Land Redistribution for Agricultural Development

June 2001

 

CONTENTS

Executive summary

Objectives of the Agricultural Development sub-programme

Basic principles of LRAD

Gender and LRAD

Key features of LRAD

Qualifying criteria.

Examples of how beneficiaries can use LRAD.

Procedures for implementation

Implementation responsibilities

Relationship of LRAD to restitution and tenure reform

Implications for the disposal of agricultural state land

Key implications for Government

Key responsibilities

Monitoring and evaluation

Executive summary

Orientation

Land reform encompasses three distinct compo­nents, namely the restitution, tenure reform and the redistribution programmes. The redistribution pro­gramme, in turn, has different components or sub-programmes:

·     Agricultural Development—to make land available to people for agricultural purposes

·     Settlement—to provide people with land for settle­­ment purposes

·     Non-agricultural enterprises—to provide people land for non-agricultural enterprises, for example ecotourism projects.

The collective aim of land reform is to ensure the transfer of 30 % of all agricultural land over a period of 15 years.

The Land Redistribution for Agricultural Development sub-programme (LRAD)

The Land Redistribution for Agricultural Develop­ment sub-programme has two distinct parts. First, there is the part that deals with transfer of agricul­tural land to specific individuals or groups. Second, there is the part dealing with commonage projects, which aim to improve people's access to municipal and tribal land primarily for grazing purposes. Both these parts of the sub-programme deal with agri­cul­tural land redistribution. However, they operate according to different financial mechanisms, different target groups, and different delivery systems. This document deals only with the first part of the sub-programme. Wherever in this document we refer to the Land Redistribution for Agricultural Development sub-programme, or LRAD, we in fact exclude the municipal and tribal commonage aspect, which is documented elsewhere.

This document therefore serves as the policy framework document for the Land Redistribution for Agricultural Development sub-programme—or LRAD. The document therefore aims to describe the objectives of LRAD, and to set out its operational principles.

The initial framework document was developed by the Departments of Agriculture and Land Affairs, approved by the Minister, and presented to the MinMec in April 2000. Upon acceptance of the general framework docu­ment, MinMec requested the Departments of Agriculture and Land Affairs to elaborate on LRAD.

This document responds to the MinMec request. It also reflects consultative processes between the Departments of Agriculture and Land Affairs; between the Departments of Agriculture and Land Affairs and Provincial Departments of Agriculture; and between Government and key stakeholders.

LRAD is de­signed to provide grants to black South African citizens to access land specifically for agricultural purposes. The strategic objectives of the sub-programme include: contributing to the redistribution of 30 % of the country’s agricultural land over 15 years; improving nutrition and incomes of the rural poor who want to farm on any scale; de-congesting overcrowded former homeland areas; and expanding opportunities for women and young people who stay in rural areas. These objectives will be made possible by the sub-programme’s key underlying principles, which are as follows:

·     LRAD is unified, basic, and flexible and beneficiaries can use it in ways according to their objectives and resources

·     All beneficiaries make a contribution (in kind or cash), according to their abilities

·     LRAD is demand directed, meaning that beneficiaries define the project type and size

·     Implementation is decentralised

·     District-level staff assist applicants, but do not approve the application

·     Ex-post audits and monitoring will substitute a lengthy ex ante approval process.

The mode of implementation is adopted in the interest of total participation of beneficiaries, speed of approval and quality of outcomes.

LRAD encourages participants to design what works best for them. To do this, beneficiaries can access a range of grants (R20 000 to R100 000) depending on the amount of their own contribution in kind, labour and/or cash. Beneficiaries must provide an own contribution of at least R5 000. The grant and own contribution are calculated on an individual adult basis (18 years and older). If people choose to apply as a group, the required own contribution and the total grant are both scaled up by the number of individuals represented in the group. The approval of the grants is based on the viability of the proposed project, which takes into account total project costs and projected profitability.

The Land Redistribution for Agricultural Development sub-programme is flexible enough to accommodate a number of types of projects.  Purely residential projects would not be supported under LRAD unless beneficiaries seek to establish household gardens at their new residences, and unless funds for top-structure are sourced form elsewhere, e.g. Department of Housing.

The types of projects that can be catered for include—but are not limited to—the following:

·     Food-safety-net projects

Many participants may wish to access the Programme to acquire land for food crop and/or livestock production to improve household food security. This can be done on an individual or group basis. Many of these projects will be at the smallest end of the scale, because poor families may be able to mobilise only the minimum own contribution in cash, labour and materials.

·     Equity schemes

Participants can make the requisite matching own contribution, and receive equity in an agri­cultural enterprise equal to the value of the grant plus the own contribution. Because under the terms of LRAD, the grant is intended for people actively and directly engaged in agri­culture, the grant recipient in the case of the equity scheme will be both a co-owner and employee of the farm. The purchased equity should be marketable in order to retain its value.

·     Production for markets

Some participants will enter LRAD to engage in commercial agricultural activities. They will access the grant and combine it with normal bank loans, approved under standard banking procedures, and their own assets and cash to purchase a farm. These farmers will typically have greater farming experience and expertise than those accessing land for subsistence or food-safety-net-type activities.

