A critical appraisal of South Africa's market-based land reform policy

A critical appraisal of South Africa’s
market-based land reform policy
breaking of control of labour by large
landlords (Griffin et al. 2002:287), a better
total factor productivity of small farmers,
the labour-intensive nature of small farms
(Griffin et al. 2002:286; Prosterman &
Riedinger 1987; Wilson & Ramphele
1989:311), and the large contribution of
agricultural growth to the non-farm rural
sector (Mellor 1999:23; Van Zyl et al.
1996:5).
Studies in countries from Sierra Leone
to India and Malaysia show that growth in
agriculture makes a significantly larger
contribution to overall economic growth
than growth in other sectors such as
industry (Mellor 1999:8). Growth in
agriculture also has a disproportionately
positive impact on poverty levels. Part of
the reason for this can be found in the
labour-intensive nature of agricultural
production and the large proportion of
people in the lower income bracket who
participate in agriculture. It was found in
a study of 27 low to middle-income
countries that agriculture accounted for
only 25% of GDP (gross domestic
product), but 51% of the labour force
(Mellor 1999:9). Not only is agriculture a
large employer, it is a large employer of
the poor. Thus a relatively small increase
in growth in agriculture will have a large
positive impact on employment and
incomes for the poor. An assessment by
Prosterman and Riedinger of poverty
indicators across more than 120 countries
showed that those that adopted the familyfarm
model of development fared
consistently better than others (1987:
74–9, 100–1).
Market-based land reform 2
The primary mode of redistributive land
reform over the last decade has been
market-based land reform and debates
have increasingly revolved around the
merits and disadvantages of this approach
(Borras 2003:367). The market-based
approach has been particularly strongly
pushed by the World Bank on the basis
that this is the only form of land reform
that is compatible with its economic
policies and those of the International
Monetary Fund (El-Ghonemy 1999:106).
The market-based approach has been
bolstered by critiques of the state-led land
reform programmes of the past (Borras
2003:367). The risk of landlord resistance
to the forced seizure of land is argued to
be counter-productive to land reforms.
Interventions such as setting maximum
landholding sizes have been hard to
enforce and have had negative effects such
as reducing the ability to use land as
collateral for loans (World Bank 2003:
124–5). Further problems have been the
drop in productivity on land inappropriately
divided up and, in some cases, given
to beneficiaries without the potential to
become effective producers. Programmes
have focused on the land redistribution
process without giving attention to measures
such as farmer support to ensure
effective production (World Bank 2003:
146). Bloated bureaucracies, needed to
drive state-led land reforms, are expensive
and inefficient, have little understanding of
local dynamics, and often end up stifling
land reform due to the development of
their own interests (Borras 2003:368).
Fiscal arguments against state-led land
reforms suggest that they are too expensive
as the beneficiaries do not contribute
and the state has to pay for the land and
other support services. In addition, the
bureaucracies necessary for implementation
consume a substantial portion of the
budget, the state has often ended up
paying more than market value for land,
and this approach has contributed to other
distortions that have pushed up prices
(Borras 2003:370; World Bank 2003:153).
In the face of these critiques, it is
claimed that the market-based land reform
model offers an efficient way to enhance
equity in asset distribution. The key
features of the ‘market-led’ land reform
model according to Borras (2003:370–3)
are: landlord co-operation in the form of
voluntary land sales (encouraged by
payment of full market prices); production
of ‘viable farm plans’ before land is purchased;
and programme financing through
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