Editorials 23.6.2014 11:01 am

Land plan will lead to

Having shattered confidence in South Africa’s mining industry through policy confusion, the ANC looks set to do the same in the once-thriving agriculture sector.

Ironically, one of the stated aims of Rural Development and Land Reform Minister Gugile Nkwinti’s newly published plan is food security. In fact, the opposite effect is bound to occur. Hunger beckons.

By introducing further uncertainty into the lives of farmers and workers, the minister will ensure they seek pastures elsewhere. Farming requires investment – much of it on credit. According to AgriSA, South African agricultural land, which is worth R155 billion, carries a debt of R89 billion.

If the government takes away half of commercially owned land from farmers and gives it to workers, what happens to that debt if the collateral is no longer held by the debtor? Will banks be happy to see their security disappear into a mishmash of confused collective ownership? Obviously farmers will stop investing, being unsure of their security. This has already happened to countless farms under current land reform schemes. It can only get worse in the 10 months allowed for comment on Nkwinti’s new plan. Surrounded by uncertainty, farmers will hold back or pull out – to the detriment of everyone, including farm workers.

The plan published by the Sunday Times yesterday understandably evoked strong reaction when it was mooted in April, a month before the elections. It is a transparent a empt to match the radicalism of Julius Malema’s Economic Freedom Fighters, who demand expropriation without compensation.

Nkwinti’s plan does something similar. When the government “buys” the 50% stake from commercial farmers, the proceeds will not go to the farmers. Most South Africans accept that land reform is necessary and requires adjustment. However, this plan exacerbates economic uncertainty, which is ruinous.

 

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