South African farmland grab could ‘ruin’ economic stability

South African farmland grab could ‘ruin’ economic stability


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South African President Cyril Ramaphosa giving his first State of the Nation Address recently, speaking about the controversial policy of ‘farm land expropriation without compensation’.

South African President Cyril Ramaphosa giving his first State of the Nation Address recently, speaking about the controversial policy of ‘farm land expropriation without compensation’.

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WARNINGS have been sounded about the new South African President's potentially radical policy allowing government to strip land off farmers, without any compensation.

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WARNINGS have been sounded about the new South African President's potentially radical policy allowing government to strip land off farmers, without any compensation, which has potential to “ruin” that country’s agricultural viability and economic stability by sending it into a downward spiral.

Cyril Ramaphosa was appointed South African President in mid-February, after being elected by the parliament following Jacob Zuma’s resignation as leader of the ruling African National Congress (ANC) party due to a series of corruption scandals.

Mr Ramaphosa was Mr Zuma’s Deputy-Leader but has pledged to fight the political corruption that has plagued the ANC regime; despite being the largest political party in the post-apartheid era.

But concerns have been raised about the ferocity of Mr Ramaphosa’s statement, made in his first State of the Nation Address recently, about the ANC’s policy of ‘farm land expropriation without compensation’, which also drew the biggest reaction, from the assembled audience.

“As agriculture needs land as a basic resource, we will accelerate our land distribution program not only to redress a grave historical injustice but also to bring more producers into the agricultural sector and to make more land available to our people for cultivation,” he said.

“This approach will include the expropriation of land without compensation.”

Julius Malema - head of the Economic Freedom Fighters revolutionary socialist political party which is the nation’s third-largest political force, and who has previously been convicted of hate-speech – issued a ferocious warning about the new President’s attitude towards the expropriation policy which he said would determine his hold on the “metros” which is the powerful coalition of metropolitan municipal councils.

“President, you mentioned expropriation of land without compensation and we all agreed (it) was the highest applause you got, and the leader of the opposition is saying something else,” he said.

“I want to warn you, the leader of the opposition, that your stay in the metros is going to depend on your attitude to the expropriation of land without compensation.

“And I want to warn you about that…for that’s a fundamental issue which is going to make us fight with you, because anyone opposed to expropriation of land without compensation is the enemy of our people and such a person will be dealt with.

“This cannot be an issue to laugh about; this cannot be an issue to pass time with; it’s an emotive issue; and you only mention it if you mean it.

“It’s not a matter that you can go around joking about it, there are no conditions attached to expropriation of land without compensation because when they took our land, they never attached any condition, they just killed us.”

A spokesperson from the Department of Foreign Affairs and Trade said the Australian government had noted that President Ramaphosa was seeking to avoid mistakes that others had made on the “delicate political and economic issue” of land redistribution.

“It hopes that land redistribution is handled in full accordance with provisions of the South African constitution and relevant laws to achieve his goal of improved food security, rural development and reduction of poverty,” the spokesperson said.

Federal Agriculture and Water Resources Minister David Littleproud was contacted for comment but did not respond before deadline.

But Brisbane based agribusiness lawyer Trent Thorne said the situation brewing in South Africa due to the new President’s farm land policy push was “eerily reminiscent” of the “land grab” by the Mugabe regime from white farmers in the year 2000, which forced the “mass exodus” of white farmers from Zimbabwe.

Brisbane based agribusiness lawyer Trent Thorne.

Brisbane based agribusiness lawyer Trent Thorne.

“The problems that have flowed from this ill-considered, but populist decision, is that the former fruit bowl of Africa was quickly turned into an unproductive wasteland,” he said.

“The new Zimbabwe government has issued a plea for the return of these exiled farmers, as they now understand that you cannot hand over these farms to favoured cronies and individuals, who have no farming experience, and expect the properties to continue to be productive.

“Farming in South Africa is already one of the riskiest professions, with 64 murders on farms in 2015, 71 in 2016, and 68 in the first nine months of 2017 alone.

