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Subdivision of agricultural properties could assist land reform programme

Posted on May 24 2021 by Gert Minnaar in Case Law

A judgment of the Gauteng high court on August 20 seems to have slipped by unnoticed, though it could have important implications for SA’s land reform programme. In the matter between Freedom From Interest and the agriculture, land reform & rural development minister and SA president, judge Selby Baqwa ordered as follows:

  1. The minister was directed to take all the steps necessary to submit the Preservation and Development of Agricultural Land Bill (PDAL) of 2018 to cabinet on or before February 28 2021 for its consideration and approval.
  2. The first respondent was directed to take all the necessary steps to submit the bill to parliament by no later than the last date of the second term of parliament in 2021 (that is, September 30 2021) for its consideration and enactment.
  3. In the event the bill is not passed into law by parliament, the minister is to set out the date that will be assigned by the president to bring the Subdivision of Agricultural Land Act Repeal Act 64 of 1998 into force, and to do so within 60 days from the date on which parliament fails to pass the bill.

This case emerged from the 22-year delay in the promulgation of the Subdivision of Agricultural Land Act Repeal Act (Act 64 of 1998). The act was passed by parliament in 1998 to repeal the Subdivision of Agricultural Land Act (Act 70 of 1970), which had as its purpose controlling the subdivision and use of agricultural land. This latter aspect is important as it in effect protects high-potential agricultural land from being rezoned for urban use, given that people tend to live in fertile areas in direct competition with agriculture for scarce high-potential land. The SA president never signed the repeal act into law, and as things stand now the legislation prohibits the subdivision of agricultural land without the approval of the relevant minister.

The purpose of the PDAL bill of 2016 was to deal with the constitutional dilemma caused by the state failing to enact the repeal act of 1998, but at the same time to ensure the continuation of the prohibition of subdivision of agricultural land. In the lead-up to this high court case, the department of rural development & land reform removed the restrictions on the subdivision of agricultural land from the PDAL bill and provided a new draft as part of the court papers.

We have for many years argued that Act 70 of 1970 is an impediment to the process of rapid land reform as the process of subdivision is cumbersome, bureaucratic and expensive, even if the minister agrees that all applications for subdivision for the purposes of land reform will be granted. It will thus always delay the implementation of private transactions where existing landowners want to sell off parcels of land to aspirant farmers, especially those with limited capital who can only afford a smaller farm.

Without these restrictions on subdivision, there could be many opportunities for commercial farming operators to contribute to or donate land for the land reform programme. One can, for example, subdivide land and allocate viable portions of land to workers (for farming or housing), tenants and potential beneficiaries. Again, ease of subdivision is key, and efficient and quick registration of new owners should be possible. At the same time, subdivision could have facilitated the establishment of joint ventures with privately identified beneficiaries. These joint ventures could access subsidised capital, water rights and market contracts. At the same time, agribusiness could provide well-integrated support services for these new entrants.

Getting rid of the restrictions on subdivision, but finding a sensible mechanism to protect high-potential agricultural land, could facilitate access to land for many disenfranchised and disempowered communities in SA. Land redistribution would be exponentially advanced should the government facilitate subdivision rather than act as a barrier in cases where a portion of a property is to be subdivided and transferred to a land reform beneficiary of the owner’s choice.

In agriculture, land ownership is necessary because only the owners of land will invest in maintaining the long-term ability of land to produce farm products sustainably, and because land is the perfect collateral for borrowing if you want to expand your business. Both of these views have solid support in the literature. However, when access to land is so expensive that only those who can afford it are able to buy land, land reform in favour of the majority is not possible and inequality ensues.

Often, the cost of acquiring land is taken as the value of the land only, but the act of buying land can be very expensive: in cash in terms of the cost of surveying, conveying and registering land, and in time when these processes are inefficient and take too long. As a result, scrapping the subdivision act on its own is a necessary action, but it is not sufficient. The other costs must also be taken into account, and measures introduced to address them. This could include instruments that range from using government surveyors and conveyancers to grants to beneficiaries, tax relief for farmers who want to sell-donate land for land reform, or some combination of these.

• Johann Kirsten and Nick Vink are professors in agricultural economics at Stellenbosch University.