21 July 2022: Land Reform – Post settlement support for beneficiaries of South Africa’s land reform programme is a crucial factor that will guarantee the success of this initiative, enabling emerging farmers to benefit from the growth of the agricultural sector. So says Peter Setou, Chief Executive of the Vumelana Advisory Fund, a non-profit organisation that helps beneficiaries of the land reform programme to make their land profitable.
The agricultural sector has continued to buck the trend of the sluggish growth experienced by other sectors of the economy in the aftermath of the COVID-19 pandemic. The agricultural industry has registered a solid growth, with its gross value-added expanding by 13.4% year on year in 2020 and 8.3% in 2021, according to Setou.
Since government embarked on its policy of land reform to redress the historical injustices of land dispossession the programme has been criticised as a failure. Once flourishing farms lie fallow after they were purchased from commercial white farmers and allocated to emerging black farmers.
To date, the government has settled more than 82 000 claims, reaching some 2,2 million beneficiaries, at a cost of R40 billion, including financial compensation, according to statistics recently cited by the Department of Agriculture, Land Reform and Rural Development (DALRRD).
The 3,5 million hectares of land restored to dispossessed communities can be used as a catalyst for agricultural and economic development. However, returning the land is not enough.
Post settlement support
“The importance of post settlement support to the beneficiaries of the land reform programme cannot be overemphasised,” Setou says. “While the efforts by the government to purchase disputed land on behalf of claimants were commendable, in many instances communities were left to their own devices and not provided with the requisite support to allow them to sustain the farms. “There is ample evidence that land ownership on its own will not transform the lives of the claimant communities.”
As it currently stands, many communities feel that they have been set up for failure, Setou says, adding that a multi-pronged post settlement support approach is required to give the claimant communities a leg up. Such support must include access to finance and markets, clear water usage rights and technical know-how.
Edward Lahiff, a land reform scholar from the Institute for Poverty, Land and Agrarian Studies at the University of the Western Cape, made this point forcefully in a paper titled ‘Joint ventures in agriculture: Lessons from land reform projects in South Africa’. He concluded that the lack of post settlement support is one of the factors that has led to the failure of many land reform projects. Using Limpopo as an example, he argued that although the former Department of Agriculture was the lead agency in the implementation of land reform in the province, it did not take responsibility for post-transfer support of beneficiaries. Limited support was provided to the new famers despite such support being central for their success, he added.
Role of agriculture in stimulating economic growth
The agriculture sector has shown resilience in the face of the devastation bought about by the outbreak of the COVID-19 pandemic. It is little wonder that the industry has been identified as a cornerstone of the country’s economic reconstruction and recovery.
Government departments and industry role players are in the final stages of concluding an agricultural and agro-processing master plan. It focuses on, among others, ensuring food security, expanded production, employment creation, import reduction, expanded agro-processing, providing comprehensive farmer assistance and development finance. The plan has also identified the key industries to focus on that can play a critical role in bringing about the necessary transformation towards an inclusive sector. This is a welcome development provided it is implemented without any delay.
“The role the agricultural sector is envisaged to play in the master plan is crucial in light of the importance of food security and the contribution that the sector can make in alleviating unemployment and poverty,” Setou says, adding “it is important that emerging black farmers should not be left behind by these major developments.”
He emphasises: “It is critical that structural and institutional impediments that stifle the success of the land reform programme be addressed expeditiously to ensure that emerging farmers are given an opportunity to play a meaningful role in the growth of the sector going forward.”
Importance of partnerships with private investors
Partnerships between the claimant communities and private sector investors can go a long way towards improving the fortunes of land reform beneficiaries, Setou continues. It is also important to note that these partnerships do not just happen. They need independent facilitation to ensure fairness and sustainability. This unfortunately requires funding, which government, corporates and other players could contribute to. Organisations involved in this area of work should be supported to ensure that communities and other emerging farmers are supported. “However, claimant communities also need to play their part, adopting good corporate governance structures in the communal property associations (CPAs), the juristic bodies that oversee the management of the claimant land, he adds.
Currently many CPAs are dysfunctional and riddled with internal strife, which makes them unattractive to private investors. “Any investment decision is based on whether the investor will get a return on their investment. Having proper corporate governance structures gives prospective investors a sense of comfort that there is accountability and risk management in place,” Setou says.
Implementing good corporate governance will help the CPAs to become more efficient, mitigate risk and insulate them from mismanagement. These key ingredients will attract the much-needed finance that will help the farming operation become not only sustainable, but to thrive, Setou notes. Once again communities need to be supported on this to ensure that they have governance processes in place.
Due to historical factors, the majority of commercial farmers in South Africa are white farmers who have amassed a wealth of technical expertise over the years. These skills need to be passed on to the emerging farmers.
Practical programmes should be established to give expression to the National Development Plan’s Vision 2030 to ensure “human capabilities precede land transfer through incubators, learnerships, mentoring, apprenticeships, and accelerated training in agricultural sciences,” Setou says.
To that end, he adds, white commercial farmers and organised industry bodies should be enticed to contribute to the success of black farmers through mentorships, chain integration, preferential procurement, and meaningful skills development. “The challenge, however, is that white commercial farmers don’t have the incentive to do this. While we have witnessed some private initiatives by established farmers and other players to support emerging farmers, this has had a limited impact due to the limited scale and extent of reach.”
On the other hand, Setou notes, there is lack of monitoring and oversight on some of these informal programmes, which undermines their objectives and renders them futile.
Access, or lack thereof, to finance
“Although partnerships with private investors are important in attracting financial injections into claimant farms, this does not exonerate the government from giving a helping hand to claimant communities,” Setou says.
In addition, Setou notes, many beneficiary communities are hamstrung from accessing capital from commercial finance institutions due to lack of collateral and little track record in farming. If we are to make progress and ensure inclusion of disadvantaged communities into the mainstream economy and promote their meaningful participation, we need to develop innovative ways through which they have access to affordable finance. His observations were echoed by Nkanyiso Gumede, a researcher at the Institute for Poverty, Land and Agrarian Studies at the University of the Western Cape. Gumede says access to finance is biased towards elite farmers who have collateral.
In the case of individual emerging farmers, who are part of land redistribution efforts, most will not be able to provide collateral since the land given to them by government is under a lease agreement and cannot be used as collateral.
Access to markets
“One critical component that is often overlooked in the land reform programme is access to markets,” Setou notes. Access to markets is a key determinant at the tail end of an agricultural venture.
Lack of access to markets has compelled many emerging farmers to rely on unpredictable informal markets to sell their produce. Citing Stephen Greenberg’s paper ‘The disjuncture is of land and agricultural reform in South Africa: Implications for the agri-food system’. Setou says lack of market support is a major constraint to the success of new farmers under the land reform. “Marketing strategies are very weak and traditional. Consequently, they have been an obstacle to growth in farm production.”
Greenberg argues that new farmers are failing to break the barriers of markets which are controlled by white commercial farmers who have well-versed marketing strategies and resources for both local and international markets.
“This too is an important issue that needs to be addressed post settlement,” Setou urges.