WHEN Remgro subsidiary TSB Sugar realised that it was about to lose 60% of its cane fields owing to successful land claims, management sprang into action.
Instead of shutting down the company’s mills, TSB decided to get involved in providing technical and management expertise to the new landlords, transforming them into commercial cane growers almost overnight.
Ten years on, TSB provides professional agricultural services to its new partners, who have also become the company’s main cane suppliers. In this, TSB joined its competitors Illovo and Tongaat Hulett, which run extensive out-grower schemes as part of a model considered among the most empowering for start-up small black farmers.
"It has not been an easy transformation process," says TSB CEO John du Plessis. The company was intent on ensuring that its business did not just survive after the land transfers, but that it continued to grow.
"We had to develop sustainable business models that would be acceptable to communities in order to nurture long-term partnerships that would be beneficial to our business and the communities, and be acceptable or endorsed by the relevant government department, says Dawie van Rooy, chief operations officer (agriculture) responsible for cane supply to the company’s three sugar mills.
These are the Malelane and Komati Mills in Mpumalanga, as well as the Pongola Mill in KwaZulu-Natal.
Mr van Rooy says the biggest challenge was finding a model that would result in the "balance of interests" among the parties involved, for example, ensuring that communities saw tangible benefits such as community schools and clinics.
The desired model also had to guarantee a flow of other benefits to locals such as the transfer of management skills and entrepreneurship opportunities. As a result, TSB has accommodated entrepreneurs wanting to provide other industry-related services such as cutting and transporting sugar to the mills.
Operating as the Libuyile, Mgubho, and Sivonuseftu farming trusts, the communities now account for 62% of RSB’s cane-growing areas in Malelane and Komati, north of Nelspruit in Mpumalanga.
Last year, TSB’s cane supplies came from commercial farmers (including black community trusts) who harvested 35,003ha (64%), followed by TSB’s own fields 11,735ha (21%) and independent small-scale growers in communal lands who harvested quality cane from 8,353ha (15%).
Mr du Plessis says this was in line with the company’s strategy of capitalising on local opportunities. However, TSB also plans to expand through acquisition and organic growth in Mozambique, bringing competition to Tongaat Hulett, which operates two mills in Mozambique, two in Zimbabwe and has extensive cane operations in Swaziland.
Illovo, on the other hand, has agricultural and downstream sugar manufacturing operations in six African countries including SA, Zambia and Malawi.
According to the South African Sugar Association, the local sugar industry is worth an estimated R8.5bn. Exports alone bring in about R1bn, and production of sugar and associated products such as molasses sales account for R300m.
The share of both commercial and small-scale sugar growers amounts to R5.3bn (64.37%) annually, while millers’ share is estimated at R2.9bn or 35.63%.
Theo Chiyoka, CEO of community farming trust business which incorporates TSB’s three Mpumalanga-based trusts, says it has not been smooth sailing for the community. The first business attempts saw farms failing to cope, with lots of infrastructure being lost and some farms lying idle.
"The failure, however, has made us learn from our mistakes and our community has learnt to separate farming as business from subsistence farming.
"Since the partnership with TSB is based on skills transfer, the young people being taught farm-management skills are being drilled, and nothing is being left to chance so that they understand that this is not a game; if they mess up, the whole community falls with them."