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.