Agricultural experts have panned government’s plan to cap farm sizes at 12000ha and ban foreign ownership as politically expedient but economically and environmentally damaging.
Not only do the proposals contradict President Jacob Zuma’s nine-point state of the nation (SONA) plan to re-ignite growth by various means, including through revitalising agriculture and encouraging private investment, but the kitty to fund capital purchases of new land is shrinking.
The 2015 national budget shows government’s capital budget for buying and developing land for restitution and redistribution has declined by about 30% since 2013/2014 (see graph).
“The budget tells us that treasury is not buying the new policy talk of government,” says associate professor Ruth Hall of the Institute for Poverty, Land and Agrarian Studies (Plaas) at the University of the Western Cape.
“It is not going to fund this ministry’s promises of expanding its programmes, speeding up land reform ... or funding new pie-in-the-sky plans like paying farmers 50% of the value of their land.”
Though she believes that attempts to limit land concentration is a progressive way to broaden access to land, she warns that setting an “arbitrary” land ceiling is a blunt instrument that will disproportionately affect the lower-value section of agriculture — namely stock farms in the North West and Northern Cape — while leaving the wealthier, capital-intensive farming areas of the KwaZulu Natal midlands and Cape winelands intact.
She also accuses government of not listening to farm workers, whose land hunger is for very small pockets of land , close to main roads, urban centres and schooling. “It’s essential to focus on people’s needs or we’re setting up the country and the beneficiaries for failure,” she warns.
Her colleague Professor Ben Cousins points out in a recent Plaas position paper that while SA urgently requires practical policies that transfer land to black farmers who can use it to sustain their livelihoods and supply markets, imposing land ceilings is not the way to do it.
Environmental and market conditions are dynamic, making the achievement of optimum productivity a constantly moving target, he writes.
“To imagine that officials who have never farmed themselves could designate landholding sizes that make economic sense in SA today is a fantasy. The task itself is probably inherently unfeasible, but it is definitely beyond the capacities of officials at present.”
Frikkie Liebenberg of Pretoria University’s department of agricultural economics, extension and rural development agrees: “One has to wonder if the people who came up with this pearl of wisdom realise what environmental risks we would face if we reduced farm size to sub-economic levels — let alone the damage to the economy.”
He adds: “If the aim is to introduce an equality of land ownership at all costs, government runs the risk of achieving equality of misery in large parts of this country.”
AgriSA highlights that the department of rural development and land reform ordered an independent study (by Professor Herman van Schalkwyk of North West University and private consultant Andrew Makanete) into the viability of land ceilings last year.
It found that such a measure would be contrary to market forces and would deprive farmers of the opportunity to utilise economies of scale, which in turn is essential to remain profitable and to produce food as cheaply as possible.
In any event, AgriSA says it’s virtually impossible to link the economic value and production of a farm predominantly to its physical size. Factors such as geography, climate, intensiveness of farming systems, infrastructure and distances from suppliers or markets should also be considered.
In practice there could be farms of 50ha that are much bigger and more stable businesses than an extensive livestock farm of 20000ha. “The placing of limitations on farm sizes will, therefore, be a naive return to a central planning approach that will constrain a complex industry such as agriculture,” it concludes.
AgriSA president Johannes Möller also chides government for making unilateral pronouncements that undermine the credibility of its ongoing consultation process with organised agriculture.
This, and the fact that the proposals are at odds with the chapter on land reform in the National Development Plan (NDP), also places a question mark over whether the NDP is still the relevant point of departure.
Both AgriSA and AfriBusiness feel the proposals may be unconstitutional and are considering steps to test their legality. Though this could scupper the plan, when it comes to retarding foreign investment the damage may already have been done.
Zuma’s initial Sona announcement that “foreign nationals will not be allowed to own land in SA but will be eligible for long-term leases” made huge headlines and created anxiety with existing foreign home-owners and prospective buyers. Government later clarified that the restriction applied only to rural land.
“With the level of foreign ownership being actually very small, this proposal does seem misconceived,” says Tom Clode of Fine and Country, Franschhoek.
“Also, the presentation was badly executed because it caused and continues to cause uncertainty, which is always bad for investor confidence both locally and overseas.”
Pam Golding Property group CE Andrew Golding agrees that damage has been done, saying foreigners who were thinking of buying farms are hesitating and that it will take time to reassure foreigners interested in residential property that their investment is still welcome.
