Image: Business Day

Land policy seeks to thwart ‘undesirable’ land use, such as prime agricultural land being converted into golf estates.

The report found that institutions are not responsive to farmers' conditions and that emerging farmers do not have capacity and tend to operate unviable farms. In these circumstances, only between 43% and 57% of emerging farmers succeed.

Recommendations include:

• Writing off some of the debt of emerging farmers;
• The government renting farms for a few years with an option to buy in an effort to accelerate the transfer of land;
• Capitalisation of interest rates on loans for a certain period or discounted interest rates; and
• Improved selection criteria for beneficiaries.

Johan Willemse, head of the department of agricultural economics at Free State University, said the recommendations were a step in the right direction.

He said choosing the right beneficiaries, such as subsistence farmers or farm workers with an in-depth knowledge of farming, was vital.

But he said the suggestion for government to rent land rather than buy it could make it even more difficult for emerging farmers to access finance as they will not have security to back their loan applications.

"The other problem with rented land is that a farmer has no incentive to improve or invest in the land as they can be kicked off at any time," he said.

He also warned that if interest is capitalised for three years, a farmer's debt might start to get out of control.

Livhuwani Ngwekhulu, transformation manager at Agri SA, said the recommendation that government rent land could mean commercial farmers would be more willing to participate in the transfer of land.

If a commercial farmer can rent a portion of his land to government he could use it for security for financing while he worked with a beneficiary or black economic empowerment (BEE) partner, Ngwekhulu said.

In most cases commercial farmers would prefer beneficiaries to be farm workers they know and who have a knowledge of farming, while beneficiaries will gain from the transfer of skills from commercial farmers, he said.

Ngwekhulu said it was a concern that many of the report recommendations fall outside the powers of the Land Bank.

The government aims to transfer 30% of commercially owned agricultural land to black commercial farmers by 2014. Only 7% has been transferred so far, according to government.

Ngwekhulu said government only recorded land it had itself transferred to black owners since 1994, and not land bought by black entrepreneurs with their own resources, so the true percentage could be higher.

He said an accurate picture of black land ownership would only be clear once a planned land audit was completed.

Land Bank CEO Pakamani Hadebe said countries that had done well in agriculture had a government committed to the sector, which was also supported by an institution similar to the Land Bank.

With the average age of farmers in SA between 58 and 63, Hadebe said something drastic had to be done to ensure food security.

Mokara Makhura, head of agricultural economic research at the Lank Bank, said the policy of withdrawal of effective support for agriculture in the 1990s, including the closure of the Agriculture Credit Board, the scrapping of the National Marketing Act and the phasing out of funding concessions, made it difficult for emerging farmers to succeed.

Japie Jacobs, a consultant at the Land Bank who worked on the report, said looking at the history of the bank it was surprising to see the level of support provided to establish white farmers in earlier years.

"We have completely underestimated the problems of establishing farmers," he said.

According to Willemse many support measures, such as lower interest rates for new entrants, were cancelled in the 1990s as they were seen as measures to benefit whites.

"These measures are now being revisited as it is realised that it helps emerging farmers," he said.

"In the 1930s, when some of these measures were first launched, a big part of agriculture consisted of white subsistence farmers. Many became successful commercial farmers because of these support measures."

Land audit pilot project to finally see light of day

Plans for a proper land audit have been in the making for several years.

John Purchase, CEO of the Agricultural Business Chamber and member of the CEO forum, a formal structure where the agricultural sector engages with government, said the pilot project for the land audit had been done in four districts.

It was completed some years ago, but was never made available.

Purchase said the CEO forum would present the findings of the pilot project to the directors-general and deputy directors-general of the Department of Agriculture, Forestry and Fisheries and the Department of Rural Development and Land Affairs and the CEOs of agricultural interest groups at a meeting on Tuesday

He said a project proposal for the launch of the comprehensive land audit would also be done.

Purchase said the real percentage of land that had been transferred to black people since 1994 could be almost double the 7% that was officially quoted, as the official number did not include land sold to black people in normal free-trade transactions.