Agriculture and land reform: How far are we from an integrated and inclusive rural economy?

Progress with land reform as per the NDP has been underestimated and, while still slow, is closer to the 30% target than typically believed

Chapter 6 of the National Development Plan (NDP) sets out the parameters for an integrated and inclusive rural economy. It opens with: “By 2030, SA’s rural communities should have greater opportunities to participate fully in the economic, social and political life of the country. People should be able to access decent basic services that enable them to be well-nourished, healthy and increasingly skilled. Rural economies will be supported by agriculture and, where possible, by mining, tourism, agroprocessing and fisheries.”

Agricultural expansion, more agroprocessing, job creation and land reform are central to growing rural economies. It rests on goals such as promoting irrigated agriculture and high-value and labour-intensive industries; bringing unproductive land in former homelands and underutilised land reform farms into production; increasing productivity; and expanding access to new export markets.

It needs to encourage inclusivity by extending these activities to former homeland areas. Redistributing 30% of commercial farmland formerly under white ownership is another important goal.

Good quality and regularly reported data is vital to measure if we are reaching these targets. We report here on indicators for which long-term series of good quality data is available from official resources.

2020 was a good year for agriculture, despite the Covid-19 pandemic. Agricultural gross value-added expanded by 13.1% year on year, continuing an improvement that has been under way for a while. Based on a five year moving average, the gross value of agricultural production increased by 44% between 2010 and 2020. In value terms, horticultural production is the star of the sector, increasing by 70%. The value of animal production grew by 43% and field crops by 22% over the same period.

A number of high-value, export-led and labour-intensive industries have exceeded the targets put forward during the drafting of the NDP: citrus, macadamias, berries, dairy and pork fared particularly well.

However, these gains are not reflected in agricultural employment statistics. In 2012, the NDP estimated that agriculture has the potential to create about a million new jobs. This is often misinterpreted as referring to on-farm jobs only, but includes 393,000 jobs through the revitalisation of smallholder and land-reform farms and underutilised farmland; 250,000 jobs in export-led and high-value agricultural industries; and 326,000 jobs in agro-food value chains with upstream and downstream linkages.

Between 2012 and early 2020, SA lost 100,000 full-time equivalent jobs in the former homeland areas. The general lack of farmer support services — such as access to finance, farm inputs, product markets, extension services and infrastructure — has left agricultural production in these areas severely underdeveloped. The general lack of data also remains a major stumbling block in the measuring, monitoring and support of agriculture outside commercial production.

Poor record-keeping by the government has resulted in an underestimation of progress on land reform. Our estimates … suggest that 13.2-million hectares have already been transferred

In addition, the 2017 agricultural census by Stats SA missed a large chunk of the agricultural sector since the survey sample only included VAT-registered farmers.

High-value, export-led agricultural industries saw a gain of 25,000 jobs, though it remains far from the target of 250,000 new jobs. Agroprocessing and its integrated value chains created 102,000 jobs. Overall, a net gain of only 27,000 jobs has been recorded since the publication of the NDP. The poor performance can, in part, be attributed to the field crop and livestock industries being challenged by animal disease and external factors in recent years. This has increased the drive towards mechanisation and consolidation of farms, resulting in a reduction in job numbers.

The redistribution of farmland owned by white farmers and businesses at the start of 1994 is a critical component of the NDP’s vision. In 1994, 77.58-million hectares of farmland was owned by white farmers and agribusinesses. The NDP prescribes that 30% of this area (equal to 23.25-million hectares) should be transferred to black owners by 2030.

Poor record-keeping by the government has resulted in an underestimation of progress on land reform. Our estimates — which include restitution, redistribution, private transactions and state procurement — suggest that 13.2-million hectares have already been transferred. Of this area, 3.08-million hectares went to the state and 10.14-million to black owners through private and state-supported transactions (including land restitution).Graphic: SUPPLIED

Most official estimates of land-reform progress ignore private transactions in which black individuals have bought land without making use of government programmes. Based on records from the deeds office, we estimate that 1.5-million hectares have been transferred in this manner.

If we add land that was successfully identified for restitution but for which communities elected to receive financial compensation as the means for restitution (2.34-million hectares), the total area of land rights restored since 1994 comes to 15.56-million hectares. This suggests that we have so far met two thirds of the NDP target.

SA’s progress towards the ambition of creating an integrated and inclusive rural economy has thus far yielded mixed results. There is good progress from an agricultural growth perspective and in the expansion of high-value, capital-intensive industries. This is also the area where most employment creation has happened, though the effects are offset by job losses in underutilised land, especially in former homeland areas. More could have been achieved if the former homeland areas in the Eastern Cape, KwaZulu-Natal and Limpopo were fully productive.

Progress with land reform has been underestimated and, while still slow, is closer to the 30% target than typically believed. Of concern is the 2.4-million hectares the state still owns, and which is not being transferred to deserving beneficiaries. These are some of the challenges SA policymakers should address in the near term to live up to the NDP’s promise of improving rural livelihoods.

• Prof Johann Kirsten is director of the Bureau for Economic Research. Wandile Sihlobo is chief economist of the Agricultural Business Chamber of SA. This is the third instalment in a series on SA’s progress towards the 2030 goals of the NDP.