Series of 4 Articles and 2 Case Studies Appearing in July 28 2011 Edition of Financial Mail

Series of 4 Articles and 2 Case Studies Appearing in July 28 2011 edition of Financial Mail

______

Cover story 1 - Land reform

Land reform - A road to nowhere

Prakash Naidoo

Thursday, 28 Jul 2011

For 15 years, the land debate has failed to produce a coherent policy. The result has been little or no change in rural land ownership and farming. Prakash Naidoo asks whether an imminent new green paper heralds a shift in thinking

Earlier this month, a farm between Qwaqwa and Harrismith in the Eastern Cape was illegally occupied by a small group of supporters of ANC Youth League leader Julius Malema a few days after their highly charged conference.

According to the group, they had Malema’s permission to claim the farm after he ended the conference with calls for land to be expropriated, even without compensation if necessary.

It left land activists, farmers, property owners and opposition politicians seething, lamenting that a confused and erratic application of land policies over the past 15 years has allowed populist ranting to infuse the highly emotive land debate with cheap politicking.

Ten years ago, Ben Cousins, professor at the University of the Western Cape’s Poverty, Land & Agrarian Studies (Plaas) Institute, sounded a warning that resonates now. He said though conditions did not exist at the time for Zimbabwe-style farm invasions, the land question could easily become the rallying cry for populist politicians if government continued to ignore rural development issues and leave land reform policies under funded.

That invasion may be the first of the chickens coming home to roost. It is made all the more urgent as government has still to clarify how it plans to address almost 15 years of failed land reform and rural development policies.

It has also increased pressure on President Jacob Zuma’s administration, which has failed to articulate a coherent line on the issue since the resolutions at the ANC’s elective conference in Polokwane in December 2008 and promises made during the 2009 general elections to make land and rural development one of five priorities.

The long-awaited new green paper on land reform, which was expected to give fresh impetus to a dismally failing programme, is already 15 months behind scheduled release for public comment. And as sections of the draft began to be intermittently leaked in recent months, the groundswell of criticism and alarm from across the spectrum signals that it will fall short of expectations.

Faced with such intense pressure and his own admission that 90% of land reform projects by government have failed, rural development & land affairs minister Gugile Nkwinti declined three requests in two weeks to be interviewed on the issue.

Last month, Zuma, speaking to Cosatu’s central committee , reiterated that the land question remained a “national priority”, calling for co-operation among stakeholders to help speed up the restitution and redistribution process.

Rural development programmes were also identified as one of the five “job drivers” in SA’s New Growth Path framework, where government believes it can achieve a measurable improvement in the livelihoods of 500000 households and stimulate employment in other sectors.

Since 1994, 87% of SA’s commercial arable land has belonged to white farmers and just 13% to black farmers. The new ANC-led government promised that at least 30% of that land would be transferred to emerging black farmers within five years.

That overly ambitious deadline had to be extended to 2014, then to 2020, and now, with less than a quarter of that target reached (7%), government has abandoned any targets and deadlines.

There is still no data showing how much of that 7% of land claimed is still in the hands of the original new owners and how many have succumbed to bad debts and poor management.

In a recent report on the status of land and agricultural policy in SA, researcher Stephen Greenberg estimates there are 240000 black farmers with a commercial focus and between 2m and 4m farmers who produce food mainly to meet their own household consumption needs.

But the worrying trend is that the disjunction between land reform and agriculture and the lack of a cohesive policy has resulted in much less money going into agriculture in recent years. Taking the provincial and national budgets (including environmental and conservation) of the four main producing provinces for 2009/2010 — KwaZulu Natal, Mpumalanga, North West and Gauteng — Greenberg comes to a figure of R10,35bn: just 1,6% of the national budget (see graph on page 32).

If the leaked sections of the green paper are to be taken as an indication of current thinking on the land issue, then the latest proposals could have worrying implications for constitutionally protected property rights. Nor do they address some of the more critical policy aspects.

When the first white paper was released in the mid-1990s, land reform was aimed at poor rural South Africans and focused on the transfer of land to individuals and groups. During the Thabo Mbeki administration, under then minister Thoko Didiza, the Land Redistribution for Agricultural Development programme also envisaged a whole new class of black commercial farmers who could qualify for state assistance.

But in the leaked drafts of the new green paper, there is stronger emphasis on the state as a land owner or leaseholder. This raises uncomfortable questions as to whether this is an indirect route to nationalisation of land.

The draft paper proposes major revisions in systems of property rights, which include, among other things :

Limiting or capping the number of hectares any one farmer can own;

Making land owned by the state available through leasehold;

Restricting foreigners’ land ownership rights (see story on page 37; and

Establishing a land management commission which will administer land ownership in SA.

Ruth Hall, senior researcher at Plaas, says it is unclear what problems these substantial changes envisaged in the green paper aim to solve. Since the 2005 national land summit, government has acknowledged that its policy approach to land reform is inadequate. “But in the past six years it has yet to offer any serious proposals for public debate on what the alternatives are,” says Hall.

So what will work? And, can the state emerge as a viable leaseholder of land? Certainly, one of the more glaring deficiencies of the policy is failure to identify exactly who or which group is to benefit from land reform. Lessons from the past 15 years reveal that those wanting to acquire land cannot be defined as a single, homogeneous group.

If land reform is to be at the centre of rural development, agriculture production and poverty alleviation , there has to be a more defined protocol on how the various strands of government will be drawn in to make that happen.

