Solms-Delta business problems, and an attack

A comment was recently placed under my August 2016 article on Solms-Delta’s groundbreaking agreement with the national government. The farm’s workers were to take 45% of the business (including brand and land), funded by the government’s National Empowerment Fund, with the NEF itself taking 5%. I commented that “For many years now, Solms-Delta has represented by far the most radical gesture towards transformation in an industry which has changed little in structure since the coming of formal democracy to the country in 1994.”

The recent comment came from Christopher Rawbone-Viljoen, son of the owner of Oak Valley, the very substantial agri-business in Elgin, which includes a small wine-growing component. It’s worth dealing with it here, as it raises a significant matter (it also makes an extraordinary attack on me, which I’ll deal with secondly).

Firstly, there’s a comparison between what Christopher regards as the failure of the Solms-Delta project and his own business’s success. He says:

“It seems your poster child for transformation has gone belly up and wasted 65m of taxpayers money in the process with more to come. To the contrary, we have implemented 4x highly successful BEE fruit projects with another 3 in the pipeline.”

It turns out that this rather distastefully exultant bit of triumphalism is in response to a recent Sunday Times article, luridly entitled ‘Land reform’s poster child goes sour as debts mount’. The article was motivated by Solms-Delta being placed under business rescue – which is, I understand, a high-level legal mechanism to prevent any liquidator attack on a business which persuades a court that it has a good chance of recovery.

So, “gone belly up” is somewhat excessive on Christopher’s part. As Mark Solms has said, “The court would not have granted [business rescue], unless they were satisfied we had a viable turnaround strategy.” Furthermore, the R65 million rand is not exactly “wasted”, as it is lodged in title to a valuable bit of land, quite apart from in a business which will hopefully become profitable.

I can’t go into the whole matter here (which is complex and largely outside my sphere of understanding), but it seems that the Sunday Times journalist was on something of a bashing mission and largely ignored statements by the farm and, importantly, by the government, about supportive operational money due to come to Solms Delta under the original deal. (The article doesn’t seem to be easily available for all online.) A rather more objective piece about the business rescue move, by Farmers Weekly, can be found online here.

The harvest festival on Solms Delta, founded primarily for the winery workers of Franschhoek.

Most of us who have welcomed the extraordinary social experiment at Solms Delta, and know something about the transformation of workers’ lives there will be hoping that the “turnaround strategy” will be successful. Although undoubtedly there are very many in the farming and general business sector which would like to see this sort of radical land-transfer project fail – Christopher R-V perhaps among them. But he should pay a visit and try to learn that not only his own ideas have value, and that he too should hope for the full success of this deal between Solms-Delta and the government, ultimately giving actual land and ownership – and a measure of real social satisfaction – to the workers. Perhaps he might at least pick up a few good ideas.

Meanwhile, I’m delighted to hear that Oak Valley is implementing so many projects aimed, however belatedly, at redressing some of the ills in its industry, and I wish them well too.

Personal attack

The second part of Christopher R-V’s comment is an attack on me:

“Perhaps, if you’d bothered to ask before penning your highly offensive personal attack against me in Feb 2013, we could have discussed the merits of these projects and our views on how to implement sustainable transformation. It begs the question, what have you done for transformation besides making a lot of noise and supporting failures that drain our national fiscus?”

This is strange, as there is no actual connection between what he’s referring to and the matter at hand, outside Christopher’s resentful imagination. I had thought that our little dispute was long resolved (February 2013!) and forgotten – certainly it was by me; but it clearly festers in his mind.

It arose out of an Oak Valley newsletter that Christopher wrote in early 2013, concerned with the farmworker strikes in the Elgin/Grabouw area, in which he put forward what he calls a “farmer’s perspective”. His newsletter is available here, my response here (if anyone can be bothered to look).

A picture from the Oak Valley newsletter

The newsletter made me very angry, and I responded in anger. But “a highly offensive personal attack” on him (in a subsequent email he also claimed it as a personal attack on his family too!)? Not at all, it was a political attack on his provocative statements, which I had regarded as an attack on the striking workers. And I indicated the social context of the author’s highly privileged position – perhaps that’s what he particularly objects to, though it was a description which I regard as undeniable.

