Agricultural Sector and the Amended B-BBEE Codes

The Agricultural Sector’s Amended Code was published in Gazette Number 41306 on 08 December 2017.

Below is a summary of important aspects from the Code.

SCOPE OF APPLICATION

The scope of the Amended Agri-BEE Sector Code includes any Enterprise which derives more than 50% of its turnover from:

the primary production of agricultural products;
the provision of inputs and services to Enterprises engaged in the production of agricultural products;
the beneficiation of agricultural products whether of a primary or semi-beneficiated form; and
the storage, distribution, and/or trading and allied activities related to non-beneficiated agricultural products.
where an Enterprise trades in more than one sector i.e. falls under more than one Sector Code, the Measured Enterprise must be guided by the principles embodied in the Amended Codes of Good Practice (refer to statement 003 of Amended Codes of Good Practice).

Whilst many regards compliance as voluntary for the private sector, it comes with a host of outcomes to consider if one were to choice not to transform their company:

Compliance assists with:

a competitive marketing advantage
preferential procurement and ongoing industry transformation
the ability to do business with the State or anyone doing business with State
preferential financing (dti, IDC, Land Bank etc.)
licensing and registration (water rights, export permits, liquor licenses)

Classification of business category is as follows and based on annual turnover levels:

EME R10m per annum
QSE R50m per annum
Large >R50m per annum

Elements of the Amended Agri-BEE Sector Code Scorecard

Applicable to Large and Qualifying Small Enterprises (QSE)

Ownership
Management Control;
Skills Development;
Enterprise and Supplier Development; and
Socio-Economic Development

Priority Elements, Sub-minimum and Discounting Principle

For Large businesses

Ownership 40% sub-minimum;
Skills Development 40% sub-minimum;
ESD 40% sub-minimum on each of the sub-elements

For QSE businesses

Ownership 40% sub-minimum;
Skills Developmen 40% sub-minimum OR ESD – 40% sub-minimum on each of the sub-elements

Non-compliance results in a one level downgrading, once per measurement cycle.

One of the key highlights of the Amended Agri-BEE Sector Code is an increase of the target for Supplier Development to 3 % of Net Profit After Tax (NPAT) (which is higher than 2% of NPAT of the Generic Codes).

Based on Dr Davies of the DTI’s comment, the aim is to create a pipeline of black suppliers and black industrialists within the value chain of the South African agricultural industry.

Author Craig Tonkin

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