Who’ll Fall in the Shadow of the Rainbow Oligopoly Cartel Klub? - Rational Standard

4 March 2019 - One might speculate that the next move is likely to be that small- and medium-scale farmers are taken for granted, driven off or forced into paternalistic roles as hyper-extended extension officers “up-skilling” their replacements to make ends meet after expropriation without compensation.

Gabriel Crouse

The most recent state-backed land conference in Pretoria was full of sunshine. Through an ionic colonnade, the generous tiled portico of St George’s Hotel gave onto a neatly styled courtyard garden nestled between mosaics of ancient gods and cherubs and fountains and ponds.

After Nkosazana Dlamini-Zuma’s speech, with apologies from the absent deputy president David Mabuza, men and women of state took tea and coffee .They discussed a fresh carve up of “the land” in the name of “our people” as an ultimate catharsis of congenital “original sin”. They also discussed the fine weather and their flights from across the country.

Half of President Cyril Ramaphosa’s special advisory team on land reform was there, including Dan Kriek, who was first to catch my eye on the portico, waving a friendly hello. Kriek is the President of AgriSA, the largest representative body of farmers, and a cattle farmer himself. In a room recalling an earlier collapse of democracy, called “Acropolis 2”, Kriek chaired the plenary on exactly which land ought to be racially transferred. Before the official introduction he spoke across the floor, surprisingly, to myself: “You got me into trouble,” he said.

Kriek was referring to my piece on the earlier state-backed land reform colloquium at the University of the Western Cape, which had reported the impression that he was willing to sacrifice small and medium farming enterprises to protect mega-farmers from expropriation at low or zero compensation.

At that colloquium, Kriek had said the words “80% [of farmers] make 20% of food, so with that then we can do drastic things. No, not drastic things – but we can make faster progress.” He had struck me as an eminently decent person mindful of his own role as a representative of other vulnerable human beings, so I approached him afterwards for clarification. He explained that he meant to make the opposite impression, that he wanted to protect the small farmer, too. I reported this in the same piece.

In “Acropolis 2”, Kriek argued that the caveat was not enough; readers were not reading to the end, and AgriSA members were accusing him of betrayal.

Kriek was clearly determined, as plenary co-chair of the discussion on which land exactly to expropriate, to put the matter beyond doubt – though his first opportunity was lost by his absence from the opening session and the second opportunity was cut down from over an hour to a few minutes by an intervention of a Public Works official.

However, he still had enough time, a few minutes, to make two hard points. He recommended that about 40% of the total land should be transferred, bringing the total up to 75% or 80%. Any more, he said, might be economically unsustainable.

So he is prepared to draw some kind of red line, there.

Kriek’s other red line was the proposal of major exemptions from expropriation for some farmers, to protect the economy. Exemptions, he proposed, should go to “farmers that employ more than 100 people; farmers that are willing to invest more than R10 million; and perhaps farmers who enact a certain level of skills development”.

For the rest, Kriek said, “either stay where you are and you will come under all sorts of pressure or…”

Though the numbers are as yet unclear, AgriSA would itself be best placed to evaluate what portion of farms employ 100+ – but what is as clear as the Highveld sky in a drought is that small- and medium-scale farmers have less clout on the basis either of food security or lobbying concentration, and so must occupy Kriek’s front line of expropriation at sacrificial levels of compensation. How many will be sacrificed is too soon to tell, and Kriek is not telling the whole story yet.

One might speculate that the next move is likely to be that small- and medium-scale farmers are taken for granted, driven off or forced into paternalistic roles as hyper-extended extension officers “up-skilling” their replacements to make ends meet after expropriation without compensation. This would provide cover for the exempted mega-farms, but race nationalists might eventually renew their attention. As with the mines, this could mean ramping up BEE compliance quotas by bringing in multimillionaire black investors to complete the inner circle.

South Africa’s national theatre sport of Rainbow Oligopoly would reach its conclusion in yet another sector. In this game, big government and big business gab about how much they care for poor black people until they – though not the poor – end up in bed together taking selfies filtered by the elite’s inglorious self-regarding lens: oligarchy through diversity.

This filter makes poverty invisible in all ways.

The unemployment rate was not mentioned within earshot in two days at St. George’s. That creating an environment for job growth is the top priority for ordinary South Africans in every credible poll was unheard of. That even the ANC’s own polls show land reform is not in the top ten priorities went unmentioned, though in fairness it is possible that between all the land experts no one even knew this inconvenient truth. The fact that Ramaphosa’s attempt to unify his party and outflank the EFF by attacking the Bill of Rights, which in turn shrank SA’s GDP per capita and turned capital transfers to a net-outflow in 2018, was all delicately ignored. The poor’s problems, reported views and the perpetuating factors of poverty were simply filtered out.

The picture-perfect oligarchy that shone through was getting help from all sides at the St George’s land conference. A representative from the Land Bank said that mass loans to new emerging farmers should aim for “useful” but not necessarily “commercially viable” food producers. Several others argued that agricultural small and medium enterprises need to become more subsistence based. That means less competition against the oligarchs from below.

Then there were multiple calls for import tariffs to protect growers on “native soil”. That means less competition against the oligarchs from beyond.

Another popular call that Kriek echoed was for a centralized board that would manage marketing, pricing and financing of the agriculture industry. That means a route to punish competition from within the cartel by oligarchs who get ahead of themselves.

It is easy to forget, but a little over a decade ago when Tiger Brands was looking to wriggle up the BEE pole, it also got caught in bread price-fixing. This scratched the shallowest purses hardest, but the bigger lesson is clear. For a cartel, especially a food cartel, to really pull off the trick of price fixing over a sustained period it needs to block off competition from below and beyond and it needs vocal government approval.

This is what the new dawn seems to offer. Rainbow Oligopoly Cartel Klub, a billion-ton food ROCK to roll over competition and consumers who seek the best buy. Those in its shadow will face what Kriek calls “all kinds of pressure”.

The red line that should be drawn is around the state’s millions of underutilized and degrading hectares of rural land. An environmental expert said degraded land in SA is on average an order of magnitude less productive than it would be with proper soil care. Within those boundaries, cheap loans and precision support could produce value-add and self-sustaining jobs where they are desperately needed.

Drawing this line means standing up to the dazzling promises of being a ROCK insider and saying, no, thank you. The sun might always shine on top but it’s a shame to ride the countryside flat to hit your destination.

* Gabriel Crouse is the George F D Palmer Financial Journalist Trust Fellow at the Institute of Race Relations (IRR), a liberal think tank that promotes political and economic freedom. Readers are invited to take a stand with the IRR by sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).