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New Policy Proposal on Land Ceilings

It would appear that the Government has again changed the goal posts, in that the original 12 000 ha land ownership ceiling has now been reduced to 5 000 ha and that they will expropriate any excess land owned over this ceiling. Of importance to note is that the forestry land holding ceiling is still 12 000 ha.

Please refer to article from Business Day below:

Nkwinti defends cap for farms

by Troye Lund, May 11 2015
Business Day

RURAL Development and Land Reform Minister Gugile Nkwinti has rejected critics who have decried his proposed ownership ceilings for farms as "nonsensical and arbitrary", saying these were a critical part of speeding up reform and avoiding land grabs.

This also forms part of the minister's broader plan to prohibit foreign land ownership in SA.

Although academics have warned that the proposed ceilings would drive investment away from agriculture, Mr Nkwinti said the government was open to debate on the size needed for a viable farm. However, the government would not back down on the principle of capped farm sizes.

During his budget vote speech on Friday Mr Nkwinti presented a plan to classify farm ownership into three bands.

The proposed ceiling for a viable commercial small-scale farm is 1,000ha while caps for medium-scale and large-scale farms are 2,500ha and 5,000ha. The proposal does allow for a special 12,000ha land ceiling for forestry, game and renewable energy farms. Concessions on sizes will be available for some farming enterprises - sugar, grapes, vegetables, fruit and horticulture - that generate more than R5m a year.

These will be considered for workers' share equity schemes.

"Any excess land portions between each of these categories shall be expropriated and redistributed; and compensation will be on the basis of the ‘just and equitable' principle enshrined in section 25(3) of our Constitution," Mr Nkwinti told Parliament.

Ben Cousins of the Institute of Poverty, Land and Agrarian Studies at the University of the Western Cape has criticised the plan and said any measure used to decide what size made a farm viable could not be anything other than "arbitrary" and based on "dubious assumptions" about what constituted acceptable income from farming. "Even if one accepts some kind of target income, there are too many variables to compute and these variables, including the price of inputs and outputs, shift (too) continuously for viability to be determined," he said.

Also, the notion of excess land among the prescribed categories made no sense unless a minimum farm size for each segment was proposed, said Prof Cousins. "If, for example, a farm is 1,500ha - which is in excess of the 1,000ha cap for a small-scale commercial farm - would it not then be a medium-scale farm? Setting upper and lower limits on the basis of hectares alone is simply foolish."

Agri Sector Unity Forum chairman Japie Grobler said: "There's no way you can have ceilings in agriculture. There are so many factors that affect farms - like what you are farming, what water rights you have, how far you are from markets, whether you farm for export or for something that is subsidised."