Eviction case may sow seeds of reform (Business Day)

THE decision by the Department of Rural Development and Land Reform to try to evict emerging farmer Veronica Moos again is probably a blessing in disguise.

Moos herself, of course, is devastated. After winning a court order to be restored to her farm, she set about securing production credit with the backing of the Gauteng branch of farmers' union AgriSA, and is being assigned a mentor to provide her with technical and marketing guidance. To be told she's still in breach of the department's controversial "use it or lose it" policy and faces fresh eviction proceedings therefore came as a nasty shock.

The department's decision has, however, prompted Lawyers for Human Rights (LHR) to prepare a case on behalf of Moos against the government's Proactive Land Acquisition (Plas) policy.

Plas, under which Moos was awarded her farm, was the government's response to widespread complaints that the pace of land reform was too slow because officials sat back and waited for land grant applications to trickle in rather than redistributing land themselves.

There is nothing intrinsically wrong with Plas or the "use it or lose it" principle. Under Plas, officials are supposed to sit around the table with municipal officers, estate agents and representatives of farmers' unions and landless workers, tenants or squatters. The idea is to identify land available on the open market and establish local land needs. The government then buys farms and leases them to suitable beneficiaries, who can apply for grants to become outright owners. It sensibly reserves the right to cancel leases of unproductive emerging farmers, or those who sublet the properties to others rather than getting down themselves to the hard work of farming .

But several flaws immediately became apparent. For a start, because it helped show on paper that land redistribution was speeding up, Plas gave officials the incentive to go on farm-buying sprees before actually identifying beneficiaries. Second , by giving emerging farmers short leases of three years, the department made it difficult for them to gain access to production credit, effectively leaving them dependent on handouts and support from notoriously inefficient provincial land and agriculture departments.

In some ways it is a red herring to insist farmers will only get bank loans if they have full title to their properties, as former director-general of land affairs Glen Thomas has remarked. Thomas, who was a key architect and promoter of Plas, rightly points out that many commercial farmers prefer leasing land as it reduces their risk exposure. They have no trouble getting credit to make it productive.

But this obscures the fact that lending to emerging farmers, as with any start-up entrepreneurs, is risky. Banks don't like doing it at the best of times, let alone when presented with a three-year lease.

The conditions attached to support are also onerous. Rentals, set at 5% of the land value, are hopelessly too high. A poultry farmer I met is being charged R250000 a year for her farm bought for R5m as a going concern. Her business plan was premised on high demand and prices for poultry products. With the economic downturn, prices and demand have dropped and she's going under because she can't afford her state rentals.

Plas also obliges the government to provide beneficiaries with grants for basic farm infrastructure. To access these, they must supply three quotes for any job, then remain at the mercy of officials to appoint service providers to carry it out. Quotes typically lapse by the time subcontractors are eventually appointed, which means the whole laborious process must start from scratch.

Hopefully, the LHR case against Plas will result in sorely needed reforms to Plas. Farmers must be given leases that last at least 10 years, charged a nominal rental during the start-up phase of their businesses, and get to appoint their own contractors. Officials, on the other hand, must be incentivised to provide support and fired if they don't.

Unfortunately, these reforms will come too late for Moos, who has sunk her life savings into her farm and now risks losing everything because the department wants to save face rather than confront its own mistakes.

- Hofstatter is contributing editor - Business Day.