An analysis of land redistribution and the land market in the Boland region of the Western Cape

Maphutha, Jacob Mampuputlane (2005-12)

Thesis (MAgricAdmin)--Stellenbosch University, 2005.

Thesis

ENGLISH ABSTRACT: South Africa is experiencing major political, economic and social changes and in its policy orientation towards the event of globalisation. These changes are intended for the empowerment of those previously disadvantaged and for the levelling of the playing field for future equality of opportunities. In empowering these individuals it is recognised that agriculture is one of the important sectors that would serve as a vehicle for the development of the country. It is the main source of economic growth and the bedrock of economic development. Agriculture depends strongly on land, which is also an asset that can be used to generate income. For this reason land reform in the form of grants is one of the important tools employed in South Africa to redistribute land to the disadvantaged in order to enable them to improve their income and also to develop rural areas. As this programme is based on a market-assisted approach, its success depends on land markets that function well and are stable enough to carry it. The objective of this study was to determine the state of land redistribution and to analyse the land market in the Boland region of the Western Cape province. The effectiveness of land redistribution was analysed with regard to the number of transactions that took place in the years 1998, 1999 and 2000 in terms of citizenship, race, mode of land acquisition amongst the disadvantaged (government grants, private acquisitions and inheritances), quantity and quality factors. The findings were discussed in terms of their implications for the success of the programme and their influence of the land market. Finally recommendations were made for potential improvements as well as for further research. It was found that land redistribution by means of government grants was rather slow and most of the transactions took place through private purchases, mostly through mortgage loans provided by the Land Bank of South Africa. Although private transactions redistributed more wealth measured in terms of size pf land, the accompanying land was less superior using price per hectare as a proxy for quality compared to land purchased with the assistance of the government. Transactions for the latter were mainly through joint ventures with current owners. The study also revealed that the land market in the Boland is one of the major obstacles to the speedy transfer of land not because of the foreign investment, but due to the nature of the sectors. The two main agricultural sectors are viticulture and deciduous fruit which have experience high growth in income and export. The analysis conducted established that there was no significant difference between properties bought by foreigners, white and Black South Africans. Future trends in land prices could not be predicted but it is expected that agricultural land prices will be well above the capitalisation value of future profits arising from the level of foreign investment as well as economic gain. Based on the finding the areas to be emphasised by the land reform programme in this region are joint venturing and the promotion of subsidies on mortgage loans as well as extending the government's role in the land market. Increased government spending and involvement of the private sector, including financial institutions and established commercial farmers, are some of the things to be encouraged to facilitate the process and ultimately to overcome poverty. The sole reliance on the current regional land market seems incapable of effectively and speedily redistributing land to beneficiaries, whereby equality can be achieved in the long run. However, if all the shortcomings of the land market are recognised and a new policy is adopted, land reform in the Boland and in South Africa will in the future be more likely to promote increased access to land, resulting in higher productivity, growth and a globally competitive agriculture.

AFRIKAANSE OPSOMMING: Suid-Afrika ondervind tans grootskaalse politieke, ekonomiese en sosiale veranderinge en so ook in beleidsoriëntering na aanleiding van globalisasie. Hierdie veranderinge het ten doel om voorheen benadeeldes te bemagtig en om die speelveld gelyk te maak met betrekking tot toekomstige geleenthede. Tydens die bemagtiging van hierdie individue word landbou erken as een van die belangrikste sektore wat kan dien as 'n voertuig vir die ontwikkeling van die land. Landbou is die hoofbron van ekonomiese groei en die hoeksteen van ekonomiese ontwikkeling. Alhoewel landbou grootliks afhanklik is van grond, is grond 'n bate wat gebruik kan word om inkomste te genereer. Om hierdie rede is grondhervorming in die vorm van 'n toekenning of subsidie een van die belangrikste meganismes wat in Suid Afrika gebruik word om grond aan die voorheen benadeeldes te herverdeel. Die doel van grondhervorming is om die voorheen benadeeldes in staat te stelom hul inkomste te verbeter en ook om landelike gebiede te ontwikkel. Hierdie program is gebaseer op 'n markondersteunde benadering en daarom hang die sukses af van die grondmark wat goed funksioneer en stabiel is. Die doelwit van hierdie studie was om die stand van grondhervorming te bepaal en om die grondmark in die Boland-streek van Wes-Kaapse provinsie te ontleed. Die effektiwiteit van grondherverdeling is ontleed met betrekking tot die getal transaksies wat plaasgevind het in die jare 1998, 1999 en 2000 in terme van burgerskap, ras, metode van grond aanskaffing tussen die minder bevoorregte (staatstoekennings, private aanskaffing en erflatings), hoeveelheid en kwaliteit. Die bevindings is bespreek in terme van hul implikasies vir die sukses van die program en hul invloed op die grondmark. Finale aanbevelings is gemaak vir potensiële verbeterings sowel as vir verdere navorsing. Daar is bevind dat grondherverdeling by wyse van staatstoekennings baie stadig was en meeste van die transaksies was deur private aankope, meestal deur verbandlenings verskaf deur die Landbank. Alhoewel privaat grondverkope grootliks rykdom herverdeel, is die waarde in terme van prys per hektaar minder in vergelyking met die waarde van grond aangekoop met die hulp van die staat. Wingerbou- en tuinbouprodukte het die hoogste groei in inkomste en uitvoer ondervind. Dit word egter verwag dat grondpryse ver bo die kapitalisasiewaarde van toekomstige winste sal styg voortspruitend uit onder andere die vlak van buitelandse investerings. Die areas wat beklemtoon moet word deur die grondhervormingsprogram in die streek, is gesamentlike ondernemings en die bevordering van subsidies op verbandlenings. Verhoogde staatsbesteding en betrokkenheid van die private sektor, insluitende finansiële instellings en gevestigde kommersiële boere, moet aangemoedig word om die proses te fasiliteer en om uiteindelik armoede te oorkom. Die huidige streeks-grondmark blyk onbevoeg te wees om herverdeling van grond aan begunstigdes effektief en spoedig op die lange duur te laat geskied. Indien die tekortkominge van die grondmark erken word en 'n nuwe beleid aanvaar word, sal grondhervorming in die Boland en in Suid-Afrika in die toekoms meer geneig wees om toegang tot grond te bevorder. Dit sal aanleiding gee tot hoër produktiwiteit, groei en 'n globaal mededingende landbou.

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