Farmers are oozing excitement and confidence after the Department of Agriculture, Land Reform and Rural Development criss-crossed the country last December to inform them they will be receiving title deeds to the farms they are leasing from the department.
This has brought delight not only to the leaseholders, but to the wider agricultural fraternity, who have argued that the lease arrangement is disadvantaging black farmers.
To understand the shortcomings of the lease arrangement, one must first contextualise the evolution of the land reform programme in South Africa.
Land reform has three pillars – restitution, redistribution and tenure security. Restitution focuses on redress by assisting individuals who were dispossessed of their land by race-based policies, such as the Natives Land Act of 1913.
To remedy the injustice, the government, in 1994, enacted the Restitution of Land Rights Act, which established the Commission on Restitution of Land Rights.
In 1998, a total of 79 696 land claims were lodged with the commission. By June 2023, 94% of the lodged claims had been successfully settled, benefiting 2.3 million people and restoring 3.97 million hectares.
Most of this land is administered by Community Property Associations (CPAs). In addition, the commission paid out R22.5 billion between 1995 and 2023 in financial compensation to those beneficiaries who elected to take money instead of land.
Regarding tenure security and the redistribution pillars, multiple pieces of legislation have been promulgated over the past 30 years. These were then executed through various programmes. Initially, between 1997 and 2000, it was the Settlement and Land Acquisition Grant.
This programme granted R15 000 to poor individuals to be used to buy land for farming and housing purposes. The R15 000 was later increased to R16 000. However, the increase had little effect and the amount was not enough in the economy of the 1990s, given high land prices and inflation.
The government then, in 2001, introduced the Land Redistribution for Agricultural Development (LRAD), which largely targeted the acquisition of agricultural land. This allowed beneficiaries to get a grant portion of up to R100 000 for acquiring land. This change enabled both poor and non-poor black people to acquire farmland, supported by the government.
Moreover, the LRAD helped to advance some of the goals of the Reconstruction and Development Program (RDP), such as the empowerment of women to acquire economic assets in the form of farms. Despite its ambitions and good intentions, the LRAD was constrained by a limited budget allocation.
Compounding the budget issue were soaring land prices and the reluctance of farm owners to sell high-potential and strategically located land. Moreover, farmers were unable to service their bank loans, and subsequently, bank repossession of land reform farms meant the gains of LRAD were being reversed.
The government’s answer to these challenges was the Proactive Land Acquisition Strategy (PLAS), developed in 2006 to acquire strategically located and high-value farmland. Land was then purchased proactively, after which a beneficiary was identified to lease the farm from the department.
Between 1997 and last year, the government acquired 5.2 million hectares, of which 2.3 million hectares were acquired through PLAS. The programme brought numerous advantages, such as the power to negotiate with white farm owners, absorb land market price hikes, and avoid land repossessions by the banks.
On the other hand, PLAS constrained black farmers from securing private capital, while the government had inadequate post-settlement support for farmers. Furthermore, PLAS farmers under lease arrangement have a relatively weak security of tenure, which undermines the strategic objectives of the land reform programme.
Therefore, the recent move by the department to transfer title deeds of farms under PLAS aims to correct the shortcomings of the programme.
Title deed transfers will enhance farmers' ability to access private capital, an argument that was raised by agribusiness during the development of the Agriculture and Agro-processing Master Plan (AAMP).
Transferring ownership of land to farmers will help the department remove the burden of paying municipal rates. In addition, it will allow it to focus on acquiring land, and stop managing leased farms and properties, which is neither the focus nor competency of the department.
The department’s decision to transfer title deeds has not only brought excitement to lessees, but also to the broader agricultural sector – including commodity associations, banks, inputs suppliers and marketers.
The issuing of title deeds unlocks opportunity for commodity associations to work with farmers directly to improve the productivity of transferred farms. Under the AAMP, commercial agribusinesses committed to working with black farmers to expand private investments in rural and land reform farms.
They further committed to increasing the share of output from black farmers to an average of 20% by 2030, provided the government makes available the land.
The transfer of 2.3 million hectares to individual farmers creates a clear and solid incentive for agribusinesses and commercial commodity associations to scale up their already-agreed commodity transformation targets and established production schemes.
With the transfer of title deeds, the government has effectively made available a R12.3bn asset to farmers, markets, banks and commercial commodity associations to drive inclusivity and transformation in the sector, which is one of the goals contained in the AAMP.
Sifiso Ntombela (PhD) is an agricultural economist. He serves in the Department of Agriculture, Land Reform and Rural Development as special advisor to Minister Thoko Didiza. He is also elected president of the Agricultural Economics Association of Southern Africa.
BUSINESS REPORT