The state capture inquiry on Tuesday heard how intended beneficiaries of the controversial Estina dairy farm project were duped by senior government officials in the Free State.

One of the intended beneficiaries, a Vrede small-scale farmer, Ephraim Dhlamini, described two years of frustrating to-ing and fro-ing between the group of farmers and the government - which eventually resulted in them not receiving a cent from the project.

The farming project, which was signed off in 2012, was promoted as a tool by the provincial Free State government to benefit small-scale Free State farmers, using their services to produce and sell milk on a large scale.

However, of the R220m transferred out of state coffers to Estina - a Gupta-linked company contracted by the Free State's agricultural department to run the project - only 1% was spent on actual farming.

Most of the remaining money went to individuals and entities associated with the Guptas.

Then Free State premier Ace Magashule, who now serves as the ANC's secretary-general, and former Free State agriculture MEC Mosebenzi Zwane are among some of the alleged key facilitators who oversaw the deal.

For Dhlamini, who farms about 50 cattle out the Thembalihle township in Vrede, the project was seen as a sign of hope for a community plagued by unemployment.

"There is high unemployment and mostly people are working in the farms and are earning far less. You need to be very creative in making money. Most people are working outside Vrede to make money," he said via a translator.

Dhlamini also serves as the chairman of the African Farmers' Association, a group that represents about 120 small-scale farmers in the area and acts as an intermediary between them and the Free State agricultural department.

He described four meetings with government officials which they attended. The project was punted to them at these meetings.

The first meeting, he said, was in 2012 and was held at a community hall in their township. Dhlamini said among those present was Zwane, an official from his department Peter Thabethe and Phumelela local municipality mayor John Motaung.

About 100 community members were in attendance.

"Motaung officially opened the meeting. It was in that meeting where Zwane requested us to group ourselves. He said whenever he is initiating a project he wants it to be a very successful project. He said if it is going to be a dairy project, there should be activities that involve milking and processing the milk into cheese, yoghurt," he said.

"We then wrote down the names to identify how many members were in each group … He [Zwane] said he wants to do good things for all of us."

Shortly afterwards, in the same year, another meeting was called. Here, Dhlamini said, they were told the farmers would earn a 52% stake in the Estina dairy farm - 20% would go toward the construction of roads, a clinic and to the education of their children, and 28% would go to provincial government.

Zwane is said to have chaired that meeting.

Dhlamini said some farmers sold their cattle with the expectation that they would be allocated dairy cows through the project.

"According to what the government said they would do, government would buy 10 cows for each beneficiary. These would go to the dairy. Then we would go to India to undergo training. We were supposed to start working there [on the dairy farm]," Dhlamini said.

"Zwane, instead of taking the farmers to India for training, took his church choir to India," he said.

At a third meeting that year, the beneficiaries were requested to hand over their identity documents so copies could be made.

"On a Friday, we were requested to bring our IDs, then on Saturday we were called to a meeting at the town hall. The farmers had a caucus meeting before and we requested them not to hand in their IDs. I had already heard that government funds were released and the department in Pretoria wanted the names of the beneficiaries," Dhlamini said.

"After the caucus I noticed they did not take my advice. They gave them their IDs to make copies."

The fourth meeting, according to Dhlamini, was around 2014.

He said that in the meeting, then regional agriculture director Alta Meyer informed them that the Free State Development Corporation would be taking over the project. They then came to find out that the FDC had replaced them with new beneficiaries.

The state capture inquiry will continue to hear testimony from other intended beneficiaries on Wednesday.