Unions fume at proposed land claim extension

TAU has strongly rejected acting chief land claims commissioner Blessing Mphela’s proposal to extend settling outstanding land claims by another five years, saying the cut-off time of the end of this year must be respected.
Issie date : 15 August 2008

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TAU has strongly rejected acting chief land claims commissioner Blessing Mphela’s proposal to extend settling outstanding land claims by another five years, saying the cut-off time of the end of this year must be respected. “Farmers have been living with uncertainty for the past nine years and can’t live like this any longer,” said TAU president Paul van der Walt.

“The process is having a paralysing effect on agriculture, especially at a time when the debate around food security is so relevant. The whole process of land claims lacks credibility and an extension can open the door to corruption.” A total of 79 000 land claims have been registered, of which 74 800 have been completed. “This means that 8 311 claims have been dealt with annually, or 693 per month. At present only 4 949 land claims are left. If another five years are required, this means that only 990 claims will be handled annually. Why has the tempo dropped so dramatically?” asked Van der Walt. He added that the R18 billion needed to finalise the outstanding claims was unrealistically high and unacceptable in the current economic climate.

Agri president Lourie Bosman took a more resigned approach. “We were not surprised,” he said. “We have stressed that the target they set themselves was too early. Hopefully they will finish as soon as possible, but there is nothing we can do. We estimate it will take another four years to settle the outstanding claims. Unfortunately this will hamper Land Redistribution for Agricultural Development programmes as we can’t use land that’s under claim.” Bosman said the remainder of the claims would take longer to complete as they were complex rural ones. “The information about them is limited and the owners of the land have never been consulted. It’s only after a claim is gazetted that owners start looking at the issues and getting information. In most instances, the facts of the claims are so wrong, it’s unbelievable. It is a ridiculous situation.” – Robyn Joubert

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Agri deficit hits SA as land reform fails

SOUTH AFRICA suffered A deficit in agricultural trade for the first time last year because of rapidly increasing imports. Agricultural exports amounted to R29,2 billion compared to imports of R29,4 billion, according to the latest statistics from the SA Revenue Service. In 1990, however, farm exports amounted to R4,6 billion compared to imports of less than R2 billion. The balance was over R10 billion in SA’s favour in 2002, with exports amounting to R25,8 billion and imports amounting to R15 billion. Prof Nick Vink of the agricultural economics department at Stellenbosch University attributed the rise in agricultural imports to the growing need for animal feed.

“The growth of the middle class is fuelling the demand for animal products, particularly chicken and dairy,” he said. “Most animal carbohydrate requirements are supplied by domestic maize feed, but the protein requirements are supplied by oilseeds.” Dr John Purchase, CEO of the Agricultural Business Chamber, added that the unfavourable climate conditions have resulted in a sharp increase in maize and wheat imports.

He said imports will probably decline this year due to more favourable conditions, but added that the tendency will probably remain negative. Imports of animal and vegetable fats and oils rose by 60% from last year to R2,6 billion in May this year. Seed imports increased from R1,4 billion in 1996 to R2,3 billion in 2001, rising to an astronomical R6,6 billion last year. Oilseeds overtook rice as the second-largest imported product in 2003. Rice imports last year amounted to R2,1 billion whereas oilseed imports amounted to R1 174 billion, compared to animal products at R1 176 billion. V ink argued that South Africa is starting to feel the pinch of the failed land reform programme. “With rising global food prices, new black farmers would now have been able to reap the benefit,” Vink said.

Dr Purchase responded that many empowerment projects initiated and settled last year are doing well, because of the favourable market prices and relatively low input costs. “But the escalation of input costs by between 60% and 70% with market prices remaining relatively stable, will pressurise farm profit margins and make it more difficult for new entrants to be successful.” ink feels that the programme is failing primarily due to poor policy. “You can’t enrich people by impoverishing them – in other words, you can’t give them more debt than what they used to have and then expect them to succeed.” G overnment is also paying too little attention to skills. “Farmers need support structures in the form of good infrastructure, market access, agricultural support services and access to information, all of which government is failing to supply efficiently at the moment,” Vink said.

He added that subsidisation, whether through price interference or through subsidising input costs is not the answer to the problem, as it would only distort prices. “Farmers need to be rational whether they are white, black, commercial or small-scale. Subsidies, however, are counterproductive as they make people used to hand-outs,” he stressed. – Glenneis Erasmus

August rate hike likely

SOUTH AFRICAN consumers might have to brace themselves for yet another interest rate hike of 50 basis points when the Reserve Bank’s monetary policy committee meets on 13 and 14 August. This would increase the repo rate to 12,5% and the prime lending rate of commercial banks to 16%. Despite recent claims by Investec that Statistics South Africa overestimated inflation by more than 2%, which resulted in interest rates being too high, some economists believe this hasn’t prevented another rate hike.

Economic data for June, like the growth in M3 money supply, private credit extension, CPI and PPI inflation, is expected to weigh heavily with Reserve Bank governor Tito Mboweni and his team when they determine the interest rates. “Inflation is not yet under control,” Ulrich Joubert, economist at Kruger International, stressed. “Monetary policy has to continue to be strict and has probably not been strict enough.” He said every time the Reserve Bank hesitates about increasing interest rates, inflation goes up. The bank should therefore send a strong message that it won’t hesitate to act against inflation.

According to Joubert, the Reserve Bank should increase the repo rate by another 50 basis points at the upcoming meeting and another 50 basis points in October. “I think it would be a mistake to leave the rates unchanged and especially to lower them,” he said. Doret Els, an economist at the Efficient Group, also expects a rate hike in the middle of August, but reckons it will be the last in the current interest rate cycle. In a survey that Merrill Lynch conducted among fund managers in July, 63% of the respondents said they expected interest rates to go up in August. However, Rian le Roux, chief economist at Old Mutual Investment Group South Africa said that the interest rate cycle might have already peaked. “August will be a close call, but I would be surprised if there were any further increases,” he said.

The Bureau for Economic Research (BER) in Stellenbosch recently adjusted their economic growth forecast for 2009 from 3,8% to 3%. It said recent interest rate hikes will dampen growth well into 2009, but it does not expect another hike. – Drieka Burger