SUBMISSION BY AGRI SA TO THE AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE ON THE PACE OF LAND REFORM, ON 20 OCTOBER 2004.


Introduction

AGRI SA's would like to express its appreciation for the opportunity to submit evidence on this important subject to the Committee. Because of the complexity and the sensitivity of land reform to the various groups and to communities involved, discussions on the different views and the sharing of information are of critical value to improve our common understanding of the needs, expectations and concerns related to land reform as well as to build wider consensus on the strategies that have to be deployed to achieve a result that will be in the best interest of South Africa.


Being an organisation that promotes the viability of commercial agriculture and serves the interests of commercial producers of all sizes and races, AGRI SA has a direct interest in this debate. Land reform affects participation in this industry, its structure, support services and possibly its output as well. We recognise the need for and support the process of transformation in this industry. The reallocation of resources between participants is by necessity a part of this process. The theme of this Committee's hearing obviously ask from us to reflect on the acceptability of the progress that has been achieved as well as on proposals that may improve on the quality and pace thereof.


As mentioned earlier, land reform should address different needs, in some cases driven by expectations, as well as certain concerns. To understand this is quite simple. Land fulfils various functions that are of importance to the community at large, including having a place to stay - a basis for family and community life. It serves as a source of savings to build an asset base. It is required for physical infrastructure. We need it for conservation and recreational purposes. It is used for production, which in agricultural terms implies establishing and managing successful farming businesses on it. It is on the latter that AGRI SA feels itself equipped to make an input.


Context

Equitable access to agricultural land and achieving an industry demography that is more representative of South Africa's population characteristics is important for rural stability. Furthermore, the productive and sustainable utilisation of our countries' natural resources are imperatives for the future success of this industry and for achieving its optimal contribution towards national growth and development These contributions include job opportunities, household and national food security, maintaining the quality of natural resources,. export earnings and providing a platform for industrialisation, also in regional context.


Primary agriculture is currently contributing less than four percent to the Gross National Product (GDP). Although it may seem as if South African agriculture is a declining industry, it should rather be viewed against the relative faster growth of other sectors in the economy, as well as the impact of national policies and international trade regimes on the profitability of the industry. The industry had to adjust to minimal levels of support and protection, distorted international prices and uncertain currency values. It nevertheless had adjusted successfully to the changed circumstances by continuously improving productivity and is by far the dominating agricultural economy in Africa.


We cite this information about the relative small contribution of primary agriculture to GDP for a specific reason. AGRI SA believes that the redistribution of resources should enhance opportunities for more people and that such opportunities should preferably be achieved by growing the industry, not by replacing present productive participants. We are concerned that the expectation may exist that by providing large numbers of people access to agricultural land, we may succeed in empowering a substantial percentage of the population.


It is our view that although we may succeed in growing agriculture's output, it will be difficult to significantly increase its contribution towards GDP. By sharing its four-percent contribution to the GDP between, say, twenty percent of the population, more people may have access to land but with no real prospect of becoming successful players in the mainstream of the economy. Commercial agriculture is therefore not a numbers game in the sense that it cannot increase its output linear to increased numbers of participation.


Endeavours to improve access to agricultural land to the previously disadvantaged, must therefore be accompanied by an understanding of the harsh market realties that dictate economies of scale, the managerial skills required for the utilisation of labour, the accessing and application of capital and technology, the mitigation of natural and market risks, as well as other supports required for the successful introduction of new entrants into the industry.


AGRI SA appreciates the guidance given by the Strategic Plan for South African Agriculture, a document drafted by organised agriculture and the Ministry of Agriculture and Land Affairs and approved by president Mbeki's working group for commercial agriculture in November 2001, to put into context the challenges of improving participation by black persons in commercial agriculture with the vision of achieving a united and prosperous agricultural sector. The Sector Plan requires from policy makers to inter alia distinguish between the different demands for land, to be realistic about the prospects of commercial agriculture, to accept that market forces should direct business activity and resource allocation and to ensure the sustainable use of natural and biological resources.


In terms of land reform, AGRI SA is satisfied with the basis that Section 25 of South Africa's constitution provides for the protection of property rights on the one hand, and for restoring rights as well as empowering the previously disadvantaged to gain access to the land market. Although AGRI SA have specific concerns about aspects of the Extension of Security of Tenure Act and the Restitution Act, these concerns do not have a direct impact on the pace of land reform as such.


