              33   Winalo                              97   Hoekskuil
              34   Worcester SF                        98   Appollis
              37   Omega                               99   Graceland
              38   Digby                              100   Cedar Estate
              39   Crispy Coolers                     101   Bergriver Fishing Women
              40   Ashton/Zolani                      102   Broadway Hydroponics
              43   Salamansvlei                       104   Kirkleyvale
              44   Nduli Vukani                       105   Goedemoed
              45   Masiphile                          106   Erfdeel
              46   La Vouere                          107   Harmonie
              48   Morceaux                           108   Vredendal Commonage
              49   Witzenberg Deelnemers              109   Karnemelksvlei
              50   den Haag                           110   Boontjiesrivier
              51   Welgemeen                          112   Goedehoop Worker's trust
              53   Destiny                            113   Siyanqoba
              56   Langfontein                        114   Bugler's Post
              57   Garcia                             115   Eikevlei
              59   Riversdale SF                      116   Leliesfontein
              61   Ericaville                         117   Lebanon
              62   Friemersheim                       119   J Swarts
              63   Lawaaikamp                         120   Crispy Farming
              64   Johnson Group                      124   Arora



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Appendix 2: Farms excluded from the analysis
                                             Found /    could
 Survey
               Project Name       Studied   followed   still be   Reason for exclusion
  ref.
                                                up     visited
  5       Uitzicht                 Yes          no        no      Informed by DLA/DoA - not operative
  8       Ruitersvlei              Yes         yes        no      Liquidated
  12      Klein begin Hoenders     yes          no        no      Informed by DLA/DoA - not operative
  20      Deo Volente 1            yes         yes        no      Done, but as Deo Volente 2
  24      Whitehall                yes         yes        no      Liquidated - delisted but researched and
                                                                  visited
  26      Rietpoort                 yes       no         no       not found
  27      Na-die-Oes                yes       no         no       not found
  35      Northridge A              yes       no         no       Liquidated
  36      Northridge B              yes       no         no       Liquidated
  41      Retrospective Trading     yes       no         yes      Owner not found
  42      Bergsig Vark Boerdery     yes       yes        no       Informed by DLA/DoA - not operative
  47      Vickersvlei               yes       no         yes      Not available at the time
  52      Robertson Dev Company     yes       yes        no       sold
  54      Mentoor family            no        no         no       never started
  55      Bongolethu                yes       no         yes      Not available at the time
  58      Warmwater                 yes       no         no       Informed by DLA/DoA - not operative
  60      Simanyene Trust           yes       no         no       Not in farming
  72      Albertinia                yes       no         yes      Not available at the time
  78      Appelkloof B              yes       yes        no       Done but as Appelkloof A
  83      Stellenberg               yes       yes        no       Not started
          United farmers            yes       yes        no       Informed by DLA/DoA - not operative
  84      association
  85      Robyn                     yes       yes        no       Informed by DLA/DoA - not operative
  89      Boplaas                   yes       no         no       Hardly started
  90      Murraysburg Small         yes       yes        no       Not started
          Farmers
  103     Nuwe Hoop Landgoed        yes       yes        no       Reason not included in analysis
  111     Redelinhuys SF            no        yes        no       Not started
  118     Rietkuil                  yes       yes        no       Not found
  121     Letjiesbos                yes       yes        no       Not started
  122     Gelukwaarts Trust         no        no         no       Not started
  123     Kromrivier                no        no         no       Not started




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Appendix 3: Project rating questionnaire
                                          Project number                               1
                                            Project name                         Fair Valley                        Plan   Operation   Comments
Is the project concept fundamentally researched to be
                                                            yes=10//not clear=5/no=0
achievable (overall impression)?
Will the project add value in the general economic sense
                                                            yes=10//not clear=5/no=0
in terms of growth?
Has risk been assessed/built in - market?                   yes=10//not clear=5/no=0
Has risk been assessed/built in - financial?                yes=10//not clear=5/no=0
Has risk been assessed/built in - production?               yes=10//not clear=5/no=0
Number of beneficiaries based on official approval?         Give actual number
                                                            Give estimated amount , if not, give reasonable
Level of annual returns in Rand value at maturity?
                                                            professional estimate
Additional jobs over and above those existing, expressed
                                                            Jobs created per beneficiary
per beneficiary contributing?
Female beneficiaries expressed as % total beneficiaries?    Percentage
Youth (18-35 years) expressed as % total beneficiaries?     Percentage
Handicapped expressed as % total beneficiaries?             Percentage
                                                            sole ownership(7),equal share(6), part ownership (5),
Nature of tenure and control of BEE component - degree
                                                            controlling equity(4), leasehold(3), non-controlling
of control over how land is used?
                                                            equity(2), commonage(1), no access(0)

Creditworthiness measured in terms of available credit -    none(0), grant(1), soft loans(2), mortgage bonds(3),
opinion where necessary?                                    supplier credit(4), commercial loans(5)

Standard of infrastructure - roads, fencing, water supply
(human, animal, irrigation), housing, farm buildings -      good=3, fair=2, poor=1,none=0
overall impression?
Standard of movables - Machinery, livestock etc?            good=3, fair=2, poor=1,none=0

Market issues - dealt with as a business component?         Addressed=2, not clear=1, not addressed=0

Is/was capacity building form part of the programme?        yes=2/not clear=1/no=0
Is there a specific plan to develop management capacity
                                                            yes=2/not clear=1/no=0
to transfer responsibility?


