Land policies try to solve imaginary issues at expense of real problems
Many policy analysts and academics argue that land reform has been a very slow process in SA. The general disenchantment is reflected in emerging proposals for land reform that include pilots on the Strengthening the Relative Rights of People Working the Land (50/50) policy and gazetting the Regulation of Agricultural Landholdings Bill — in an effort to "hasten" the process.
But the pace of land reform has been fair and not as slow as experts and policy makers claim, especially if progress is measured and defined by how much land has been transferred from white to black ownership. However, the operational success of farms granted under various land-reform programmes is the key concern — with service delivery and co-ordination between government departments a key factor in explaining a number of failures.
Official statistics on land restitution and land redistribution programmes presented by Rural Development and Land Reform Minister Gugile Nkwinti in Parliament in 2017 show:
•Total area redistributed: 4,850,100ha
• Total area restored through restitution claims: 3,389,727ha
• The area for which financial compensation was chosen: 2,772,457ha.
This means 11-million hectares have been redistributed through government programmes. The government has also been buying farms and, according to the state land audit in 2015, owns more than 4,000 farms, which equate to just more than 4-million hectares. The total land area that moved out of "white" ownership through the restitution and redistribution programmes, including through state procurement or state ownership outside the communal areas, is effectively 15-million hectares.
But there is more. The provincial land audits and research by the University of Pretoria show that there are also many private transactions in which land has exchanged hands from white to black farmers on the open market, outside the formal government programmes. The data — essentially a willing-buyer, willing-seller model — are neither included in the official data nor appropriately accounted for in land estimates.
If we assume that for every hectare of land redistributed through the Department of Rural Development and Land Reform’s redistribution programme, another hectare is bought in the market, it suggests that private land purchases amount to 4.8-million hectares.
Using a more conservative estimate, where it is assumed that private land purchases are half of the land that the department redistributes, this figure is reduced to 2.5-million hectares transferred to black individuals through private market transactions.
This implies that a total of 17.5-million hectares has been transferred from white ownership since 1994, which is equal to 21.2% of the 82.8-million hectares of farm land in freehold. It can, therefore, be argued that the land-reform programme — through government and private acquisitions — is closer to the 30% target, contrary to common belief.
Obviously, much more can be done to make these land reform farms commercially viable operations, but this is more of an agrarian question than a land-reform one. It appears that the urgency should be redirected towards efforts to make land more productive, rather than exclusively focusing on transfers.
The new land-reform proposals, which seek to accelerate the pace of land transfers, are based on a false premise. Given the observed pace of land reform, these recently crafted policies seek to resolve an imaginary problem at the expense of real challenges, such as productivity, sustainability, service delivery and the department’s co-ordination efforts.
The Strengthening the Relative Rights of People Working the Land (50/50) policy and the gazetting of the Regulation of Agricultural Landholdings Bill are based on fundamentally flawed assumptions.
The policies imply that most farms consistently generate positive returns that can be distributed among farm workers, when in actual fact, returns are generally low. At best, returns reach 6% in a good season. With the erratic rainfall over the past two seasons, returns have tended to be negative. The sector is vulnerable and fragile, and a significant policy shift can easily translate into extended negative returns.
The sector is sagging under debt — a record R142bn in real terms in 2015 and estimated to have increased to R160bn in 2016 because of the drought. A compulsory 50/50 arrangement would imply that farm worker beneficiaries would inherit significant debt levels, which increases the risk of insolvency unless there is a significant government commitment.
The National Development Plan suggests that the identification of transferable farms and beneficiaries should take place at a district level, facilitated by district land-reform committees that were established in 2015
With regards to the land ceiling proposals, most farms are below 1,000ha and will therefore not make a contribution by releasing land under this scheme. The land ceiling has not sufficiently incorporated the nuances of agronomic conditions that would create space for extensive production systems in arid and semi-arid conditions.
Given these realities, the government should retain its policy of market-based land transfers and work towards more public-private partnerships in line with chapter six of the National Development Plan.
The National Development Plan suggests that the identification of transferable farms and beneficiaries should take place at a district level, facilitated by district land-reform committees that were established in 2015.
Farms for sale could be identified by committee and a leading successful farmer who is appointed as mentor or co-investor to acquire new land with a qualified beneficiary. The beneficiary should be selected only by the farmer investor (not by the state) to ensure a good working relationship.
In acquiring the farm, the state can contribute 30% of land value in grant money to the beneficiary. Another 30% can be a loan from the Land Bank in the name of the beneficiary and farmer (50-50) and the remaining 40% is a cash contribution by the farmer (7% with turnover of R3m a year).
The contributing farmers would then be exempted from future land-reform claims and the farm could be operated via the farmers’ existing operation to ensure success.
A subsidised interest rate would need to be provided by the Land Bank for the loan and backed by a state guarantee in the spirit of risk sharing.
If farmers in districts work together and get 20% of land-reform targets implemented through this mechanism, then land ceilings and other punitive measures would not be needed.
Farmers, together with commodity organisations and agribusiness, could take up the task of redistributing the land on behalf of the government. Agribusinesses and commodity organisations would have to provide post-transfer support and mentorship to beneficiaries.
This can be done only if there is a fair and transparent beneficiary selection; grants and loans are disbursed fast; title deeds are transferred and registered speedily; the government shares in the risk of redistributing land and developing new farming operations; and there is policy stability.
One of the most enduring and fundamental factors in the land-reform debate is the trust deficit between the government and private sector. Trust needs to be built in order to ensure the success and sustainability of the land programme and the agricultural sector.
SA needs more public-private partnerships such as the Agricultural Business Chamber and the Banking Association of SA’s land-reform model, and the Land Bank and Afgri land reform model. These should be tested to create joint collaboration between the government and private sector and, in turn, to build trust.
• Sihlobo is an agricultural economist and Kapuya is a trade economist