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Can South Africa’s white farmers promote Black Economic Empowerment?

Written by John Howell

Last month’s Land Summit of ‘stakeholders’ in South Africa was convened by the Minister of Agriculture and Land Affairs to address the slow pace of land reform – slow, that is, when set against the Government’s target of transferring 30% of agricultural land owned by white commercial farmers in the old RSA (contemporary SA less the former homelands) into black ownership.

The slow progress, according to most civil society, trade union and political party representatives, was a consequence of the ‘willing buyer -willing seller’ policy. Farmers, they claimed, were proving recalcitrant sellers and, even then, only willing to sell at exorbitant prices.

Government itself went along with much of this – although it was careful to say it would ‘re-visit’ the willing buyer-willing seller principle rather than do away with as many stakeholders wanted. Slightly adding to the pressure on landowners, the Vice-President then offered the view that SA had much to learn from Zimbabwe (which is perfectly true) and said the land reform programme needed more ‘oomph’ (which is also true, if slightly more ambiguous).

In London, meanwhile, DFID has offered its vision of Africa’s agricultural development and, within that vision, insists the willing buyer-willing seller principle must be respected if there is to be successful development.

The Land Summit, and DFID, may be missing the point.

Most land redistribution programmes involve government intervention in the market. In South Africa, the intervention takes the form of grants to eligible buyers once they have identified properties: the government itself is not a buyer. Elsewhere, governments have directly acquired land for subsequent farmer settlement. In fact, there are senior officials in SA who would strongly support such interventionist buying in selected areas for farmer settlement, although this would require significant additional government capacity.

In South Africa, there is an active market in farmland as any reader of, say, The Farmers Weekly, would attest. Furthermore, the overall trend in land prices has been down since 1995 when new policies came into force. The problem may not be willing sellers at all, but willing buyers among potential land reform beneficiaries. ‘Demand’ – in the general sense – is high, but effective demand is severely constrained by the need to identify suitable land from the generally large units on offer, forming an association, preparing a business plan, securing the grant, raising working capital etc.

So the real issue is not whether there are willing sellers (there are) or willing buyers (there could be many more sales if government intervened directly). The issue for SA (as it should be for DFID) is ‘fair compensation’ in circumstances where re-distribution is a legitimate policy direction.

SAs commercial farmers are surprisingly relaxed about expropriation. What they want, above all, is a ‘market’ price that allows them to start a farming business elsewhere. At the same time, price is also an issue for potential black commercial farmers – especially where they have to supplement their acquisition grant with a long-term loan.

But price alone is not the only factor deterring black farmers.

More intractable than the land price problem (that government does have the power to resolve) is the ‘farming problem’ – the sheer difficulty in entering into a risky and internationally competitive industry which has been largely deregulated. The government does have support programmes for ‘emergent farmers’, including concessionary finance, but where it cannot offer significant assistance is in the transfer of business experience from already established farmers, market agents, input suppliers, processors and retailers etc.

Without this experience, and the confidence it can bring, it is hardly surprising that enquiries to The Farmers Weekly from black buyers is well short of the government’s expectations.

Fortunately, there is now a growing recognition that reaching government’s black economic empowerment (BEE) targets will need a more effective effort from industry itself to bring significant numbers of black farmers into the commercial mainstream of agriculture and agro-processing. A potentially important development this week has been the formation of the Farmer Development Trust (in which ODI itself has played a role). This brings the main white farmers union, Agri-SA, and its commodity associations, into formal collaboration with the National African Farmers Union for the first time (and after years of mutual suspicion).

The two unions may well continue to see land redistribution, and what constitutes ‘fair compensation’, in different lights, but they have now come together on meeting the challenge of establishing black commercial farming. It could bring the achievement of a de-racialised agriculture a little closer, with long term consequences for rural security.