·     Agriculture in communal areas

Many people living in communal areas already have secure access to agricultural land, but may not have the means to make productive use of that land.  Such people would be eligible to apply for assistance so as to make productive investments in their land such as infrastructure or land improvements. These projects may take on the character of food-safety-net projects, or may be more commercially oriented.

Objectives of the Agricultural Development sub-programme

The agreed objectives of the Agricultural Development sub-programme as reflected in the framework document are to:

·     Increase access to agricultural land by black people (Africans, Coloureds, and Indians) and to contribute to the redistribution of approxi­mately 30 % of the country’s commercial agricultural land (i.e. formerly 'white commercial farmland') over the duration of the programme

·     Contribute to relieving the congestion in over-crowded former homeland areas

·     Improve nutrition and incomes of the rural poor who want to farm on any scale

·     Overcome the legacy of past racial and gender discrimination in ownership of farmland

·     Facilitate structural change over the long term by assisting black people who want to establish small and medium-sized farms

·     Stimulate growth from agriculture

·     Create stronger linkages between farm and off-farm income-generating activities

·     Expand opportunities for promising young people who stay in rural areas

·     Empower beneficiaries to improve their eco­nomic and social well-being

·     Enable those presently accessing agricultural land in communal areas to make better productive use of their land

·     Promote environmental sustainability of land and other natural resources.

Basic principles of LRAD

The following key principles underlie LRAD:

·     It is unified and basic and beneficiaries can use it in flexible ways according to their objectives and resources

·     All beneficiaries make a contribution in kind or cash, but varying in amount

·     It is demand directed—beneficiaries define the project type and extent

·     Implementation is decentralised: local-level officials provide opinions and assistance in preparation of the project proposal

·     Interdepartmental collaboration will take place at all spheres of government, with district government assuming a key role

·     Projects will be undertaken in a manner consistent with district and provincial spatial development plans

·     Projects are reviewed and approved at provincial level

·     Local-level staff assist applicants, but do not approve the application

·     Ex post audits and monitoring will substitute a lengthy ex ante approval process

·     The mode of implementation is adopted in the interest of maximum participation and empowerment of beneficiaries, speed of approval and quality of outcomes.

Gender and LRAD

LRAD provides an excellent vehicle for redressing gender imbalances in land access and land ownership, and therefore in improving the lives of rural women and the households they may support. The sub-programme will serve as a means of creating opportunities to enable women to develop in numerous spheres of life, therefore giving them security against poverty and providing them independent economic status. By ensuring that women participate fully in asset redistribution and agrarian reform, the sub-programme will help government meet its international commitments, for example in terms of the Beijing Platform for Action (1995) and the Convention on the Elimination of All Forms of Discrimination Against Women (1996).

Under the Agricultural Development sub-programme, adult individuals can apply for grants in their own right, rather than as members of households. This means that women can apply for grants to acquire land individually, or can pool their grants with which they choose, therefore augmenting their control of the manner in which they benefit from the sub-programme. However, in order for the sub-programme to accomplish its overall goals in respect of women, it must ensure that women are able to participate on an equal footing with men in the course of all aspects of implementation. It also means that women-only projects are allowed for and encouraged, and that altogether not less than one third of the transferred land resources must accrue to women.

Key features of LRAD

LRAD is designed to provide grants to black South African citizens (Africans, Coloureds, and Indians) to access land specifically for agricultural purposes, or to make better use of land already accessed (e.g. in communal areas). Acquisition of land by absentee owners for specu­lative purposes will not be supported under LRAD.

Beneficiaries can access grants under LRAD on a sliding scale, depending on the amount of their own contribution in kind, labour, and/or cash. Every beneficiary individual makes at least the minimum contribution in cash, labour, and/or kind. Those who make the minimum contribution of R5 000 receive the minimum grant of R20 000. Those who make a larger contribution of own assets, cash, and/or labour receive a bigger grant, determined as a basic proportion of their own contribution (Box 1). The table below indicates the amount of grant available for each level of own contribution. The grant and own contribution are calculated on an individual adult basis (18 years and older). If people choose to apply as a group, the required own contribution and the total grant are both scaled up by the number of individuals represented in the group. The approval of the grants is based on the viability of the proposed project, which takes into account total project costs and projected profitability.

Own contribution by beneficiaries in labour can be for up to R5 000 per applicant (individual). In order for the applicant to claim the full R5 000 in own labour towards the own contribution require­ment, the business plan must show evidence that the applicant intends to devote a significant amount of own labour towards the establishment and operation of the project.

The contribution in kind could be calculated by costing assets such as machinery, equipment, livestock, and other assets that a beneficiary may possess. The cash contribution can be in the form of one's own cash contribution to the project, or borrowed capital, or some combination of the two. These three forms of own contribution can be added in any combination to make up the required own contribution from the beneficiary.

Beneficiaries will select the position on the scale at which they wish to enter LRAD, de­ter­mined by their objectives and ability to leverage the grant with their own resources. Because LRAD is intended to function over 15 to 20 years, grants under LRAD will be indexed to the real value of the Rand.

