Synopsis of the IRR's Submission on the Preservation and Development of Agricultural Land Framework Bill – 29 May 2015

Synopsis of the IRR's Submission on the Preservation and Development of Agricultural Land Framework Bill of 2014.
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Synopsis of the IRR's Submission on the Preservation and Development of Agricultural Land Framework Bill – 29 May 2015

Synopsis of the IRR's Submission on the Preservation and Development of Agricultural Land Framework Bill of 2014.

South African Institute of Race Relations NPC
Submission to the
Department of Agriculture, Forestry and Fisheries,
regarding the
Preservation and Development of
Agricultural Land Framework Bill of 2014

Johannesburg, 29th May 2015

SYNOPSIS

Introduction
The Department of Agriculture, Forestry, and Fisheries (DAFF) has invited interested people and stakeholders to submit written comments on the Preservation and Development of Agricultural Land Framework Bill of 2014 [BXX–2014] (the Bill) by 30th May 2015.

This submission is made by the South African Institute of Race Relations NPC (IRR), a non-profit organisation formed in 1929 to oppose racial discrimination and promote racial goodwill. Its current objects are to promote democracy, human rights, development, and reconciliation between the peoples of South Africa.

Purpose of the Bill
The purpose of the Bill is ostensibly, as DAFF’s accompanying discussion document stresses, to enhance food security; limit any further loss of high potential cropping land to mining, residential, and other non-agricultural uses; prevent the fragmentation of farms into uneconomical units; and ensure that agricultural land is used optimally, so as to maintain and increase agricultural output and employment. [Department of Agriculture, Forestry, and Fisheries, Discussion Document on the Preservation and Development of Agricultural Land, Document No 19.P.2/PD-ALF, 2014, pp9, 11-12]

However, these important objectives could be met in very much better ways. In particular, there is no need to end the freehold ownership of agricultural land, as the Bill seems to envisage, in order for these goals to be fulfilled. On the contrary, the further erosion of property rights heralded by the Bill is likely to limit food security, reduce rural jobs, and worsen poverty and hunger.

The importance of property rights
Property rights are vital to democracy, development, upward mobility, and rising prosperity for all. That is why the racially discriminatory laws that earlier barred black South Africans from owning agricultural land and many other assets were so profoundly unjust.
Since these restrictions began to crumble in 1975 – and were finally abolished by the National Party government in 1991 – African ownership of farming land, houses, and other assets has finally started growing, and has done so very rapidly. To speed up this process, South Africa needs an annual growth rate of 7% of gross domestic product (GDP) – which would double the size of the economy every ten years – coupled with an upsurge in investment and employment. However, these advances will not be possible if the Bill is enacted in its current form. The Bill could in fact reverse the gains already made in extending the ownership of agricultural land to thousands of black South Africans.
If the Bill is enacted into law, all agricultural land will become vested in DAFF as ‘custodian’ for all South Africans. This will prevent black South Africans from either acquiring such land in the future or from retaining the freehold land ownership they currently enjoy. Far from helping to provide effective redress for the Natives Land Act of 1913 and other discriminatory laws, the Bill will once again bar black South Africans from gaining (or  retaining) individual ownership of agricultural land. 
The impact of this prohibition will be heavily felt by all South Africans, not only those who were disadvantaged by racial laws in the past. In eroding – and perhaps ending – the individual land ownership that many of the country’s farmers currently enjoy, the Bill will undermine all property rights. This is likely to worsen unemployment and add to the country’s economic malaise. The Bill is also likely to disempower all South Africans by increasing their dependency upon the State and restricting their scope for upward mobility. Far from helping to overcome disadvantage, the Bill will make it much more difficult to enhance food security or to counter joblessness, poverty, and hunger.

