Black empowerment is witnessing a genuine success story, writes BILL CORCORANin Cape Town
BY THE end of this year, South Africa’s wine industry, one of the slowest sectors in the country to embrace the concept of black economic empowerment (BEE), will witness a genuine transformation success story.
Located in the picturesque Elgin Valley to the east of Cape Town in the Western Cape province, Thandi wine and fruit farm is a prime example of how the poor black majority can secure a greater share in the country’s wealth if given the right support.
In a year that over 350 emerging black farmers in South Africa faced foreclosure for the non-repayment of government loans used to buy their farms, Thandi’s shareholders look set to become the first black collective in the world to take full control of a vineyard and its wine brand.
Thandi’s cellars sell merlot, cabernet sauvignon, pinot noir, semillon, sauvignon blanc, chardonnay and chenin blanc, and their products became the first Fairtrade certified wines in the world in 2003.
The project began in 1997 when established wine producer Paul Clover and the state forestry company Saf Col decided to embrace the government’s BEE plans and became equal shareholders in the Thandi initiative with a group of 250 of their workers.
Mr Clover and Saf Col each contributed 100 hectares of land to the venture, while the workers secured a government loan of R2.3 million to help cover the initial start up costs. Since then the workers from the farming communities of Nietbegin, Lebanon and Paardenkloof have increased their shareholding to 55 per cent of the business, and over the next five years this will increase to 100 per cent.
According to Thandi Estate general manager, Sewis van der Horst, after the company broke even for the first time two years ago, the collective decided to buy out their remaining partner, Mr Clover.
“We have been told by government our loan is approved and we hope to have the funds in by the end of the year to complete the transaction. We are generating profits now and paying dividends to our shareholders, which is good for them.
“The workers lives have improved but not significantly, but in five years’ time they should see some real benefits. We have lots of plans. For instance, we are going to establish a bursary so our children can afford to go to university,” he told The Irish Times.
To understand the significance of this event, one need only take a look the history of South Africa’s wine industry as well as its make-up 15 years into democracy.
Many of the country’s predominately white wine producers have been producing for generations, establishing their businesses on the back of black workers often paid with low quality wine – the infamous “dop system” – to make up for paltry wages. Few wealthy black entrepreneurs have invested in wine farms in the Western Cape, and, while some initiatives have been established to get vineyard workers involved in wine production, success has been hard to come by.
Black winemakers face numerous obstacles, chief among them the fact they have to compete with brands that have been in existence for decades, and many lack commercial farming expertise.
The National African Farmers’ Union’s Western Cape provincial president Willy Williams said the government should shoulder much of the blame for the plight of many black farmers.
“Our members face many challenges when getting started, and many of these revolve around a lack of expertise in running a modern farm. The state is responsible for providing training in this area, but it does not have the capacity to deliver it on time.
“There is also an issue around the high cost of land in the Western Cape. The state does not provide enough money to cover the cost of purchasing the land and the initial working capital needed to run a farm,” he said.
An example of the high attrition rate amongst emerging black winemakers was on show this month at Soweto Wine Festival, established five years ago as a testing ground for African wine producers and drinkers.“We had 12 black exhibitors in 2005 and this year we have only eight,” said festival co-convener Marylin Cooper.
Elgin wine estate owner and Thandi co-founder Paul Cluver says the low number of black people getting involved in the wine industry can also be attributed to the poor returns investors get in the early years.
“For black people, if they are skilled, it is more lucrative to be in finance. Agriculture is not a way to make a fast buck. Sadly, the returns are fairly low and the capital expenditure pretty high.
“We were able to get the project off the ground in a relatively inexpensive way. And we [the Thandi shareholders] are successful because we help each other,” he said.