Land cap is grim reaper stalking SA’s farm sector
Farmers and their bankers are battling to digest Zuma’s plan
AGRICULTURE is the goose that laid South Africa’s golden egg. But it seems few people care about its slow demise, other than the farmers.
Agriculture still contributes about R84-billion (about 3%) to gross domestic product. If one adds in the entire food value chain, this figure soars to more than half a trillion rand, according to Roelof Botha, a joint managing director of consultancy Gopa Group.
Unlike banking, money spent in farming does much for the country, thanks to the multiplier effect of the relatively high number of people employed in the sector, says consulting group PwC.
The mood this week at the Standard Bank agriculture conference held in Johannesburg was sombre.
Dark clouds of gloom were evident everywhere, from the farmers and consultants to the bankers that lend to the sector.
It’s no surprise why. A few weeks ago, President Jacob Zuma said that the government would cap land ownership at 12 000ha and that farmers would be forbidden from owning more than two farms. At the same time, foreigners would be banned from owning land, and commercial farmers would need to give half their land to workers.
It’s an unpopular diktat in farming circles.
Botha says the rules would make local farmers “uncompetitive” with their global peers — and farmers agree.
Vito Rugani, a carrot farmer and director of Greenway Farms, says that if the country starts “nationalising land and moving into a socialist system, we will have a serious problem of supply and demand in food”.
Rugani is a fourth-generation farmer who cultivates 800ha to 900ha of carrots a year. Greenway Farms has three bases — in Limpopo, Gauteng and the Free State.
The use of three locations, he says, helps farmers like him supply the market all year round.
“Farming is economies of scale. The bigger the unit [farm], the cheaper the food,” Rugani says.
He would be far less efficient and profitable if he was limited to two farms, he says.
Rugani, who qualified as an agricultural economist at the University of Pretoria, says land-capping or redistribution is not a farming issue but an ideological struggle in political circles.
Politicians are selling the idea that nationalising land would right the wrongs of the past but the truth is that this would just perpetuate the injustices of the past, he says.
“They are denying ownership to the general population. All the land they are buying up is now [owned by government].
“How many black people are getting land? It is another form of apartheid … another form of exclusivity.”
Farmers haven’t helped the situation, however, by exploiting workers and paying them appallingly low wages.
Farmers, says Rugani, believe they are somehow “entitled” to cheap labour, and they’ve done little to change the way they pay workers — something that has hurt their credibility when it comes to lobbying the government.
“There are things that we have inherited in our legacy, in our attitudes … that labour is plentiful, therefore, labour should be cheap,” he says.
Because they have paid workers too little, farmers’ place in society has been questioned, and this “is our biggest problem”, he says.
It is not just farmers who are already in the system — the squeeze on the farming sector is deterring young South Africans from entering an industry essential to feed the country’s 50 million people.
Agri SA says South African farmers have an average age of 62 — higher than the EU (55), the US (58) and Australia (53).
Throw in the fact that more than half a million jobs have been lost in the industry over the past 12 years and it is apparent that there is a real problem.
Rugani, however, is not going anywhere. He is still one of the 37 000 farmers working the land and trying to make a buck.
What should alarm policymakers is that this number is less than a third of the 120 000 farmers who were around when the country become democratic in 1994.
Part of the reason for the shrinking numbers is urbanisation, says Rugani.
People who have chosen to stay in rural areas are buying bigger farms, so by default, the number of farmers who own land is declining.
Another worrying trend much debated at this week’s conference is the “corporatisation of agriculture” — when farms bought by the government are “leased” back to large farming corporations for long periods.
The danger here is the potential for back-handed deals behind the scenes, whereby farmers do deals with politicians on the basis that “you scratch my back, I scratch your back”.
Smaller independent farmers are then squeezed out as they don’t have the cash flow to compete.
This has created an unwelcoming environment, and some disgruntled farmers are now looking at either shutting shop or moving north.
Other countries are happy to have them.
In 2009, the Democratic Republic of Congo enticed South African farmers with long leases on up to 10 million hectares of land as the battlescarred country tries to revive its agricultural sector by planting sugar, maize, soya beans, coffee and tea.
At the time, more than 2 000 farmers expressed an interest in moving — although only 70 reportedly signed up, according to Agri SA.
In 2011, Mozambique reportedly signed up more than 800 South African farmers in its southern Gaza province.
This week the farmers, bankers and consultants built up a compelling case as to why Zuma should backtrack on his plan to limit farm ownership or risk decimating the sector further.
Without ham-fisted interference from the government and provided they take the lead in transforming the sector themselves, local farmers could make a decent living.
Rugani makes this case strongly, saying that local farmers have not grabbed all the opportunities that have come their way.
Botha says it is “pathetic” that Africa produces less than 5% of the world’s food — the continent boasts more than 60% of the world’s arable land. “The sky is the limit for South African farmers,” he says.
Provided the government sticks to trying to run the country and not the country’s farms, of course.