State ‘custodianship’ of agricultural land
The most damaging provision in the Bill is Section 3(1), which states: ‘Agricultural land is the common heritage of all the people of South Africa and the Department [DAFF] is the custodian thereof for the benefit of all South Africans.’ [Section 3(1), Bill]

This provision is clearly modeled on a similar clause in the Mineral and Petroleum Resources Development Act (MPRDA) of 2002, which says that ‘mineral resources are the common heritage of all the people of South Africa and the State is the custodian thereof for the benefit of all South Africans’. [Section 3, Mineral and Petroleum Resources Development Act of 2002]

This provision in the MPRDA precludes any black South African from ever owning any of the country’s vast mineral resources. It also provides the basis for the State’s absolute control over mineral resources and mining rights. In practice, the State’s powers in this sphere have often led to long delays and seemingly arbitrary decisions in the granting of mining and prospecting rights. They have also led to shifting regulatory requirements, policy uncertainty, insecurity of mining titles, and a steady decline in the size, profitability, and attractiveness to investors of the country’s mining industry. Giving the State custodianship of all mineral resources has also led to the effective expropriation without compensation of all those who previously owned these resources. This has further damaged South Africa’s reputation as an investment destination, and contributed to a major (40%) decline in mining jobs between 1990 and 2014.

Following the example of the MPRDA and vesting all agricultural land in the custodianship of DAFF is likely to have the same negative impact in the agricultural sector. It risks choking off investment in farms, thus eroding, rather than enhancing, the country’s food security.

Further ramifications of the Bill
Even if farmers are able to retain residual ownership rights, the normal competencies of ownership will be significantly curtailed. Farmers will need State consent for any rezoning or sub-division, both of which (on the current wording of the Bill) seem to be defined broadly enough to include proposed changes from one agricultural use to another. Consent might also be needed for such changes as opening up ‘bed & breakfast’ accommodation on one portion of a maize farm, or setting up a restaurant on a wine farm. In addition, any sale of a portion of a farm, or any sale where the buyer plans a non-agricultural use, will also need to be approved, as will any long lease of ten years or more, or any sale to a foreigner.

If, as some provisions in the Bill currently suggest, consent will indeed be needed before farmers may change from growing crops to animal husbandry, for instance, this requirement will bog many farmers down in all the Bill’s complicated bureaucratic processes. This could rob them of a necessary flexibility and nimbleness in responding to shifting market needs.

The information demanded under the Bill will also be complex and often very costly to procure, particularly as regards the necessary agro-ecosystem report, the agro-system impact assessment, and the scientific report, all of which have to be compiled by registered agricultural experts.

In addition, the Government lacks both the capacity and the financial resources to ensure that all the new bureaucratic bodies to be established under the Bill carry out their tasks efficiently and effectively. Long delays in the granting of approvals are likely to become endemic, along with ‘backhanders’ to officials who turn a blind eye to contraventions or promise to help speed up approval processes.

The Bill also ignores the fact that many current obstacles to food security are largely the product of the Government’s own interventions since 1994. These include the dismantling of agricultural extension services, the disbanding of the commando system which helped maintain farm security, and the laying down of often unrealistic minimum wages for farm workers. Most damaging of all, however, have been the Government’s inept attempts at land reform over the past 21 years.

Long delays in settling claims for the restitution or return of land have eroded investment in farms by owners no longer certain of their title. Though at least 8 000 claims from the first window period (from 1995 to 1998) still remain unresolved, the Government has now compounded the difficulty in finalising these outstanding claims by re-opening the land claims process for an additional five years (from 2014 to 2019).

In addition, the farming potential of agricultural land is being further undermined by misguided proposals by the land reform minister to transfer 50% of all commercial farms to long-serving farm workers; introduce ceilings on the maximum size of farms (pegged in general at 5 000 hectares, at most); and appoint a state official (the ‘valuer general’) to value all land and movables targeted for land reform. Also in the legislative pipeline is the Expropriation Bill of 2015, which comprehensively contradicts the property clause in the Constitution and various other guaranteed rights.

Farm owners are likely to become increasingly unwilling to put further working capital into farms which have been vested in the ‘custodianship’ of DAFF. This reluctance will be compounded by the Bill’s constraints on their competencies of ownership – and by the fact that their ‘right to farm’ will depend on the ministerial regulations to be issued in the future. Also relevant are the host of other damaging policies (as outlined above), which have already been written into the law or are soon to be enacted into statute. In addition, even where farmers are still willing to invest, their capacity to raise working capital from banks will diminish as the collateral they have to offer becomes increasingly uncertain and insecure.

The best way to enhance the country’s food security is to create a policy environment conducive to agricultural investment – and then leave it to the market and individual farmers to make their own decisions on how best to use their land. This requires freehold title, policy certainty, and a concomitant confidence that ownership rights will be respected in the future, rather than incrementally eroded. Damaging dirigiste interventions regarding labour, in particular, must also be removed, while the current damaging land reform process must be fundamentally transformed.

