Regulation of Agricultural Land Holdings Bill needs careful consideration – Solidarity

18 May 2017

The trade union Solidarity has submitted comments on the Regulation of Agricultural Land Holdings Bill (2017) published by the department of Rural Development and Land Reform.

According to Gerhard van Onselen, economics researcher at the Solidarity Research Institute (SRI), the controversial bill seeks to expand government’s control over and involvement in agriculture by means of a range of regulatory interventions.

“These interventions seek among others to establish a land commission, a register of agricultural land ownership, which includes a requirement for the disclosure of race, gender and nationality, a prohibition on the acquisition of agricultural land holdings by foreign persons, categories of ceilings that limit agricultural land ownership, and to designate portions of land exceeding the determined ceilings as redistribution agricultural land,” Van Onselen explained.

Solidarity’s contention is that the likely economic consequences of the Agricultural Landholdings Bill need more careful consideration. As stated by Van Onselen, the exact impact of the bill, as it stands, is presently uncertain but is likely to be economically harmful.

“The Minister’s final delegated authority in the setting of ceilings, and the still to be stipulated regulations called for in the bill, add to uncertainty,” Van Onselen said.

Solidarity’s recommendation is that the bill be put on hold until a more rigorous and transparent socio-economic cost-benefit analysis has been conducted and subjected to public scrutiny. What complicates the matter further is that the exact economic impact is difficult to determine when the exact nature of the ceilings is uncertain.

According to Van Onselen, it is important to consider agriculture’s direct and indirect impact on the economy. Commercial agriculture remains a significant employer and plays an important role in exports, and consequently in South Africa’s trade balance. “Moreover, this sector is closely linked to other industries that make use of agricultural inputs. A weakened agricultural sector could have adverse knock-on effects on other sectors of the economy,” Van Onselen said.

“In reality, a small number of the total number of farmers in South Africa produce above subsistence levels, feeding the rest of South Africans and contributing to exports. Measures that would serve as encumbrances to a well-functioning market in agriculture and that may impede agricultural investment and production are ill-advised,” Van Onselen said.

Specific concerns raised in Solidarity’s comments include: the impact on aggregate agricultural output; the impact on agricultural investment; the added cost of added ‘red tape’; and the possible impact on land values and the broader financial sector.    

Solidarity has retained the right to test the constitutionality of the bill at a later stage should the need arise.

Issued by Gerhard van Onselen, Economics Researcher:  Solidarity Research Institute, 18 May 2017