Land reform proposal a snub to the NDP

Minister Nkwinti’s suggestion that 50% of farms be transferred to farm workers, ignores empowerment strategies championed by organised agriculture and is a departure from the land reform model proposed in government’s National Development Plan.

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The same old cake cannot be cut into smaller and smaller pieces, rather a bigger cake must be created. This analogy is often used by prominent agricultural economists and leaders of organised agriculture to describe a principle that should form the basis of any land reform model. Using this approach would be to the benefit of all involved. Globally, due to a cost-price squeeze in primary agriculture, farming units are becoming fewer and bigger in size as farmers increasingly rely on economies of scale to help secure financial sustainability.

Furthermore, in South Africa with unemployment at 25%, agriculture is touted as one of the few economic activities which could meaningfully contribute to economic growth and job creation. But, for this to happen the sector needs to grow. Productivity on farms has to increase and the area farmed has to be expanded, instead of subdivided into smaller, less productive units. The Department of Rural Development and Land Reform’s latest proposal for land reform in agriculture, ignores the need to grow the sector so that it can provide opportunities for new entrants.

Origins of the 50:50 proposal
The Final Policy Proposals on Strengthening the Relative Rights of People working the Land, has been dubbed ‘Nkwinti’s 50:50 plan’, or ‘50% proposal’ due to land reform minister, Gugile Nkwinti’s vigorous backing of the plan. It proposes that 50% ownership of all farms be transferred to farm workers, who will be allocated share percentages based on their years of service. Farmers would retain the other 50%. The proposal moots that government will pay for the 50% transferred to farm workers, but the money will be transferred into an ‘Investment and Development Fund’ jointly managed by shareholders.

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This proposal is a sub-policy of the Land Tenure Security Policy for Commercial Farming Areas, which emerged from the Green Paper on the land reform consultation process. This process started in September 2011 and lasted almost two years. The Restitution of Land Rights Amendment Bill and the Property Valuation Bill, which was recently signed into law by President Jacob Zuma, has led to the reopening of restitution claims and the establishment of the office of the land valuer-general was a result of this process.

READ MORE: Land reform dilemma

Sandy La Marque, CEO of Kwanalu and vice-chairperson of Agri SA’s transformation committee, and Annelize Crosby, Agri SA’s legal advisor, said in a joint statement that the draft proposal to take 50% of farms, essentially without compensation, “came almost as an afterthought in the Green Paper process of August 2013”.

Since being formally tabled at the end of March, the 50:50 proposal has elicited widespread, mostly negative, reaction. Agricultural organisations, opposition politicians, and other stakeholders say the plan is unworkable; question its constitutionality; call it a further attack by government on private property rights and the free market system; and say it poses serious risks to food security and future investment in the agricultural sector.

A snub to the NDP
The most obvious problem with Nkwinti’s proposal is its marked difference with government’s National Development Plan (NDP), which has already been endorsed in its entirety by the ruling party. Prof Mohammad Karaan, Dean of the Faculty of AgriSciences at Stellenbosch University, and one of the architects of the NDP told Farmer’s Weekly when the Green Paper on Land Reform was first drafted, the 50:50 proposal was put forward by a department official, which means that it is not entirely unexpected.

At the time, however, the proposal, “failed to find any traction politically or otherwise”. Karaan says it is “largely inexplicable” why Minister Nkwinti chose to publish and back a land reform model that differed greatly from that of the NDP in terms of implementation. However, he adds that the minister’s proposal and the NDP’s model could possibly be compatible, since both sought to give farm workers a stake in a farming business. Integrating the two plans would require some “creative inputs” from the industry, says Karaan. “If the plan goes through to be implemented in its current form it will be a catalyst for mass uncertainty.”

The NDP suggests a land reform model in which district committees will identify 20% of commercial agricultural land in a district, from land that is already on offer or available in the market to “ensure land can be found without distorting markets”. Commercial farmers in the district would be given the “option of assisting in its transfer to black farmers”.

The NDP suggests further that land be bought by the state at 50% of market value, adding that this would be “closer to the fair productive value of the land”. The 50% shortfall to the current owner would then be made up by “cash or in-kind contributions from commercial farmers who volunteer to participate”. 

DA leader, Helen Zille, questions the minister’s decision to reject the land reform model proposed in the NDP, and says the 50:50 proposal is an “unworkable deviation” from the NDP approach. “We cannot understand why the government does not just get on with implementing its own plan (NDP), which uniquely, has buy-in from all major role players in South Africa,” Zille says.

She also points out that, unlike the land reform model proposed in the NDP, the new proposal “removes the willing-buyer/willing-seller principle, and places development funds in the hands of government, that has so far failed to run any state-owned enterprise efficiently or productively”. Zille says the ANC has made a ‘mockery’ of the NDP by ignoring its land reform proposal.

