The amended Agriculture (Agri) Sector Code was gazetted on 8 December 2017 and came into effect immediately. This Sector Code applies to any entity falling within the following scope of application:
- Primary production of agricultural products.
- Provision of inputs and services to Enterprises engaged in the production of agricultural products.
- Beneficiation of agricultural products, whether of a primary or semi beneficiated form (beneficiation is where value is added to a product).
- Storage, distribution, and/or trading and allied activities related to non-beneficiated agricultural products.
The same requirements for an Exempted Micro Enterprise (EME) as per the Amended Broad-Based Black Economic Empowerment (B-BBEE) Act is applicable. Where an entity has a turnover of less than R10 million per year, they will qualify for an automatic level 4 affidavit. If the entity has 51% or more black ownership and their turnover is less than R10 million, they will be entitled to an automatic level 2 affidavit. Should the ownership be 100% black and the turnover below R10 million, an automatic level 1 affidavit can be obtained.
Entities with a turnover of R10-R50million will qualify as a Qualifying Small Enterprise (QSE). These entities have to be rated on the QSE Scorecard, unless they have 51% or more black ownership. If they have 51% or more black ownership, they will also qualify for an automatic level 2 affidavit and if the black ownership is 100% they will qualify for an automatic level 1 affidavit.
Business owners must note the following important points regarding the amended Agri Sector Code:
- Enterprises (farms) with gazetted land claims are exempted from the Ownership element, provided that there is sufficient evidence from the Land Claim Commission. These entities will use the specialized scorecard.
- Farmworkers are included in the definition of Designated Group.
- Where a percentage of the land is under land claim, the exemption from ownership should be proportional.
- 85% of Skills Development expenditure must be spent on scarce- and critical skills as determined by the relevant SETA.
- Socio-Economic Development (SED) refers to contributions that are related to the agricultural industry.
- Where SED is directed at farm workers it should not be linked to the wage packages.
- An entity can earn the full points under SED element, in case where 10% of agricultural land was made available for farm workers. A formal lease agreement must be in place between lessor (farmer) and the lessee (farm workers) without any restriction of trade to the lessee.
These are just a few of the important differences in the amended Agri Sector Code and business owners must contact their legal advisor for more detailed breakdown of the Codes.