Incidentally, I went out of my way to state specifically that “by all accepted standards, Oak Valley is an exemplary employer” with “comparatively well-paid workers”.

Why should I not have replied as “offensively” as he had written? Why was that “completely out of line” as he now claims? I stand by the critique I made, and by my right to publish it.

And what does Christopher mean by sneering at “what I have done for transformation”? (Incidentally, “he means “raise the question”, not “beg the question”, which is an entirely different thing.) I have no wish to discuss my political life with him, or make claims for it, but in the terms in which his limited mind moves, I am neither a rich capitalist farmer nor a philanthropist, so what does he expect me to do except occasionally write about schemes in the wine industry that appeal to me? (God knows, there are few enough of them.) If he’d invited me to observe what Oak Valley has done, I would have been pleased to learn about it; but he didn’t.

12 thoughts on “Solms-Delta business problems, and an attack

  1. Hi Tim, I am once again flattered to have attracted your attention, seemingly for the wrong reasons again, despite being an exemplary employer (your own words not mine) and clearly a progressive force in transformation in the fruit industry. The substance of what I wrote in my newsletter a few years ago, something you missed, was the potential impact of the minimum wage on employment and job creation in the agricultural sector. Especially in the context of the hidden benefits (rent-free housing, transport, medical, pension, etc.) that many farmers include at their own cost and the high unemployment rate which is getting worse by the day. This has again come into focus with the National Minimum Wage (R162 p/day) coming into effect on 1st May 2018, which will constitute another 17% increase from the current (138 p/day). There are many examples of marginal farmers, grape farmers included, who cannot afford these increases with labour being a large component of production cost. Bearing in mind that only two industries in SA essentially employ unskilled labour en mass, agriculture and mining. Government policy has all but destroyed the mining industry. Instead, you chose to focus on an aspect of my newsletter which stated that buses had brought ANC supporters into Grabouw during the strike. These anarchists then closed down a national highway for days, partially burnt down a factory and looted stores in Grabouw. They were not farmworkers. Then you referred to me as the son of a rich farmers, as if this was my only noteworthy qualification. Entirely inappropriate and rather childish. So yes, I took exception. I take absolutely no joy in the demise of the Solms-Delta project and I feel for the many families that will likely be affected if it closes its doors. We as farmers, have a responsibility to institute transformation in a sustainable way, ensuring the long-term success of these projects through strong mentorships and technical support. Solms-Delta, along with any winery based transformation, raises questions about whether winery business models are suitable at all for transformation in the first place. Generational wine business owners are finding it hard enough to operate in the current trading environment, never mind prospective BEE farmers who may lack the full spectrum of skills required to navigate through these trying times. Food for thought – and it would make for an interesting article. I’d rather you direct your focus on addressing the substance of the issues, which are very important, than spend an inordinate amount of time and energy in trying to vilify me personally. Because ultimately, I think we are on the same side. That would be far more productive! Cheers. Chris

    • Try and be as openminded as Tim is. And read this section again:

      “What is distressing is that among all the newsletter’s self-righteousness and accusations there is not the slightest shred of acknowledgement that most farmworkers in the wine industry – let alone any other agricultural industry – have a hard time. Not even a brief mention of sympathy for people who have been earning less per day than the cheapest Oak Valley wine costs per bottle. And, of course, photos of burning rather than of ragged children. Fair enough, it’s a farmer’s perspective.”

      Try to imagine that you would earn R138 p/day.

      You seem to be (relative) good for your employees, but is it the same elsewhere in the Cape or nationwide?

