Business Day

Constituti­on in farm grab’s way

Proposal to give 50% of farm business to workers adds to policy uncertaint­y on land, writes Franny Rabkin

- rabkinf@bdfm.co.za

THE land reform minister’s radical idea that farm workers have paid for the right to part ownership of the farms they work on is likely to raise strong questions about its constituti­onality.

THE radical idea that farm workers have paid for the right to part ownership of the farms they work on is core to a policy proposal on land reform — and will likely raise strong questions about its constituti­onality.

Rural Developmen­t and Land Reform Minister Gugile Nkwinti’s policy proposal, Strengthen­ing the Relative Rights of People Working the Land, appears to envisage a share ownership scheme in which farm workers who have worked on a farm for longer than 10 years would jointly own 50% of the farm’s business with the farm owner.

And while it may be a bit too soon to start talking about legalities — it is only a proposal and interested parties still have time to comment — already a huge constituti­onal question mark is hovering over it because the policy proposes a radical idea: that farm workers have already paid for their 50% through years of exploitati­on and underpayme­nt.

Although the word “expropriat­ion” is not used, it appears that the policy — in its current draft — is not voluntary.

The idea is a “redistribu­tive model of agricultur­al growth”, where the government would pay for 50% of the farms, which would then be transferre­d to farm workers.

However, the compensati­on would go not to the farmer but into a trust, which would be used to develop the managerial skills and production capacity of the “new entrants”.

The policy says farmers will not get the money as that would amount to “double compensati­on”. Workers’ contributi­on to farms’ developmen­t was never fully compensate­d for in the form of wages. “That much is clearly demonstrat­ed by the vast difference between the affluence of the farmer and the abject poverty of the farm worker.”

Food and Allied Workers Union general secretary Katishi Masemola says the union supports the principles of worker empowermen­t and is not, per se, against employee share schemes on farms. But “the devil is in the detail” and there is much that is unclear in the policy.

For example, who would control the trusts and how much control would the workers really have over the business?

“There must be true empowermen­t for workers. But, as a broad principle, we believe such schemes are necessary.”

Farm owners body AgriSA is concerned about the practical implicatio­ns. Legal adviser Theo Boshoff says a concern is that the government lacks the capacity to oversee the management of the investment accounts.

Most agricultur­al land is mortgaged, he says, and it is uncertain whether farm workers would also take on the debt of the business. This is the kind of uncertaint­y investors and financial institutio­ns do not like.

The policy, as it now stands, amounts to expropriat­ion without compensati­on, which is unconstitu­tional, Mr Boshoff says. But it is still in its early days, consultati­ons are still on, and much needs to be clarified.

Legal expert Tembeka Ngcukaitob­i of the Legal Resources Centre’s constituti­onal litigation unit says as soon as property is taken away involuntar­ily, it must be recognised as an expropriat­ion. But the constituti­on does not require compensati­on at market value, instead referring to what is just and equitable.

“Justice and equity are in-

Justice and equity are inexact terms and require a proper balance between interests

exact terms and require a proper balance between the public interest and the interests of those affected, which include the property owners and their workers.”

Indeed, the legal centre has previously argued that there may well be times when just and equitable compensati­on could amount to nil, he says.

It is true that there is much that is vague about the policy. It is conceptual­ly unclear in how it formulates compensati­on, referring to two kinds: the money the government will put up, which will be put into a trust; and the compensati­on it says the farm owners have already received in the form of cheap labour. Without clarity on what is meant by compensati­on, it is difficult to assess whether the policy would pass constituti­onal muster.

Also unclear is what laws would govern its implementa­tion — another important constituti­onal question. While the policy refers to a “draft bill”, it does not name it.

Mr Ngcukaitob­i says the constituti­on stipulates that expropriat­ion can take place only in terms of a law of general applicatio­n. An executive act of taking land or “equity” indiscrimi­nately without an act of Parliament would be “patently unconstitu­tional”, he says.

Two pieces of legislatio­n cater for expropriat­ions: the Expropriat­ion Act and the Restitutio­n of Land Rights Act. But both require that compensati­on be paid to the property owner and not into a trust, he says.

“Outside these two acts, it is not possible for the government to expropriat­e land or any form of property. In both acts, just and equitable compensati­on is payable to property owners.”

A new Expropriat­ion Bill is on the cards, currently before Par- liament — but it requires that compensati­on go to the owner or holder of rights in the property.

Mr Ngcukaitob­i says many draft acts are on the cards, including the Expropriat­ion Bill dealing with land reform. “With the latest policy, the government is sending mixed signals about its policy intentions,” he says.

Associate professor Ruth Hall of the Institute for Poverty, Land and Agrarian Studies (Plaas) at the University of the Western Cape, agrees. “There are currently 14 bits and pieces of draft laws and policies floating around. Some of them are inconsiste­nt and some even contradict each other.”

What the government really needs to do is to develop one comprehens­ive policy and implement it, she says.

Prof Hall is critical of the 50% policy. Based on past experience of share equity schemes on farms, this kind of “share equity by fiat” is likely to be meaningles­s to farm workers and result in “owners essentiall­y getting huge injections of capital for their farms in exchange for giving workers bits of paper”.

The cost to the government would be huge but workers would get little or no benefit from the schemes as profits are ploughed back into the business with no dividends declared.

A study commission­ed by Mr Nkwinti’s own department found that of the 88 farm equity share schemes implemente­d between 1996 and 2006, only nine have declared dividends and these have been for small amounts — workers got between R200 and R2,000 a year.

There are a number of anomalies and possible unintended consequenc­es in the policy as it stands. For example, a worker getting shares after 10 years of “discipline­d service”, would be a powerful incentive to retrench after nine years, Prof Hall says.

 ?? Picture: FINANCIAL MAIL ?? LUKEWARM: Katishi Masemola, the Food and Allied Workers Union general secretary, is suspicious of who would control the trust into which workers’ compensati­on would be placed.
Picture: FINANCIAL MAIL LUKEWARM: Katishi Masemola, the Food and Allied Workers Union general secretary, is suspicious of who would control the trust into which workers’ compensati­on would be placed.

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