The uncertainty around land reform, particularly the issue of expropriation without compensation, is already having a negative effect on the agricultural sector and the economy, agricultural industry body AgriSA told MPs in parliament on Wednesday.
It said evidence on the ground suggested talk of expropriation without compensation had caused a significant lag in capital investment in the agricultural sector and farmers who wanted to sell their properties were struggling to find buyers.
This week, Stats SA published GDP data for the second quarter of 2018, showing that the country had entered into a recession. The decline was mainly because of a drop in the production of field crops and horticultural products, it said.
However, analysts said the drought in the Western Cape, and not necessarily policy, was a major factor in the sector’s dismal performance.
AgriSA said that amending section 25 of the constitution — or the property clause — would result in capital flight, depreciation of the rand, hyperinflation and SA becoming a net importer of food, which would lead to an increase in food prices.
The joint constitutional review committee is holding public hearings on the possibility of amending section 25 of the constitution to make it clear how land could be expropriated without compensation.
In its submission during a heated session on Wednesday, AgriSA said there was no need to amend the constitution as it provided for expropriation under certain circumstances. The organisation said it was not opposed to expropriation but was against expropriation of property without compensation.
"It is not the constitution that is failing the people, it is a bureaucratic, inefficient, highly fragmented and unaccountable government system," said Annelize Crosby, the head of agricultural development at AgriSA.
She argued that section 25 as it currently stands provides the state with the necessary legislative powers to ensure that land reform takes place in an orderly way and according to prescribed processes.
She emphasised that expropriation with some form of compensation was an internationally accepted approach.
MPs, particularly those from the ANC, EFF and UDM, asked why the government should pay for land that was "stolen using the barrel of the gun".
"Why should government pay for land which was taken from the people with the barrel of a gun? The people [who currently own the land] keep pushing the prices up … the government will end up spending its entire budget on buying land that was stolen," said UDM MP Mncedisi Filtane.
In his submission, National African Farmers Union president Motsepe Matlala called for the nationalisation of all land in SA but said this should exclude buildings or permanent fixtures.
He claimed nationalisation of land was the order of the day in most countries, including those in Europe.
"We believe that our proposed measures for nationalisation of land and our other proposed interventions will help to deracialise the land question and enable government to at last move forward in creating a more equitable agricultural sector and transforming SA," said Matlala.
The Agriculture Business Chamber (Agbiz), an organisation that represents commercial farmers and agribusiness enterprises nationally, said expropriation without compensation posed a major risk to commercial banks and would constrain agricultural finance.
The total farm debt amounts to more than R197bn, of which roughly 75% is collateralised through the value of the land.
"Expropriation without compensation poses a risk to commercial banks, which have an exposure of R148bn, with the Land Bank holding R49bn, and the remainder primarily sitting with agribusinesses," Theo Boshoff, the head of legal intelligence at Agbiz, told MPs.
"In the absence of reliable collateral, it will constrain agricultural finance. This could likewise have a spill-over effect on the rest of the value chain as well as other sectors of the economy," he said.
The hearings will continue on Thursday.