The grant would be used to cover expenses such as acquisition of land, land improvements, infra­structure investments, capital assets and short-term agricultural inputs. Expenses associated with housing top-structure, however, will not be covered.

Small farmers may choose to access land as a group, either with the intention of maintaining it within group ownership, or of subdividing it. Group production projects, however, will be discouraged.

Some beneficiaries will have the skills and resources to manage larger farms. In that case, total project costs can range up to R500 000 or higher, of which the grant can cover up to 100 000. The remainder (about R400 000) would be financed through a combination of normal bank loans approved under standard banking pro­cedures, and own assets and cash.

 

  Text Box: BOX 1: Sliding scale of grants and own contribution
The minimum grant amount is R20 000 which can be accessed with an own contribution of R5 000. The maximum grant is R100 000, which will require an own contribution of at least R400 000. If the participant contributes more than this amount(s) he/she still can only access a grant of R100 000. Between the minimum and maximum amount, a continuum of grant amounts is available, depending on the participants’ own contribution (as highlighted in the graph).

 
Taking a range of own contributions as illustration, we have the following:
Own contribution R	Matching grant R	Proportion of total cost%	
		Own contribution	Grant
5 000	20 000	20	80
35 000	40 871	46	54
145 000	68 888	68	32
400 000	100 000	80	20

Farmers choosing this option would have to possess managerial skills adequate to handle the debt, as well as prior experience in agriculture. Land would be either owned or leased on an individual or household basis.

Beneficiaries under LRAD (e.g. rural dwellers, labour tenants, farmworkers, and people at present farming on smallholdings and others) can purchase land on offer from any owner, whether public or private. The land must be intended for an agricultural use of their choosing, such as better food production to improve household consumption, grazing, production for markets and other agricultural activities.

The following table provides basic information on available grants for a certain own contribution, or alternatively, on what contribution should be made to receive a certain grant.


Scale of grant and own contribution

OWN CONTRIBUTION

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

                  -  

 

25,798

33,278

38,622

42,926

46,592

49,819

52,721

55,371

57,819

60,100

1,000

 

26,717

33,880

39,090

43,317

46,932

50,122

52,996

55,624

58,054

60,320

2,000

 

27,585

34,463

39,548

43,702

47,268

50,422

53,269

55,875

58,287

60,539

3,000

 

28,408

35,031

39,998

44,081

47,600

50,720

53,540

56,125

58,519

60,756

4,000

 

29,192

35,583

40,439

44,455

47,928

51,014

53,808

56,372

58,750

60,972

5,000

20,000

29,941

36,120

40,871

44,823

48,252

51,305

54,074

56,618

58,978

61,187

6,000

21,385

30,659

36,644

41,296

45,187

48,572

51,594

54,337

56,861

59,206

61,400

7,000

22,631

31,350

37,156

41,714

45,545

48,889

51,879

54,599

57,103

59,431

61,612

8,000

23,768

32,015

37,655

42,125

45,899

49,202

52,162

54,858

57,343

59,656

61,823

9,000

24,819

32,657

38,144

42,528

46,248

49,512

52,443

55,116

57,582

59,879

62,033

 

 

 

 

 

 

 

 

 

 

 

 

OWN CONTRIBUTION

110,000

120,000

130,000

140,000

150,000

160,000

170,000

180,000

190,000

200,000

-

 

62,241

64,262

66,180

68,006

69,751

71,424

73,032

74,582

76,077

77,524

1,000

 

62,448

64,458

66,366

68,184

69,921

71,588

73,190

74,733

76,224

77,666

2,000

 

62,654

64,654

66,552

68,361

70,091

71,751

73,347

74,885

76,371

77,808

3,000

 

62,859

64,848

66,736

68,537

70,260

71,913

73,503

75,036

76,516

77,949

4,000

 

63,063

65,041

66,920

68,713

70,428

72,075

73,659

75,186

76,662

78,090

5,000

 

63,266

65,233

67,103

68,888

70,596

72,236

73,814

75,336

76,807

78,230

6,000

 

63,467

65,424

67,285

69,062

70,763

72,396

73,968

75,485

76,951

78,370

7,000

 

63,668

65,614

67,467

69,235

70,929

72,556

74,123

75,634

77,095

78,510

8,000

 

63,867

65,804

67,647

69,408

71,095

72,715

74,276

75,782

77,239

78,649

9,000

 

64,065

65,992

67,827

69,580

71,260

72,874

74,429

75,930

77,382

78,788

 

 

 

 

 

 

 

 

 

 

 

 

OWN CONTRIBUTION

210,000

220,000

230,000

240,000

250,000

260,000

270,000

280,000

290,000

300,000

-

 

78,926

80,286

81,608

82,893

84,145

85,366

86,558

87,722

88,860

89,973

1,000

 

79,064

80,420

81,738

83,020

84,269

85,487

86,675

87,837

88,972

90,083

2,000

 

79,201

80,553

81,867

83,146

84,392

85,607

86,793

87,951

89,084

90,193

3,000

 

