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SED Contributions in the Agricultural Industry

SED Contributions in the Agricultural Industry

Entities that fall under the scope of application for the Agricultural Sector Codes are required to provide sector-specific contributions as part of their Socio-Economic Development (SED) initiatives. The contributions must be related to the Agricultural Industry (refers to the combination of Farming Enterprises and Agri-business Enterprises).

Both Generic Entities(Turnover that exceeds R50 million) and Qualifying Small Enterprises (turnover that is below R50 million) have to comply with the sector-specific contributions in order to obtain SED points. The targets for both the Generic and QSE entities is a total of 1.5%, of their Net Profit After Tax or Deemed Net Profit. The maximum number of points available for SED is 15.

The objectives of the sector-specific contributions are to create more social and economic opportunities for black South Africans. The priority initiatives are those that assist with income generating activities. These activities encourage sustainable growth and development for the beneficiaries. It is important to note that the SED initiatives directed toward farm employees, should not be linked to their terms and conditions of employment. Therefore, it is possible for an employer (farmer) to uplift his employees as part of his SED, as long as it entails additional assistance outside of their normal wage package.

Farming Enterprises may implement the following initiatives as part for the SED contributions:

  1. 10% of their Agricultural land to be made available for farm workers. A formal lease agreement must be in place between the lessor (farmer) and lessee (farm workers). However, there must not be any restriction of trade to the farm workers. The land does not have to be transferred to the farm workers. The workers must have access to the land. It must be noted that 10% of the meterage of the land must be proved in order to claim the maximum points for SED. The Deed of Transfer may be used to confirm the size of the land. The workers may use the land for the production of their own goods, or to store their cattle. The lease agreement is to be completed annually and all occupants may sign the agreement, alternatively, elect a representative to sign on their behalf.
  2. Transportation assistance to farm workers or their dependents, e.g. transport to clinics and hospitals, in line with legislation and regulations.
  3. Implementation of retirement and funeral related schemes.
  4. Investment in farm or rural schools.
  5. Maintenance of bursary schemes to enable black people to gain access to tertiary education institutions. Should an entity wish to provide bursaries for SED, they must note that these bursaries will not qualify under Skills Expenditure.
  6. Provision for recreational facilities as well as the running costs involved, to be implemented by the farmers.

The sector-specific contributions now gives the Agricultural industry the opportunity to provide further assistance and uplift their employees in various ways, whilst being able to use these initiatives for the SED Contributions. All contributions need to be made before the end of the financial year.

ABOUT THE AUTHOR:

Saigal Inderpal has been working for SEESA Durban as a BEE Legal Advisor since 2017. She graduated from the University of KwaZulu Natal and is an admitted attorney.

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