2. Land Restitution / Redistribution of Large Scale Enterprises: Overview of Issues faced by Beneficiary Communities Ruth Hall (with acknowledgements to Edward Lahiff, Bill Derman and Espen Sjaastad and their paper on Strategic Questions for Strategic Partners) TIPS Forum 2008, Cape Town

3. Introduction The thrust of land redistribution has been away from large community projects and towards smaller groups or family farming, given: –view that group dynamics are largely to blame for poor outcomes –changes in grant structure (revised LRAD grants) and –introduction of proactive land acquisition which does away with the grant formula In the future, land reform will affect large scale farming enterprises in two major ways: –AgriBEE deals (with workers or 3 rd parties) –Restitution claims The latter are increasingly being resolved through the establishment of strategic partnerships or other forms of joint venture. Indeed, this is already effectively a condition for settlement of such claims.

4. Strategic partnerships in Limpopo Restitution is finally addressing the transfer of large areas of high quality agricultural land: approx. 5,000 rural claims in Limpopo, 70% of land area North-eastern Limpopo forms part of the ‘last frontier’: area of post-1913 settlement, forced removals continued into the 1970s on white farms and through homeland consolidation New model of strategic partnerships (SP) is now dominant method of settling community claims on commercial farms – joint ventures between claimants and private investors SP model raises questions about the direction of the restitution programme, land rights, and the realisation of benefits among restitution claimants.

6. Background Upper Luvuvhu (Levubu) Catchment, high-value irrigated land, situated close to the town of Makhado (formerly Louis Trichardt). Relatively recent date of dispossession means that claimants have personal memory of the land; many continue to live close to the claimed land, and many communities remain relatively intact, and have actively contested their dispossession over the years. Land under claim is largely used for export quality subtropical fruit and nuts (and some forestry), and many claimants remain involved in agriculture in various capacities Strong argument for restoration of the land.

7. Claimant communities Claims at Levubu are all community claims, in terms of the Restitution Act, and identify themselves as tribal claims (i.e. restoration of tribal land to entire communities), and traditional leaders are generally at the forefront of these claims Claimant communities are typically upwards of 1,000 households in size Claims process has reinvigorated numerous local disputes around boundaries and hierarchy between and within chieftaincies (inc. sub-chiefs) Fuelled by ethnic segregation during apartheid, of what were often mixed (Venda, Shangaan) communities prior to removals. Potential for conflict with non-claimant communities living adjacent to claimed lands (many of whom currently work on the farms)

8. Return of land to claimants presents numerous challenges In upper Levubu alone there are 350 portions, nine claimant communities, upwards of 10,000 ha of agricultural land; potential cost of R1 - 2 billion CRLR has limited staff and technical resources Potentially disruptive of local economy – agricultural production, employment, upstream and downstream industries, property values. Concerns expressed across the political spectrum and business interests Opposition among landowners, although the threat of expropriation led many owners to accept the state’s cash offers. Failure of a few projects in the Province has attracted negative publicity, adding to the pressure on the CRLR to come up with ‘sustainable’ solutions that preserve the productive capacity of the farms and ensure material benefits for the claimants over time.

9. Three imperatives behind the SP model (with some contradictions between them…) economic imperative to maintain productivity of farms and minimise the impact on employment and the local economy developmental imperative to ensure long-term benefits to claimants (over and above the limited benefits perceived to flow from alternative land uses – i.e. ‘subsistence’) political imperative to preserve the image of government as competent in the implementation of its programmes, dependable in fulfilling its promises, and responsible in the use of state resources, in the eyes of political opponents, potential investors and international commentators.

10. The Generic Strategic Partnership Model (1) Successful claimant communities, through their Communal Property Associations (CPAs), must enter agreements with a SP to form new company to undertake agricultural production Operating companies will pay rent to CPA over ten-year lease Two SPs selected for Levubu– South African Farm Management (SAFM) and Mavu Management Service (MMS) – controlled by white agri capital and new BEE partners SP will be retained as managing agent with full operational control over the farms; management fee of 4-8% of turnover.