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Is mentoring built in to the plan?                            yes=2/not clear=1/no=0
Is decision making responsibility commensurate with
                                                              yes=2/not clear=1/no=0
share?
Is effective administration built in?                         yes=2/not clear=1/no=0
Potential or existence of technical service                   Available=2, not clear=1, none=0
When do benefits accrue meaningfully?                         0-1yr = 4, 2-5 yr =3, 5-10y r=2, >10yr =1
Does the project enhance food security?                       yes=2/not clear=1/no=0
Is housing security included in the programme?                yes=2/not clear=1/no=0
Does the project improve social environment?                  yes=2/not clear=1/no=0
How effectively has the communication between
stakeholders aligned the beneficiaries (consider structures   good=3, fair=2, poor=1, none=0
and process)?
Have expectations been appropriately tempered? Is there
                                                              yes=2/not clear=1/no=0
disappointment?
                                                              easily tradable=2, tradable with difficulty=1, not
Is the benefit tradable and transferable?
                                                              tradable=0
Can beneficiaries exit without personal cost under worst
                                                              yes=2/not clear=1/no=0
case scenario?
What share of the total is acquired for the group of
                                                              Actual share in %
beneficiaries?
General Narrative




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Appendix 4: Project information
                                                                                                                   Operation
Categories          Components                                                  Format                  Planning               Comments
                                                                                                                    (check)

                    Number
                    Date ministerial approval
                    Project name
     Basic          File number
  information
                    Dominant enterprises
                    Total Ha
                    Nearest town
                    Ha Special
                                                                Share equity, share cropping,
                    Type of project: What involvement           housing+agric, full ownership, joint
Project structure
                    structure is applied                        ventures, lease,subdivision, co-
                                                                operative, property association.
                    Total value of project (all parties)        Amount in Rand?
                    Total debt against project (all parties)
                    not beneficiary borrowings to inrease       Amount in Rand? (If known)
                    grant.
                    Total contribution of benefic to value of
                                                                Amount in Rand?
                    project
                    Total farmer donation(%)                    % of total equity
    Project         Total farmer loan (%)                       % of total equity
 capitalisation
    (Total)         Total farmer equity(%)                      % of total equity
                    Beneficiaries' contribution (grant)%        % of total equity
                    Beneficiaries' contribution (loan)%         % of total equity
                    Beneficiaries' contribution (labour)%       % of total equity
                    Beneficiaries' contribution
                                                                % of total equity
                    (assets/cash)%
                    CASP Grant %                                % of grant which is casp or DoA grant



                                                                                                                                          83
                   Allocation of funds to land/fixed assets
                                                              Percentage grant to land?
                   (%)
                   Allocation of funds to other (%)           Percentage grant to other?
                                                              Land with improvements; land,
                   Value source: What kind of value           improvements plus movables; part of a
                   underpins the grant money?                 simple going concern; part of a
  Beneficiary                                                 complex operating entity.
    capital                                                   What share of the total is acquired for
                   Group beneficiary share of total%
                                                              the beneficiaries as a group?
                                                              What share of the total is acquired for
                   Individual beneficiary share of total%
                                                              each beneficiary?
                                                              Which resource is most limiting to
                   First limitation
   Resource                                                   project furtherance
limitation (seen
                   Second limitation                          similar to above
by beneficiary)
                   Third limitation                           similar to above
                   Initiator of project                       Farmer or beneficiary

 Stake holder      Farmer - reason for involvement            What does the farmer intend to achieve
 relationships                                                What does the beneficiary intend to
                   Beneficiary - reason for involvement       achieve
                   Name of planner (DLA)
                   Clarity of project objective               clear, conflicting, muddled
                                                              aligned, conflicting, disinterested,
                   Degree of internal alignment               doubtful
 Co-operative      Leadership style                           autocratic, consultative, balanced
  behaviour        Leadership strength                        strong, reasonable, weak
                                                              weekly, monthly/quarterly, biannually,
                   Frequency of meetings                      annually, sporadic, none
                   Attendance                                 keen, average, indifferent
                   Management standards                       Rate out of ten
   On site
 observations      Empowerment                                Rate out of ten
                   Sustainability                             Rate out of ten




                                                                                                        84
Appendix 5: Project ratings: Proposed questions to include in a questionnaire
                 A. Basic information.
                 Name of project:                                                                   Farm number:                   Leader's name:                                                 Tel Number
                 Total size of farm (ha):                                                           Nearest town:                  General type of farm (eg wine grapes):
                 Number of beneficiaries                                                            Value of grant:                Sweat capital:                                Other HDI investment:
                 Enterprise mix                                                        a                  b                c               d                    e                comments
                 Type
                 Ha or stock units
                 Irrigated/dryland (I or D or na)

What did the HDI entity acquire (underline):                                       (Land only; land,improvements; land, improvements, movables; share in going concern;J/V arrangement; land lease; other)
What ownership structure applies (underline):                                   (sole ownership;S/E with control; S/E equal share; S/E veto powers( >25%); S/E small minority(<25%) ; leasehold; subdivision)

                 Name up to three constaints to growth.
                 Excuding the original LRAD grant, from where have further grants been received?
                 For what purpose were these received?                                                                                                    How much?
                 Are there long/medium term loans against the business?                                                                                   How much?


