GOVERNMENT’S POLICY ON STRENGTHENING THE RELATIVE RIGHTS OF PEOPLE WORKING THE LAND: INCLUDING THE 50% PROPOSAL AND SIZE OF LAND OWNERSHIP CEILINGS 1

LEGISLATION 2 Since the re-election of the current Government, there has been a marked increase from Government’s side to continue with, and with considerable vigour, the restitution of land. The Minister has published a draft but final policy proposal on Strengthening the Relative Rights of People Working the Land dated 21 February It is this policy that has given rise to the farming sectors outrage at a proposal that up to 50% of a farm can be expropriated without direct payment to the owner i.e. expropriation without compensation. The bottom line of Government’s Land Reform Proposals is as it appears in the last paragraph of the 50% proposal which states as follows,

“The moral basis for these proposals is that fellow South Africans who benefited from the proceeds of the land dispossession wars and the race based segregation policies and laws of successive colonial and apartheid regimes have a moral duty and responsibility to contribute to the restoration of justice and national reconciliation efforts. Secondly, maintaining the current status quo is politically undesirable and unsustainable.” The following specific Acts are relevant: On 1 July 2014 the President signed into Law the Restitution of Land Rights Amendment Act, Act 15 of It provides for the reopening of the process to lodge a land claim and such period has now been extended to 30 June 2019 i.e. there is another 5 years for individuals and/or communities to put in land claims. It also provides for and creates certain offences and penalties if there is contraventions of the Restitution of Land Rights Act; 3

Also on 1 July 2014 the President signed into Law the Property Valuation Act, 17 of This Act provides for the established of the office of the Valuer General, provides the mechanism for the valuation of property that has been identified for purposes of land reform and the purpose is to give effect to the provisions of the Constitution which provide for land reform and facilitate land reform through the regulation of the valuation of property; The upgrading of Tenure Rights Act, 112 of 1991; The extension of Security of Tenure Act, 62 of 1997; The Interim Protection of Informal Land Rights, Act 31 of 1996; The Commercial Properties Association Act, 28 of 1996; The Expropriation of land Act, 63 of 1975; The Restitution of Land Rights Act, 22 of 1994; The Abolition of Racial Based Land Measure Act. 4

Five new Acts are proposed for 2014 these are: The Communal Property Association Amendment Bill; The Communal Land Tenure Bill; Extension of Security of Tenure Amendment Bill; The Regulation of Lands Holding Bill; The Election Deeds Registration Bill; The Promotion and Protection of Investment Bill As you can see, it is a variable minefield of legislation and proposed legislation to deal with land restitution. 5

WHAT ARE THE MAIN ISSUES RELATING TO LAND REFORM? 6 The State’s ability to deprive someone of property: Section 25 of the Constitution provides for circumstances where the State can deprive a land owner of property. Deprivation of property can occur without compensation. However not all deprivation of property is an expropriation explained hereunder. Deprivation of property means that the State can limit a farm owner’s rights in terms of what he can or cannot do with this property. For example the registering of servitudes in the name of the Government which happens on each property transaction. The State can also limit your rights for example determining what the building lines are next to a highway or similar circumstances.

7 A land owner has no right to compensation if he is deprived of property unless that depravation is equal to an expropriation. Not all depravation equals expropriation however all expropriation does amount to depravation of property. Deprivation of property is lawful on condition that the decision made to deprive someone of property is rational and relating to the purpose of which the power was given. Such deprivation may therefore not be arbitrary; Section 25 of the Constitution also allows for expropriation of property. Our Constitution guarantees no expropriation without compensation. This means that the State cannot lawfully take over property unless it pays for it. The Minister’s 50% proposal is indeed an expropriation attempt to expropriate 50% of a farmers farm without compensation. Consequently his proposal is unconstitutional.

WHAT THE MINISTER IS ASKING THE ORGANISED AGRICULTURAL INDUSTRY TO AGREE TOO? 8 What the Minister is asking the organised agricultural industry to agree to? Is to agree to give up 50% of their farms without being paid for them; The entire agricultural industry must object to this proposal of the Minister as it “flies in the face of the Constitution”. The 50% ownership proposal: The Minister is proposing that a current owner will retain 50% of his farm and what he wants farmers to do is to give away the other 50% to his workers who acquire ownership of portions of the farm depending on the length of years of service;