79,338

80,686

81,997

83,272

84,515

85,727

86,910

88,066

89,196

90,302

4,000

 

79,475

80,819

82,126

83,398

84,637

85,846

87,027

88,180

89,308

90,412

5,000

 

79,611

80,951

82,255

83,523

84,760

85,966

87,143

88,294

89,419

90,521

6,000

 

79,747

81,083

82,383

83,648

84,882

86,085

87,259

88,408

89,531

90,630

7,000

 

79,882

81,215

82,511

83,773

85,003

86,203

87,375

88,521

89,642

90,738

8,000

 

80,017

81,346

82,639

83,898

85,125

86,322

87,491

88,634

89,752

90,847

9,000

 

80,152

81,477

82,766

84,022

85,246

86,440

87,607

88,747

89,863

90,955

 

 

 

 

 

 

 

 

 

 

 

 

OWN CONTRIBUTION

310,000

320,000

330,000

340,000

350,000

360,000

370,000

380,000

390,000

400,000

-

 

91,063

92,131

93,178

94,206

95,214

96,204

97,177

98,134

99,074

100,000

1,000

 

91,171

92,237

93,282

94,307

95,314

96,302

97,274

98,228

99,168

 

2,000

 

91,278

92,342

93,385

94,409

95,413

96,400

97,370

98,323

99,261

 

3,000

 

91,386

92,447

93,489

94,510

95,513

96,498

97,466

98,418

99,354

 

4,000

 

91,493

92,553

93,592

94,611

95,612

96,595

97,562

98,512

99,446

 

5,000

 

91,600

92,657

93,694

94,712

95,711

96,693

97,657

98,606

99,539

 

6,000

 

91,707

92,762

93,797

94,813

95,810

96,790

97,753

98,700

99,632

 

7,000

 

91,813

92,866

93,899

94,913

95,909

96,887

97,848

98,794

99,724

 

8,000

 

91,919

92,971

94,002

95,014

96,008

96,984

97,944

98,888

99,816

 

9,000

 

92,025

93,075

94,104

95,114

96,106

97,081

98,039

98,981

99,908

 

 

 

 

 

 

 

 

 

 

 

 

 

GRANT SIZE BY OWN CONTRIBUTION

 

 

 

 

 

 

 

GRANT

 

 

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

                  -  

 

 

5,000

15,080

33,005

60,596

99,548

151,463

217,873

300,245

400,000

1,000

 

 

5,710

16,489

35,301

63,953

104,130

157,427

225,368

309,415

 

2,000

 

 

6,481

17,977

37,695

67,425

108,844

163,538

233,024

318,761

 

3,000

 

 

7,315

19,549

40,189

71,014

113,690

169,796

240,843

328,283

 

4,000

 

 

8,214

21,204

42,784

74,722

118,671

176,204

248,825

337,983

 

5,000

 

 

9,180

22,945

45,484

78,550

123,788

182,763

256,974

347,863

 

6,000

 

 

10,214

24,774

48,289

82,499

129,042

189,474

265,289

357,923

 

7,000

 

 

11,320

26,693

51,201

86,572

134,435

196,339

273,772

368,166

 

8,000

 

 

12,498

28,703

54,222

90,770

139,969

203,360

282,425

378,592

 

9,000

 

 

13,751

30,807

57,353

95,095

145,644

210,537

291,249

389,203

 

 

 

 

 

 

 

 

 

 

 

 

 

Because the program is intended to function over 15 to 20 years, benefits (grants) under the program will be indexed to the real value of the Rand


Land Affairs and Agriculture officers, as well as potential officials from other government depart­ments, must play a facilitative role to ensure that applicants are able to access information about land on the market. This can be done in part by tapping into existing databases at a local level, e.g. in print and via the Internet.

People who presently have secure access to agricultural land in communal areas can also access grants. The purpose of the grants in this instance would be to enable people to make more productive use of their land, for example in terms of infrastructure investments and land improvements, productive capital, and operational inputs. These projects may take on the character of food-safety-net projects, or may be more commercially oriented. These grants would not be applicable, however, to purchase of livestock for communal grazing areas. Also, existing land holdings cannot be counted towards one’s own contribution requirement.

Land owners, communities, individuals and agents can initiate actions on their own. For example, a present owner of a large commercial farm could decide to sell a section of his/her land under LRAD, and could hire a design agent to draw up an attractive package. Individuals or small groups of people wishing to access land can choose a farm which is at present on the market, and offer to buy it under LRAD, with subdivision and apportionment to meet their needs. A professional developer could purchase farmland (outside LRAD, with own financing), subdivide it, establish basic infrastructure, and then sell it to beneficiaries under LRAD. Beneficiaries are responsible to design their own projects, and can use grant money to hire the advice of specialists or design agents.

Although some farms may change hands as entire units, most may have to be subdivided in order to meet the objectives of beneficiaries. An owner of agricultural land seeking to subdivide in order to sell part to a beneficiary under LRAD will not be required to seek a permit. Until the restrictions on sub­division are fully rescinded, any subdivision undertaken for transactions under the land reform programme will be automatically preapproved without further action on the part of the seller. The permission to subdivide for sale of land under LRAD will be effective immediately upon the launch of LRAD. A permit will be required only if land is to be rezoned for agricultural use (e.g. from commercial to agri­cultural or from forest to agricultural use). The Land Development Objectives (LDOs) presently used to regulate land use and farm size will, over time, have to be incorporated into a new and improved system of zoning for land use.