AGRI SA wants to put on record its appreciation for willingness of the Minister and her deputy to consult with stakeholders on the statutory' framework that guides land reform as well as on issues of implementation that may expedite the process. The same appreciation should be noted for the open door of the Land Claims Commissioner.


We nevertheless want to make use of this opportunity to focus on specific aspects of land reform that have an impact on the pace of the process, and propose possible solutions.


Problem areas and possible solutions


1. Defining the demand for land and managing expectations

The importance and sensitivity of the land question requires from all the parties that have an influence on expectations, to assist with the responsible management thereof. It requires a common understanding of the different needs, concerns and the constraints. An acceptable and accessible database on land needs and available resources could be helpful.


2. Administrative capacity

In various regions there are apparently insufficient administrative capacity in the offices of the Land Affairs department to process and verify land claims, also to assist with the facilitation of negotiations and other processes leading up to the finalisation of such claims. This needs to be addressed urgently. (Also refer to paragraph below).


3. Overlapping claims

On the same land, there may be conflicting Restitution and Labour Tenant claims. Apparently, the information basis for these claims are not harmonised, causing delays in the finalisation of claims. If this is the case, it should urgently be harmonised.

4. Publishing of information

Restitution claims are not published before they were properly processed. We appreciate that it serves to some extent, the need to minimise uncertainty. It, however, limits the opportunity of communities to interact amongst themselves on various options to systematically and comprehensively deal with the different land reform challenges on local level.


5. Valuation of land

AGRI SA supports the "willing buyer willing seller approach". The fiscus should provide the funding for land reform and it should not be the burden of individual land owners. It is, however, clear that the land valuation methodology and the procedures employed leads to unacceptable delays Earlier information sharing and consultations between claimants and landowners on aspects such as the appointment of a valuator may expedite the process.


The exclusion of improvements such as hot houses from valuations also causes differences that delay the finalisation and acceptance of valuations. Guidance should be given in this regard.


6. Commercial viability of Land for Labour Tenants

In many cases, labour tenants could become successful commercial farmers. Their allocated farming unit may, however, be too small to enable them to become commercially viable and the present farm from which such land is allocated, may have the same problem. It is therefore necessary to find innovative ways to link LTA cases with LRAD schemes and have the necessary funding available required for establishing such farmers in a commercial viable fashion. In such cases buying alternative land for labour tenants, seem to be appropriate.


7. Consultation forums

A partnership approach between various stakeholders is required to find and implement the best solutions at local level. AGRI SA proposed to the Land Claims Commissioner that such forums be established on local, provincial and national level that could share information and mobilise their resources to effectively and innovatively deal with challenges that need to be addressed. Solutions may include the exchange of land, the identification of resources and mutually acceptable facilitators that may assist in expediting the process, as well as possible mentors to assist new entrants.


8. Funding

There are large numbers of screened applicants that are not successful with accessing LRAD funding for land acquisition. It is to be welcomed that commercial banks are increasingly willing to assist with funding requirements, in addition to what is available from government sources. Inadequate funding will remain, however, the single biggest constraint towards land reform.


9. Availability of land

A substantial portion of commercial land is being traded every year. The challenge is to capture a part of it for redistribution purposes. If government has the required funding available, it already has the mechanisms at its disposal to acquire such land. Whether government should pre-actively buy land for redistribution purposes is a different question. International experience indicates that governments are not the best redistributors of land.


10. Conclusion

In summary:

1 AGRI SA is concerned about the pace of land reform; in this regard the efforts of government to speed up the process by setting deadlines is welcomed;


2. Land reform should however not be speeded up in ways which will cause a loss of production and create instability;


3. The reasons for the slow pace of particularly the restitution process and the processing of labour tenant claims need to be established and resolved;


4. The budgets of both DEA and the Department of Agriculture probably need to be increased;

5. A study needs to be done on the area of land already transferred to PDI's through the market (without government assistance); and mostly by commercial farmers;


6. Expropriation should remain a measure of last resort and current owners should receive market-related compensation for land taken in terms of land reform programmes;


7. There is scope for more co-operation between government and the private sector in finalising land claims and facilitating the transfer of land.