“ There is a huge disconnect between the various government departments,” says Cousins, “and they do not address the important question of how land reform will help create jobs and alleviate poverty in rural areas.”

Underpinning much of the failure of the land-reform policy has been a distinct lack of political leadership and weak government capacity to be an effective player in the land market. The current proactive land acquisition strategy allows the state to purchase farms and pieces of land that are on sale, but there is no guidance on which land should be prioritised for acquisition.

The strategy also exposes substantial weaknesses in the state’s ability to act as leasehold agent. The fact that the department has received four consecutive qualified audits from the auditor-general suggests that officials remain wholly incapable of managing and collecting income from leased state-owned farms.

It is crucial that more clarity is sought on how rural and land reform will fit into government’s wider growth plan or with the policies of the agriculture, forestry & fisheries department under Tina Joemat- Pettersson.

Also, the Communal Land Rights Act, which critics argued entrenched traditional authorities’ power over ordinary people, was declared unconstitutional and struck down. But it still left the rights of 19m people in the former bantustan areas no more secure. Of these, around 2,2m households engage in small-scale farming in communal areas and Hall says the green paper offers little indication of how their positions will be secured.

It is estimated that more than 1m people were evicted from farms in the first decade of democracy, despite laws to prevent this.

Drawing on this, Cousins calls for a focused and capable state to implement land policies . This means the state will have to acquire land for redistribution that best serves a wide group of different categories of farmers.

AgriSA deputy president Theo de Jager says the land policies of the past 15 years have not worked for any of the big stakeholders — government, commercial farmers or beneficiaries of restitution.

“ This not because of the legislation or the goals that government has set. It is because of poor implementation,” says De Jager. “All the problems come back to the department not wanting to pay market-related compensation .”

In total, AgriSA has submitted 17 proposals to the rural development & land affairs department on just about every issue related to land reform and restitution, including a programme to assist emerging black farmers, but with little response. In April this year the organisation met Nkwinti, and attended a workshop two weeks ago to engage again on aspects of the green paper.

“In essence, we said that it makes no difference what is contained in the green paper if there is no capacity in the department to see it through,” says De Jager. “Government has to develop a better foundation for more effective implementation. A good starting point is to make sure there is competent staff and a desire to root out corruption.” AgriSA, he says, spent R84m in 2010 in the nine provinces on projects to assist new farmers who are beneficiaries of land restitution.

According to insiders, the long delay in formally releasing the green paper points to serious disagreements within the ANC and its alliance partners on a new land reform policy.

Last week, after the ANC lekgotla, the party said it had agreed to a comprehensive rural development plan. Among other points, it calls for a new office of the land valuer-general and a land management commission to be established.

It also supports proposals on state and public land leasehold, the limited extension of foreign ownership and communal tenure with institutionalised user rights. The idea of the state as a leaseholder of land has gained some traction.

Also last week, the Land Bank proposed that government acquire available farming land, but rent it out to prospective black farmers for a few years before agreeing to a sale. With almost half of SA’s small-scale farmers supported by the bank unable to cultivate their land profitably, the leasehold option could prevent more bankruptcies.

But there is also the danger it could create two classes of commercial land owners: the wealthier farmers with freehold land and poorer, black emerging farmers, most of whom would need to use their land to secure initial capital.

“Land reform is climbing up the political agenda, partly because there is no proper policy in place,” says Hall. “And this is why the politics around land reform won’t go away and it is likely to become a political football.”

with the state, farmers and the dispossessed all signalling a readiness to focus the debate , there is still an opportunity to defuse political tensions and remove populist rhetoric from the discourse.

Cover story 2 – land reform success story

The Mondi model

Joan Muller

Thursday, 28 Jul 2011

Three years ago, Mondi and the land claims commission jointly developed a pioneering sale-and-leaseback model to return land to dispossessed communities. In what was touted the first successful commercial land settlement by the SA forestry industry

Land reform initiatives haven’t failed across the board. Over the past few years corporate SA has been quietly but resolutely doing its part to help expedite restitution of commercial land.

JSE-listed paper and packaging group Mondi, which owns vast tracts of forestry land in KwaZulu Natal and Mpumalanga, is a prime example of how land reform can work when the private sector and government pool resources.

Three years ago, Mondi and the land claims commission jointly developed a pioneering sale-and-leaseback model to return land to dispossessed communities. In what was touted the first successful commercial land settlement by the SA forestry industry, 4000ha of Mondi-owned land in the Kranskop area of KwaZulu Natal was transferred to the AmaBomvu and AmaHlongwa communities in October 2008.

Mondi has since entered into nine other settlement agreements, transferring 18000ha of land, around 7,5% of Mondi’s forestry land ownership in SA. In addition, there are 33 known claims on Mondi land in KwaZulu Natal and around 39 in Mpumalanga.

Mondi corporate affairs manager Lora Rossler says the group’s sale- and-leaseback model creates a win-win solution for all parties: communities regain land ownership while lease agreements provide for a recurring income.

The latter is structured over a 20- year period, with Mondi paying annual rental and stumpage fees to the communities based on production output. Mondi, at the same time, is ensured of a continued timber supply for its mills.

However, Rossler concedes that land transfer alone is no guarantee of successful land reform. “Post settlement support in the form of resources and skilled people to help communities become viable farmers is vital to the process.”