   SCORE         B. Scoring elements                                           (NOTE: All answers are: yes(y) / no(n) / neutral(ne) / not clear(na)
Cate-   Ques-    1. Sustainability elements (TOTAL SCORE IS 100% )                                                                                                                                Yes    No    Ne/na
gory     tion
 25        5     Resource base:                                            Is the farm mix, system appropriate for standard farming in the area?
           5                                                               Is the land/plantation acceptably productive?
           3                                                               Are movables of an adequate standard?
           3                                                               Are fixed assets of an adequate standard?
           4                                                               Are these in line with the latest business plan?
           5                                                               Is the farm, stand alone, of economic size?
 15        5     Markets:                                                  Is there acceptable access to markets?
           5                                                               Is there a focus to improve the marketing of farm product?
           5                                                               Does the production strategy fit market trends?
 20        4     Financial:                                                Do the project assets exceed the liabilities by a factor of 3:1?
           2                                                               Will the project be able to obtain commercial and supplier loans without mortgaging the land?
           5                                                               Is the project making an operating profit now? (Assume CASP is repayable?)
           2                                                               If grant assistance (eg CASP) is provided, will it be less than 3 years before there is profit?
           4                                                               If grant assistance (eg CASP) is NOT provided, will it be less than 3 years before there is profit?
           3                                                               When project stabiliises would dividend after wages and owners time exceed R2000 each?
 25        4     Management                                                Can management clearly describe how the farm will look in ten years time?
           5                                                               Can management outline the programme (hectares allocated) for the next two years?



                                                                                                                                                                                                                85
       4                                         Can management outline the requirements to achieve plan/budget and its role to get them done?
       4                                         Is decision making done efficently?
       4                                         Are costs being recorded appropriately?
       4                                         Are the costs being regularly monitored by the management?
15     5     Risk                                Is the production risk inherently high on the farm?
       5                                         Is the marketing risk inherently high on the farm?
       5                                         Is the financial risk inherently high on the farm?
100   100
             2. Empowerment (TOTAL score 100%)
10     5     HDI level                           What is the percentage of female beneficiaries?
       5                                         What is the percentage of youth beneficiaries?
20     4     Human capacity                      Is the technical capacity adequate for the project?
       3                                         Has technical training been given?
       2                                         Is appropriate technical training available?
       5                                         Is managerial capacity adequate?
       4                                         Has management training been given?
       2                                         Is appropriate management training available?
15     3     Group behaviour                     Are group meetings held at least monthly?
       3                                         Is the attendance at such meetings over 60%?
       2                                         Is there a split beween committed and passive members?
       3                                         Are more than 20% of the group strongly committed to the project?
       4                                         Are conflict resolution mechanisms needed?
15     0     Security needs                      Is food security an intended benefit?
       7                                         If yes, has this benefit been delivered equitably?
      or 7                                       If no, is this lack of planned food security consistent with the needs and nature of the project??
       0                                         Was housing security one of the key intended benefits of the project?
       8                                         If yes, is housing being delivered as planned?
      or 8                                       If no, is housing a non-essential issue?
10     5     Social needs                        Does the project enhance the quality of life of the beneficiaries?
       5                                         Does the project enhance the status of the beneficiaries?
15     5     Resonsibility devolvement           Has responsibility been devolved?
       5                                         Is there a plan to transfer responsibility?
       5                                         Is the plan being implemented?
15     5     Exit strategy                       Is exit only possible through sale via the trust?
       4                                         Could exiting beneficiaries rely on being paid out the LRAD value within 1 year?
       3                                         Are restrictions/conditions for new entrants built in to the deeds/contracts?
       3                                         Will tradability free up with time?
100   100    3. Intervention (TOTAL 100%).
 50    10    Grant management                    Was the use of grant funds (incl. CASP) for the next three years allocated in the business plan?
       12                                        Are grant funds adequate for the purpose intended?




                                                                                                                                                      86
      0                         What input funding has been excluded which should not have been?
      8                         Is it posssible to obtain equity funding other than grant funding for this purpose?
      10                        Will a lack of further funding cause stagnation?
      10                        Is the grant assistance being efficiently supplied?
20    5     Extension/support   Is technical extension adequately available?
      6                         Is appropriate management support available?
      4                         Has training SIGNIFICANTLY added value to the project?
      5                         Is group coordination organised?
30    15    Mentor              Is there a regular mentor in place?
      15                        Does the mentor add significant value?
100   100




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