Opinionista Mzukisi Qobo 26 March 2018

Black farmers deserve state support

One of the self-serving myths about agriculture in South Africa is that this is such a difficult sector and only white Afrikaans farmers can thrive in it due to intergenerational farming and the hardiness of the group that runs the sector. This view is not supported by historical facts.

The question of land will not go away any time soon. President Cyril Ramaphosa’s key message is that land expropriation without compensation will be carried out in a way that does not harm the economy or food security.

The details of how this will be done exactly may take a long time to emerge. The credit rating agency, Moody’s, and the investor community seem unfazed by this policy direction towards expropriation without compensation. What may likely be a source of comfort for rating agencies and investors is the fact that the Constitution remains supreme, and whatever new dispensation is put in place on land and agriculture policy will be realised through the Constitution, either in its current form or amended to have an enabling clause on expropriation.

As Moody’s noted in its recent ratings review of South Africa,

The previous weakening of South Africa’s institutions will gradually reverse under a more transparent and predictable policy framework.”

This suggests that there is confidence in the stability of the country’s institutions and the quality of its constitutional arrangement. By and large this debate is about defending narrow interests, and it gets more intense when the spotlight is on the lack of transformation of commercial agriculture in South Africa. Across the value chain, the sector is controlled by highly concentrated white interests that have done very little to open up, and instead put up many defence mechanisms to explain away why the sector remains what it is.

The rise of white commercial farmers

One of the self-serving myths about agriculture in South Africa is that this is such a difficult sector and only white Afrikaans farmers can thrive in it due to intergenerational farming and the hardiness of the group that runs the sector.

This view is not supported by historical facts. Serious scholarly work such as those by Monica Wilson and Leonard Thompson on the history of South Africa, and Timothy Keegan on the history on rural transformations and the history of the Southern Highveld, tell a different story about the evolution of commercial agriculture and the role of the state in South Africa.

Intensive grain production, and what would later become known as commercial grain farming, took root only in the late 19th Century. Much of the land, especially in the Free State and around the former Transvaal, was used for speculative reasons, and under the ownership of mining magnates and their associates. Many of the Afrikaners who were given concession to land by Paul Kruger’s government in Pretoria failed to turn the free land to productive asset, and instead sold them on to land speculators who were prospecting for mineral riches. Boer land owners who were supported by government largesse, especially in the Transvaal, were not equipped with commercial production methods and could earn no livelihood from the land.

Combined with the effects of war, drought, and diseases, this condemned many Boers into a state of destitution, especially in the 1890s, and immediately after the Anglo-Boer War: they were landless in the rural outskirts and jobless in towns. Those who wanted to get into farming were discouraged by heavy requirements for capital to engage in intensive farming, as well as for lack of support from government at the time. Their challenges were not that different from those faced by black farmers today.

During this period, black farmers were far more adept at working the land productively as sharecroppers, especially around the Free State. They were able to mobilise households as labour co-operatives to drive efficiencies. Indeed, many landowners preferred black sharecroppers than Boer bywoners (tenants), since black sharecroppers were regarded as skilled and efficient, and the latter were seen as inefficient and lazy. The bulk of grain that was produced on the arable Highveld, according to Keegan, was produced by independent black tenant farmers. They were the ones responsible for food security, including supplying the new mining compounds in the Witwatersrand.

How ideology shaped state intervention

At the turn of the 20th century, the budding Afrikaner intellectual class took upon itself the struggle of promoting government intervention. The Afrikaner nationalist ideological ferment at the time, and the emergence of a counterforce against the dominance of English capital, gave life to many of the ideas that would chrystalise in the growth of white commercial farmers and state intervention in the economy.

The report on the Poor Whites Commission in 1908 created a momentum for an array of interventionist policies in favour of the white Afrikaner community and discriminatory policies against blacks. One such policy was the Land Bank Act of 1912, which established the Land Bank, followed by the promulgation of the Native Land Act in 1913. The 1913 Act dealt a shattering blow to the sharecropping system and designated much of the arable land for exclusive use by white farmers.