“South Africa has enough social and economic problems at present, but this decision will be a death knell for the South African agricultural industry and will ultimately hurt the impoverished black South African communities.”

South African agricultural news service ‘farmer’s weekly’ has published several articles on the topic, with one quoting the country’s Agricultural Business Chamber CEO Dr John Purchase saying the new farm land policy could be “disastrous”.

Dr Purchase was referring to Mr Ramaphosa’s reference in his State of the Nation Address for financial institutions to partner with government to mobilise resources to accelerate the land redistribution program.

“Farmers owe more than 160 billion Rand (AUD$53b) in debt to financial institutions - if you start expropriating without compensation the land market would collapse,” Dr Purchase said.

“As land served as collateral for debt, financing of agriculture would also collapse.

“It would be disastrous.”

Analysis reveals potential for downward spiral into “complete mess”

Omri van Zyl the CEO of Agri-SA - the South African farm representative group Agri SA which consists of nine provincial and 24 commodity organisations - gave a radio interview in December after an ANC meeting had put forward the controversial policy.

Mr van Zyl said the ANC had “succumbed” to pressure from the left of the party but the policy’s “proviso” was that it was sustainable and won’t have any negative impact on the South African economy etc.

“But from AgriSA’s perspective that’s not going to work; if this goes through it will literally ruin our economy,” he said.

Asked why, Mr van Zyl said it was about the 101 of agricultural economics.

“Our farm and asset value is about 450b Rand (AUD$50b) against that we borrow 153b Rand (AUD$17b) – in other words, approximately a third of the money from the banks that we borrow against the value of the farm and the assets,” he said.

“The moment you start tampering with value of the farm and assets, and the value of land, then you start tampering with the whole economic system…banking system, agricultural, agribusiness - that whole value chain, right through to the consumer.

“So these things are all interlinked and the table, on which all of this stands, is the value of farm assets in South Africa.

“In other words, if the value decreases, banks will have to up their risk profile, they would have to increase terms and that would have a complete negative impact on the number of farmers because the numbers are low in agriculture…and that would just spiral down into a complete mess.”

Mr van Zyl said the challenge was about section 25 of the South African constitution which actually protects property rights and guarantees a fair compensation where property is disposed.

He said a recent land audit actually determined that the government and the home land office together sit on 49pc of the most fertile lands in South Africa, already.

“People don’t want to farm anymore; it’s too risky and dangerous,” he said.

“We have leaders in this country that should give a damn.

“At the end of the day we’re not against land reform - we’re actually pro-land reform - and we help the government where we can because it has to be a sustainable endeavour.

“To date, it’s been a completely unsustainable endeavour, and…of those farms that have been transferred…one out of 10 works.

“The simple reason is, you cannot get finance to fund the farm because it belongs to the state.

“We really need to take a good look at what the next generation wants.”

Mr van Zyl said his questions to the ANC was “what do you want to achieve” through its reform policy.

“Do you want to achieve cheap redress; do you want us to grow the economy; do you want us to create more jobs; do you want us to create more sustainable livelihoods in the rural areas?” he said.

“What is it that we want to achieve, and let’s work through the private sector to actually coordinate those efforts because that’s the way it’s going to happen the quickest - it’s going to be a lot more sustainable?

“You can transfer 100pc of the land in South Africa now and tomorrow we’ll be completely food insecure and the economy will collapse.

“From our perspective we need to have a commercial approach to this – there’s obviously an enormous redress issue but there’s also the economic realities and in South Africa right now we cannot afford to make any economic blunders or our country is going to go down the tubes.”

Agri-SA President Dan Kriek in addressing the farm sector’s expectations for the nation’s recent budget, said agriculture was the best performer across the first three quarters of 2017 and was the largest contributor to the country’s 2pc GDP growth in the third quarter.

“Agri SA hopes that agriculture will receive greater attention in the 2018 budget. Agri SA recommends that the budget make adequate resources available to ease the impact of the drought on farmers and to provide the necessary infrastructure to help boost agriculture’s competitiveness, and subsequently improve food production and job opportunities in the sector,” he said.

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