Grasslands Development Trust: Using Share milking to facilitate land reform in dairy farming 1 Sabelo Magagamela Grasslands Group 2 Organizational stats: Grasslands Development Trust: Legal Entity 3 Schoonfontein Dairy Farm Acquired Large
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Grasslands Development Trust: Using Share milking to facilitate land reform in dairy farming 1 Sabelo Magagamela<br>
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Grasslands Group 2 Organizational stats:<br>
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Grasslands Development Trust: Legal Entity 3<br>
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Schoonfontein Dairy Farm Acquired Large scale commercial dairy farm in Tsitsikamma
Total area 485 ha
Irrigation 128 ha pivots
48 point swing over
Milking 1000-1100 Jersey/Friesian cross bred cows twice daily
Producing 6 million litres annually
Grasslands Development Trust as land owner entered into sharemilking agreement with Grasslands Agriculture
Initial 10 year agreement (2004-2014)
Agreement extended by 5 year (2015-2019)
Agreement extended by 5 years (2019-2024)
Agreement extended by 5 years (2024-2029) 4<br>
05
Funding Model 5<br>
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Sharemilking Structure Farm Management is based on a Sharemilking Agreement – a New Zealand concept
Trusted model with more than 4 500 contracts annually
Governed by the New Zealand Sharemilking Act of 1990.
The Land Owner (in this case the Grasslands Development Trust) provides the land
The Sharemilker (in this case Grasslands Agriculture) provides the livestock, movable equipment, management and labour
The Sharemilking Agreement designed to deliver equitable return on capital to both the Land Owner and the Sharemilker 6<br>
07
Land Owner
Grasslands Development Trust
(100% BEE Land Owner) Sharemilker
Grasslands Agriculture (Pty) Ltd
(Sharemilker) Livestock
Movable Assets
Labour
Management Experience Farm Land
Fixed Infrastructure Sharemilking Agreement Dairy Farming Enterprise Relative Capital Contribution +-60% +-40%<br>
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Land Owner
Grasslands Development Trust
(100% black owned) Sharemilker
Grasslands Agriculture (Pty) Ltd Milk Income 50% 50% Milk income (50%)
Land owner expenses
Fixed Infrastructure maintenance
Pasture renovation
Fertiliser
Land owner profit share
± 65% Milk income (50%)
Sharemilker expenses
Labour
Stock health & breeding
Maintenance on movable assets
Sharemilker profit share
± 45% 50% Shared expenses
Bought in cow supplements
Replacement stock bought feed
Silage making cost Profit share structure<br>
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Income & Expense Sharing: Milk income – shared 50/50
Feed purchased from off farm– expense shared 50/50
Expenses related to the land and fixed infrastructure upkeep paid by Land Owner
Expenses related to livestock, labour, management, moveable assets are paid by the Sharemilker
Outcome: profit shared aligned with capital contribution of parties 9<br>
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Benefits of Sharemilking Model Designed to ensure equitable ROI to both parties
100% black land ownership
Experienced management retained for extended period
Financing of movable assets & livestock not necessary for land owner
Established commercial farmer can grow his business without having to own the land.
Model can be adopted for other agricultural types
Benefit from economies of scale with commercial partner
Creates environment for skills transfer 10<br>
11
skills transfer Sabelo Magagamela functions as empowerment farm manager and trust chairman.
Three beneficiaries today employed as farm managers for Grasslands Group
Two beneficiaries today employed as herd managers in Grasslands Group.
Life skill courses completed
Trustees make the decisions at bi-annual trust meetings.
Local and overseas conferences and courses for managers 11<br>
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Key Success Factors Empowerment of those that work the land – taken ownership and commitment in the workplace to a new level!
Make a meaningful difference to the individual – break the cycle of poverty
Title deed transfer – access to funding and wealth creation
Equitable reward for both parties – no charity required, long term business opportunity for both parties
Clear roles, responsibilities and rewards - “colour of my tractor”
Above all – Trust that is earned! It takes a while. 12<br>
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13 Grasslands Development Trust
Highlights Financial Results 21 years later (2026)
Standard Bank loans of R4.8m was repaid within 7 years (2011)
Profit distribution (2004-2026) – R110m
Cash distribution since (2004-2026) – R97m
- (R2.56m per beneficiary)
Cash distribution for last five years average R230 000 per year per beneficiary on top of farm worker salary
Retired employees remain beneficiaries for life.
Loan account serves as death benefit (+- R1 million)
State grant of R4.4m enabled R110m wealth generated for beneficiaries over 21 years<br>
