Ideal land reform model for SA - Pretoria News

13 June 2018 - As tens of thousands of South Africans sign up to reject the government’s proposal to take land without paying for it, the focus must fall squarely on what it will take to achieve successful land reform.

Terence Corrigan

As tens of thousands of South Africans sign up to reject the government’s proposal to take land without paying for it, the focus must fall squarely on what it will take to achieve successful land reform.

The Institute of Race Relations’ (IRR) submission to the Joint Constitutional Review Committee opposing Expropriation without Compensation and the erosion of property rights goes beyond the anxiety about the drift of present policy thinking and proposes constructive measures to achieve long-overdue land reform.

By Tuesday (12 June), more than 34 000 South Africans from all communities had endorsed the IRR’s submission.

At the heat of it is research showing that a future in which sizable numbers of black commercial farmers are assisted into business, securely holding their land, is by no means beyond South Africa’s reach – provided the necessary conditions are put in place.

Currently, government policy is to place the state rather than the aspirant farmer at the centre of its land reform efforts. This has been codified in the State Land Lease and Disposal Policy, which specifies that land acquired for purposes of redistribution (including making land available for aspirant farmers) will remain under state ownership.

Only the largest producers may qualify to purchase their holdings, and then only after 50 years. The policy of the government is now moving towards one of expropriation from existing farmers and presumably leasing it to emerging producers. The reason for this approach, the government says, is that ‘the willing buyer, willing seller model has failed’ as there is not enough money to make it work.

But this argument is incorrect.

The IRR estimates that good quality grazing land is in the market for R10 000 per hectare. To purchase a 1 000 hectare farm for a young upcoming farmer would cost R10 000 000. We further estimate that to stock that farm with 200 pregnant cows would cost another R4 000 000. A further R2 500 000 could then procure a new Land Cruiser bakkie, a tractor, trailer, and implements. Another R3 500 000 in cash could be provided to the farmer as working capital.

The whole investment would come to R20 000 000 and would create a debt-free commercial farmer generating a positive cash flow of around R1 000 000 a year and with more than sufficient collateral to buy more land and expand his farming enterprise.

These sums are actually quite modest when measured against other commitments the government has chosen to make. South African Airways (SAA), for example, has received extensive coverage in recent years for it poor performance and governance challenges. It received a bailout of R10 billion from the government last year and has recently requested another R5 billion.

Based on the IRR’s sums, had it been spent on land reform, it could have established 750 successful new black commercial farmers over the past two years alone. Considering that there are only 30 000 commercial farmers in the country, this is a not inconsiderable number. A ten percent cut in the government’s wage bill would finance the establishment of an estimated 3 000 new black commercial farmers every year.

In reality, though, government is starving emerging black farmers of support.

This year the budget of the Department of Rural Development and Land Reform is some R10.4 billion. This amounts to less than one percent of government’s total budgeted spending. The budget for land reform – the acquisition of land for redistribution – comes in at R2.7 billion.

Restitution – settling land claims – is budgeted at R3.7 billion. (In each case, this includes administration costs, and not just the amounts dedicated to actual land transfers.)

VIP protection and associated services (such as the SAAF 21 Squadron), by contrast, can expect to cost a total of R2.6 billion. In other words, protecting the country’s political elite is seen as pretty much on a par with providing land to emerging farmers, and not much less important than addressing cases of land dispossession. If that doesn’t tell us everything we need to know about priorities, it certainly tells us a great deal.

Each of the new farmers established under the IRR’s model would be well-positioned to grow their businesses through their own collateral and cash flow – particularly if the Land Bank would grant them generous loan conditions, something it does not at present do. These emerging black farmers would arguably be in a much stronger financial position than most white farmers. Their rise, eminence, and success and expansion would be the most powerful answer South Africa could offer to the historical denial of property rights to black people.

Our model would represent a rethink of the direction of policy. It is simple, straight forward, cost effective and could be put into action within weeks. But it would only work if property rights are respected and the agricultural sector is run as a market economy – in other words, if pragmatism is favoured over ideology.

This constructive model underpins the IRR’s invitation to all who share a commitment to a prosperous future and to sensible policy suggestions to join it in opposing the introduction of Expropriation without Compensation by endorsing its submission to Parliament here. (https://irr.org.za/campaigns/defend-your-property-rights-before-d-day-15-june-2018)

Terence Corrigan is the Project Manager at the Institute of Race Relations (IRR), a think tank that promotes political and economic freedom. If you agree with what you have just read then click here or SMS your name to 32823.   

 

 https://www.iol.co.za/pretoria-news/ideal-land-reform-model-for-sa-15453365

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