9 The State will acquire the ownership of the 50% not retained by the farm owner. In lieu of compensating the farmer for the loss of 50% of his farm, the State will pay money into a fund and the purpose of the fund is to finance the upliftment and education of farm workers to enable them to farm the land. What is proposed is that workers who have been employed for 10 years get 10% of the workers’ half of the business. Those employed for 25 years get 25% of the 50% and those employed for 50 years get 50% of the 50% to be allocated to the farm workers. Those that have been working for less than 10 years get nothing. To date all the AGRI members and all AGRI geared business including the financial institutions have all rejected the Minister’s proposal as being unworkable. That proposal is unworkable for a number of very important reasons. The main ones being:

10 Most farms already have land claims on them; With the reopening of the land claims process those that do not yet have claims will have land claims on them soon; It is therefore impossible to implement the Minister’s proposal because farms cannot be divided, sold or in any way tampered with during a land claims process without the Land Claims Commissioner agreeing to such changes; The intention is to expropriate without compensation which is unconstitutional; Most farms are bonded for capital and, the organised financial banking industry cannot agree to the proposal as it is unworkable. The proposal includes that the new owners get the land free of debt.

11 At the recent Land Summit held between the 3 rd and the 6 th of September 2014 the Minister also brought to the table the question of land ceilings. This was first considered in a green paper of October 2012The State land audit has been completed. According to this audit approximately 23% of land in the country is owned by the Government. The land ceiling proposal is that: the majority of land should be held by the State and the State can lease the land out on 30 year leases. Foreigners will not be allowed to own land but will only be able to lease land. Land that is held by private individuals or private entities will be regulated as follows:

12 A small enterprise may not hold more than 4000 hectors; A medium size enterprise 4000 to 8000 hectors; and A large enterprise 8000 to hectors. A farmer that holds more than hectors would be required within a period of (let’s say 12 months) to hand over the other land to the State. At this stage the proposal is that the handover will be accompanied with payment of compensation. There are no guidelines as to what a small, medium and large enterprise is.

13 Government will shortly be issuing a Bill which has the intention that all land owners will have to declare inter alia: What their race is; Their gender; and The amount of land owned; The intention will be to take that information to determine which farms are to be targeted with regarding to the Land Ceiling Proposal and possible expropriation.

WHERE ARE WE IN THE LAND REFORM PROCESS EXCLUDING LAND CLAIMS? 14 Government and the organised agricultural industry are at a stalemate. It is this stalemate that has lead the Minister to call on all South Africans to make proposals to him on how to resolve this rather problematic issue. The reason why we are here today is to decide what the Sabie Valley consortium wants to do. The main areas of contention and differentiation between Government and the organised agricultural industry are the following:

1. FOR: The Minister is of the view that the policy that he has proposed i.e. that as much as 50% of the person’s farm can end up in the hands of the farm labours is needed. Ownership of the farms or part of the farms must move to the labourers. Farmers will not be compensated for that portion of the farm that goes to the labourers but rather that Government will put the money which would have been paid to the farmers into a Fund which is to be administered by the Government with the intention of using the funds to uplift black farmers. The Minister is of the view that Share Ownership Schemes and BEE Empowerment Schemes have not worked. It is quite interesting that in an article written by RUTH HALL on 8 September 2014 when she addressed the Land Summit, she recorded that of the 88 Farm Equity Share Projects implemented between 1996 and 2008 only 9 of those have declared dividends and of those 9 the dividends declared were between R 200 and R 2000 per year. No wonder Government does not believe that these proposals are sound. 1. AGAINST 1. AGAINST: The Minister’s latest policy is not required. There is no place for such a policy in a system where there are already Agricultural BEE Codes, Share Ownership Schemes and Empowerment Schemes. As opposed to the Minister’s policy they are of the view that these current BEE and Share Ownership Schemes can offer better result than the Minister’s policy of taking as much as 50% of the farm and giving it to the labourers. 15

2. FOR: The policy will lead to transformation of the farming sector, will stabilise food security and will improve the tenure of farm labourers. 2. AGAINST 2. AGAINST: The proposal threatens food security, will lead to substantial job losses, reduce confidence in the agricultural sector and will lead to disinvestment by foreigners in South Africa. As you know, the 50% advocates that labourers who have less than 10 years employment are not entitled to anything. The incentive is therefore large for farm owners to simply get ride of farmers in the ninth year i.e. to avoid them getting 10 years tenure which then enables them to qualify in terms of the 50% proposal. As opposed to the Minister’s policy they are of the view that these current BEE and Share Ownership Schemes can offer better result than the Minister’s policy of taking as much as 50% of the farm and giving it to the labourers. 16

3. FOR: The Minister has already stated that he will not consider AGRI Villages as an alternative to his policy proposal as this simply leads to further segregation which is not what Government wishes to achieve. 3. AGAINST 3. AGAINST: If there is an intention to improve farm workers living conditions then AGRI Villages provide a better alternative to what the Minister is proposing. 17

