DECIDUOUS FRUIT PRODUCERS’ TRUST

18 October 2004

SUBMISSION TO THE AGRICULTURAL PORTFOLIO COMMITTEE OF THE NATIONAL ASSEMBLY OF THE REPUBLIC OF SOUTH AFRICA

THE PACE OF LAND REFORM IN SOUTH AFRICA WITH SPECIFIC REFERENCE TO LAND REDISTRIBUTION

We thank you for the opportunity to express our experience with regard to land redistribution from our industry perspective. The producers of Deciduous Fruit has pledged to assist and support the transfer of 30% of deciduous farm land to Historically Disadvantaged Individuals (HDI’s) and communities. This is a daunting challenge, which is made even more daunting by environmental factors, such as the lack of finance. We will address the matter of finance from our prospective.

  1. LACK OF FINANCE

    2. Deciduous fruit farming, unlike many other types of farming is a long-term investment. A return on investment can be between 5 and 10 years, if at all. It is a highly capital intensive type of farming with very low returns. Forums therefore cost anything from R80,000 to R100,000 per hectare to establish. This is also the norm when purchasing a farm. To be economically viable a farm need to have a minimum of fruit bearing hectares in full production. A farm could cost anything between R1,5 million and R20 million. With the governments grant system, the result is many people benefiting, but this is a recipe for disaster, as people are from different cultural backgrounds and have varying levels of business sense if at all. Their investment realises very little if no economic returns. The question we must ask is: Do we want 80% of the people on the land or 80% of the land for the people.

    To finance the purchase purely with debt, is an absolute no. At this point, other than grant funding debt, finance is the only other solution to ensure the transfer of land.

    Innovative solutions need to be found, however, everybody, including state organs are interested only in the profit motive. A solution could be where interest payments are deferred or spread over a longer pay back period. Finance or the lack thereof remains the greatest obstacle to the transfer of land in South Africa. This brings us to another obstacle, the fair value price of land. The very principle of willing buyer, willing seller, rests on the premise of fair value. The question remains, what is fair value and who would determine it. For this to occur somebody has to agree to set a price. In the interest of fairness, a land valuers office or an industry body could set the fair value price.

    If this land valuation mechanism is in place, more projects could be financed as less would have been paid for a particular piece of land. Currently farmers are selling their land predominantly to workers who qualifies for LRAD funds. He determines who qualifies and on that basis determines the price that has to be paid. There is also the question of a price for HDI’s and a price for current commercial farmers. A land valuers office would eradicate all of the above as this is the price government would be prepared to pay. Exploitation would not occur.

  2. LACK OF INFORMATION

Nowhere can it accurately told how much land has been transferred through a commercial process. The reason for this is everybody keeps the information to themselves under the banner of confidentiality. What confidentiality is there when something is in national interest? The ARC says we cannot access such information as we did not pay for it, yet our industry spends more than R10 million a year on research with the ARC? How much more must we pay? This is a government institution which makes its own rules. Banks are also reluctant to give information regarding the transfer of land. This information would assist greatly in the strategies adapted and give a clear vision as to where we find ourselves with regard to land reform. We cannot under estimate or under value information in this process. We are too secretive about who has sold or bought what and at what price. This should be public knowledge, so that all citizens can keep track of the scoreboard.

In conclusion we have addressed only two issues that we feel is hampering land reform. To address it, is not good enough, to solve it is our resolve , therefore we suggest the following:

    1. Money not be made available to the department of Land Affairs in the provinces, but rather to industry bodies who then has to report to Parliament on their progress or the lack thereof.

    2. Industry bodies to accredit and approve service providers such as design agents for projects.

    3. A land valuers office or the industry body concerned to determine a fair value for the land to the purchased and that should be deemed the selling price.

    4. Information on land reform should be made public or at the minimum be provided to industry bodies concerned.

We once again thank the committee for affording us this opportunity to make this submission.

Yours sincerely.

DENVER R WILLIAMS

GENERAL MANAGER

TRANSFORMATION & TRAINING