Dairy Joint Ventures in South Africa’s Land and Agrarian Reform Programme: Who Benefits?

Abstract

Joint Ventures (JVs) between ‘agribusiness’ investors and ‘small farmers’ or ‘customary landowners’ are being promoted in South Africa’s land and agrarian reform programme as a way to include land reform beneficiaries in the country’s competitive agricultural sector. This paper undertakes an in-depth comparative analysis of two JV dairy farms located on irrigation schemes in the former ‘homeland’ of the Ciskei, in South Africa’s Eastern Cape Province. The community, through government investment, brings the fixed assets to the business: land, irrigation infrastructure and milking parlours. The agribusiness partner or ‘sharemilker’ contributes the dairy cows and other movable assets. The paper explores what incentivizes agribusiness partners to enter into these types of ‘sharemilking’ JVs. The research reveals that investing in ‘moveable assets’ is more profitable for agribusiness and is also viewed as a more politically pragmatic way to arrange production in the context of land reform. These arrangements have led to further opportunities for investment in other parts of the dairy value chain. The social relations of production involved in sharemilking JVs also obscure class and race relations in ways that benefit agribusiness partners. Although beneficiaries are receiving benefits in the form of jobs and dividends, which in certain cases make notable contributions to household incomes, the structuring of sharemilking contracts is not a fair return on investment for the customary landowners. It is also argued that the JV model is at risk of equating ‘black emerging farmers’ with a group of ‘beneficiaries’ who are in reality workers and passive recipients of dividends and land rents.

A methodology for class analysis: Agricultural investments and agrarian change in South Africa

“…Pervasive unemployment means that there are high demands from the surrounding community for jobs, which the farms are unable to meet given the relatively low labour requirements of capital-intensive dairy farming. Many respondents from the surrounding communities emphasized the tensions exerted on the social fabric of the community by the astonishing spectacle of hundreds of hectares of fenced green pastures, latest technology in rotary dairy parlours, and the numerous high value dairy animals, amidst the extreme poverty of the residential locations and an otherwise 9 For a more in-depth analysis of Amadlelo Agri's JV model, see Bunce (2020a). drought-stricken landscape.…”

“…Keiskammahoek started off with 97 “commercial smallholder units,” while Shiloh only had 17. In Keiskammahoek, only 35 landowners benefit from the JV today, and over the years, they accumulated larger plots (many with private titles), dairy cows, and other assets and managed to hire in labour on their land (Bunce, 2018; Holbrook, 1996; Laker, 2004). The process through which some of the original group of 97 households in Keiskammahoek were squeezed out by their accumulating neighbours points to a classic trajectory of class differentiation among petty commodity producers.…”

“…The remaining 35 households in Keiskammahoek have private title to their land (or are in the process of finalizing their titles), unlike Shiloh, where irrigation plots continue to be held under a form of communal tenure (Bunce, 2018; van Averbeke et al, 1998). A much larger group of 395 households at Shiloh has rights to relatively small irrigation plots, which is a sharp contrast to Keiskammahoek.…”

“…JVs typically involve collaboration between agribusiness investors and small‐scale farmers (Cotula et al, 2009; IFAD, 2012) or local people with existing land rights (Mayson, 2003). In South Africa, many JVs have struggled and some have collapsed after major losses for both investors and communities (Bitzer & Bijman, 2014; Bunce, 2018; Davis, 2014; Lahiff et al, 2012; Manenzhe, 2016; van Koppen et al, 2018). Critics of JVs highlight their tendency to promote large‐scale commercial farming as the only viable option within land and agrarian reform.…”

“…The JV model may be a new way for agribusiness firms to exploit black small‐scale farmers while retaining their dominance over the market and benefiting from improved political credibility (Lahiff et al, 2012; Tapela, 2005). The unequal power relations between small‐scale farmers and agribusiness partners are highlighted in existing studies (Bunce, 2020a; Davis, 2014; Derman et al, 2006; Hall et al, 2015; Spierenburg et al, 2012; Vermeulen & Cotula, 2010). Here I argue that the intense struggles over jobs, dividends and land, cannot be fully explained without investigating dynamics of social differentiation within the communities in which these JV investments take place.…”