Small farmers ‘need more support’

23 October 2012

President Jacob Zuma has urged stakeholders in South African agriculture to find ways of providing tenure security for communal farmers, to increase support for emerging farmers, and to consider a new approach to land reform in the country.

“We need to find ways of providing tenure security for communal farmers, and investigate better ways of financing land reform so that new farmers do not become saddled with debt,” Zuma at the African Farmers Association of South Africa (Afasa) gala dinner outside Pretoria on Monday evening.

Zuma said South Africa was planning for what its agriculture sector would look like in the next 30 years through the National Development Plan produced by the country’s National Planning Commission.

‘More support for emerging farmers’

South Africa’s commercial farming sector, comprising an estimated 37 000 members, currently produces 90 percent of the country’s agricultural output. On the other hand, there are 25-million people live in SA’s rural areas, producing 10 percent of agricultural output through subsistence farming.

Zuma said more support for emerging farmers would enable the government to improve the participation of black South Africans in commercial agriculture.

He said 11 000 new smallholder farmers had been established since 2009, with a target of 50 000 having been set for 2014.

Support has been provided to both new and long-established farmers through various state programmes, including Letsema, the Recapitalisation and Development Programme, and through funding agency Mafisa.

Despite this support, Zuma said, only a marginal number of 5 381 smallholder farmers were involved in agri-businesses, and a mere 3 910 were linked to markets.

“To achieve further success, smallholder farmers require a comprehensive agribusinesses support package, including favourable commodity pricing, access to finance, provision of technical expertise and mentorship, and contracted markets,” he said.

Land reform: lessons learned

On the question of land reform, Zuma said that the government had made a commitment in 2009 to transfer 30 percent of the 82-million hectares of agricultural land which was white-owned in 1994 to black people by 2014. This 30 percent translates to 24.5-million hectares.

“Between 1994 and December 2011, 3.9-million hectares were redistributed through the land acquisition and redistribution programme. We have learned a number of lessons from the exercise.”

According to Zuma, one major lesson was that the process of acquiring and distributing a particular piece of land was often lengthy, which escalated the cost of redistribution because the previous owner stopped investing in the land.

He said many farms were in a poor state of repair at the point of acquisition, contributing to a decline in productivity on redistributed farms.

This led to the adoption of the Recapitalisation and Development Programme in November 2010. By December 2011, 595 farms were in the process of being rehabilitated under this programme, mainly through rebuilding infrastructure.

Land reform: new approach put forward

Taking these issues into account, South Africa’s National Development Plan proposes a district-based approach to land reform and its financing. It proposes that each district should establish a land reform committee where all stakeholders can be meaningfully involved.

The committee would be charged with identifying 20 percent of the commercial agricultural land in the district and giving commercial farmers the option of assisting in its transfer to black farmers, in line with the government’s land reform targets.

The implementation of this land reform proposal would entail identifying land that is readily available from land that is already in the market; land where the farmer is under severe financial pressure; land held by an absentee landlord willing to exit; and land in a deceased’s estate. In this way, land could be found without distorting markets.

After being identified, the land would be bought by the state at 50 percent of its market value, which is closer to its fair productive value.

The shortfall of the current owner would be made up by cash or in-kind contributions from the commercial farmers in the district who volunteered to participate.

In exchange, commercial farmers would be protected from losing their land and gain black economic empowerment status.

Land reform: spreading the cost

Zuma said this would remove the uncertainty and mistrust that surrounds land reform and the related loss of investor confidence, adding that a stepped up programme of financing should be created.

“This would include the involvement of the National Treasury, the Land Bank as well as established white farmers. The model envisages that the cost of land reform be spread between all stakeholders. It also envisages new financial instruments being designed for the purpose of facilitating land reform.

“These could include 40-year mortgages at preferential rates for new entrants into the markets, as well as land bonds that white farmers and others could invest in.”

Zuma said this was an innovative proposal that needed to be tested, and that it would be useful to hear from members of the farming sector if they would support such an approach.

Zuma said South Africa’s food security situation was too serious to leave to short-term planning only.

“Our long-term vision document, the National Development Plan, forecasts that by 2030, more than 70 percent of South Africa’s population will live in urban areas, compared to just over 60 percent today.

“Even with these changes, rural areas will remain home to millions of our people. We know this because there is also considerable movement within rural areas resulting in a consolidation into denser settlements,” Zuma said.

Agriculture and job creation

The National Development Plan argues that agriculture is the primary economic activity in rural areas and has the potential to create close to one-million new jobs by 2030; Zuma said this could be done by expanding irrigated agriculture.

“There is evidence that the current 1.5-million hectares under irrigation can be expanded by at least 500 000 hectares through more efficient use of existing water resources and the development of new water schemes,” he said.

Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson, also speaking at Monday night’s dinner, said the government was working extremely hard to assist smallholder farmers to become commercial farmers.

“We are working very hard to turn rural areas into commercially viable zones. We are trying to eradicate deeply entrenched poverty in rural areas through programmes that will overhaul the entire social system.

“We need to decisively move so our programmes translate to visible change in our communities,” she said.