What followed was a battery of support from credit through the Land Bank to creating transport and market infrastructure linkages. The role of the Land Bank was to stimulate commercialisation of agriculture among white farmers through the mechanism of co-operatives, an idea that was inspired by the success of black sharecroppers. Some of the co-operatives still exist today as commercial farming groups, and they still get the lion’s share of the Land Bank’s loan book, with roughly 80% of the loan book oriented towards white commercial farmers.

A new phase of state intervention to support white farmers took off in the 1930s with the establishment of statutory marketing boards that would facilitate off-takes from farmers, with guaranteed prices, essentially ensuring that the white South African farmer never fails. Since then until the early 1990s white farmers enjoyed large-scale transfer of subsidies from the state to support their capitalisation. Their efficiencies were carefully cultivated by the state in ways that were denied black farmers.

It is not by genetic ordering or special talent that we have only 40,000 white commercial farmers feeding 52-million of South Africa’s population. The claim that this sector is sacrosanct from a food security point of view is disingenuous. There is nothing as insecure as having a minority responsible for a country’s food security.

The need to support black farmers

Black farmers today are not supported to the same extent as white commercial farmers were. A recent documentary tracks the experience of five black commercial farmers in the Free State. Some of these farmers are producing cash crops, maize, dry beans and soybeans, and some are involved in milk production.

These black farmers farm on anything between 50 hectares and 500 hectares and are doing so productively. However, they have no land of their own, and farm as tenants just like in the late 19th century. They cannot secure finance from the Land Bank without substantial down-payment on similar terms as commercial banks. They also battle to market their products and are price takers in a value chain that is totally controlled by white agribusiness groups.

As the 2017 land audit by the Department of Rural Development and Land Reform shows: 72% of the total 37,031,283 ha farms and agricultural holdings by individual landowners in South Africa is owned by whites, compared to 15% owned by coloureds, 5% by Indians and only 4% by Africans. These figures lend support to the growing calls for land expropriation. It is not just government that has failed to implement a land reform programme with urgency, but the white commercial farmers have spent a lot of energy defending their own interests. We are where we are on the land issue because they simply were not interested in transformation.

Using stalling tactics, white commercial groups such as Agri South Africa (AgriSA) have come up with their own distorted measures of land ownership. They have suggested that land ownership by previously disadvantaged individuals has increased markedly since 1994. They claim that the share owned by black South Africans has increased from 14.9% by value in 1994 to 29.1% currently, and with ownership potential of 46.5%. The ownership potential is clearly a figment of the imagination to inflate the appearance of land redistribution.

The study lumps together all land owned by government and that falls under the custodianship of traditional authorities in former homelands as representing a share of black ownership. The thrust of AgriSA study is to de-emphasise land ownership by hectare, and to place weight on fickle measures such as rand value and ownership potential. Further, it advocates for market mechanism rather than government intervention as the means through which redistribution will take place, forgetting that the white commercial farming sector would not have existed if it had been left to market mechanisms.

The banking sector is still in search of a clear and coherent position on the land question. The commercial banking sector has been part of the problem. It has done very little to support the expansion of the agricultural sector on a diversified basis. This is despite that over the past 20 years the sector has been registering healthy growth.

When adjusted for inflation, South Africa’s agriculture value was R108-billion in 1994, and it more than doubled to R263-billion in 2016, succoured in large part by financial support from commercial banks. Disconcertingly, this growth is highly concentrated among a few white players, which means the value generated is captured by a tiny minority. Before 1994, there were 100,000 commercial farmers in the country, and today this stands at 40,000. While the number of farmers has been in decline, the value has been increasing astronomically.

The issue of land, and in particular support to expand black farmers, has been left to fester for too long. There is another struggle beyond just access to land, which is full participation and ownership of the value chain from storage to transport to marketing channels. The longer we tarry the more the populists will gain traction. DM

Qobo is deputy director at the NRF Chair on African Diplomacy and Foreign Policy, University of Johannesburg

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