Will banks stand with farmers on land reform threat? - Weekend Argus

Nov 02, 2019
2 November 2019 - Perhaps the question needs to be asked whether those industries that do business with the farming economy – such as banking, in the case of Mr Maree, or those dealing in farming inputs, in agri-processing and so on – will be willing stand with it?

Terence Corrigan

FNB agriculture information and marketing head Dawie Maree seems rather relaxed about the land reform ‘debate’ that has been a millstone around South Africa’s economic neck for the better part of two years.

It’s a risk, a ‘key risk’, he said recently, though with a rhetorical shrug of the shoulders. ‘There is very little that farmers can do to mitigate this. We have to work around it. We consider the new policy of land a risk for agriculture but we are not overly concerned at this stage. We do expect more clarity around March next year.’

Keep calm and wait and see.

He is correct that the push to introduce a policy of expropriation without compensation represents a key risk. The intention to short the protections accorded to private property and to gift the government with the power to seize it is something that businesspeople and investors can be expected to react strongly to. None other than some of President Cyril Ramaphosa’s investment envoys remarked last year that this was a significant hurdle to them in their work.

Farmers are particularly vulnerable to this policy since it is so often phrased in the language of land reform – and since they have long been at the receiving end of a campaign of vilification.

Yet Maree seems to fall into the common trap of seeing this largely as a matter of ‘uncertainty’. We really don’t know what this means, so await the outcome – the reference to March 2020 presumably relates to the outcome of the work of the committee investigating amending the constitution – and then reassess things.

Well, yes, in part. For the farming community, the issue is not merely uncertainty about the final form the policy may take, or how it is to be implemented (these uncertainties will probably last well beyond March next year), but a concern that the policy that emerges will be a bad one.

In fact, the direction of policy that is unfolding before us provides disconcerting evidence of this. Regulations gazetted in terms of the Property Valuation Act give the state a substantial discount when acquiring land for land reform purposes – possibly resulting in no compensation at all.

The Expropriation Bill defines the concept of expropriation so as to limit its applicability to specific conjunctions of circumstances. To lose one’s property as a result of state action is not necessarily to suffer expropriation – and hence, to be eligible for compensation.

And the report of the Presidential Advisory Panel on Land Reform has put forward a set of recommendations that will expand the power of the state at all levels to seize land. Market value as a basis for compensation appears to be viewed as something to be invoked sparingly.

These are clearly articulated positions that are either operative or under very serious consideration. And each of these tips the relationship between the state and those subject to it very firmly in the direction of the former. These are real concerns for farmers.

And if the process around amending the constitution is a signifier of what lies in store, it is well to recall that a senior civil servant told an audience in Davos earlier this year that a constitutional amendment would seek effectively to nationalise all land. Indeed, a draft of what purported to be the amendment – which surfaced earlier this year – contained such provisions.

This – a blanket ‘custodial’ taking of land – has long been a fear of the farming community. It would likely destroy the capital base of the industry. (It is unclear to what extent Maree’s institution would remain willing to fund farming under those conditions.) It would represent such a threat to the viability of agriculture that many in the industry and observers of it have been unwilling to consider the possibility of this becoming a reality.

They might be advised to do so now. Recently, government fought a fierce court action to deny a successful black farmer the purchase of the land he had been working, even though it had initially agreed to sell it to him. A commitment to state ownership through which people could ‘access’ land is the preferred model. Acting director-general of the Department of Rural Development and Land Reform Rendani Sadiki put its position bluntly in its court papers: ‘Black farming households and communities may obtain 30-year leases, renewable for a further 20 years, before the state will consider transferring ownership to them’.

This may well prefigure the future the government has in mind for the agricultural sector as a whole. March next year might indeed bring this dread clarity.

Farmers have, however, shown that they are willing to do what is possible to oppose this, to ‘mitigate’ it. The position of organised agriculture has become more assertive about the need to protect their interests, and about the indispensability of property rights to a successful farming economy – something that emerging farmers require no less than established ones.

This is good. If the farming sector resists pressure to assist in its own demise, the prospect exists to forestall the disaster that eroded property rights would represent – and in so doing, to produce real solutions to the maladies afflicting land reform.

Perhaps the question needs to be asked whether those industries that do business with the farming economy – such as banking, in the case of Mr Maree, or those dealing in farming inputs, in agri-processing and so on – will be willing stand with it?

Terence Corrigan is a project manager at the Institute of Race Relations. Readers are invited to join the IRR by sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).

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