Ideal land reform model for SA
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The Institute of Race Relations’ (IRR) submission to the Joint Constitutional Review Committee opposing expropriation without compensation and the erosion of property rights goes beyond the anxiety about the drift of present policy thinking and proposes constructive measures to achieve long-overdue land reform.
By yesterday, more than 34000 South Africans from all communities had endorsed the IRR’s submission.
At the heart of it is research showing that a future in which sizeable numbers of black commercial farmers are assisted into business, securely holding their land, is by no means beyond South Africa’s reach - provided the necessary conditions are put in place.
Currently, government policy is to place the state rather than the aspirant farmer at the centre of its land reform efforts. This has been codified in the State Land Lease and Disposal Policy, which specifies that land acquired for redistribution will remain under state ownership. Only the largest producers may qualify to purchase their holdings after 50 years.
The policy of the government is now moving towards expropriation from existing farmers and presumably leasing it to emerging producers. The reason for this approach, the government says, is that the “willing buyer, willing seller model has failed” as there is not enough money to make it work.
But this argument is incorrect.
The IRR estimates that good quality grazing land is in the market for R10000 per hectare. To purchase a 1000-hectare farm for a young upcoming farmer would cost R10million. We further estimate that to stock that farm with 200 pregnant cows would cost another R4m.
A further R2.5m could then procure a new Land Cruiser bakkie, a tractor, trailer and implements.
Another R3.5m in cash could be provided to the farmer as working capital.
The whole investment would come to R20m and create a debt-free commercial farmer generating a positive cash flow of about R1m a year and with more than sufficient collateral to buy more land and expand his farming enterprise.
These sums are quite modest when measured against other commitments the government has chosen to make. The SAA, for example, has received extensive coverage in recent years for its poor performance and governance challenges. It received a bailout of R10billion from the government last year and recently requested another R5bn.
Based on the IRR’s sums, had it been spent on land reform, it could have established 750 successful new black commercial farmers over the past two years alone. Considering that there are only 30000 commercial farmers in the country, this is a not inconsiderable number. A 10% cut in the government’s wage bill would finance the establishment of an estimated 3000 new black commercial farmers every year.
In reality, the government is starving emerging black farmers of support.
This year the budget of the Department of Rural Development and Land Reform is about R10.4bn. This amounts to less than 1% of government’s total budgeted spending. The budget for land reform - the acquisition of land for redistribution - comes in at R2.7bn.
Restitution - settling land claims - is budgeted at R3.7bn.
VIP protection and associated services (such as the SAAF 21 Squadron), by contrast, can expect to cost a total of R2.6bn. Protecting the political elite is seen as pretty much on a par with providing land to emerging farmers, and not much less important than addressing cases of land dispossession.
Each of the new farmers established under the IRR’s model would be well-positioned to grow their businesses through their own collateral and cash flow - particularly if the Land Bank would grant them generous loan conditions, something it does not, at present, do. These emerging black farmers would arguably be in a much stronger financial position than most white farmers. Their rise, eminence, success and expansion would be the most powerful answer South Africa could offer to the historical denial of property rights to black people.
Our model would represent a rethink of the direction of policy. It is simple, straightforward, cost-effective and could be put into action within weeks. But it would only work if property rights are respected and the agricultural sector is run as a market economy - if pragmatism is favoured over ideology.
This constructive model underpins the IRR’s invitation to all who share a commitment to a prosperous future and to sensible policy suggestions to join it in opposing the introduction of expropriation without compensation by endorsing its submission to Parliament here. (https://irr.org.za/campaigns/defend-your-property-rights-before-d-day-15-june-2018)
Terence Corrigan is the project manager at the IRR, a think tank that promotes political and economic freedom. If you agree with what you have just read then SMS your name to 32823.