Beneficiaries may choose to access land under one of several forms of contract. The choice of contract is up to the participant. For example, land can be purchased outright. Alternatively, the participant could enter into a lease contract with an option to buy at a future date. Beneficiaries may purchase land individually. Alternatively, they could purchase within a group such as a common property asso­ciation. The size of the grant per participant will depend on the amount of the bene­ficiary’s contribution, and not on the form of the contract.

Participants may do all the planning themselves, or may choose to accept the assistance of a design agent. The design agent will be paid in two parts.  A small payment will be made up-front in order to defray travel expenses, etc. The second, larger payment will be paid only upon approval of the project.  If the project is not approved and no transfer takes place, the design agent is not awarded the second payment. Payments made to design agents, together with those to valuers and expenses associated with subdivision, etc, will be taken out of a separate ‘planning grant’, which will be a maximum of 15 % of the projected total capital costs of the project.

For project applications, which are processed directly through banking institutions in terms of both loans and government land grants, no up-front planning grant money will be accessed from the government. Upon approval of the project, however, the bank will inform the Provincial Grant Committee to release the planning grant to beneficiaries to pay the design agent they have appointed. Applicants may also choose to pay a retainer to design agents out of their own resources, which can be counted towards their own contribution requirement.

With improved incentives for sound and efficient design of projects, cumbersome and centralised steps in approval can be eliminated. Because project designs may have unintended or unforeseen environ­mental implications (as, e.g. with intro­duction of irri­gation from surface sources), projects should undergo Environmental Assess­ment Plan (EAP) screening according to national guide­lines.

Qualifying criteria

LRAD will be open to citizens of South Africa who are members of previously-disadvantaged groups including Africans, Coloureds, and Indians; who are willing to live on or near the land and operate or work on it; and who are committed to use the grant to purchase or lease land for agricultural activities. Men and women will have equal access to all benefits under LRAD, and women will be actively encouraged to apply.

For the purposes of LRAD, agricultural activities can include crop and livestock production at a range of levels from subsistence to medium-scale commercial. Successful applicants will be required to participate in training courses and acti­vities designed to assist them in successful operation of their farms and gardens.

Beneficiaries will be allowed to graduate from smaller to larger farms, and will be able to access LRAD to facilitate investment to increase scale. Smaller farmers can therefore trade up through LRAD if they have sufficient own contributions. Some beneficiaries can expect to benefit several times through trading up, although lifetime benefits for a single applicant are limited to an accumulated amount of R100 000. Two principles govern the graduation process. First, upon applying for a second or third grant, the required own contribu­tion will be gauged not in relation to the new grant being applied for, but rather in relation to the total amount of grants that have been accessed up to that stage plus the new grant. Second, assets acquired by means of the grant cannot be counted as an own contribution when applying for an additional grant.

Those who have previously accessed the Settle­ment/Land Acquisition Grant (SLAG) are eligible to apply, though priority will be given to first-time applicants.

Examples of how beneficiaries can use LRAD

Beneficiaries can use LRAD for a continuum of projects, ranging in size from food-safety-net and subsistence production to small and medium-sized farms. People can access LRAD as individuals or as groups at any level. Beneficiaries might want to access LRAD to achieve varying objectives, such as food-safety-net projects, equity schemes, pro­duction for markets, and others. These are now discussed briefly for illustrative purposes only—because LRAD encourages beneficiaries to design whatever works best for them.

Food-safety-net

Many beneficiaries may wish to access LRAD to acquire land for food-crop and/or livestock production to improve household food security. This can be done on an individual or group basis. Many of these projects will be at the smallest end of the scale, because poor individuals may be able to mobilise only the minimum own contribution in cash, labour, and materials.

Equity scheme

Beneficiaries can make the requisite matching own contribution and receive equity in an agricultural enterprise equal to the value of the grant plus the own contribution. Because under the terms of LRAD, the grant is intended for people actively and directly engaged in agriculture, the grant recipient in the case of the equity scheme will be both a co-owner and employee of the farm. The purchased equity should be marketable in order to retain its value.

Production for markets

Some beneficiaries will enter LRAD to engage in commercial agricultural activities. They will access the grant and, together with normal bank loans and their own assets and cash, they will purchase a farm. These applicants will typically have greater farming experience and expertise than those accessing land for subsistence or food-safety-net-type activities.

Agriculture in communal areas

Many people living in communal areas already have secure access to agricultural land, but may not have the means to make productive use of that land. Such people would be eligible to apply for assistance so as to make productive investments in their land such as infrastructure or land improvements. These projects may take on the character of food-safety-net projects, or may be more commercially oriented.

LRAD is flexible enough to accommodate a number of types of projects. Purely residential projects would not be supported under LRAD unless beneficiaries seek to establish household gardens at their new residences.

