What is the truth about the cost of the nationalisation of farmland?

The Department of Rural Development and Land Reform has continuously issued conflicting statements on whether the nationalisation of productive land is this government's policy. As this issue is of critical importance, on the one hand, and has a number of profound financial implications on the other, the Department must therefore do two things urgently: First, it must act to allay these inconsistencies and provide clarity on its standpoint; Second, it needs to explain whether a cost-benefit analysis has been done for the proposal and, if not, why not.

With regard to the first requirement, the Department must indeed act to provide a clear standpoint in its policy in that:

• In an interview on e-News on Monday, the Minister of Rural Development and Land Reform, Gugile Nkwinti actively endorsed plans to nationalise farmland (see report)..
• Last week,his Deputy-Minister said that all the department wanted to do was come up with a model for land reform, and it had no intention to nationalise land.

Is a plan to nationalise farmland on the cards or not? This isn't a game. It goes to the heart of our economy and its best financial management. Being inconsistent or unclear on such a fundamental issue is like the Treasury vaguely suggesting pegging the currency against the Zimbabwean Dollar.

The Democratic Alliance (DA) fully supports a vigorous land reform process. This is not only a moral imperative, but is also important to South Africa's economic development. But if it is to work, it must be done in a coordinated, deliberate way, and without threatening the foundations of our economy. This means making sure that the institutions involved, such as the Land Bank, are operating efficiently, and that the budget is used to maximum effect to provide support and assistance.

If it is the government's intention to carry out a plan as ill conceived as this one, it needs to do the maths. Both as a pre-requisite in order to understand its implications but, more practically, to understand its likely impact.

The placing of the control of this entire economic sector in the hands of the state could have the effect of destroying it.

Private commercial farming plays an important role in terms of economic contribution to the South African economy. In the season ending in 2009, the South African economy made R 10.5 billion from agricultural exports - from R 7.7-billion in 2000. The sector also employs over 650 000 people.

The implications, however, stretch far beyond this; those are just the direct costs. These aren't small numbers.

The DA will be writing to the Minister of Finance requesting that he carry out a cost-benefit analysis of the nationalisation of land to determine what these consequences would be. The government undertook no such analysis when it punted getting rid of labour brokering; this pattern - of promoting profound ideas with massive implications without doing the proper analysis - seems to becoming standard practice. This is not how legislation should be conceived.

Statement issued by Mpowele Swathe, Democratic Alliance shadow minister of rural development and land reform, March 30 2010

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