4. FOR: 4. AGAINST 4. AGAINST: The problem is that within the Macadamia Nut Industry there is no land available to purchase with the intention of trying to establish AGRI Villages. Existing Government owned land is already over populated or held for strategic purposes and therefore it is impossible to suggest to Government that the land should be used to establish AGRI Villages. 18

5. FOR: The policy that has been put forward must be legalised, legislated and made compulsory. 5. AGAINST 5. AGAINST: It is not possible to make the policy compulsory and compliance with the policy must be voluntary. If the Minister intends to make the policy proposal legally binding and compulsory farmers will simply disinvest in their farms. 19

6. FOR: Those that are to benefit by the policy should not be responsible for the previous debt of the farm owners. 6. AGAINST 6. AGAINST: The proposal is unworkable because farms have been bonded for working capital. Consequently if the Minister’s proposal is to work those getting the asset must also get the pro rata liability attached to the land. 20

7. FOR: The policy that Government is proposing must work retrospectively. 7. AGAINST 7. AGAINST: The policy proposal cannot work retrospectively or going forward for that matter. The policy is rejected. 21

22 In a nutshell the following: Government’s policy dictates, and appears to be a non- negotiable that part of the land (50%) must be transferred to the labourers. The current Share Ownership Incentives and Empowerment Schemes are not working and will not work and are not alternatives to the policy proposals. Against this the organised agricultural industry maintains that the proposed policy will not work and the only way to achieve what the Minister wants is to improve Share Ownership Schemes and Empower Schemes.

THE FOLLOWING ALTERNATIVE PROPOSALS HAVE BEEN MUTED? 23 One must work harder at implementing the AGRI BEE Codes. Share Incentive Schemes must be improved thereby giving labourers part of the business (not necessarily the land). Look at State owned land and convince Government to rather utilise State owned land better. Move labourers on to State owned land and create AGRI Villages and the AGRI Industry will then support the Minister by providing training, transfer of skills, and other supplementary services to assist with the upliftment of farm labourers; Consider suggesting to the Minster regarding land which was expropriated in terms of the Land Restitution Act, which land has now fallen into disuse, stands unused and is unproductive.

24 It appears from the Minister’s comments and things that he has done, that the land that has been reclaimed and expropriated at great cost to Government in terms of the Land Restitution has not been very successful. We all know of examples where such land was reclaimed and now stands in ruins. It seems that the most logical way to try and solve the land crisis issue is to recapitalise such land, implement proper controls and restore the land to be productive again. The agricultural industry can offer assistance to the Minister on how this can be done. Examples exists. The recapitalisation must come from Government. However there are a number of auxiliary things that will need to be done and it is here that the mac nut industry can play a roll, including inter alia: Educating farm labourers on how to run a business; Educate farm labourers on the best farm practice; Skills transfers to labourers to help them to become profitable;

WHAT CAN THE MACADAMIA NUT INDUSTRY DO? 25 As you know Government has asked all South Africans to come up with proposals. The following is suggested and the floor will be opened up for debate for other suggestions: 1 st : A mandatory objection to the Ministers proposal is required, both with regards to the 50% proposal as well as the Land Ceiling Proposal. You simply cannot give away a Constitutional Right guaranteed by the Constitutional, and it is my recommendation that you object most strenuously to the Minister’s proposals of expropriation without compensation 2 nd : The principle of right of first refusal should be mandatory. If a farmer wants to sell his farm it should be compulsory for the farmer to first offer his farm to Government. Government will have the opportunity to buy the farm at the market value for a certain period of time. This is the model currently applied in Namibia. Considerable time and effort will have to be spent on improving on that model, but the basic principle appears to be sound.

26 3 rd : Although Government has invited suggestions and alternative proposals to its policy, it has become quite clear that what the Minister wants is for the industry to come up with suggestions as to how he can implement the policy he has put forward i.e. he does not want to change the policy but wants suggestions as to how his policy can be implemented. It is therefore mandatory that an objection must be lodged against the Minister’s policies. 4 th : The only possible option is for the Macadamia Nut Farmers to put a proposal forward in which it offers technical as well as farming skills support i.e. transfer of skills to labourers who will be the beneficiaries of recapitalised land which has already been expropriated by the State and which has currently fallen into disuse. Of course it may be that the Mac nut industry decides to simply object and not offer anything nor make any proposals. This can be debated. It seems to me that simply objecting only has the benefit of telling government that like all other AGRI participants the Mac farmers also do not support his proposals.

27 Information to be added here following an open floor debate:

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