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AgriSA says study supports harm of land expropriation to GDP

Agricultural industry body AgriSA yesterday warned against land expropriation without compensation (EWC), citing a study that supported this view which showed a decline in economic growth. Picture: Henk Kruger/ANA/African News Agency

Agricultural industry body AgriSA yesterday warned against land expropriation without compensation (EWC), citing a study that supported this view which showed a decline in economic growth. Picture: Henk Kruger/ANA/African News Agency

Published Mar 25, 2021

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DURBAN - AGRICULTURAL industry body AgriSA yesterday warned against land expropriation without compensation (EWC), citing a study that supported this view which showed a decline in economic growth.

Annelize Crosby, AgriSA’s head for Land and Legal Affairs, in her executive summary presented in a virtual media conference on Wednesday, said that primary agriculture represented 2.5 percent of gross domestic products (GDP)and secondary agriculture roughly 15 percent.

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“These two constitute the food system, which makes up approximately between 17 and 18 percent of GDP. The whole system is hedged against the market value of land,” said Crosby.

AgriSA said that an independent study into the possible economic impact of a policy of nil compensation, by GOPA Group Southern Africa, had concluded what the impact that a policy of expropriation without compensation would exert on economic capital formation, which augmented a society’s stock of productive assets.

AGRISA says under no circumstances should the payment of compensation to a landowner be dependent on the state’s ability to pay. | File photo

The study suggested that the inevitability of a sharp decline in the economic growth rate and a further erosion of taxation revenue growth.

In his presentation, economist Dr Roelof Botha said the purpose of the study was to quantify the likely macroeconomic impact of land EWC in South Africa, based on a calculation of declines in capital formation/GDP ratios that have occurred in countries that have implemented EWC and applying a proxy of these declines to an econometric model of the South African economy aimed at forecasting the effect of EWC on the country’s GDP and fiscal revenues.

Agri-SA said it was against EWC but firmly believed in the free market and the basic economic principles that drive developed and developing countries.

“Property rights are also believed to lower transaction costs by providing an efficient resolution for conflicts over scarce resources. Those countries that provide secure property rights and equality of opportunity have found that this has led to economic prosperity. The procedures followed with expropriation should be fair towards the landowner and the principles of administrative justice should always apply,” said Crosby.

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The organisation said that the purpose of the expropriation should be clear, a landowner whose land was expropriated should always have recourse to the courts as they stood firm on the principle of full access to the courts to adjudicate on the merits of expropriation as well as the amount of compensation, should there be any dispute.

Agri-SA said that under no circumstances should the payment of compensation to a landowner be dependent on the state’s ability to pay, it was of utmost importance that a transparent process be followed in valuing land and land owners should also have access to valuation reports.

It said that the payment should be immediate and in cash. It also said that it believed that transformation and land reform would not be possible if the liquidity in the food system changes; when it does not reflect market-related prices. It said that this was a principle that had been established in several countries that have tried similar interventions.

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AgriSA said that it had submitted its commentary on the Expropriation Bill electronically to the Portfolio Committee on Public Works and Infrastructure on last month as was mandated by all the organisation’s affiliates.

Agri SA had commissioned a study in support of its commentary, namely a study on the economic impact of an approach of zero compensation or minimal compensation, in the agricultural sector.

“Agri SA believes that past inequities must be dealt with through positive, future and solution-driven conversation. The organisation wants to make a positive contribution to finding solutions,” said Crosby.

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The conference took place at a time a Parliamentary committee into Land Expropriation met this week to hear oral presentations from groups against the amendment to the constitution.

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