In May we argued that land reform has not been as slow as portrayed in many political messages and that the problems that have emerged are largely to do with lack of focus on agrarian support.
Now we want to illustrate that some of the limitations in ensuring successful commercial black farmers are due to unintended consequences in the implementation of the policy itself.
A case in point is the proactive land acquisition strategy introduced in 2006, for the state to acquire farm land for land reform purposes.
To date, it is estimated that between 2.1-million ha and 4.3-million ha – depending on the data source within the Department of Rural Development and Land Reform – has been acquired by the state.
It seems, however, that these farms are not being transferred to beneficiaries.
According to policy, land would be leased to a beneficiary for between five and 30 years, followed by the option to transfer ownership.
In reality, however, beneficiaries only received short-term leases of one to five years.
This was reflected in a research paper released early in 2017 by Ruth Hall and Thembela Kepe that focused on a couple of municipalities in the Eastern Cape.
This makes sustainable farming almost impossible, as articulated by Bongani (not his real name), a potential beneficiary in the Eastern Cape who aimed to start commercial farming in mid-2005.
That dream was deferred when he discovered after three years that his application forms had been misplaced and were never processed.
He was told, after numerous follow-ups, that this had happened during the demarcation of municipalities, which is strange seeing that land reform is not a competence of local government at all.
Bongani reapplied in 2009 but still to no avail.
He is currently farming on communal land near Maclear.
We asked him to spell out the application process he followed in late 2009:
lIdentify a farm in your area of interest;
lSubmit an application through the department’s district office;
lThe application then goes to the beneficiary screening committee;
lIt is then transferred to the provincial land committee; and
lIf successful, it goes to the national land committee, which is chaired by the deputy minister of rural development and land reform.
We have skipped some details, but just to give you an idea, the process entails a three to four-year wait.
The obvious risk is that more than one applicant can express interest in one piece of land or farm. This complicates the process.
After application, beneficiaries need to have a fundable business plan to be eligible for state post-transfer support. The business plan has to follow a tedious screening process akin to the one above, and to make it worse, farmers such as Bongani believe some officials in the department tend to lack agricultural proficiency to expedite applications.
This could lead to errors and delays in dispensing agricultural support services.
After this convoluted process, if an applicant finally gets access to farmland, he or she is placed on probation for about five years to assess whether they can farm successfully.
This is largely where the problem arises because beneficiaries have no title deeds to use as collateral.
Therefore, the running of the business, including all input costs, depends largely on one source – the post-settlement support system. Its effectiveness thus has a huge bearing on success.
At the same time, this creates a permanent dependency on state resources, without real economic empowerment taking place.
Post-settlement support was initially vested in different departments.
The Department of Rural Development and Land Reform was initially responsible for delivering the land in question, after which beneficiaries could approach the Department of Water and Sanitation to obtain water rights, the Department of Agriculture, Forestry and Fisheries to obtain agricultural inputs, and the Department of Trade and Industry for implements.
This fragmented approach resulted in a misalignment between the land and associated services, which often set the beneficiaries up for almost certain failure.
Instead of improving alignment between the different departments, the Department of Rural Development and Land Reform ventured into the sphere of post-settlement support through the creation of the recapitalisation and development programme in 2009, which recapitalises poorly performing land reform projects.
However, this is more like papering over the cracks than identifying the root causes of failing projects and spreads the budget responsible for land acquisition very thin. Bongani’s story is not unique.
It illuminates the grassroots frustrations of many aspiring black commercial farmers.
Similar case studies, albeit about having use rights to land, were highlighted in Hall and Kepe’s paper.
The bureaucratic approaches that deferred Bongani’s dream of being a successful black commercial farmer could have been avoided had the market-assisted land reform programme prior to 2006 been expedited, giving the issue the attention it deserves.
The market-assisted approach entailed the transfer of title deeds to beneficiaries, which would have solved the problem of access to finance.
Briefly, this process entails:
lA beneficiary expresses interest in land purchase for farming;
lHe or she identifies a farm for sale and agrees with the owner on a price;
lAn application for a land reform grant and a mortgage (at preferential interest rates) is lodged and an own cash contribution is provided;
lA grant and bond are registered (all funded from one source, such as the state-owned agricultural bank), the transaction is completed, the title deed is registered and post-settlement support is also made available immediately; and
lMentorship and support by neighbouring farmers and agribusiness firms kicks in.
With such a programme implemented at a faster pace, it is hard to imagine that aspiring black commercial farmers such as Bongani would be experiencing the challenges they do.
It is clear Bongani’s failure to access land is far less from scarcity of land than failure of state departments, duplication of duties, bureaucratic inefficiencies and human capital challenges.
This story can be interpreted in various ways. Some may read it as a reluctance on the part of the government to transfer land and efficiently provide post-settlement support.
Others might describe it as a failure of the state to reinvent its mechanism to deliver on a promise whose effort and resource requirements it clearly seems to have underestimated.
We’ve narrated Bongani’s story in the hope of redirecting the land reform debate to some of the more immediate issues that remain unaddressed at grassroots level, which have led to the failure of the policy.
New land reform policy proposals should seek to tackle the challenges faced by aspiring black commercial farmers first, before more radical measures are considered.
If the systemic issues are not resolved, it is difficult to imagine how land expropriation without compensation could yield a different outcome from the failures we have outlined above, observed from past policy propositions.
In fact, we anticipate that expropriation without compensation will worsen the challenges and exacerbate the problem faced by new black farmers.
Sihlobo is head of agribusiness research at the Agricultural Business Chamber and Kirsten is director of the Bureau for Economic Research at Stellenbosch University...