Redistribution of farmland is a key catalyst for agricultural transformation and growth in South Africa.
But what reforms and interventions are necessary to accomplish this?
The imperative for land reform from a social justice point of view and for a more equitable distribution of productive farmland presents an important growth opportunity if executed appropriately.
Enhanced private sector participation in land redistribution, supported by enabling policies, incentives and monitoring mechanisms of the state, is a critical way to boost agricultural growth.
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If done in conjunction with a series of interventions in five specific areas of the agricultural sector, it is likely that the real agricultural gross value added could increase substantially by 2030.
It is clear that the provision of land alone (through land reform) is unlikely to achieve the growth anticipated.
To improve agricultural growth, the land reform process should be carried out by a central agency and, once the land is distributed, financial and technical support as well as offtake agreements or contracts should be provided to beneficiaries.
There are, however, a few critical preconditions necessary to achieve agricultural transformation and growth in this country.
These include:.
A stable and conducive policy and investment environment;
Comprehensive, sufficient and well-maintained infrastructure, including electricity, water, roads, rail and ports;
Efficient local municipalities with reliable service delivery;
Effective farmer support services and administrative support; and
Well-functioning state resources such as veterinary services, agricultural research, biosecurity measures, trade negotiations and support.
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LAND REFORM STRATEGY
Land reform is important in South Africa for two main reasons.
First, land has productive value and those from whom access has been unfairly removed are unable to enjoy the economic and income-generation potential that such land can offer.
Land reform has been a tool used to both rectify the imbalance of economic opportunities and restore ownership.
It has been shown to reduce poverty, support sustained growth and increase efficiency.
Second, land and access to land in South Africa have political resonance, representing dignity, heritage, belonging and restorative justice.
To date, government initiatives on agriculture and land reform have been slow in achieving the required success.
However, there is no additional evidence that the commercial agricultural industry and private individuals have made substantive progress on many of the targets set out in chapter 6 of the National Development Plan (NDP):
In the case of land reform, if we consider the private transactions by black farmers as well as government-led restitution and redistribution, the extent of land transferred away from white ownership is equivalent to 69% (16.07 million hectares) of the 30% land reform target that is highlighted in ANC documents. This represents a higher figure than official statistics, according to estimates from the Bureau for Economic Research;
Area expansion of several high-value labour-intensive crops far exceeds the NDP targets; and
The agricultural sector’s gross value added expanded by 44% between 2010 and 2020.
These largely positive achievements have not fully translated into more participation by black farmers, and their contribution to commercial output remains constrained.
There are several reasons for this, including:
Misalignment and lack of policy and programme implementation by national and provincial governments. This has been compounded by inefficiently designed programmes to support black farmers in becoming part of the commercial sector;
Slow adoption of the latest technology to increase productivity. This has been largely caused by the long backlogs and delays in getting new agricultural inputs approved by the agriculture, land reform and rural development department;
The fractious nature of organised agriculture. Many farmer associations in South Africa are still formed along racial lines, resulting in unnecessary duplication. This entrenches the divide;. Collaboration between the government and the private sector (commodity organisations, agribusinesses, farmer organisations) is not optimal. This results in slow implementation of farmer development plans;
Inefficiency of provincial departments of agriculture. This results in poor and non-delivery of critical programmes to support farmers. This is aggravated by a lack of coordination with water affairs, environmental affairs, provincial roads and local municipalities;
Slow delivery of critical large infrastructure projects, especially related to water infrastructure and improvement in rural roads and rail networks;
Failure of municipalities to deliver basic services such as water, electricity and road maintenance. These failures have been among some of the major constraints to higher growth of agribusiness, as they have increased the transaction costs of moving agricultural products;
Vandalism and lack of maintenance of critical support infrastructure for agricultural commercialisation, such as railway lines, ports and electricity supply; and
Criminality in rural communities, including the theft of stock, machinery, electricity cables, water pumps and agricultural inputs.
We need a holistic land reform strategy that takes cognisance of these basic aspects.
This will ensure that the redistribution of productive farmland takes place in a responsible manner.
Beneficiaries need to be immediately linked to the commercial farming network and included in a financial and market structure that will secure their future as commercial farmers.
A STRATEGY THAT HARNESSES UNDERUTILISED AND UNPRODUCTIVE LAND
In addition to the initial endowment of state-owned land, government has also, over the past decade, acquired a total of 2.46 million hectares of productive farmland through the Proactive Land Acquisition Strategy for redistribution to beneficiaries.
Due to bureaucratic red tape, patronage and other problems, few, if any, of these farms have been redistributed to land reform beneficiaries.
Instead, these farms are rented out to specific farmers on short-term contracts and many are unproductive or producing sub-optimally as a result.
The inability to access finance due to insecurity of tenure is a primary reason for this. One option is to transfer the state land holding to the Land Bank as a mechanism to capitalise it.
The bank could select bona fide farmers and transfer title deeds to carefully selected beneficiaries. It could then provide start-up capital to these farmers with the land as collateral.
This is a no-brainer and would help fill the gap in the market to empower farmers – who would then have funds and land, while the Land Bank would, at the same time, achieve its developmental mandate.
Anecdotal evidence suggests that if these recommendations are implemented, there should be dramatic expansion of production (especially by black farmers) in three sub-sectors of agriculture – grains, beef and poultry.
Three critical steps are needed for this:
Land ownership (title deeds) should be transferred to qualifying beneficiaries who are selected according to an approved beneficiary selection policy. Strict selection based on merit as well as on a skills and means test should be applied;
Production finance (via a land reform fund and the Land Bank at beneficial rates) must be secured by title deed. Funding from the agriculture, land reform and rural development department’s Comprehensive Agricultural Support Programme should be targeted to improvements in immovable assets and farm infrastructure;
and
Links must be established with commercial value chains, agribusinesses and government procurement schemes.
AMENDMENTS TO THE BENEFICIARY SELECTION PROCESS
A transparent beneficiary selection process is critical.
Following a suggestion of the presidential advisory committee, the agriculture, land reform and rural development department developed a draft policy for beneficiary selection and land allocation in 2019, but this was not progressed further.
It now needs to be expedited, taking the following into consideration:
An independent selection panel should be established for land allocation at both provincial and national level. The panel should be a non-statutory, multidisciplinary group consisting of representatives from relevant stakeholders. We suggest it also includes private sector individuals to increase transparency and provide a signal of private-public cooperation;
Applicants must be subject to a skills audit to determine training needs and the development programmes they require before they take ownership of land. A skills audit must be conducted on new applicants and existing beneficiaries to ensure that they have the necessary expertise to manage a farming operation, including those prioritised in the land distribution process, such as women and people with disabilities;
and
Monitoring and evaluation should take place through the planning, monitoring and evaluation department. Evaluations must take place annually and extension officers must be included as evaluators. A database containing the details of each land recipient should be created for monitoring purposes. This will deter the allocation of land to unqualified individuals or those with political connections.
Johan Kirsten is a director of the Bureau for Economic Research.