Procedures for implementation

Beneficiaries, once informed about the options available within LRAD, select the desired amount of the grant according to their preferred own contribution. They will also decide whether to apply individually or as members of a self-selected group. They will then locate an available area of land, either through their own knowledge, or through the assistance of an estate agent or a DLA or agricultural officer. The land should have the necessary water rights if irrigation is contemplated, and the rights should be specified in the sale contract and reflected in the land price. Once a suitable area of land is located, the participant(s) will enter into a contingent contract with the seller, with the contingency consisting of approval of the project under LRAD.

With or without assistance of a design agent, the participant prepares a farm-plan or land-use proposal (project proposal), indicating the intended agricultural use of the land and estimating a rough projected cash flow. The participant obtains evidence of additional financial resources (loan, own resources, or both). In terms of contributions in own labour, an individual applicant can claim up to R5 000.

The participant next submits all documentation to the local agricultural officer to receive his or her opinion regarding the feasibility of the farm plan (project), including its agricultural potential, value of the land relative to market prices for those of comparable quality and access to water, cash-flow projections, and environmental assessment. Once the local agricul­tural officer has provided an opinion, the participant submits the proposal package to the provincial grant committee (which comprises officers of Land Affairs and Agriculture), which meets as required.

A complete package ready for submission would include:

·     The land-use proposal/farm plan (project pro­posal)

·     A draft purchase or rental offer for the land

·     A list of beneficiaries and their contributions, if the proposal is not individual

·     Confirmation from the local agricultural officer that the seller is in legal possession of title and confirmation from a professional valuer (registered with the Council of Valuers) that the land price is reasonable in comparison with recent land transactions in the area

·     Evidence of own contribution and any necessary financing in addition to the grant (draft loan agreement, own funds)

·     Opinion of the local agricultural officer on feasibility (agricultural and environmental issues).

Upon review of the package, the provincial grants committee makes one of three determinations:

·     Complete and in conformity with the require­ments of LRAD: approve

·     Complete but not in conformity with the require­ments of LRAD: do not approve and state reasons

·     Incomplete: return to applicant and state reasons.

The provincial DLA director, who is part of the provincial grant committee, will, together with the Provincial Grant committee approve or reject the application. The provincial Grant Committee will decide either way.

The Provincial DLA director will be the official in whom delegated powers in terms of the PFMA will reside from the Director-General: Department of Land Affairs, but should not and must not exercise that authority outside of and separate from the criteria used by the Provincial Grant Committee.

Frequently, farmworkers or former farmworkers may be residing on the land being contemplated for purchase. The interests of these existing residents must be borne in mind. A number of different solutions are possible, including accommodating them within the group of applicants and assisting them to apply for separate tenure security grants (see below).

Implementation responsibilities

Primary responsibility for design and implementation rests with the applicants. They select the chosen amount of the grant, engage a design agent if required, identify available land, enter into a contingent contract with the seller, apply for a normal bank loan through standard banking procedures, if necessary, engage a transfer agent, prepare a farm plan, submit all documentation to the local agricultural officer for an opinion, assemble the completed proposal package, and submit it to the provincial grant committee. Some applicants, however, may need assistance in order to develop their project proposal. For instance, some people may need assistance in exploring the different possibilities for what they would propose to do with the land, to identify and manage a suitable design agent, or identify an appropriate piece of land. Indeed, some projects may be of such a basic nature that government officials can assist applicants in less time than it would take to secure the services of an appropriate design agent.

Where the applicants do choose to engage a design agent, the design agent will work directly with them. The design agent can assist in any or all stages of the process as requested by the applicants. For example, an agent may be asked to help identify land for purchase, to assist beneficiaries in preparation of a farm plan and land-use proposals, to prepare a submission to the provincial grant committee, as well as to assist and facilitate the process of grant approval, in case the approval committee has queries.

Agricultural and land officers, and possibly officers from other government departments at local level, will play an important role in implementation. They provide a technical opinion on the proposed farm-plan, land-use and environmental assessment, and in this way contribute to the quality of proposals. They also can assist in identifying land. They certify the accuracy of the seller’s title and make a preliminary check to see that the land price is reasonable. They can also ad­vise beneficiaries or design agents in negotiations with sellers.

Local-level officials will be an important source of information and training for participants and agents (clarifying technical and legal aspects of LRAD). They must be adequately trained to fulfil this role. The local agricultural offices should provide assistance to applicants and design agents seeking assistance for and evaluation of their proposals. The offices should have all the necessary information about procedures for implementation, and on how to draw up a complete application.

The Provincial Executive Council should hold overall political accountability for LRAD in the province. It should further decide on the appropriate MEC to chair the provincial land reform coordination committee, which should consist of key stakeholders and should meet quarter­ly to review the performance of the provincial grant committee.

