Land policy must change South Africa’s agrarian structure

Changing the racial distribution of land is symbolically important, but on its own will do little to address wider crises of poverty, inequality and structural unemployment. Land reform has the potential, in my view, to make a significant contribution to reducing these key problems. This means that we must be clear about who will benefit — a small number of the emerging middle class, or large numbers of poor people.

Pro-poor land redistribution can generate as many as 1.2 million new employment opportunities, in my estimation. To achieve this, the policy must target around 250,000 market-oriented smallholder farmers as the main beneficiaries, and a minimum of 48 million hectares (or 60% of private farmland) must be transferred. Sceptics will ask: Will a smallholder-oriented land reform on this scale not place national food security, agricultural export earnings and farm employment at risk?

A core issue is the degree of concentration in the commercial farming sector. If only a small minority of commercial farmers produce the bulk of agricultural produce, then these risks can be minimised through careful targeting of both land acquisition and beneficiaries. If the farms of the few very large and efficient producers are not acquired for redistribution over the next decade or two, these can help stabilise the environment within which land reform takes place. In return for such protection, large producers can be required to provide practical assistance to land reform beneficiaries — and also contribute some of their land.

Land reform can then focus on transferring the farms of the majority of less efficient producers, including those with irrigation water. Large tracts of extensive grazing land would also be transferred.

Concentration: What do the data show?

A recent article by Kirsten and Sihlobo on News24 contends that South African agriculture is composed largely of family-owned farms, and that land redistribution must not promote small-scale farms and subdivision of large farms. But their focus on farm size, as measured in hectares, misses the point. As they themselves assert, the size of a business, measured in gross income or capital investment, is much more important in assessing the agrarian structure.

Kirsten and Sihlobo show the distribution of income categories within the commercial farming sector, using data from the 2007 agricultural census. This collected data from the 40,000 farms then registered for VAT. The authors add to this an estimated 30,000 farmers or landowners not registered for VAT, suggesting that there are currently around 70,000 privately owned farms.

But most of these farms make only a small contribution to the South African economy. Of this number, only 7.2% had annual turnovers of R3-million or more. An earlier census in 2002 reported aggregate gross farm income, and showed that 18% of farms were responsible for 62% of income. In 2015, I estimated that around 20% of farms produced 80% of all agricultural value and argued that 80% of farms could be targeted for transfer to black farmers.

The removal of state subsidies to white farmers and the abolition of state marketing boards from the mid-1980s to the mid-1990s, termed deregulation and liberalisation, led to a massive shakeup in the sector. Marginal farmers sold their land and increased concentration was the result.

Large farm enterprises now dominate particular subsectors through vertical integration within value chains, increasing productivity through technological innovation (which also leads to declining levels of employment), and exerting market power. After a drought, larger producers buy up farms going out of business. In a deregulated sector, large farming businesses tend to outcompete smaller ones — “natural, simply capitalism”, according to Kallie Schoeman, one of the country’s biggest farmers.

In 2012, the Financial Mail reported that Schoeman supplied 60% of the beans canned by the Koo brand, and was the sole supplier of citrus to Shoprite-Checkers. In that year, Karan Beef produced a quarter of South Africa’s grain-fed beef, and Vito Rugani supplied a third of the carrots consumed in South Africa, or 150 tons a day. The Du Toit farming group owned 20 large estates and produced 200,000 tons of fruit and vegetables a year. It was the main supplier of fresh produce to Pick n Pay and Woolworths. The ZZ2 company owned by the Van Zyl family of Limpopo produced 40% of all the tomatoes and one-third of the onions consumed in the country, on holdings amounting to 70,000 to 80,000 hectares.

Policy choices

The policy implications of this analysis are clear: much farmland can be redistributed via land reform at low risk to national food security, exports and much farm employment. Of course, targeting would have to take local specificities into account, as well as strategic considerations.

Maize for poultry feed, for example, is a critical component of the value chain that supplies poor people in urban areas with much of their protein. Land reform should aim to avoid damaging disruptions to this supply chain, while also promoting black maize producers.

Targeting of beneficiaries is as important as the targeting of the land to be transferred. Both subsistence-oriented producers and black commercial farmers should also benefit to some degree. But market-oriented smallholders should get the lion’s share of redistributed land. They are not the poorest of the poor, but most earn much less than the poverty datum line.

They already produce fresh vegetables, livestock and wool on a competitive basis, mostly within local, informal markets, and in Limpopo are beginning to plant subtropical fruit. In relation to cattle, goats and sheep, smallholder farmers are highly skilled and could replace commercial farmers across much of the country without severe disruptions to meat supply.

The implication is that in the short to medium term we must accept that agrarian structure in South Africa remains “dualistic” — with a small number of mainly white-owned large-scale capitalist enterprises, a large number of black smallholder farmers and a small number of black commercial farmers in between. Over time, we can expect to see processes of accumulation and concentration among black small-scale farmers too. Accepting dualism is a pragmatic solution to the immediate problem, rather than a long-term ideal.

Will the president’s advisory panel on land reform suggest a programme focused on smallholder farmers as the key beneficiaries, or a small number of black commercial farmers? It is worrying that Wandile Sihlobo, a member of the panel, has come out against smallholder-focused redistribution.

Implicitly, land reform focused on black commercial farmers aims to preserve the current agrarian structure, while de-racialising it at the margins. Its stance is reactionary, its class agenda being to promote a narrow set of (black) middle-class interest.

My proposal is the opposite: To embark on a large-scale land reform that targets at least 60% of all commercial farmland, subdivides large farms, and transfers them to 250,000 black smallholders. This can be scaled up over time.

Land redistribution must focus on agrarian structure, radically changing patterns of land ownership — but also changing the life prospects of a significant proportion of South Africa’s rural poor. DM

Ben Cousins holds a DST/NRF Research Chair in Poverty, Land and Agrarian Studies at the University of the Western Cape.