Land expropriation without compensation could compromise sustainability of food production and South Africa will in effect become a nett importer of food rather than its current status as a nett exporter. This is according to agricultural and economic industry analysts who spoke to FTW following Parliament’s adoption of the Economic Freedom Front (EFF) resolution on the matter last week. “Expropriation without compensation – as officials in the banking industry have warned – will undermine the capital base of agriculture,” said a spokesperson for the Institute of Race Relations (IRR), pointing out that the heightened risks were likely to make financial institutions exit the agricultural sector. “With national farm debt now at over R160 billion, government cannot match these financing requirements.” He said that this would lead to an inability to sustain production. “The damage would not be limited to job losses, declining taxes and export receipts, and the disruption of value chains. It would likely prove destabilising to the country as food price inflation takes off, compromising food security,” the IRR spokesperson said. Dan Kriek, president of industry lobby organisation AgriSA, agreed with the IRR that the resolution as it stood now would likely lead to financial institutions no longer making production loans available to farmers. “Without these loans farmers cannot purchase seed, fertiliser, feed or implements and will be unable to produce,” he warned, adding that AgriSA would participate in the consultations and would get legal and other advice regarding the process that was now unfolding. Another issue with the current resolution according to Dr John Purchase, CEO of the Agricultural Business Chamber (Agbiz), is that it effectively erodes property rights that are the “very foundation of the values and principles related to individual liberty and economic freedom”, which are the drivers of a country’s prosperity. He maintains that the open and competitive South African agro-food system is fundamentally based on secure property rights to leverage financing for investment and production. “Erosion of these property rights creates uncertainty, which will inevitably divert potential investment away from the agro-food sector and also the country,” Purchase commented. He said that Agbiz would make “substantive submissions” to the Constitutional Review Committee once the envisaged amendments to the legislation became clearer and the implications were fully understood.
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Without these loans, farmers cannot purchase seed, fertiliser, feed or implements and will be unable to produce. – Dan Kriek