Several media reports suggest that the minister’s proposal does not enjoy the full support of cabinet and the ANC.
Denis Worrall, chairperson of Omega Investment Research, an investment advisory and marketing consultancy, writing in the company’s newsletter says that the 50:50 proposal would “certainly have been challenged” had it gone before the cabinet.

READ MORE: How to promote effective land reform in South Africa

Worrall refers to an article in the City Press (29 June) stating that ‘Minister Nkwinti was forging ahead with his controversial policy proposal, despite not having a mandate from the ANC’. Worrall says the proposal would not have been given full approval because “somebody, in all probability Cyril Ramaphosa as head of the NDP, (would have objected)”.

“He (Ramaphosa) would have been failing in his duty if he did not point out that Chapter six of the NDP deals comprehensively and very thoughtfully with this specific issue,” says Worrall. However, there is some support for the proposal in the ANC. In its online newsletter, ANC Today, Jeff Radebe, ANC NEC member and Minister of Planning, Performance, Monitoring and Evaluation in the Presidency, recently refers to the plan as going a long way towards fulfilling the crucial Freedom Charter declaration that land should be shared among those who work on it.

Existing solutions
Policy confusion and uncertainty in land reform goes beyond the contradictions in Nkwinti’s new land plan when it is compared to the NDP’s land reform proposals. As several agricultural organisations and other stakeholders point out, it is not the lack of a land reform policy, but rather the abundance of policy proposals that has caused confusion around the issue of transformation.

In the Sunday Times of 20 June, Nkwinti says he came up with the proposal “because the previous system had many deficiencies”, and because “too few proactive proposals were coming from stakeholders in agriculture”. The Land Tenure Security Policy which emerged from the Green Paper consultation process, propose a number of land tenure security interventions.

These interventions include a decentralised land rights management system, an awareness and capacity building programme, redistributive measures, incentives for farm owners to improve farm worker services and housing, a farm worker grant, and an alternative dispute resolution. “So, it is not as if there are no other measures being contemplated to develop a sustainable tenure security dispensation in commercial farming areas,” say Sandy La Marque of Kwanalu and Annelize Crosby of AgriSA.

The Farmworker Equity Scheme (FES) programme has been in place since 1996. “The FES was essentially a business arrangement that allowed farm workers to obtain shares in agricultural operating companies or farms through government funding. “Minister Nkwinti placed a moratorium on these schemes, but later announced that the FES would be revived. This never happened.”

Crosby and La Marque argue that there is no reason why FES cannot be revived, as it includes shareholding in the land as well as the business. In addition to the FES schemes, Agri SA and Kwanalu favour off-farm settlement, where land is acquired for farm workers who can then receive title deeds to the land. These should be sustainable settlements with the necessary infrastructure and services, say La Marque and Crosby.

“Rather than trying to re-invent the wheel by coming up with a completely new policy, the existing FES policy could be implemented in a more efficient way. Farm workers could get shares in existing farms, or farmers and farm workers could buy new farms jointly.”

The FES programme also has the support of the Western Cape provincial government where similar schemes enjoy an 80% success rate, compared to the national land reform project failure rate of 90%.

No solution
Much of the criticism aimed at the 50:50 land reform proposal, deals with the fact that existing land reform policies have failed, not because they are flawed, but because the land reform department is unable to implement them properly. “It is a pity that government chooses to turn away from existing policies that fail because of poor implementation and keep on experimenting with new, more radical policies that may hold serious unintended consequences for SA.

It is critically important to understand why the implementation of the existing policies and laws has been so weak, and it needs to be identified and addressed,” say La Marque and Crosby. Athol Trollip, leader of the DA in the Eastern Cape and former party spokesperson for land reform, accuses the ANC of “playing the blame game whenever it is unable to meet its own targets”.

Trollip says government “has blamed their inability to come close to reaching their own target of redistributing 30% of ‘white-owned’ commercial farms, with the current policy of willing-buyer/willing-seller”. Trollip suggests that this failure is “premised on many, much more fundamental reasons” like the “gravely flawed” beneficiary identification process; ineffective pre- and post-settlement support, and the lack of state support through scientific extension services.

In an analysis of the policy proposal, Prof Ruth Hall and Prof Andries du Toit of the Institute for Poverty, Land and Agrarian Studies (Plaas) at the University of the Western Cape, say the proposal represents “a new type of policy emerging in South Africa, which “bears no relation to lessons from the past, nor prospects of successful implementation in the future”.

“These are spurious policies, never intended to be implemented, and appealing to an audience too angry to care about questions of feasibility and impact.”

For more information, phone Prof Mohammad Karaan on 021 808 4792; email Denis Worrall at [email protected]; Plaas at [email protected] or phone 021 959 3733; Agri SA on 012 643 3400; TAU SA on 012 804 8031; Afasa on 012 348 8566; and Athol Trollip on 040 608 0240.