If DAFF is serious about improving food security, it must withdraw this Bill and stop tying all farmers up in yet more reams of expensive, impractical, and damaging red tape.

South African Institute of Race Relations (IRR)    29th May 2015

IRR TV

South African Institute of Race Relations NPC
Submission to the
Department of Agriculture, Forestry and Fisheries,
regarding the
Preservation and Development of
Agricultural Land Framework Bill of 2014

Johannesburg, 29th May 2015

SYNOPSIS

Introduction
The Department of Agriculture, Forestry, and Fisheries (DAFF) has invited interested people and stakeholders to submit written comments on the Preservation and Development of Agricultural Land Framework Bill of 2014 [BXX–2014] (the Bill) by 30th May 2015.

This submission is made by the South African Institute of Race Relations NPC (IRR), a non-profit organisation formed in 1929 to oppose racial discrimination and promote racial goodwill. Its current objects are to promote democracy, human rights, development, and reconciliation between the peoples of South Africa.

Purpose of the Bill
The purpose of the Bill is ostensibly, as DAFF’s accompanying discussion document stresses, to enhance food security; limit any further loss of high potential cropping land to mining, residential, and other non-agricultural uses; prevent the fragmentation of farms into uneconomical units; and ensure that agricultural land is used optimally, so as to maintain and increase agricultural output and employment. [Department of Agriculture, Forestry, and Fisheries, Discussion Document on the Preservation and Development of Agricultural Land, Document No 19.P.2/PD-ALF, 2014, pp9, 11-12]

However, these important objectives could be met in very much better ways. In particular, there is no need to end the freehold ownership of agricultural land, as the Bill seems to envisage, in order for these goals to be fulfilled. On the contrary, the further erosion of property rights heralded by the Bill is likely to limit food security, reduce rural jobs, and worsen poverty and hunger.

The importance of property rights
Property rights are vital to democracy, development, upward mobility, and rising prosperity for all. That is why the racially discriminatory laws that earlier barred black South Africans from owning agricultural land and many other assets were so profoundly unjust.
Since these restrictions began to crumble in 1975 – and were finally abolished by the National Party government in 1991 – African ownership of farming land, houses, and other assets has finally started growing, and has done so very rapidly. To speed up this process, South Africa needs an annual growth rate of 7% of gross domestic product (GDP) – which would double the size of the economy every ten years – coupled with an upsurge in investment and employment. However, these advances will not be possible if the Bill is enacted in its current form. The Bill could in fact reverse the gains already made in extending the ownership of agricultural land to thousands of black South Africans.
If the Bill is enacted into law, all agricultural land will become vested in DAFF as ‘custodian’ for all South Africans. This will prevent black South Africans from either acquiring such land in the future or from retaining the freehold land ownership they currently enjoy. Far from helping to provide effective redress for the Natives Land Act of 1913 and other discriminatory laws, the Bill will once again bar black South Africans from gaining (or  retaining) individual ownership of agricultural land. 
The impact of this prohibition will be heavily felt by all South Africans, not only those who were disadvantaged by racial laws in the past. In eroding – and perhaps ending – the individual land ownership that many of the country’s farmers currently enjoy, the Bill will undermine all property rights. This is likely to worsen unemployment and add to the country’s economic malaise. The Bill is also likely to disempower all South Africans by increasing their dependency upon the State and restricting their scope for upward mobility. Far from helping to overcome disadvantage, the Bill will make it much more difficult to enhance food security or to counter joblessness, poverty, and hunger.

State ‘custodianship’ of agricultural land
The most damaging provision in the Bill is Section 3(1), which states: ‘Agricultural land is the common heritage of all the people of South Africa and the Department [DAFF] is the custodian thereof for the benefit of all South Africans.’ [Section 3(1), Bill]

This provision is clearly modeled on a similar clause in the Mineral and Petroleum Resources Development Act (MPRDA) of 2002, which says that ‘mineral resources are the common heritage of all the people of South Africa and the State is the custodian thereof for the benefit of all South Africans’. [Section 3, Mineral and Petroleum Resources Development Act of 2002]

This provision in the MPRDA precludes any black South African from ever owning any of the country’s vast mineral resources. It also provides the basis for the State’s absolute control over mineral resources and mining rights. In practice, the State’s powers in this sphere have often led to long delays and seemingly arbitrary decisions in the granting of mining and prospecting rights. They have also led to shifting regulatory requirements, policy uncertainty, insecurity of mining titles, and a steady decline in the size, profitability, and attractiveness to investors of the country’s mining industry. Giving the State custodianship of all mineral resources has also led to the effective expropriation without compensation of all those who previously owned these resources. This has further damaged South Africa’s reputation as an investment destination, and contributed to a major (40%) decline in mining jobs between 1990 and 2014.

