POLITICS

Cap on land ownership is a cap on job creation - Thomas Walters

DA MP says four substantial changes needed to govt's land reform approach

Cap on land ownership is a cap on job creation 

1 February 2015

The ANC's announcement this week of a proposal to restrict land ownership will result in destructive and far-reaching consequences for our economy if implemented by government.

The ANC is proposing that land ownership be restricted to 12 000 hectares, or 2 farms, and that land ownership by foreigners be banned.

This populist proposal from the ANC is an admission of their failure to do justice to reform by properly funding land reform programmes, allocating land and acquiring land from the market for redistribution.

Land Reform in South Africa is an essential means of creating a fair society through redressing Apartheid's legacy of restricting land ownership on the basis of race. 

This pursuit of a fair society must be accomplished while supporting our country's need for job creation and investment.

The DA believes that there are 4 substantial changes needed to government's land reform approach in order to deepen its impact: 

Farm workers must become farm owners through the NDP's approach to Equity Schemes. This approach involves the formation of district committees to identify suitable land on the market, purchase 50% for workers from the restitution fund, encourage interested farmers to invest in the other 50%, and ensure that the right financing and agricultural development models are in place;

The extension of individual property rights to as many people as possible by releasing the 17 million hectares of communal land in South Africa for reform purposes;

The redistribution of state-owned land through a process of getting the Department of Land Reform properly staffed, corruption free and working efficiently; and

Substantial increases in support to emerging farmers as they move through the various stages of business development.

These changes will exponentially enhance the potential of South Africa's land reform programme to redress the legacy of Apartheid. 

These measures, however, will require hard work and principled commitment to the goal of a fair society. This latest populist proposal by the ANC is instead designed to shift focus away from government's failure to implement a successful and sustainable land reform programme

In reality, the ANC's proposal to cap land ownership:

1)  Caps investment, and Caps job creation 

The proposal does not consider the negative impact that driving away investment will have on job creation. The South African economy depends on investment to drive growth.  Effectively, when farms grow beyond the ANC's proposed cap, government will expropriate them.

This proposal not only caps land ownership, it caps investment and caps job creation. This includes preventing investment in black-owned agri-businesses that have grown beyond a certain point.

2) Undermines growth in the Agricultural sector

The ANC's proposal does not consider the impact that the destruction of land value will have on the financial sector and by implication the rest of the economy. If you destroy the value of the collateral on which debt is based, it will also destroy the provision of finance. 

It is exactly the emerging farmer that will be least able to deal with this. Financial data since 1994 shows the increasing necessity of debt provision in the agricultural sector for it to survive and grow.

3) Negatively impacts Share-Equity Schemes as the most successful Land Reform model

The proposal also negatively impacts the most successful model for land reform - Share-Equity Schemes.  There are approximately 90 Share-equity schemes in the Western Cape, with an 80% success rate - the highest of all Land Reform models. If you restrict existing agricultural ventures such as these from expanding, you destroy the crown jewel of land reform. 

4) Goes against global trends toward bigger farms

Globally, the trend is toward agriculture becoming more and more concentrated ie. bigger farms. This develops economies of scale capable of delivering food that is more affordable, for more people. The ANC's proposal to restrict land ownership will therefore lead to more expensive food for less people and should be considered a red flag for food security.

5) Ignores the real issue of creating successful farmers

The proposal to cap land ownership does not address the real issue of government's failure to support emerging farmers to run successful businesses. Even if land prices are driven down, that in itself is not going to translate into successful farms. Past experience shows that even with access to land, the ANC in government has largely failed to produce successful farms and farmers. According to the latest statistics, at least 73% of restituted farmland is unproductive, delivering neither food nor jobs. 

The DA will continue to push for a more effective land reform programme capable of benefitting more South Africans, and enhancing the cause of a fair society. To this end we will oppose the ANC's populist proposal should it be tabled in Parliament and use this opportunity to advocate for the alternatives that will really make a difference for South Africans.

Statement issued by Thomas Walters MP, DA Shadow Minister of Rural Development and Land Reform, February 1 2015

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