Proposal for an Agri BEE Charter Agri BEE

Proposal for an Agri. BEE Charter Agri. BEE INDABA 6 Dec 2005

Index Ø Ø Ø 5 Stages of Agri. BEE process Where are we in recommended process Section 12 and 9 Charters/Codes Structure of draft Agri. BEE Charter Tasks for Breakaway Sessions 2

5 Stage Process Ø Ø Ø Aug 2002 - driven by the Reference Group July 2004 - Agri. BEE Framework launched by Minister Oct 2005 - Draft Agri. BEE Charter recommended to Minister Indaba 6, 7 Dec Follow up 3

Agri. BEE Framework process Ø Wide publicity, including provincial launches Ø An Agri. BEE Steering Committee (SC) appointed to consult stakeholders, lead key strategic approaches and report Ø Public comments received until Dec 2004 Ø The SC undertook consultations, as mandated Ø The dti released BBBEE Codes of Good Practice (CGP) in June 2005 Ø The SC engaged with CGP directives and utilised them in the development of its recommendations Ø SC presented draft Agri. BEE Charter and large-scale scorecard to Minister 28 Oct 2005 4

Agri. BEE Framework process Ø Commentary process transparent with 55 written inputs received Ø Consultation process inclusive, broad, including organised agriculture, labour, youth, women and provinces Ø Agri. BEE Framework is accepted in principle Ø Charter should be aligned with the CGP Ø Certain Codes of Good Practice remain presently outstanding, e. g. for SMMEs Ø Scorecard should run from 2007 to 2017 Ø Need to publish draft Agri. BEE Charter for comment Ø Need for an Indaba in Dec Ø Propose first phase: Section 12 Charter, then Section 9 Sector Code 5

Draft Agri. BEE Charter Ø Draft, including large scale scorecard published on 2 Nov Ø Negotiations identified with stakeholders • Agri SA • NAFU SA • TAU SA • ABC, SA Processors Assoc, SACOB • Banking Council • Labour • Wine and sugar sectors (legislation) • Women, youth & disabled groups Ø Indaba planned for 6, 7 Dec 6

Agri. BEE Charter negotiations Ø Scope of the Charter requires refinement Ø One main sector charter, limited sub-sector Charters Ø Single balanced scorecard, but weightings taking into account farming/ non-farming Ø The scorecard requires further interrogation Ø How to deal with issues affecting implementation, e. g. land restitution Ø SMMEs need to be addressed 7

Agri. BEE Charter negotiations (cont. ) Ø Need to align other policies, e. g. funding and support with Agri. BEE Charter Ø All stakeholders need to fully digest the CGP Ø Need for certain clarifications by the dti Ø need for follow up communication Ø Impact studies could be done by Agri. BEE Council Ø Cost of implementation to be kept down Ø Time constraints in preparations and negotiations 8

Process A C B You are now here 9

Sector Charter (Section 12) Ø Ø Expression of commitment to transformation No Legal Status Developed by major stakeholders in sector Advances objectives of Act 10

Sector Code (Section 9) Ø To be signed by Minister of Agriculture and industry associations Ø Independent third party analysis • Justified, defines scope • advances BEE Act • All scorecard elements • consistent with CGP • addresses funding to meet ownership & enterprise development targets Ø Addresses sector challenges & vision Ø Adresses Charter Council Ø It is legally binding 11

Ownership Ø Weighting 20% Ø Targets for voting rights & economic interest for categories of black people 10 -25% Ø Bonus points for land transfer contributions ----------------Ø Empowerment starts with improved land access and tenure security Ø Distinction between land enterprise ownership Ø Voluntary sales of land Ø 30% commercial land target agreed Ø Lead to viable and sustainable enterprises Ø Will develop diversity of enterprise models 12

Management Control (see also Employment Equity) Ø Weighting 10% Ø Exercisable voting rights at board and executive level 4050%, women 20 -25% ----------------Ø Undertaking to promote black participation, incl. Women, at executive and board levels 13

Employment Equity Ø Weighting 10% Ø EE 50%, women 50% ----------------Ø Proactive employment of black, incl. Women, managers Ø Bonus points for employment of disabled and youth 14

Skills Development Ø Weighting 20% Ø Investment as % of payroll 3%, bias toward literacy & numeracy Ø Learnerships and interns 3% Ø Qualifying mentorship programmes ----------------Ø Require more resources for expanding human capital pool for sustained productivity , entrepreneurship and skills 15

Preferential Procurement Ø Weighting 20% Ø 50% ----------------Ø Proactive Agri. BEE procurement Ø Annual spend reporting Ø Progressively provide preferential supplier status 16

Enterprise Development Ø Weighting 10% Ø Cumulative contribution to enterprise development as % of average nett profit 10%, or 20% of land or assets leased Ø long term leases (>5 years) ----------------Ø Recognise access to support services core to sustainable empowerment Ø Develop operational and financial capacity Ø Financial contribution to enterprise development Ø Lease agricultural land 17

Rural development and poverty reduction Ø Weighting 10% Ø Cumulative contribution to social development as % of nett profit 10%, or land made available to farm workers 10% ----------------Ø Contribute to social development and industry specific initiatives, e. g. housing, recreational and health facilities, transport etc Ø Make agricultural land available to farm workers 18

Monitoring and evaluation Ø Ø Ø Ø Each institution fully discloses and reports annually All elements of scorecard M&E centres to be established Link Agri. BEE baselines and measurements to census periods Independent Agri. BEE Council to be established Targets to be reviewed and corrected every 3 years Comprehensive evaluation after 5 years 19

Tasks for Breakaway Sessions Ø Focus on improvements to the draft Charter Ø Address specifically: • In principle agreement of the draft Charter • Identify any gaps for attention • How should the Charter cover the value chain • SMMEs • Scorecard weightings/targets where possible • Any further work that needs to be done • A way forward, e. g. planning for implementation, organizational and institutional arrangements, funding • Road shows and further clarification required • April launch of Agri. BEE Charter 20