The provincial grant committee under the appropriate MEC should consist of provincial officers of Land Affairs including up to the provincial accounting officer, namely the provincial Land Affairs director as well as officials from the Provincial Department of Agriculture together with other necessary Departments and stakeholders. The committee’s main functions are to review project proposals, and to make a recommendation. The committee should check that the proposed package is complete and coherent, and whether, based on the information provided in the proposal, the project is eligible for approval under LRAD. The provincial grant committee should not be expected or required independently to verify the accuracy or veracity of the submission, because much of the verification will become evident from the documentation (e.g. contingent contract, draft loan agreement, etc).

The Departments of Agriculture and Land Affairs at national level will be responsible for the overall design of LRAD and monitoring of its impact. The Department of Land Affairs should budget for the grant components of LRAD, while the Department of Agriculture must budget to ensure that its provincial counterparts are financially prepared to meet their commitment to provide post-transfer agricultural support. Both Departments should provide training for beneficiaries, design agents and local land and agricultural officers; coordinate policy issues and interdepartmental activities; monitor the flow of funds to the provincial level; monitor and evaluate the outcomes of the land reform programme, including random ex post financial and physical audits of approved projects. The Department of Land Affairs will rely primarily upon existing procedures that may be modified for grant disbursement.

Relationship of LRAD to restitution and tenure reform

Programmes managed in terms of tenure security and restitution legislation, most notably the Land Reform (Labour Tenants) Act, the Extension of Security of Tenure Act and the Restitution of Land Act, which in their own accord allow for state grant support, aim to improve certain landless persons’ tenure insecurities—converting a de facto situation into a de jure reality. The Restitution Process aims to restore people’s tenure rights which they lost as a result of apartheid legislation. LRAD does not replace the Tenure Reform or Restitution Programmes, but in fact aims to enhance these by offering persons who have benefited from such programmes a wider range of options.

LRAD is designed to offer black South Africans an opportunity to access agricultural land so as to improve their nutritional status and/or incomes. LRAD therefore addresses the tenure insecurities of persons who have no land and who want to farm, opening an opportunity for previously- disadvantaged persons who have no tenure security presently to access the programme directly without necessarily first applying for assistance in terms of the Tenure Security or Restitution Programmes. Such support would then be framed by the conditions prescribed by LRAD.

Tenure security beneficiaries, including persons who have restored their rights in land through the Restitution Process, may subsequent to securing and improving their immediate land rights, seek to enter LRAD.  Recipients of land under the tenure reform and restitution programmes would in this instance have to show an intention to farm or enter Agribusiness in order to be eligible for grant financing and support under LRAD, as well as make an own contribution, other than the land secured to them through the restitution programme or the tenure grant.

Implications for the disposal of agricultural State land

The proposal developed does not directly address the disposal of State land, but has several implications for moving ahead with the process. For example, for State land against which restitution claims have been lodged, the claims can be evaluated and settled. Those who receive land against their claims can enter LRAD if they opt to use the land for farming. LRAD would provide additional resources for start-up and operation of new farms, as noted above in the discussion of implications for restitution. State land that is free of claims can be offered to the general public through LRAD, or through other sub-programmes of the redistribution programme.

The State would have to publicly announce its intentions to dispose of its agricultural land, in order to invite beneficiary bids for the purchase of such land. The State would in this case be a seller of agricultural land and bene­ficiaries the buyers of land under LRAD. The time of three months should be sufficient to enable beneficiaries—either as groups or indivi­duals—to place their bids and to secure a grant under LRAD.

To effect this process, all information about State and parastatal agricultural land would have to be compiled and made available to beneficiaries upon request and selected location, so that they can be able to participate effectively. An interim provincial grant committee should also be established together with, possibly, an interim land grant account with a financial institution. The selection of a financial institution should be done through a competitive tendering system.

Key implications for Government

LRAD already has sufficient legal foundation to permit immediate implementation. Several important new features are included in the design, however, and require governmental actions in order for LRAD to achieve its optimum impact. Some of these are listed as follows, and others may be identified during further elaboration of LRAD and a continued consultative process.

Subdivision and land-use management

The ability of participants to subdivide existing large land units will be critical to the success of LRAD.  Signature of the repeal of the Subdivision of Agricultural Land Act, Act No. 70 of 1970 is still pending, and in the meantime subdivision requires the approval of the Minister. Retention of the requirement for ministerial approval prior to subdivision could in principle create a serious obstacle to implementation. However, the Provision of Land and Assistance Act, Act No. 126 of 1993, makes provision for subdivision, such that approval for subdivision is not necessary when the Minister or Minister’s delegate has approved the project for funding.

Another function formerly served by the Subdivision of Agricultural Land Act was that of land-use zoning. While it is widely recognised that the Subdivision Act was not an ideal instrument for this function, its repeal risks leaving a void. For this reason, work is underway to develop a comprehensive land-use management system, which will incorporate the present approaches to regulating land-use contained in the Land Development Objective (LDO) and in the Integrated Development Plan (IDP). The land-use management system will serve as a mecha­nism to enable municipalities to regulate growth and influence land-use patterns. The system should include, inter alia, a procedure for changing the designated classification of land by use.

