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February : Land Ceilings a Political Daydream

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3 February, 2015

Land Ceilings a Political Daydream

"The ANC's position, namely that ownership of farm land should be limited to two farms per owner and a maximum of 12 000 hectares in order to accelerate land distribution, is totally unacceptable to the agricultural sector and could be detrimental to the economy and the interests of consumers. This statement issued yesterday by the ANC secretary-general, Mr Gwede Mantashe after the party's lekgotla, also undermines the credibility of the current consultation process between the Minister of Rural Development and Land Affairs, Mr Nkwinti, and role players in the industry, which aims to put together a package of practical measures aimed at making a success of land reform," says Agri SA president Johannes Möller.

In his reaction to this announcement, Möller referred to various events and the agreed-upon modus operandi that relate to the land debate and which are not reconcilable with this policy statement:

  • The National Development Plan makes no provision for a limitation on land ownership by legal entities in order to make land available for redistribution. However, this plan does have a proposal for promoting redistribution per district, which has been debated intensively over the past year within agriculture and is finding application on a trial basis. Various other models which meet the criteria for economic sustainability and lasting empowerment are also being implemented at present.
  • In the NAREG consultation process, which followed on the Green Paper on Land Reform, the Department of Rural Development and Land Reform ordered an independent study into the viability and implications of land ceilings. This study showed that such a measure was contrary to market forces and would deprive farmers of the opportunity to utilise economy of scale, which in turn is essential to remain profitable and to produce food as cheaply as possible. A limitation on farm size and further direct interferences with ownership will probably increasingly lead to higher levels of protection and support for agriculture, weaker export performance, greater dependence on imports and more expensive food.
  • Agri SA's proposal, as approved at its 2014 congress, was that farmers who already enjoy scale benefits and who make a considerable contribution to food production should be able to expand their land ownership on condition that it includes adequate participation by an empowerment partner. This proposal hinges on the application of turnover norms rather than on physical farm size, and is currently the topic of further evaluation and discussion.
  • It is 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 50 hectares that are much bigger and more stable businesses than an extensive livestock farm of 20000 hectares. The placing of limitations on farm sizes will, therefore, be a naïve return to a central planning approach that will constrain a complex industry such as agriculture.
  • In his statement, Mr Mantashe conceded that the constitutionality of the ANC's proposal still has to be tested. This is a question that should be answered sooner rather than later because a rejection thereof will eliminate unnecessary further speculation.
  • Minister Nkwinti has on various occasions invited role players in the industry to submit by the end of February 2015 proposals for accelerating sustainable land reform. Last year Agri SA gave intense attention to this matter and its congress resolutions in this regard in October 2014 were welcomed by Minister Nkwinti. Agri SA also consults in this regard with other agricultural organisations within the Agricultural Sector Unity Forum (ASUF) with the view to compile a wider representative input for consideration by the minister, within the set time frame. Agri SA also provides these inputs to the Interdepartmental Task Team which Minister Nkwinti had appointed to advise the cabinet on aspects regarding the implementation of the National Development Plan.

The implications of this policy statement issued by Mr Mantashe, on behalf of the ANC, on the above mentioned processes now requires clarification.

"Apparently the 50/50 redistribution proposal, which elicited controversy last year, is being revisited as a policy framework," according to Möller.  It is possible that the unrealistic proposals regarding accelerated land reform are used to divert attention from other failures such as the energy crisis and that of various state institutions," says Möller.  This thinking of the ANC can at best be politically expedient, but economically and socio-economically it is nonsensical. Naturally Agri SA will, unless government decides differently, continue to be involved in existing structures where we are invited to make inputs and where we have to date in good faith sought meaningful solutions to land redistribution.

Issued by Agri SA, Directorate:  Corporate Liaison

Mr Johannes Möller, President Agri SA, 082 647 8481
Mr Hans van der Merwe, Executive Director, Agri SA, (012) 643 3400 or 082 388 0001