  2. Hi Udo, are you a business owner? If you’d like me to concede that there are farmers in SA that don’t abide by the labour act, then, yes, I’m sure if you go looking you’ll find several examples. But you could say the same about any industry, not only in SA, but worldwide. However, the substance of the debate is whether the effects of a minimum wage are beneficial to our society given our low growth rate and high unemployment, with the National Minimum Wage pending. I believe the point of difference between Tim and I lies more in our political-economic philosophy. Tim has a more socialist approach while I am unashamedly capitalist. Why should government dictate the wage between employer and employee? Provided the wage is mutually agreed between both parties, surely it is best left to market forces to decide given the circumstances of their individual industries/businesses? Venezuela and Brazil are the latest examples of another failed socialist experiment, plunging their people into poverty and leading to economic ruin. The reality is we’re not all born equal. People differ greatly in intelligence, their capacity to learn and productivity and therefore deserve to be compensated at different rates. If you don’t believe that, then you are no better than Castro, Chavez and Rouseff. The capitalist system has shown that, over time, it leads to real wage growth and higher levels of employment, especially for the poor. Yet in SA, we are fast becoming one of the largest socialist states in the world. No wonder we are firmly on the path to a failed state. The minimum wage will just exacerbate the many problems we have in trying to create employment. But that is merely a farmer’s perspective. I’m sure there are a number of people, far more intelligent than myself, that are eager to disagree!

    • “People differ greatly in intelligence, their capacity to learn and productivity and therefore deserve to be compensated at different rates.”
      yak
      And Trump is a great President?

      I believe more in something like this
      “People differ greatly in opportunities and education and therefore deserve to get chances and trust.”

      And for your information: I am a (small)business owner and not a socialist.

  3. What has your latest rant got to do with the matter, Chris? Who was talking about socialism? You seem like a nasty little guy, anyway, even if you got where you are by your great intelligence rather than by having a rich pop.

  4. Sorry. I’m feeling guilty. I’m sure Chris is a very nice and kind guy. Just very young, with the arrogance of entitled youth, trotting out dull cliches as though they are discoveries. It happens with leftwingers too – though (while I’m pretty centrist) I find a bit of idealism more attractive in the youth. Mark Solms and Richard Astor must have more idealism and faith in humanity in their little fingers than Chris has in his whole body. He’ll make lots more money, but if I was god, it would be them that went happy to heaven, even bankrupt.

  5. Hi Tony, Udo,

    I understand these are emotional issues and sometimes one can get carried away, myself included. We obviously differ in our views and that’s fine. Anne Bernstein wrote a piece in Business Day on Friday which adds to the debate.

    https://www.businesslive.co.za/bd/opinion/2017-09-08-youth-unemployment-deep-change-is-needed-to-bring-sas-young-people-into-the-economy/

    I think we can all agree that transformation is important for the future stability of SA. There are simply too many disenfranchised youths with no hope of employment and seemingly no improvement in sight. With the right policy framework, agriculture and mining in particular, have the potential for mass inclusion of unskilled labour.

    If you’d like to visit the farm, Tim included, I’d be happy to host you and we can discuss these important issues in person.

    Regards, Chris

  6. Chris,

    Sadly, you are clearly completely out of touch with: (i) the lived realities of farmworkers in South Africa; and (ii) the extensive (and nuanced) international evidence on minimum wages. The countries with the highest minimum wages in the world include Australia, France, UK, New Zealand, Canada, Japan, US and Spain. One could hardly describe these countries as socialist – although some in France would wear that description as a badge of honour.

    These governments dictate the wage between employers and employees, for many reasons (which I will leave to you to discover). Does that mean minimum wages do not come without broader welfare costs? Of course not, many South African economists have written extensively on the topic.

    The false equivalence you draw between socialism and minimum wages highlights how ill-informed you are. Which, were it not for your status as an unfortunate winner of a genetic lottery, would probably mean you should immediately get a salary decrease. Preferably down to the minimum wage. As you say, people differ greatly in intelligence and their capacity to learn and should be compensated at different rates.

    I, for one, won’t be having your delicious pinot noir again. I doubt I will be able to get rid of the bitter taste your rants have left.

    Cheers,
    D

  7. Hi D,

    I have read several studies on the topic, and, like any debate, if you go looking you’ll find arguments both for and against. Let me start by pointing out the obvious flaws in your argument;

    First, all countries you mentioned are developed economies with low levels of unemployment (with the exception of Spain), a high tax base and a labour force that is predominantly semi to highly skilled. Minimum wage increases typically follow inflation in these countries.

    In contrast, SA has over 40% unemployment which include 9 million youths with little hope of entering the formal economy. By 1st May 2018, agriculture in SA will have experienced a 135% increase in wages over 5 years since 2013. This equates to an 18.6% annualized increase while the average rate of inflation has been 5.5% during this period. As a disclaimer, there is speculation that agriculture may receive a 2-year phased implementation. In 2014, the government introduced the youth-wage subsidy which goes some way to alleviate this, but it is clearly not enough.