11. The Generic Strategic Partnership Model (2) Existing workers will be granted small shareholding in operating company (2%) Profits to be divided between shareholders: 50% to CPA, 48% to SP, 2% to workers. Preferential employment and training opportunities for community members After 10 years, new agreement can be signed with SP, or CPA can buy out SP’s share Rental income and dividends to be used for benefit of community No access to land or livelihood opportunities for community members, other than through the SP

12. What does the SP model at Levubu mean for the Restitution Programme? Key shift is away from land access by claimants and towards the maintenance of agricultural production (within a ‘commercial’ context). Benefits are almost entirely indirect, in the form of rents or dividends (or employment for a lucky few). Benefits accrue to the community (or CPA), meaning that the allocation of benefits to individuals (if this is even attempted) is entirely through collective processes, with all the risks and contestation that this implies. Individual land rights are reduced to an ‘undivided share’ in a property which is leased to an entity which is, effectively, beyond the control of the individual and of the group for the duration of the contract. Difficult to see how the SP model promotes the land rights of claimants

13. Strategic Question 1. What benefits and opportunities will accrue to claimants? Rent to CPA at 1.5% of land value p.a. (more or less guaranteed) Dividends on profits (not guaranteed): and may be retained by new company Training and employment opportunities for a few (both as general workers and in senior management)

14. Strategic Question 2. How will benefits be distributed? Communities all represented by CPA or Trust, dominated by tribal leaders, which will control distribution of benefits and opportunities Pressure to retain income for eventual buyout of SP Cash or other material benefits to all members explicitly ruled out, in favour of public goods, bursaries, etc (actually CPA office & 4x4) Benefits for the mass of poor, unemployed members unclear

15. Strategic Question 3. What’s in it for the Strategic Partners? Incentive to maintain turnover, as this ensures management fee Farm profitability less certain, and has to be shared with partners Key attraction is exclusive control of upstream (inputs, machinery) and downstream (processing, packaging and marketing) processes Inherent risk of price discrimination, as value is pushed up or down the chain

16. Strategic Question 4. Are the interests of the SP compatible with those of the claimants? SP has incentive to maximise short term profits, esp. close to end of contract, putting them in potential conflict with long term interests of communities SPs have stated interest in consolidation of production across multiple farms and multiple communities – implies radical restructuring of agricultural production at Levubu Shift away from on-farm diversification towards specialisation in large blocks, spreading risk for the SP but increasing it for specific communities SP has interest in reducing labour force and wages; community leadership will face pressure to increase both.

17. Strategic Question 5. What is the future role of the state in provision of post-settlement support? SP model viewed as the ‘solution’ to PSS in areas such as Levubu: SP, through their agreements with the claimant communities, becomes responsible for development Needs of claimant communities – not least their land needs – are not necessarily going to be met in full through these partnerships. Substantial support required in monitoring the performance of the new joint ventures in order to protect the interests of claimants. CPAs also likely to require extensive support in terms of capacity building, business advice, monitoring of compliance with the terms of settlement agreements, dispute resolution and the like. Few systems currently in place for such monitoring and capacity building, dispute resolution etc.

18. Strategic Question 6. What’s in it for workers, and who protects their interests? Neither Commission, CPA nor SP has responsibility to establish Workers’ Trust (2% shareholding) – hasn’t happened. Existing workers face constant pressure for replacement, despite laws, agreements and interests of the SP Some layoffs already due to prolonged period of transition/inactivity New workers from community may be less suitable in terms of skills Scope for tension within communities, between those employed and those not (plus connections to royal family, etc) Irony: turnover in labour force, and insistence on families not joining workers on-farm, entrenching spatial divide between commercial farm and ‘Bantustan’.

19. Conclusions (1) The strategic partnership model represents at best a partial solution to the needs of communities claiming high value agricultural land. Emphasis on maintenance of production precludes a radical restructuring of apartheid agriculture that might produce very different outcomes in terms of access to land, self-employment and livelihood opportunities. Land rights of individual community members have been diluted to an extraordinary extent. The flow of material benefits to community members is far from certain and, ironically, it is likely that the actual land needs of members – for housing and food production – will remain unaddressed. An emphasis on unitary solutions in large claims creates enormous opportunities for top-down control (and self enrichment) by community leaderships, whether elected or hereditary.

20. Conclusions (2) Opportunities also created for private commercial interests, both black and white, who have no connection to the land claims, to benefit enormously from the restitution process. Appropriate mechanisms have yet to be put in place to monitor and support the long-term interests of claimants (incl. minimal presence of NGOs, RLCC, PDoA) Under the SP model, provision of post settlement support has effectively been privatised. Poverty alleviation has virtually disappeared from the discourse. It appears highly unlikely that the SP model will achieve the objectives of restitution, and is likely to face severe contestation from within over time.

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