Rural Development and Land Reform Minister Gugile Nkwinti briefs media in Parliament on February 22 2013. Picture: TREVOR SAMSON
Rural Development and Land Reform Minister Gugile Nkwinti briefs media in Parliament last week. Picture: TREVOR SAMSON

RURAL Development and Land Reform Minister Gugile Nkwinti might have abandoned the "unrealistic" target of redistributing 30% of the land by next year, but is steaming ahead with land reform with far more vigour and determination than his predecessors.

Mr Nkwinti said on Friday he believed that when policy makers set the original target, they had assumed that beneficiaries of restitution would choose to return to the land. But of 76,000 beneficiaries, 71,000 had chosen financial compensation instead.

The government is also convinced that the "willing seller, willing buyer" principle — on which land has until now been acquired — has slowed land acquisition by rising prices.

Replacing this with the principle of "just and equitable" redistribution — now ANC policy — will change this, he believes.

While there is no doubting the political imperative of land reform — even most white farmers who have interacted with the government see this too — concerns are sure to arise about the impact of reform initiatives on the market.

The proposal here, which is contained in the green paper on land reform, is that an office of the valuer-general be established, which will set down the norms and standards of what comprises a "just and equitable" value for land.

This valuer-general would have to take into account the principles around property ownership outlined in the constitution, which include, among others, taking into consideration both the public interest (in this case, to undertake land reform) and the market value of the property.

Many observers believe the government is being naïve in thinking this shift will result in dramatically lower prices in land redistribution programmes. (Restitution programmes — comprising only a small component of land reform — are clearly different as the owner has the ability to push up the price for a specified parcel of land.)

But Mr Nkwinti is hopeful it will not.

"Valuations might be lower or equal to market value," he says.

The process will involve the state arriving at a price, based on the norms and standards, which it will put to the buyer. If the buyer does not accept, the state — under a new Expropriation Act, which is in the process of being drafted — will expropriate. The buyer will have recourse to the courts.

Mr Nkwinti says although prices might not drop tremendously, the difference between buying land this way compared to the willing buyer, willing seller model is nonetheless important as it gives the state the right to decide on the definition of "just and equitable", rather than leaving this to the courts.

It will make a notable difference to restitution cases, where the state has to date paid double for land acquired compared to that bought on the open market.

A bigger shock to the market, Mr Nkwinti says, will be the limitation soon to be placed on private freehold, setting limitations on how much land a farmer can legally hold. The maximum size for freehold is still the subject of deliberation by Mr Nkwinti’s department. The aim, to introduce more black farmers to the land, is honourable, but is it viable?

The most thorough-going work on the economics of agriculture, carried out by the Bureau for Food and Agricultural Policy at the universities of Stellenbosch and Pretoria to assist in the analysis of wage levels, suggests that subdividing farms won’t be economically viable.

The bureau states frankly that the new wage structure for agriculture will be the catalyst for the "structural adjustment" which the sector must inevitably experience.

Mechanisation is an inevitable trend, it suggests, and structural adjustment is likely to involve an acceleration of concentration of ownership, with small and medium-size farmers unlikely to achieve adequate returns on their investments.

Mr Nkwinti dismisses those who argue against subdivision as the voice of vested interests protecting their profits.

That may well be so, but best that some careful investigation be done before making the giant leap that could undermine agricultural production terribly.