Friday, November 20, 2009

(HERALD) Make farm leases bankable

Make farm leases bankable

THE 99-year leases for farms allocated under the Land Reform Programme have been attacked for being non-transferable by sale, voluntary or forced, and thus rendered useless as collateral for loans.

On the other hand, those who dislike having such leases made saleable say experience in other countries suggests that rich people and banks end up owning vast swathes of land, and we will be right back where we started, with a small minority holding the bulk of the best land.

The only difference is that this minority will not be an ethnic one, but that will not be much use to the person seeking land of their own to farm.

We believe that transferability, within a system of rules, can create two totally desirable outcomes and one outcome that some would consider useful, depending on what side of the political divide they want to sit.

We need to remember that there are more potential farmers and modest-sized farms than there is land to satisfy them.

This potential "buyers market" can make limited transferability work.

Most farmers need to borrow money and need some collateral besides the crop in the ground. Only farmers with a superb track record, and that very record implies they have earned quite a bit of their own money and so need less in loans, can have much hope of loans for land preparation and planting.

More farmers can probably borrow for harvesting a crop already in the ground, since a lender can actually see the offered collateral.

But most farmers, besides short-term seasonal loans, also need long-term capital loans to put in irrigation, build dams, erect the incredible amount of fencing modern stock management demands, build tobacco barns, greenhouses and coldrooms, or install modern dairy equipment.

And traditionally farmers getting such loans have had to leave their title deeds or long leases in the safes of the bankers.

So a major upgrade of our agriculture is unlikely until these leases are made transferable on sale.

We can, however, avoid the danger of rich men buying up all the land by insisting on a policy of "one man, one farm". The only people permitted to buy leases would be those without any land, or those wishing to move from communal lands to a larger farm, or from an A1 farm to an A2 farm, and who were willing to surrender or sell the old farm.

The double policy of transferability but within a limit, would create the two outcomes almost everyone would consider desirable: availability of collateral and the creation of a large rural middle class. Collateral would allow capital development and land reform would be meaningless if it led to a tiny rich land-holding minority and a huge population of landless labourers.

We believe that there would be another useful outcome, the replacement of inefficient farmers and people with leases but no real desire for full- time farming with efficient and dedicated farmers. We do not believe that it is essential to retain the initial grantees of land on the farms, so long as they are replaced by other landless people willing to use the land better.

The limited transferability would also allow good farmers to sell out when they wished to retire, if no one in their immediate family was willing or capable of taking over the farm. In other words, a family could realise its profits.

There will always be a new generation ready and willing to buy into these farms, admittedly on borrowed money using the leases as collateral.

Every year we graduate a new batch of highly-trained higher diploma students from three colleges associated with the University of Zimbabwe; many will want to farm in their own right and know how to do it.

The communal lands have a continual flow of young men and women who have qualified as master farmers, and can cope and need to cope with a far larger farm than the standard communal plot.

Failing as a farmer is always sad; but land reform was not instituted as a social security scheme or as a source of weekend cottages.

There are far cheaper ways of fulfilling those goals.

It was designed to promote a far fairer system of land holding, and to improve productivity by giving efficient farmers the access to land they needed.

A dual policy of full transferability of leases, along with "one person one farm" will retain both elements.

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