A lose-lose land reform scenario is evolving

Posted On Saturday, 31 March 2012 02:00 Published by
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The way in which land reform is being handled has caused widespread dislocation of farming activities and devaluation of agricultural property in the affected areas; yet the situation can still be turned around

With 87% of the non-State owned land in South Africa owned by whites and only 13% owned by blacks there can, says Tony Clarke, MD of Rawson Properties, be no argument that some form of rebalancing is urgently necessary – and this, he says, is by and large acknowledged by even such conservative organisations as Agri-SA (which represents 4 000 commercial farming organisations in SA). 

However, said Clarke, the way in which land reform is being handled has caused widespread dislocation of farming activities and devaluation of agricultural property in the affected areas.

The current situation, said Clarke, has become so serious that certain spokespeople for this sector have compared it to the situation after the Anglo-Boer War which caused many South Africans to lose their land.

The big problems at present, said Clarke, are

1. the effect that gazetting a farm for a land claim has;
2. the lack of readiness to accept the willing buyer willing seller principle; and
3. the high casualty rate in properties transferred to their “hereditary” owners.

Currently, said Clarke, some 13 000 farms have been gazetted for potential land claims.  As soon as this happens, he said, the banks will put a hold on loan capital to such farms – and loans are essential to many farmers’ operations as they operate on a once or twice a year harvest related deferred payment basis.  Furthermore, all improvements and expansion will cease, even when the farmer has capital.

The farmers’ situation, said Clarke, is exacerbated by the government in most cases paying far below the true market value for expropriated farms.

“We hear regularly of cases where the sum paid was only 60% of the real value,” he said, “and appeals to the courts cannot put matters right.”

In a recent talk to the Western Cape Institute of Estate Agents, said Clarke, Professor Henk Delport (a property law expert) mentioned that doubts and uncertainties had also arisen as a result of the ANC Youth League insisting that farms should be expropriated with no compensation – this, too, although not an immediate prospect, had shaken the faith in the entire status quo.

“The situation, as Prof Delport pointed out, is also complicated by the time it takes for claims cases to reach court and to arrive at a settlement – as well as the high cost of these court cases, which it has to be said, have often resulted in the claim eventually being proved unfounded.”  (Clarke explained that to be successful, the claim had to show that the claimant or his ancestors had originally lived on that land and had been “unlawfully” removed from it, e.g. by the Group Areas Act.)

Also clouding the picture, said Delport, is the fact that to date the farms (less than 7% of the total) that have been “handed back” have seldom proved commercially successful.

“Here again, Prof Delport was enlightening,” said Clarke.  “He pointed out that many critics allege that the government itself has been to blame by not providing sufficient working capital or adequate training.  In good years the “new” farmers come through, in bad years they go under – with the result that, some 30% of restituted farms are now back in white hands.” 

In another talk to which Clarke referred, Dr Theo de Jager of Agri-SA, said that there can be no real solution unless a partnership is formed between white commercial farmers, the state and emerging famers.  Under such agreements, the state could be allowed to purchase the farm at, say, a 30% discount value, and then lease it back to the partnerships.  This, said Clarke, over a period of ten or so years, might give the black participants the skills and capital to become outright owners – but as they would be shareholders from day one they would probably co-operate fully to acquire the necessary skills.

“Prof Delport has criticised the land reform green paper, now in the public arena for debate on account of its lack of clarity and definition.  However, if the State land restitution authorities recognise that to date they have failed and now join forces with successful farmers, we could see South Africa’s land reform working successfully.”

Publisher: eProp
Source: RP

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