    Since 2014 the deciduous fruit industry has shed 4,000 jobs (Hortgro) while the area planted has remained the same. Semi-skilled workers in the apple industry actually earn far more than the minimum wage because of competition within the industry.

    Two less obvious consequences will be; 1) the rise of an informal market where businesses intentionally subvert the minimum wage, and 2) where employers change the conditions of employment (decrease provident fund contributions, charge rent on housing, charge for transport etc.). Small businesses will bear the brunt while projects like Solms-Delta will become even more marginal.

    Second, the borrowing rate in these countries is low and debt is essentially free. Businesses are more inclined to borrow and mechanise than invest in labour. In Aus for example, 90% of grapes are harvested by machine, it is the primary reason their wines are still competitive. The Dutch have taken automated farming to a new level. Through a combination of innovation and the necessity to survive, these countries have evolved to a point where primary activities are no longer relied upon for mass inclusion of labour. In SA, borrowing costs are high at 10% so capital is still expensive relative to labour. But we are rapidly approaching the inflection point. This is a delicate balance and government policy must be sensitive to this.

    Third, all countries mentioned are highly subsidized. We are not competing on a level playing field. In SA, farmers receive almost no government support.

    Fourth, all countries mentioned spend an inordinate amount of their annual budgets on welfare/social spending. Sound economic policy, an educated populace and a high tax base has allowed a higher social spend per capita in the developed world. But these chickens have certainly come home to roost in recent times, especially in Europe.

    Bottom line, SA needs policies that support wealth creation and economic growth. The redistribution of wealth through socialist mechanisms like the national minimum wage is a zero-sum game. Only the private sector can create sustainable economic growth and it needs a labour policy framework that is flexible enough to support this.

    And lastly, all those above, including Tim, refer to my ‘privilege’ as a buttress for your argument. This is a lazy and intellectually fraudulent accusation that is only made by a person without fair and honest responses. Accusing someone of anything they cannot or shouldn’t be asked to control such as race, status, education or gender and therefore discrediting their views by removing them from the discussion is favourite tactic employed in this country today.

    D, if you produced a Pinot Noir I would happily drink it. Mainly because I choose not to persecute you for sharing an opposing view.

    Regards, Chris

  8. Thanks Chris.

    Happy to engage with your considered response. I actually think this is a worthwhile conversation to have, especially for those in the agriculture sector. Two quick points:

    1. I (broadly) agree with your four points as well as your “bottom line”. But you are pointing out flaws in an argument I did not make. I was not making an argument for minimum wages in agriculture, especially in light of the existing sectoral determination. Instead, I pointed out the silliness of equating minimum wages to socialism. A point already made by others. This false equivalence unfortunately severely weakens the credibility of any sensible points you may have made earlier.

    2. And this is the important one (albeit entirely inappropriate for the comments section of a wine blog that I thoroughly enjoy reading): whether you and I like it or not, our privilege matters, especially in South Africa given the specific historical context. Your privilege is not a buttress for an argument, but rather an unavoidable factor in light of the tone you adopted in your earlier rants (as opposed to your last response, which was much more measured and constructive). Someone as obviously privileged as you discredits themselves when they say things like: “The reality is we’re not all born equal. People differ greatly in intelligence, their capacity to learn and productivity and therefore deserve to be compensated at different rates.” I find this comment distasteful and morally reprehensible given our history.

    At the very least, show some restraint. Even better, undertake the necessary introspection that will eventually lead you to understand the hurt a comment like that can cause in a place like South Africa where, for a long time, government policy was specifically aimed at ensuring that we are not all born equal. Think about the hurt a comment like that can cause specifically in the wine industry with its history of the “dop system” and the intergenerational consequences of that practice.

    Socially responsible consumerism demands that we change our behaviour in response to comment (in this case by the marketing manager of a top wine estate) that is enormously insensitive to your own farmworkers. This is the bitter taste I am referring to and why I choose not to support your wines. Not because of some (imagined) disagreement.

    Cheers,
    D

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