Constitution in farm grab’s way
Proposal to give 50% of farm business to workers adds to policy uncertainty on land, writes Franny Rabkin
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.