Expropriation of agricultural land without compensation would likely cause serious damage to the sector and lead to economic collapse, says a senior AgriSA economist.
"The suggestion that land expropriation without compensation will fast-track land transfer to previously disadvantaged people may be true, but it will also seriously damage the agricultural sector and lead to economic collapse ... similar to what happened in Zimbabwe," Hamlet Hlomendlini said on Thursday.
Expropriating agricultural land without compensation could damage the agricultural sector’s competitive advantage and compromise food security and lead to poverty and unemployment, he said.
The government is under pressure to complete its land reform programme amid growing fears that Zimbabwe-style land grabs might become the order of the day. President Jacob Zuma has, on a few occasions, said the Constitution should be amended to allow for land expropriation without compensation. In his closing remarks at the ANC’s policy conference in June, he said "where it is necessary and unavoidable land expropriation without compensation may be pursued".
The EFF, which has long called for expropriation without compensation and for its supporters to occupy land, has offered the ANC its 6% representation in Parliament, which would give it the required two-thirds threshold to amend Section 25 of the Constitution — the property clause.
Hlomendlini said the National Development Plan identified agriculture as one of the critical sectors for economic development, with the potential to create about a million jobs by 2030, but with the current uncertainty around land, this target might not be reached.
The agricultural sector was also likely to suffer from serious disinvestment, should expropriation without compensation become a reality. Without investment, the sector would regress, productivity would be compromised and job losses would ensue, pushing the country deeper into recession in coming years, he said.
Furthermore, for sustainability and development of farms, most farmers rely on creditors, such as the commercial banks, the Land Bank, and agricultural co-operatives. In 2016, finance sourced from these institutions and other lenders amounted to nearly R145bn mostly for financing capital assets, of which land and fixed improvements constituted more than 50%.
Whenever there is an increase in farming assets, said Hlomendlini, farming debt, as well as the debt-to-assets ratio, increases. This, he said, was an indication that if land expropriated without compensation were to be implemented in SA, farmers would be left with enormous debt.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.