Now we have to remain level-headed

July 2016

JANNIE DE VILLIERS, uitvoerende hoofbestuurder/CEO

The process to finalise the new Expropriation Act took considerable time. The first draft Act was withdrawn a few years ago and thereafter a new draft was initiated. Grain SA welcomed this and the eventual Act is much better than the initial draft.

Every country has an Expropriation Act. South Africa’s Act is different because of the season of land reform we are currently experiencing. Expropriation with a view to economic development is a necessity for every country, but if utilised for political reasons it generates a lot of emotions.

Grain SA is not against an Expropriation Act per se, but if it is used in a manner where proper compensation is not involved, we will seek recourse in the Constitution of the country to ensure that the process is applied fairly. Expropriation for land reform is no easy matter, but such laws are a necessity to expedite the process.

The last time I enquired, the figure of all agricultural land coming onto the market annually, was 13%. That alone is enough for government to purchase with a view to land reform – and then almost no land expropriation would be necessary.

So where does the problem lie? Does the state not have the money or are there still those who are hoping that they will get everything for free? There might even be some avarice involved in the matter – potential producers who do not want a farm, but who want specific pieces of land close enough to their houses in town so that they may be able to farm only on weekends? The government’s agricultural support system most likely does not have the capacity to support the establishment of new producers at the rate land becomes available.

The maintenance of land values is synonymous with food security. Should the land lose its value as a result of uncontrolled expropriation or even the occupation of farms, the security which is the guarantee for production loans, will disappear. Financial institutions will just suspend or curtail credit – depending on the impact – and as a result production will decrease.

South Africa has for the past season experienced high food prices – derived from import parity – and was definitely not impressed. Plans are now feverishly made everywhere to once again ‘normalise’ food prices. However, any manner of unlawful expropriation or illegal land reform could push our country over the edge into a permanent ‘abnormal’ situation.

My observation of the current situation in the grain industry is that the relationships between the various role-players are decidedly tempestuous. The rest of the value chain is focused on their own distinctive problems – whether it is the importation of maize or countering the overseas attack on the local poultry industry.

The upcoming local election, together with the drought, has very clearly indicated where the Government’s priorities lie. All existing policies are being reviewed as if the drought will never end and everything must be done to reduce food prices. Now is the time to remain level-headed and to focus on long term sustainability.

Publication: July 2016

Section: Features