The South African government has been buying farmland for black farmers. It’s not gone well
When the African National Congress came to power in South Africa in 1994, an expressed priority was land reform. This was to address the fact that black farmers had been excluded from the agricultural economy for most of the 20th century. The aim of land reform was to provide agricultural land to disadvantaged people, raising their productivity, income and employment.
A plethora of policy initiatives were launched. The target was to distribute 30% of agricultural land to black farmers. In 2006 the Proactive Land Acquisition Strategy (PLAS) was adopted. This replaced the land redistribution programmes implemented between 1996 and 2006. The acquisition programme involved the government buying farmland previously owned by white farmers and redistributing it to black farmers.
But, overall, it’s become clear that the new approach to redistributing farmland has been mostly ineffective. Failure can be attributed to limited implementation, poor institutional capacity and corruption.
A research report first released in 2019 shed fresh light on how the most recent strategy has unfolded. Compiled by the Agricultural Research Council (ARC) for the Department of Rural Development and Land Reform, it provided a sober look at what happens when government bureaucrats get involved in land reform and farming decisions.
The main findings were that the performance on most farms bought under the acquisition scheme had been disappointing. More than half the current beneficiaries were not reporting any substantial production. The same percentage were evaluated as having a low capacity to achieve commercial status.
We argue that the data collected and interviews with stakeholders clearly indicate the reasons for failure. They include poor beneficiary selection, inadequate support and infrastructure, and rampant crime. Post settlement support was found to be inadequate, and stakeholders appointed to support the new farmers were poorly monitored and not working in an integrated manner. Agricultural infrastructure, both off farm and on farm, needed attention.
Based on our decades of experience in studying land policy, we believe that there is scope for the successful integration of farms acquired under the scheme into profitable value chains. But for this to happen, existing constraints need to be addressed.
The land acquisition programme was approved “in principle” in July 2003. It was officially implemented in 2006.
Between 2003 and August 2022, the state acquired 2.9 million hectares of farmland previously owned by white farmers through the Pro-active Land Acquisition Strategy. Around R12 billion (US$706 million) has been spent on the acquisition of these farms over the last 16 years. This land is made up of 2,921 farms and is under 30-year leases to beneficiaries.
The state also owns an additional 3,172 farms. It is unclear when and how these were acquired. Our best guess is that they were bought in the earlier iterations of the land redistribution programme.
The strategy was a noble attempt at land reform. It had some clear objectives:
acquire land of high agricultural potential
integrate black farmers into the commercial agricultural sector
improve beneficiary selection
improve land use planning
ensure optimal productive land use.
To establish the commercial potential and status of the farms, the Department of Rural Development and Land asked the Agricultural Research Council to conduct an analysis of all the land purchased under the scheme. Its remit was to:
determine the agricultural potential of the land
establish the performance of the new farmers
define criteria for beneficiary selection
define criteria for contracting support agencies
establish interventions to help the scheme achieve its objectives.
Most farms acquired under the initiative had high potential. It’s therefore possible to dismiss the myth that the land acquired for land reform was of poor quality.
The assessment showed that land acquired through the programme was generally of good or fair quality, and 98% of farms had fair to good natural resources.
Most farms (59%) were large enough in size and had a natural resource base sufficient to support viable enterprises. Some (7%) were doing well, despite limitations, indicating that it is possible for the programme to achieve its objectives.
The report noted that roughly 60% of all the farms had the potential to achieve commercial levels of production. Another 23% had the potential to reach significant (medium scale) levels of production.
Roughly 10% of the land had the capacity to support only livelihood level production.
According to the data, all the farms under review collectively employed 12,129 part-time and 7,045 full-time workers. Each farm on average employed six full-time and four part-time workers. Based on the potential of these farms, a total of 60,050 workers should be employed, suggesting that the growth and employment targets of the programme have been missed by a mile.
The report also looked at whether the farms were operational and in commercial production.
It found that performance on most was disappointing. More than half the current beneficiaries were not reporting any substantial production, and more than half the beneficiaries were evaluated as having a low capacity to achieve commercial status.
The report also addressed signs of degradation.
Nearly half (47%) of the farms that had been acquired were found to have some degree of degradation, while 13% were seriously or severely degraded. This was based on an evaluation of the land through satellite imagery and the data collected for the farm, compared to the potential based on land capability maps. Of concern was the high number of commercially viable farms (42%) and medium-scale farms (53%) that showed signs of degradation such as erosion and overgrazing.
The question of whether farmers were engaged in optimal farm enterprise mix was also addressed. It appears that most tended to avoid high value commodities (fruit, vegetables and field crops) in favour of livestock. This could be attributed to lack of skills, water constraints, insufficient suitable infrastructure and moveable assets, or limited access to capital. Of concern is the significant number (350) of farms that produced no commodities.
The analysis showed that access to capital was one of the most critical resource limitations. To access capital from a commercial bank, the land bank or any private financial services outlet, farmers require collateral. Where farmers have title deed, this is facilitated. Lease agreements are not deemed collateral.
This points to the need to transfer the farm title deeds to farmers who have proven their capability. This would enable them to access finance via the Land Bank under its newly launched blended finance programme.
Farms with better infrastructure – housing, fencing, water reticulation, fixed assets and equipment – performed better. This illustrates the importance of infrastructural investment.
For land reform success in the future, the importance of selecting beneficiaries based on the criteria of entrepreneurial aptitude, resilience and technical skills will also be vital. The criteria described in the Proactive Land Acquisition Strategy stated that beneficiaries should be evaluated. But this appears not to have happened in practice.
The latest resolution on land reform passed by the ANC argues for legislative instruments to manage the state acquisition of land. The failures set out above suggest that the state will always be a poor player in redistributing land as it will always hold onto it.
The point of identifying mistakes in policy is, surely, not to repeat them.