Does owning land really lead to prosperity? The math says no - News24

7 June 2018 - Ultimately, the contribution to upliftment offered through the land will be modest. Not meaningless perhaps, but nothing on the scale that will presage the "South African economic miracle" the country so desperately needs. It is certainly not something on which to pitch the country’s hopes.

 Terence Corrigan

As land has emerged from the shadows of political debate to its centre, so has a new narrative begun to gather momentum: land as a precondition for prosperity.

Land, by this reasoning, is the resource that will elevate millions of South Africa’s people from poverty to plenty, from drudgery to dignity. Most recently, this has been voiced by EFF leader Julius Malema, who posed a rhetorical question to his audience: "Why would you go and be a domestic worker if you have land? No one deserves to be a domestic worker… No one is supposed to work for peanuts."

He implies that, with land, all things would be possible, a livelihood and dignity.

This argument has fed the broader drive for expropriation without compensation. For if the seizure of existing landholdings and their mass reapportionment to millions of poor people offer a solution to South Africa’s multiple socio-economic dilemmas, then the case for doing so would be unassailable both on moral and economic grounds.  

And there is no shortage of people – some idealists, some ideologues – who would enthusiastically endorse the vision of a country of peasant farmers.

But does this vision stand up to scrutiny?

Farming is not, and has never been, an easy option. It is also physically taxing, and success now invariably depends on the ability to innovate. The rewards it offers are always an uncertain thing, often meagre, and always in thrall to the availability of financing and the vagaries of the weather.

The battering that South Africa has taken from drought over recent years is a salutary reminder of this, as thousands of farmers were forced out of business – and with particular concerns having been expressed about the ability of emerging farmers to remain viable.

What this means was captured in the eloquent sentiments of an aspirant farmer, Lonwado Jwili, who produces vegetables and grain near Johannesburg – in a contribution published on The Conversation. Asked for his advice to young black farmers, he said: "I would advise them to go into farming only if they have passion for it. Farming is not like most jobs. It’s extraordinarily hard and requires lots of patience which runs out if not accompanied by loads of passion. Farming will break and bankrupt you. It will test your mental strength."

This is not unique to South Africa. Pretty much irrespective of the specific national context, populations have left the land to seek alternatives when they became available. This was the case in Europe and North America in the nineteenth century and in much of Asia in the twentieth.

Opportunities for steady, waged employment, for mobility, along with facilities for education, healthcare and recreation, make urban centres far more attractive than the rural hinterland.

For its part, South Africa is a predominantly urban society, and it is no surprise that polling finds very little interest in farming as a means to make a living: a mere 1% or 2% view this as something that might improve their lives. (Notably, agriculture’s gross value add to the economy is only around 2.6%; manufacturing by contrast is 13.5%.) The great majority sought a job in a city. Indeed, a heavy reliance on "landed" activities is likely to denote a lack of economic dynamism.

And farming does not typically offer a path to wealth. In most developed countries, it leans heavily on state subsidies – a major competitive hindrance to less developed countries seeking to sell their produce in more affluent markets. And research in the United States demonstrates that for smaller farms, non-farm activity, such as holding a job in a town, is the primary source of income.

All of which begs the question as to whether land would be a significant mobility ladder.

Cabbage farming - a case study
We at the IRR ran some figures on what could be made from cabbage farming, on the assumption that doing so would be aimed at making an income rather than for personal consumption, a reasonable enough starting point if the objective is to improve living standards. The IRR estimates that one hectare of land could produce 25 000 heads of cabbage. The cost to do this – including fertilisers, fuel, seedlings, a spray programme and so on – would amount to around R53 000. 

Of the cabbage heads planted, around 20% would probably not be marketable. The rest could be sold either as loose heads, or (for the smaller ones) bagged. Gross sales – taking into account transport to markets and associated costs – would optimally be around R63 000. The net profit would be just short of R10 000.

This is not an inconsequential sum, but since cabbages can be expected to take up to four months to grow, at least four hectares would be required to keep this up. Not to mention considerable starting capital – even if this could be supplied up front, the debt burden would be a heavy one, persisting for several years. It would assume tolerably good weather. It does not factor in the treadmill effect of capital depreciation. And it would take, as any farmer can attest, managerial skills, understanding of agronomy, access to markets, and simple ‘passion’ to get right.

The "land" is probably the least troublesome of all the factors involved.

None of this is to say that prudent land redistribution, even to small-scale occupiers, might have no positive effects. A driven, ambitious smallholder can farm innovatively – provided the necessary supporting environment is at hand. This does not, unfortunately, generally exist for aspirant farmers at present.

Ultimately, the contribution to upliftment offered through the land will be modest. Not meaningless perhaps, but nothing on the scale that will presage the "South African economic miracle" the country so desperately needs. It is certainly not something on which to pitch the country’s hopes.

Rather, it is in accelerated economic growth, primarily in its urban centres – long the centre of its economy – where the hopes for South Africa’s future will be fulfilled. We should not lose sight of that.

Terence Corrigan is a project manager at the Institute of Race Relations (IRR). Readers are invited to join the IRR in opposing the introduction of Expropriation without Compensation by endorsing its submission to Parliament, or sending an SMS to 32823.