The current status and future of land reform in South Africa

Land reform tops the list of priorities affecting South African agriculture, given the current policy environment in which the sector operates. Dr John Purchase, CEO of the agricultural business chamber, Agbiz, examines current and planned developments in land reform.

One of the good things about the current SA government is that it regularly engages with Agbiz on policy and legislation affecting the agricultural sector. Agbiz is also given the opportunity to see draft policy and offer recommendations before promulgation. In this way, we try to bring a different perspective on what is good for both commercial and emerging farmers, agribusinesses, and national food security. However, government and Agbiz, as well as other key role players, do not agree on all aspects of policy and legislation.

Government’s Medium Term Strategic Framework (MTSF), its business plan for 2014 to 2019, is informed by the National Development Plan (NDP) and by the New Growth Path (NGP). The MTSF focuses on achieving 14 outcomes generated from the NDP and the NGP. Three of these are specifically related to agriculture. These are Outcome 4: decent employment through inclusive growth; Outcome 7: comprehensive rural development and food security; and Outcome 10: protect and enhance our environmental assets and natural resources.

The South African economy face a recession this year due to two consecutive terms of negative growth, and government currently regards agriculture and the agro-processing value chains as the number one driver of future economic growth. The Agricultural Policy Action Plan (APAP) and the Strategic Infrastructure Project 11 (SIP 11) – Agri- logistics and Rural Infrastructure – are geared to helping agriculture achieve this growth.

Point 2 of President Jacob Zuma’s nine-point plan to reignite economic growth and create jobs, announced in his 2015 State of the Nation Address, had as a goal the revitalising of agriculture and the agro- processing value chain. The government has since reprioritised this to point 1. This was confirmed by Zuma in his recent 2016 State of the Nation Address.

According to the Department of Agriculture, Forestry and Fisheries, one of the key constraints to agricultural development in South Africa is the uncertainty created by land reform policy and legislation. This undermines investor confidence in the sector and needs to be addressed urgently. It is widely acknowledged that land reform is absolutely necessary, even though it is a highly complex, emotive and difficult topic given our country’s history. The question is not whether we must implement land reform, but how we can implement it to achieve more equitable land ownership without compromising agricultural productivity, development, and food security.

THREE MODELS
Government has implemented three approaches and models for land reform: the Department of Rural Development and Land Reform’s (DRDLR) Green Paper and National Reference Group (NAREG) process on Land Reform, the NDP Model on Land Reform, and the Inter- Departmental Task Team on Outcome 7 of the MTSF. The first principle underlying land reform is deracialising the rural economy.

The second is democratic and equitable land allocation and use across race, gender and class. There are still concerns around the term ‘land allocation’, because it implies that government would own all agricultural land and then allocate it. Agbiz says that the market must play the predominant role in land reform. However, interventions will be necessary to create access to land for emerging farmers.

The third principle is sustained production discipline for food security. In this regard, Agbiz maintains that food production cannot be disciplined. Instead, a policy environment must be created in which entrepreneurs are prepared to risk investing their capital and skills in an agricultural venture with the goal of making money. In turn, they provide the country with food security and pay taxes.

From an ideological position, Agbiz and government are sometimes at odds about aspects of these principles. This can make negotiations on land reform a bit tricky, but the good news is that progress is being made. This progress may be small, and it may still need to be cemented, but negotiations are getting to a stage where there is a better understanding of what each party wants and what is necessary to make land reform work. Negotiations are still in its infancy and we are taking small steps.

The goal of government in land reform negotiations is to promote social cohesion and development that is based on shared growth and prosperity, relative income equality, full employment and cultural progress. From 2012 to 2014, the NAREG on land reform, in which Agbiz was involved, developed 14 policy positions. Of these, Agbiz conditionally supported 12 because they generally met our criteria for what constitutes an open and competitive market system.

The first of the two policy positions with which Agbiz has a problem, is implementing ceilings for private agricultural land ownership, and regulating ownership of agricultural land by foreign individuals or entities. Agbiz believes that foreign investment in SA agriculture is critical for the country and the land market.

The second policy position that concerns Agbiz is the ‘strengthening the relative rights of people working the land’ concept. It is no longer referred to as the ’50:50 model’ that caused so much controversy.

The 50:50 model may have been binned but the proposal for a farm equity scheme remains. Only the percentage ratios of this proposed farm equity scheme and the structure of the management model will now vary. Government has now provided Agbiz and other key role players with a stronger platform from which to engage on this topic.

Several pieces of legislation have been developed from NAREG’s 14 policy positions. The first is the Spatial Planning and Land Use Management Act, which is not yet operational but has been assented to. There is also the Property Valuation Act that is also not yet operational, and the Restitution of Land Rights Amendment Act, which is now operational.

The Expropriation Bill before Parliament, is contentious and still has a few sharp edges to it, such as the definition of expropriation. Agbiz is working closely with Agri SA and other key role players to see what inputs we can make on this bill.
The Extension of Security of Tenure Amendment Bill is also before Parliament. It too has a few aspects that concern Agbiz, and we have submitted recommendations.

Additional and new land reform-related legislation is also expected. These draft bills still have to go through cabinet and the National Economic Development and Labour Council process before being tabled before Parliament.

These include the Electronic Deeds Registration Bill, the Communal Property Associations Amendment Bill, the Communal Land Tenure Bill, the Regulation of Land Holdings Bill, which addresses land ownership ceilings and ownership of land by foreign persons or entities, and the Preservation and Development of Agricultural Land Bill. This last aims to protect agricultural land from, among others, mining and urban sprawl.

NAMIBIAN EXAMPLE
Agbiz is often asked to develop and propose alternatives to current and planned land reform legislation. One of the alternatives we have suggested is for government to consider the Namibian land reform concept of ‘right of first refusal’. This concept gives the Namibian government first option to buy or not to buy commercial agricultural land that comes up for sale. Namibia has used this concept very successfully to transfer roughly 28% of its commercial farmland to emerging farmers.

Success has been achieved by following the land market mechanism and was not due to land expropriation or other harmful interventions. Agbiz believes that with certain terms and conditions, this concept can also work well in South Africa, and government is now looking at the potential for implementing it here.

Agbiz thinks it was necessary to suspend the original farm equity scheme concept, and to have it reviewed. We also think that an appropriately amended farm equity scheme concept still holds potential for orderly land reform. Agbiz and the Banking Association of SA have developed a land reform model based on the NDP’s model for land reform. In the current financial year, and together with government, we are aiming to roll it out in four pilot projects.

Hopefully, there will be a bigger budget allocation in the next financial year to allow us to roll it out even further. Among its benefits is the creation of opportunities for commercial farmers to participate in land reform and help establish black farmers in partnerships. These commercial farmers will then be exempted from further land reform obligations.

Agbiz and the rest of the private agricultural sector want a land reform system that not only enables a more rapid transfer of agricultural land to black beneficiaries without distorting land markets or investor confidence, but ensures sustainable production on transferred agricultural land through appropriate and effective training and support structures.