Following the example of the MPRDA and vesting all agricultural land in the custodianship of DAFF is likely to have the same negative impact in the agricultural sector. It risks choking off investment in farms, thus eroding, rather than enhancing, the country’s food security.

Further ramifications of the Bill
Even if farmers are able to retain residual ownership rights, the normal competencies of ownership will be significantly curtailed. Farmers will need State consent for any rezoning or sub-division, both of which (on the current wording of the Bill) seem to be defined broadly enough to include proposed changes from one agricultural use to another. Consent might also be needed for such changes as opening up ‘bed & breakfast’ accommodation on one portion of a maize farm, or setting up a restaurant on a wine farm. In addition, any sale of a portion of a farm, or any sale where the buyer plans a non-agricultural use, will also need to be approved, as will any long lease of ten years or more, or any sale to a foreigner.

If, as some provisions in the Bill currently suggest, consent will indeed be needed before farmers may change from growing crops to animal husbandry, for instance, this requirement will bog many farmers down in all the Bill’s complicated bureaucratic processes. This could rob them of a necessary flexibility and nimbleness in responding to shifting market needs.

The information demanded under the Bill will also be complex and often very costly to procure, particularly as regards the necessary agro-ecosystem report, the agro-system impact assessment, and the scientific report, all of which have to be compiled by registered agricultural experts.

In addition, the Government lacks both the capacity and the financial resources to ensure that all the new bureaucratic bodies to be established under the Bill carry out their tasks efficiently and effectively. Long delays in the granting of approvals are likely to become endemic, along with ‘backhanders’ to officials who turn a blind eye to contraventions or promise to help speed up approval processes.

The Bill also ignores the fact that many current obstacles to food security are largely the product of the Government’s own interventions since 1994. These include the dismantling of agricultural extension services, the disbanding of the commando system which helped maintain farm security, and the laying down of often unrealistic minimum wages for farm workers. Most damaging of all, however, have been the Government’s inept attempts at land reform over the past 21 years.

Long delays in settling claims for the restitution or return of land have eroded investment in farms by owners no longer certain of their title. Though at least 8 000 claims from the first window period (from 1995 to 1998) still remain unresolved, the Government has now compounded the difficulty in finalising these outstanding claims by re-opening the land claims process for an additional five years (from 2014 to 2019).

In addition, the farming potential of agricultural land is being further undermined by misguided proposals by the land reform minister to transfer 50% of all commercial farms to long-serving farm workers; introduce ceilings on the maximum size of farms (pegged in general at 5 000 hectares, at most); and appoint a state official (the ‘valuer general’) to value all land and movables targeted for land reform. Also in the legislative pipeline is the Expropriation Bill of 2015, which comprehensively contradicts the property clause in the Constitution and various other guaranteed rights.

Farm owners are likely to become increasingly unwilling to put further working capital into farms which have been vested in the ‘custodianship’ of DAFF. This reluctance will be compounded by the Bill’s constraints on their competencies of ownership – and by the fact that their ‘right to farm’ will depend on the ministerial regulations to be issued in the future. Also relevant are the host of other damaging policies (as outlined above), which have already been written into the law or are soon to be enacted into statute. In addition, even where farmers are still willing to invest, their capacity to raise working capital from banks will diminish as the collateral they have to offer becomes increasingly uncertain and insecure.

The best way to enhance the country’s food security is to create a policy environment conducive to agricultural investment – and then leave it to the market and individual farmers to make their own decisions on how best to use their land. This requires freehold title, policy certainty, and a concomitant confidence that ownership rights will be respected in the future, rather than incrementally eroded. Damaging dirigiste interventions regarding labour, in particular, must also be removed, while the current damaging land reform process must be fundamentally transformed.

If DAFF is serious about improving food security, it must withdraw this Bill and stop tying all farmers up in yet more reams of expensive, impractical, and damaging red tape.

South African Institute of Race Relations (IRR)    29th May 2015

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