Government has announced its decision to cease the continued funding of the Solms Delta Wine estate project.
Instead, government has undertaken to initiate a turnaround strategy and a restructuring of the operations at the estate.
“A solid turnaround strategy which will encompass diversification and restructuring of operations will ensure sustainability and profitability of the business,” the Department of Rural Development and Land Reform said on Thursday.
Government acquired the estate in 2016 as part of the pilot phase of the Policy Framework on Strengthening the Relative Rights of People working the Land commonly known as the 50/50 aimed at strengthening the relative rights of people working the land.
Through an agreement reached between the owners of the Solms Delta Wine Estate located in Franschhoek in the Western Cape and the department, workers acquired a 45% stake in the winemaking business.
According to the department, this was to secure tenure, maintain the jobs of farm workers and to give workers an opportunity to participate in the winemaking business as envisaged in the 50/50 policy framework.
However, when government took over the estate, the farm was on the verge of collapse due to a variety of challenges including facing possible liquidation due to accumulated debt and poor management.
Despite the intervention by the department, including the provision of financial support for the business, the project continued to operate at a loss, due to a number of reasons identified in an assessment conducted in 2017.
These included the following; poor wine sales both local and international; under-resourced teams such as management, sales and hospitality marketing, as well as inefficiencies in the running of the hospitality business.
As such, in July 2017 the directors voluntarily placed the company under business rescue, as the cash flow situation continued to deteriorate and a Business Rescue Practitioner (BRP) was appointed.
“The challenges that have arisen have forced the department to cease the continued funding of Solms Delta in its present form, a move which is likely to lead to the liquidation of the business by the business rescue practitioner.”
Despite ceasing to fund the project, the department said it remains committed to working with the farm workers to ensure that they are supported in order to continue operations in a manner which will secure their employment and improve their livelihoods.
In addition to this, the department said it will also secure the property as the land owner. - SAnews.gov.za