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July 26, 2011

South Africa urged to try rent-to-own land reform

by Hopewell Radebe

The government should consider renting farms for a few years, with an option to buy them, so that it can accelerate transferring land to black farmers and stem the failure of land reform projects, South Africa's Land Bank argues.

The proposal is made in a newly released research report, the bank’s first analysis of the viability of emerging farmer financing and support systems in more than five years.

The Land Bank study found that, based on its loan book alone, the success rate of emerging farmers was between 43% and 57% .

Land Bank adviser Dr Japie Jacobs said the failure rate rose when emerging farmers had no business plan, which often led to high debt-asset ratios. The state needed to screen candidates for "agricultural land" distribution carefully, ensuring that most beneficiaries had practical farming skills and experience.

... recommended that older debts be cancelled and the agriculture department compensate the bank for the resettlement of farmers’ debts.

...state institutions had not been responsive to farmers’ problems. The economic environment did not accommodate emerging farmers and some had unviable farms lacking basic infrastructure .

The study showed farmers who succeeded either had agricultural training or were retired professionals with resources.

Prof Zerihun Alemu of the Development Bank of Southern Africa criticised the study for not looking beyond Land Bank clients. By focusing on defaulting clients, whose debts totalled R429m , the research failed to present an understanding of "the plight of the majority of emerging farmers."

full article...Business Day

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