In 2001 the South African government announced its intention to redistribute 30% of agricultural land from white commercial farmers to black farmers by the year 2014. This was lauded as a bold move aimed at addressing historically skewed land ownership patterns. However, by 2013, it was estimated that only 7.5% land had been transferred.[1] Although there is some debate around the exact number of hectares transferred, it is unanimously accepted that the 30% target is nowhere close to being met. This is despite the significant sums of money that the government has spent. Various reasons have been advanced for this failure. The reliance on the willing buyer-willing seller model has come under criticism, while pre- and post-settlement support services have also been identified as a factor contributing to the failure of transferred farms. Government and its supporters have argued that, while not the only reason, the cost of the willing buyer-willing seller model is prohibitive and unsustainable, and is slowing the redistribution process. Agricultural associations and other stakeholders, in contrast, continue to argue that market forces should dictate selling prices.

Agriculture is critical to achieving a number of government priorities including food security, rural development, employment creation, and poverty alleviation. The land reform programme is central to the long-term success of the agriculture sector. Consequently, given the apparent failure of the current suite of policies, the government seems to have adopted a new line of thinking. A number of policy proposals have been put forward, with some outlining particularly radical positions. This has introduced significant uncertainty about the future of land reform, with the potential to negatively affect both domestic and international investment in the sector.

This note looks at the main land reform policies dominating the public discourse. While concepts such as expropriation without compensation have been bandied around – undoubtedly adding to uncertainty – this note only focuses on government sponsored views. It also seeks to make a case for a more coherent and rigorous evaluation of policy options to ensure that all the intended and unintended consequences of a policy are identified prior to implementation.

During the 2015 State of the Nation Address[2] (SONA), President Zuma outlined the policy direction that his government will pursue with regard to land reform and agriculture generally. These included piloting the 50-50 policy framework, introducing a bill to limit land ownership, and the establishment of the office of the valuer-general. These policies are meant to fast-track land reform. However, the SA government has also adopted the National Development Plan (NDP).[3] This document captures the country’s vision for the year 2030, and how to achieve it. The NDP explicitly deals with land reform.

The NDP dedicates a chapter to the creation of an inclusive rural economy – highlighting the importance of agriculture and land reform in achieving this. Therefore, it is logical to expect that current policy proposals would be aligned to the NDP. The NDP suggests a land reform model underpinned by the formation of district committees. These district committees would be tasked with identifying 20% of commercial agricultural land in a district, from land that is already on offer or available in the market through to various mechanisms such as distressed farmers,[4] absentee landlords willing to exit, or land in deceased estates. The assumption is that such mechanisms ensure land can be found without distorting markets. Commercial farmers in the district would then be given the option of assisting in the transfer of identified land to black farmers.

Once available land has been identified, the NDP suggests that the state would purchase it at 50% of market value as this would be good proxy for the fair productive value of the land. The remaining 50% market value would then be made up by cash or in-kind contributions from commercial farmers who volunteer to participate in the programmes. In exchange, the NDP argues that commercial farmers will be protected from losing their land and gain black economic empowerment status. This is meant to remove the uncertainty and mistrust that surrounds land reform, and increase investor confidence. Moreover, the NDP maintains two key aspects of the current model: willing buyer-willing seller and market linked compensation. Recent policy proposals, however, show a drastic departure from this line of thinking.

In February 2014, the Land Reform and Rural Development Minister launched the final proposal on “strengthening the relative rights of people working the land”.[5] The importance of this proposal was signaled when a pilot project of 50 farming enterprises, to test this proposal, was announced by the President during the 2015 SONA.

In essence, the 50-50 policy proposal requires commercial farmers to transfer 50% of their land to their farm workers/dwellers. Government will pay for this 50% allotted to the farm workers, but the money will not go to the commercial farmer. Instead an Investment and Development Fund to be managed jointly by the new owners (the commercial farmer and the workers) of the farm will be created. The use of this Fund would be limited to developing the managerial and production capacity of the new owners, investments on the farm, and paying out beneficiaries that want to leave the scheme. Workers qualify for ownership based on the number of disciplined years of service provided on the farm. It is not clear what ‘disciplined’ means in this context.

The move away from willing buyer-willing seller model is a clear departure from the current and NDP models. The transfer of payments into a Fund and not the farmer has been viewed as expropriation without (direct) compensation. Naturally, this would create some anxiety and uncertainty amongst commercial farmers and the land market more widely. Other stakeholders have argued that it would negatively affect investment in farms, job creation, farm production, and ultimately food security. When the Minister launched the policy, he gave stakeholders until April 2015 to comment and provide their input on this document. It is unclear what the outcome of this has been; albeit a number of agricultural industries undertook initiatives to propose alternative plans to the Minister’s proposal. There are also concerns around the constitutionality of the proposed Bill.

The Regulation of Land Holdings Bill was also outlined by the President during the SONA. In essence, the Bill would introduce a land ownership ceiling of 12,000 hectares, with foreign nationals not being allowed to own land in South Africa. Foreigners would instead  be eligible for long term leases (minimum of 30 years). However, during his departmental budget speech in May 2015, the Minister of Rural Development stated that instead of a unitary approach, farms would be categorised into three bands with respective caps as followes:

· Small scale 1000 ha

· Medium scale 2500 ha

· Maximum 5000 ha

A special category of farming enterprises will be created for which the 12,000 ha limit would be applicable. These include forestry, game farms, and renewable energy enterprises. It is further suggested that concessions on sizes would be considered for some farming enterprises that generate more than R5m a year.[6] Based on this policy, a farmer owning land in excess of the thresholds will see his land expropriated and redistributed. In terms of compensation, the policy promotes the just and equitable principle as espoused by the South African constitution.

Apart from the constitutionality of the Bill, there are a number of other questions that need to be addressed. For instance, what exactly does just and equitable mean, and who would be responsible for determining such? How were the limits calculated? How do you transition from the one to the other? How will the classification of farms work; would this be based purely on size or will other variables be considered?

While these policy proposals have not yet been formalised, there is a clear intention by the government to adopt a radical approach to speed up land reform. The economic and social importance of agriculture and the land reform programme means that any sharp change in policy direction should undergo rigorous and robust evaluation to ensure negative consequences are identified and minimised.

Regulatory Impact Assessment (RIA) is a widely used tool for governments to improve regulatory outcomes, including in South Africa. RIAs enable decision makers to assess whether regulations and legislation contribute to government’s socio-economic objectives, and to identify and quantify the net impact of a policy. The RIA process is particularly useful where there are a number of competing approaches to achieving a desired outcome, and where there is a risk of large and unanticipated negative consequences, It is unclear whether the current Bills have been taken through this process, but there is no doubt that such a process could be critical to finding a sustainable approach to land reform.