Claire Bisseker writes for the Financial Mail where this article first appeared
Wild policy proposals are undermining agriculture
Not only do the proposals contradict President Jacob Zuma’s nine-point state of the nation (SONA) plan to re-ignite growth by various means, including through revitalising agriculture and encouraging private investment, but the kitty to fund capital purchases of new land is shrinking.
The 2015 national budget shows government’s capital budget for buying and developing land for restitution and redistribution has declined by about 30% since 2013/2014 (see graph).
“The budget tells us that treasury is not buying the new policy talk of government,” says associate professor Ruth Hall of the Institute for Poverty, Land and Agrarian Studies (Plaas) at the University of the Western Cape.
“It is not going to fund this ministry’s promises of expanding its programmes, speeding up land reform ... or funding new pie-in-the-sky plans like paying farmers 50% of the value of their land.”
Though she believes that attempts to limit land concentration is a progressive way to broaden access to land, she warns that setting an “arbitrary” land ceiling is a blunt instrument that will disproportionately affect the lower-value section of agriculture — namely stock farms in the North West and Northern Cape — while leaving the wealthier, capital-intensive farming areas of the KwaZulu Natal midlands and Cape winelands intact.
She also accuses government of not listening to farm workers, whose land hunger is for very small pockets of land , close to main roads, urban centres and schooling. “It’s essential to focus on people’s needs or we’re setting up the country and the beneficiaries for failure,” she warns.
Her colleague Professor Ben Cousins points out in a recent Plaas position paper that while SA urgently requires practical policies that transfer land to black farmers who can use it to sustain their livelihoods and supply markets, imposing land ceilings is not the way to do it.
Environmental and market conditions are dynamic, making the achievement of optimum productivity a constantly moving target, he writes.
“To imagine that officials who have never farmed themselves could designate landholding sizes that make economic sense in SA today is a fantasy. The task itself is probably inherently unfeasible, but it is definitely beyond the capacities of officials at present.”
Frikkie Liebenberg of Pretoria University’s department of agricultural economics, extension and rural development agrees: “One has to wonder if the people who came up with this pearl of wisdom realise what environmental risks we would face if we reduced farm size to sub-economic levels — let alone the damage to the economy.”
He adds: “If the aim is to introduce an equality of land ownership at all costs, government runs the risk of achieving equality of misery in large parts of this country.”
AgriSA highlights that the department of rural development and land reform ordered an independent study (by Professor Herman van Schalkwyk of North West University and private consultant Andrew Makanete) into the viability of land ceilings last year.
It found that such a measure would be contrary to market forces and would deprive farmers of the opportunity to utilise economies of scale, which in turn is essential to remain profitable and to produce food as cheaply as possible.
In any event, AgriSA says it’s virtually impossible to link the economic value and production of a farm predominantly to its physical size. Factors such as geography, climate, intensiveness of farming systems, infrastructure and distances from suppliers or markets should also be considered.
In practice there could be farms of 50ha that are much bigger and more stable businesses than an extensive livestock farm of 20000ha. “The placing of limitations on farm sizes will, therefore, be a naive return to a central planning approach that will constrain a complex industry such as agriculture,” it concludes.
AgriSA president Johannes Möller also chides government for making unilateral pronouncements that undermine the credibility of its ongoing consultation process with organised agriculture.
This, and the fact that the proposals are at odds with the chapter on land reform in the National Development Plan (NDP), also places a question mark over whether the NDP is still the relevant point of departure.
Both AgriSA and AfriBusiness feel the proposals may be unconstitutional and are considering steps to test their legality. Though this could scupper the plan, when it comes to retarding foreign investment the damage may already have been done.
Zuma’s initial Sona announcement that “foreign nationals will not be allowed to own land in SA but will be eligible for long-term leases” made huge headlines and created anxiety with existing foreign home-owners and prospective buyers. Government later clarified that the restriction applied only to rural land.
“With the level of foreign ownership being actually very small, this proposal does seem misconceived,” says Tom Clode of Fine and Country, Franschhoek.
“Also, the presentation was badly executed because it caused and continues to cause uncertainty, which is always bad for investor confidence both locally and overseas.”
Pam Golding Property group CE Andrew Golding agrees that damage has been done, saying foreigners who were thinking of buying farms are hesitating and that it will take time to reassure foreigners interested in residential property that their investment is still welcome.
Claire Bisseker writes for the Financial Mail where this article first appeared
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