Mzansi Agriculture Talk

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Tiger Brands procured R12.3 billion worth of agri products from black farmers

One of the biggest food manufacturing companies in South Africa, Tiger Brands, recently announced that it had reached its 2020 Broad Based Black Economic Empowerment (B-BBEE) goals.

According to the B-BBEE Commission, the B-BBEE Act required all organs of state and public entities include B-BBEE requirements in determining qualification criteria for “issuing of licences, concessions, or other authorisations, developing and implementing preferential procurement policy amongst other things”.

These codes also applied to all public and private companies including those listed on the JSE and AltX.

In 2019, when the amended Agri-codes were introduced, Tiger Brands B-BBEE scorecard dropped substantially from level 3 to level 7 which necessitated for the company to develop a ‘B-BBEE strategy and glidepath that aimed to restore the organisation’s rating back to at least Level 3 by 2022.’

According to the Act, Tiger Brands could be classified as Qualifying Small Enterprises (QSEs) which is not exempt from complying with B-BBEE Codes – it generates above R10 million.

For an agricultural company to achieve level scores of 1-3, there must be at least 51% black ownership. Tiger Brands strategy was enthralling to say the least, as it procured its inputs from black farmers.

“Our strong enterprise and supplier development drive saw Tiger Brands source wheat, maize and beans from emerging black farmers, which culminated in R12,3 billion being spent on BBBEE verified suppliers in 2020. Furthermore, R32 million was spent on various socio-economic development projects that saw around 100 000 beneficiaries.”

Tiger Brands furthermore said part of its B-BBEE achievements was setting up BEE Steering Committees ‘comprising C Suite executive members who are our custodians of BEE’.

It is unclear whether such a jump was promoted by any Covid-19 government relief packages for agriculture. In 2018, however, agricultural sector was considered among the poorly complaint sectors to the AgriBBEE codes.

Non-compliance to B-BBEE codes were viewed as serious offence by the B-BBEE Commission which could lead to criminal charges being laid for fronting and misrepresentation of the entity’s B-BBEE status, court proceedings being instituted for an order to restrain the breach of the B-BBEE Act. Furthermore, according to the Commission non-compliant companies could be barred from contracting and transacting any business with an organ of state or public entity for a period of 10 years.

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