PARTNERS IN AGRI LAND SOLUTIONS (PALS)

The PALS model is a commercial structure in terms whereof experienced farmers procure or, transfer an agricultural unit to a new company.

The model can be summarized in the following steps:

•    A sustainable agricultural unit is identified (it can be one farm, several farms or a portion of a larger farm). The farm is registered in name of the new company which owns the property and also develops the unit to make it a commercial farming unit which can produce food.

•    The shareholding of the new company is divided between a commercial partner and a black company with a minimum profit sharing for a larger employee group through an employee’s trust.

•    The business plan for the first ten years will be based on existing norms in the industry and the experience of the mentor. During or after the ten year period the group of potential model black farmers can acquire more shares in the company, to become the majority or sole shareholder. An option to purchase the shares of the commercial partner is therefore granted to the black farmco on day one. This option can be exercised when the project is regarded as successful.

•    The PALS plan can be implemented without government funding but, in instances where the farming unit to be transferred, forms part of a larger existing farm, the approval for subdivision will be required.

•    The Partners Agri Land Solution (PALS) framework enables the transfer of agricultural land or portions of farms for sustainable farming and land reform without prejudicing food security. The model is sustainable as the experienced commercial farmer remains involved as partner and mentor. The commercial partner ensures the success of the farming operations and must also transfer skills and expertise during the initial period.

•    Should government be required to render assistance in the form of water permits, finance or consent for subdivision, it can be calculated what the value adding amounts to, which value can be used by the Black Owned Company to procure more shares.

•    The PALS framework can be implemented in such a way that an annual report and audited financial statements are furnished to the Departments of Land Affairs and Agriculture. Monitoring of projects then become a manageable exercise and will assist the Departments in keeping track of all projects.

•    The PALS framework is in line with the key issues as set out in the Departments’ of Land Affairs and Rural Development’s policy documents and the principles as set out in the Constitution and National Development plan.

Some benefits are for example:

•    Economic development and food security;

•    Improved livelihoods and creation of model black commercial farmers;

•    Skills development;

•    Credit access;

•    Better use of existing irrigation facilities and extensions of irrigation schemes;

•    To obtain increased participation in agricultural and rural development in partnership with civil society.

•    It is based on commercially accepted principals for sustainability and it enables the company to use the land as security when finance is needed for further development or the purchase of additional land.

It involves strategic role players like government and financial institutions as “partners” and is a co-ownership model for a number of years whereafter all the shares can be transferred to the black farmer(s).

We believe that this initiative which was successfully implemented by a substantial number of our commercial farming clients, can contribute to the solution for Land reform in South Africa. PALS is the preferred private sector framework as it is based on a tested structure and legal framework.

For more information on the PALS structure and land reform projects you can contact Gerrit van Vuuren directly.

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LINKS TO YOUTUBE VIDEO 1: https://youtu.be/fEAxRF4msZU

LINKS TO YOUTUBE VIDEO 2: https://youtu.be/3CYBSugOF34