What's wrong with government's land holding policy, and what should it do instead?

AGRICULTURAL LANDHOLDINGS POLICY

The policy draws its inspiration from the 2011 Green Paper: one of the four ‘tiers’ of land tenure in South Africa will be ‘freehold with limited extent’. It proposes that government designate maximum and minimum land holding sizes in every district, and take steps to bring all farms either up to the specified minimum size (a ‘floor level’) or below the maximum size (a ‘ceiling’). The rationale is to attain higher levels of efficiency of land use and optimize ‘total factor productivity’. Opportunities in value chains will be assessed as part of the exercise. District land reform committees will determine landholding floors and ceilings by assessing a wide range of variables (including climate, soil, water availability, water quality, current production output, commodity-specific constraints, economies of scale, capital requirements, numbers of farm workers, distance to markets, infrastructure, technology, price margins, and relationships between different on-farm resources).

Holdings in excess of the ceiling will be trimmed down through ‘necessary legislative and other measures’. What this means is unclear, but may include purchase (e.g. with the state having the right of first refusal on land offered for sale), expropriation, or equity shares. The policy document reviews international experience of setting land ceilings as a land reform measure, in the cases of India, Egypt, Mexico, the Philippines and Taiwan. In almost all cases the impact of land ceilings has ‘not lived up to expectations’, and in some cases have had almost no effect on disparities in land-holdings. The document also states that ‘optimum levels of productivity’ (i.e. both floor and ceiling) are ‘dynamic and continuously changing upwards and downwards’.

IS THE POLICY APPROPRIATE?

South African agriculture is highly diverse in its products, systems and scales of production, partly in response to high levels of environmental variability, both between and within large district municipalities, but also to market realities. Environmental and market conditions are dynamic and fluctuating, and as the policy document states, ‘optimum productivity’ is a constantly moving target. Successful farmers, both large and small, are those who are able to improvise flexible and effective responses to dynamic variability. To imagine that officials who have never farmed themselves could designate landholding sizes that make economic sense in South Africa today is a fantasy. The task itself is probably inherently infeasible, but it is definitely beyond the capacities of DRDLR officials at present.[1]

‘Land floors’: the notion that farms below a designated size are ‘not viable’ is highly problematic, given a history of the state using racially-biased criteria to designate target farming incomes in the past. In South Africa today, planners often use criteria drawn from large-scale commercial farming to assess smallholder farming systems that are very different in objectives, methods and outcomes. This results in inappropriate plans, funding mechanisms and support.

‘Land ceilings’: many of the problems experienced in attempts to designate farm ceilings elsewhere in the world could well be replicated in SA, e.g. fragmentation of holdings, reduced investment, evasion via family landholdings, corruption, barriers to entry by the landless, poor implementation capacity and ineffective enforcement of policy.

ARE THERE ALTERNATIVES TO THE LANDHOLDINGS POLICY?

South Africa urgently requires practical agrarian reform policies that transfer land to black farmers who can use it productively to sustain their livelihoods and to supply markets.

(a) Land acquisition: Decentralised area-based planning and purchase of appropriately located land at or slightly below market value will be more effective than attempts to regulate farm size. The budget for land acquisition would need to dramatically increase.[2] Small and medium-scale back capitalist farmers and large numbers of market-oriented smallholders should be key beneficiaries, but additional land for supplementary food production by the poor should be provided as well. Sub-division of large farms should be allowed. Land could be acquired through expropriation in extreme cases where negotiations stall.

The many problems experienced to date with area-based planning (ABP) for land reform must be addressed. These include the lack of appropriate skills in both the department and in consultants, and in-depth training and accreditation are necessary. ABP must be integrated into the routine procedures of the department and of local government. Planning should be participatory and aim to match demand and supply of appropriate land.

Large-scale expropriation and payment of compensation at much less than market value is seen as desirable by many, but could lead to costly, drawn-out and potentially inconclusive and court processes initiated by landowners.[3]

(b) Support to land reform beneficiaries: a large-scale farmer and livelihood support programme for land reform beneficiaries is urgently needed, through provincial departments of agriculture and other relevant government bodies. Partnerships with NGOs and the private sector can assist as well.

Area-based planning could indeed identify opportunities and constraints in existing value chains, but meeting the practical needs of market-oriented smallholders should be the key focus. The comparative advantage of smallholders in specific types of agricultural production (e.g. labour-intensive fresh produce and extensive livestock) should form the basis of planning. These producers must be supported by appropriate levels of capital funding, together with extension and advisory services from trained officials who understand the differences between smallholders and large-scale commercial farming systems.

Procurement by public institutions can provide markets for smallholder fresh produce, and retailers must adopt less stringent standards and acquire from smallholders on a larger scale than at present. Informal markets could be actively supported by municipalities, e.g. by providing improved road access to farms and supporting auction sales of goats. Farmer co-operatives to purchase inputs in bulk and to market collectively should be promoted more effectively.

A key policy issue urgently in need of attention is water: is another 500,000 hectares of irrigation feasible in South Africa, as proposed by the National Development Plan, or not? Smallholder irrigation has enormous potential as a key thrust of agrarian reform.

END NOTES

[1] Michael Aliber, 2013, ‘Discussant notes on redistribution policy’, Land Reform Policy Workshop, organised by parliament’s Ad Hoc Committee to Exercise Coordinated Oversight on the Legacy of the Natives Land Act, 1913, Stellenbosch, 23-24 August 2013.

[2] Aliber, Michael, forthcoming, ‘Unravelling the Willing Buyer, Willing Seller Question’, in Cousins and Walker (eds) Land Divided, Land Restored. Land Reform in South Africa for the 21st Century, Jacana Books.
[3] Spoor, Richard, 2014, ‘Land reform – and the Law of Unintended Consequences’, Daily Maverick, July 7, 2014.

* Prof Ben Cousins works with the Institute of Poverty, Land and Agrarian Studies (PLAAS).

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