Unintended consequences of ANC land proposals – BizNews.com, 5 February 2015

Note from Alec Hogg, editor of BizNews.com: 

A couple decades back, I was part of a team trying best run an organisation that had quadrupled in size through mergers. Among the key lessons was how someone who took competent decisions in the old structure was often a wrecking ball in the new one. Size increases complexity. Added complexity brings a new range of possible outcomes that simply have to be weighed if decision making is not to become a destructive force. Few South African dilemmas are more complex than the land issue. In this brilliant think-piece, the IRR’s Anthea Jeffrey unpacks some unintended consequences of the recent politically motivated decision to cap the size of farming units – and other edicts which conveniently ignore reality. – AH

By Anthea Jeffery: 

The African National Congress (ANC) has been canny in proposing 12 000 hectares as the maximum amount of land that farmers may own. Though this may not suffice to farm successfully in the Karoo, it is enough to meet the needs of many farmers. By contrast, if a cap of 500 hectares had been proposed, this would have sparked an uproar and cast doubt on the country’s food security.

A cap of 12 000 hectares takes much of the immediate sting out of the proposal. It is also misleading in suggesting that every farmer can aspire to a farm this size. In fact, if the country’s 86m hectares of commercial farming land were to be divided equally among its roughly 37 000 commercial farmers, each would have a farm of some 2 300 hectares – far short of the 12 000-hectare level.

More seriously still, once the principle that the Government is entitled to set maximum sizes for farms has been accepted, there will be little to prevent the cap being revised downwards in the future.

Take the BEE ownership target in mining. For years the Government pledged that the 26% level was sacrosanct and would not be changed. But now the mining minister has said he wants a higher number and the ANC in Gauteng has proposed a revised BEE target of 49%.

Just as the mining BEE target now looks set to be revised upwards, so the land cap could be shifted downwards in due course.

In addition, most commentators have focused on the 12 000 figure as the relevant maximum and overlooked the rest of what the ANC has said: that the maximum will be either 12 000 hectares or two farms per farmer. In practice, the second limitation may well count the most.

Many farms are patchwork quilts of adjacent land parcels, each acquired at a different time. All these parcels might now be farmed as a single unit, but they often lack a single title deed. Hence, if farmers are forbidden from owning more than two land parcels, many will not qualify for the 12 000-hectare cap at all.

The ANC claims its proposal will free up land for black people, helping to provide redress for past injustice and boosting rural prosperity. But this overlooks at least three crucial considerations.

First, most people don’t want land to farm. As veteran journalist Mondli Makhanya wrote in 2009: ‘At the risk of being lynched, tarred, and feathered by ideologues, I will posit that South Africans have little interest in land…Should we be expending so much energy and effort on land redistribution when the instinct of rural South Africans is to head for the city and seek employment and upward mobility there?’

Makhanya’s analysis was powerfully borne out in 2013, when official figures showed that only about 8% of some 76 000 successful land claimants had chosen to have their land restored to them. The remaining 71 000 or so (92%) had opted for cash instead.

At that time, Gugile Nkwinti, minister of rural development and land reform, seemed willing to acknowledge that land hunger was much lower than the ANC supposed. Said Nkwinti:‘We thought that everybody, when they got a chance to get land, they would jump for it. Now only 5 856 have opted for land restoration.’ People wanted money because of poverty and unemployment, but they had also become urbanised and ‘deculturised’ in terms of tilling land. ‘We no longer have a peasantry. We have wage earners now,’ he said.

Fast forward to 2015, however, and ideology has again triumphed over reality. The ANC is once more exaggerating land hunger, while pretending that the 60-year-old Freedom Charter holds the key to current policy requirements.

Second, by Nkwinti’s own admission, between 73% and 90% of land reform projects have failed. Far from helping to promote rural prosperity, land reform has left its ‘beneficiaries’ with neither food to sell nor jobs to provide them with an income. This is also not surprising when new farmers were largely left to fend for themselves without adequate title, working capital, skills, or access to markets.

Put differently, what this failure rate means is that the Government has thus far spent close on R30bn on the transfer of some 7m hectares of commercial farmland, most of which is no longer in productive use. Now the ruling party plans to chase even further down the same blind alley.

Third, the proposal further undermines property rights. Yet property rights are the key to individual prosperity as well as to political and economic independence from the State.

Some commentators may think this matters little, so long as the threat is directed against a small group of commercial farmers. But property rights are indivisible. Unravel them in one sphere and the rift is likely to spread. Moreover, without secure property rights, South Africa cannot generate the investment or the economic growth needed to overcome the jobless crisis.

Far from helping the poor achieve a better life, the ANC’s proposal seems calculated to push the country still closer to calamity.

Anthea Jeffery is the Head of Policy Research, IRR. She is the author of BEE: Helping or Hurting, which deals with land reform along with many other aspects of empowerment.