Government’s move to fast-track land reform through the limitation of agricultural land ownership has received a lukewarm response from various industries for its impracticality.
Four months after President Jacob Zuma in his State of the Nation Address confirmed that agricultural land ownership will be regulated; there is still scepticism about government’s intentions.
These intentions include the Regulation of Land Holdings Bill, which will prohibit land ownership by foreign nationals through leaseholds for a minimum of 30 years. A ceiling of 12 000 hectares for land has also been proposed for locals.
Rural Development and Land Reform Minister Gugile Nkwinti recently told Moneyweb that the Bill “is moving faster,” as it is yet to debut in Parliament for review. Read more here.
The Bill has courted criticism with some industry players snubbing it as being too draconian and unconstitutional given how politically sensitive land ownership is in South Africa. Others have taken an optimistic view saying government’s attempt is a measure for historically disadvantaged individuals to own land.
This is not the first time that controversial proposals to land reform have been made by government. In 2011, the department, through a green paper, mooted land tenures and limits in the agricultural sector.
But this time, more details have come to light on farm land categories. Nkwinti said the ceilings include 1 000 hectares for a small-scale commercial farm; 2 500 hectares for a medium-scale commercial farmers; and 5 000 hectares for a large-scale commercial farm.
It introduced a special category of 12 000 hectares which will apply to various industries, but for now three industries; game farms, renewable energy farms and forestry are targeted.
Since government’s plans were announced, various industries have been at pains in understanding the impact on the agricultural sector.
Forestry South Africa executive director Michael Peter said he thought the bill was laid to rest at the height of the green paper and was surprised by governments latest move. Forestry South Africa represents growers of timber and some of its members include corporate forestry companies, commercial farmers and small-scale growers.
Peter added that from the perspective of Forestry South Africa, most of the land claims have been settled to farmers, who continued with the commercial production of the land. “These proposals by government seem to make little difference to the success/failure of land reform in South Africa,” Peter said.
Even the sugar and milling industry seems to have sold most farms to land reform beneficiaries, as reported by TSB Sugar, a subsidiary of RCL Foods, which produces 30% of South Africa’s total sugar output. TSB Sugar’s chief operating officer Dawie van Rooy said after selling land to beneficiaries, it now owns approximately 2 000 hectares of irrigated cane land.
“The biggest land owners in our cane supply area are land reform beneficiaries mostly through the land restitution program. They are however below the 12 000 hectares ceiling, covering 2 000 to 6 000 hectares,” he said. TSB Sugar does not intend on buying more land at the moment.
The biggest criticism of the bill has been is its impracticality.
If land ownership by locals exceeds the 12 000 hectare ceiling, Nkwinti said the portion of land above the limit will be redistributed on the “basis of a just and equitable principle”.
To cut off parts of a farm that is above the ceiling can make it unviable, said CEO of Astral Foods Chris Schutte. “If you cut the land off, it will never be a sustainable unit. You have to look at the practicality of geography,” he said.
Limitations on land ownership in the sector means that farms cannot grow beyond a certain size, which would result in their competiveness being at stake.
Astral Foods has land to size of approximately 9 000 hectares, making up of 80 small farms with the average size being 115 hectares. Schutte said 12 000 hectares is sufficient for Astral Food’s business model, as the cap by government is a lot of land for poultry farming.
“If you farm poultry you specifically go and look for a farm that is close to your feed mill which has sufficient water – and those farms do not come easily every day,” he said.
Schutte admitted that government’s idea to redistribute land is noble, but he foresees the bill to be marred by challenges.
One of the challenges in the interim is the land claims process allowing people who were removed from their land under apartheid rule to lodge their claims until 2019. Government expects 379 000 new claims valued to the tune of R179 billion to settle.
Peter cautions that land should be redistributed to individuals who have the skills to make it productive. “If you are a recipient of land from which you derive no benefit, no income, no employment and you are simply the land owner that does not produce a social return to you…That unproductive land becomes a liability,” he said.