Agricultural services

More rapid land reform will create an increased demand for advisory services on the part of beneficiaries. Implementation of LRAD will therefore create added urgency for reform of the agricultural extension service. The Department of Agriculture should redirect its budget and redeploy staff to create a special programme to assist land reform beneficiaries, both during the process of preparing proposals and after purchase of the land. Staff of the Department will need special training to prepare them to fulfil these functions. Public extension agents need not meet all of the increased demand for services, however. The private sector can play a greater role in the provision of services, as it does in many other countries. The public extension service should concentrate on the provision of advisory services that benefit a wide public, such as advice to land-reform beneficiaries, veterinary disease control, agents and market information.

Advice that only benefits primarily the recipient can in many cases be well provided by the private sector, such as assistance with farm-business plans, or proper application of fertiliser. Cost-sharing mecha­nisms that defray part of the expense of purchased agricultural advisory services are used in many countries and can be adopted in South Africa. Cost sharing can improve the client orientation of service providers, and can give the farmer increased power to get services that are most useful. Several pilots of alternative models of service provision are at present underway and their results will be evaluated early in summer.

A number of people presently employed by the agricultural extension service can be expected over time voluntarily to leave the Public Service to acquire land under the land reform programme. Some of these people with skills and training may concurrently enter the private sector as service providers.

Rural infrastructure

Accelerated implementation of land reform will create additional demands for infrastructure. Correspond­ing­ly, appropriate investment in infrastructure will increase the returns to land reform. Therefore, it will be important to create mechanisms within the programmes of municipal infrastructure to allow rural communities to express their needs and for the redistribution programme in general—and LRAD in particular—to respond to these demands.

Financing LRAD

The capital budget to finance the grants will be allocated at the National Department of Land Affairs. No approvals other than that of the provincial grants committee taken in public session will be required prior to authorisation of release of funds. On approval of the provincial grants committee, the provincial director of Land Affairs will issue an order to the financial manager of the provincial Land Affairs to release the funds. The provincial office of Land Affairs will submit regular reports on the flow of funds and disbursement.

Because LRAD is demand directed, its total costs will depend on demand for grants of various amounts and can be estimated only after observing demand in the early stages of implementation. It can be assumed, though, that most applicants will seek the small grants in the range of R20 000 and that a lesser number of applicants will seek larger grants of about R50 000 on average.

A range of possible total LRAD costs, depending on numbers of applicants in the various groups, can be calculated. For example, 250 000 applicants for a range of grant sizes would probably cost in the range of R16 to R22 billion, including both land grants and planning grants (but excluding the costs of agricultural support).

Key responsibilities

Key responsibilities of the various agencies and levels of government for implementation are summarised in the table. The Departments of Agriculture and Land Affairs at national level would jointly share respons­ibility for the design of LRAD, policy issues and design of training programmes. The Department of Land Affairs would be responsible for monitoring flows of funds to the provincial level and auditing the use of funds, as well as monitoring and evaluation of the outcomes.

Provincial Departments of Agriculture and Land Affairs would sit on the provincial grant committee and would access information from the national monitoring effort to track performance of LRAD in the province.



Department of Agriculture

Department of Land Affairs

National level

·     Design of LRAD

·     Provide training for participants, agents and local land and agricultural officers

·     Coordinate policy issues and interdepartmental activities

·     Monitor and evaluate outcomes of LRAD

·     Design of LRAD

·     Budget for capital transfers under LRAD

·     Monitor the flow of funds to the provincial level

·     Coordinate policy issues and interdepartmental activities

·     Monitor and evaluate outcome of LRAD

Provincial

·     Accountability for LRAD in the province

·     Participate in various provincial committees

·     Convene the grant approval committee and provide the secretariat

·     Responsibility for approving release of grants

·     Accountability for LRAD in the province

·     Participate in various provincial committees

·     Land survey, title registration and transfer

Local

·     Provide a technical opinion on the proposed farm plan, land-use and environmental assessment

·     Provide agricultural support services

·     Work with District Council counterparts to ensure project congruence with IDPs/LDOs

·     Provide information and training for participant and agents (clarifying technical and legal aspects of LRAD)

·     Work with District Council counterparts to ensure project congruence with IDPs/LDOs


Both the Departments of Agriculture and of Land Affairs have operational structures at local government level. Where both departments have staff in place, they should share responsibilities under LRAD. Local governments and municipalities should be requested to provide an audit of agricultural smallholdings within their boundaries. The agricultural staff would advise on technical and agronomic issues relating to the farm proposal and offer an opinion as to its technical and financial feasibility. Staff from the Department of Land Affairs could advise on the land price and assist with title search.

 

Monitoring and evaluation

The proposed ADSP features a streamlined process of approval at the provincial level relying on documentation prepared and submitted by partici­pants. This approach is necessary in order to deliver the desired rate of implementation. Stream­lined approval can function well together with a system of selective audits and monitoring and evaluation.

The audits should, for a selected group of approved projects, confirm the accuracy and veracity of the information submitted. The audits will be both financial (to determine that expenditures have been as permissible under LRAD guidelines) and physical (to determine that the expenditures actually took place and that purchased goods and services are in place on the farm enterprise). The evaluation activities will assess the quality of outcomes and the impact on beneficiaries and rural communities more generally.