SOUTH AFRICA EXPROPRIATES FIRST FARM IN LAND

UNCLAS SECTION 01 OF 02 PRETORIA 003930

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TREASURY FOR OASIA B. CUSHMAN
COMMERCE FOR ITA J. DIAMOND
AGRICULTURE FOR ITP

E.O. 12958: N/A
TAGS: PGOV PHUM ECON EAGR SF
SUBJECT: SOUTH AFRICA EXPROPRIATES FIRST FARM IN LAND

REFORM PROGRAM

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distribution.


1. (SBU) Summary. The South African Government initiated
expropriation procedures against the first farm as part of
its land reform program, but will compensate the farmer for
his property. The land restitution program seeks to restore
land, which was seized by the apartheid regime, to its
original black owners or their descendants. To date, the
Government has restored land largely through negotiated
purchases, but the farmer in this case sought 63 percent more
than the independent auditor value for the land. Through
this expropriation action, the South African Government is
sending a signal to other farmers to play ball on land
reform. The Government is also playing to its political
base, which strongly supports land reform, proving that it is
serious about accelerating reform. Zimbabwe-type land
seizures remain highly unlikely, as the SAG is committed to
market-based reform and the protection of private property.
End Summary.


2. (U) The South African Government announced September 22
that it had started expropriation procedures against
Leeuwspruit farm, marking the first time the government has
exercised its right of eminent domain to expropriate as part
of its land reform program. The 500-acre farm in North West
Province, now owned by Hannes Visser, was seized by the South
African government in 1942 from black farmers. The
descendants of the original owners filed a restitution claim
in 1997 under the Restitution of Land Rights Act of 1994.
This Act allows those dispossessed of their land between 1913
and 1994 "as a result of past racially discriminatory laws or
practices" to bring a restitution claim for either
compensation or the return of the land. In the case of
restored land, the law requires the Government to pay farmers
the fair market value of land.


3. (U) In the Leeuwspruit case, the Commission on Restitution
of Land Rights determined nearly three years ago that the
restitution claim was valid. The Government entered into
negotiations with Visser to purchase the land through a
negotiated sale, but have been unable to reach agreement on
the fair value. (Visser continues to dispute the validity of
the claim itself, but was willing to negotiate for the
transfer.) Visser claimed that the improved portion of the
land was worth Rand 3 million (approximately USD 500,000),
while independent auditors valued it at Rand 1.75 million
(approximately USD 300,000). As a "last resort," and
consistent with the Restitution Act and South African
Constitution, the Government announced September 22 that it
was expropriating Visser's farm and paying him the
independent auditor value. Visser has the right to appeal
the decision to the Minister of Agriculture and Land Affairs,
and then the courts.


4. (U) The major farmer's union in South Africa, AgriSA,
suggested that the Government was making an example of
Visser. They argued that the Government had not exhausted
all avenues before the expropriation. The opposition
Democratic Alliance emphasized that the value of the
compensation was the critical factor; the state had the
burden of proving that the compensation offered was fair and
market-related.


5. (SBU) While Visser has challenged the independent
auditor's valuation, Government and several land NGOs have
argued that commercial farmers often inflate the value of
claimed land in a bid to take advantage of -- or slow down --
the land reform program. Marc Wegerif of Nkuzi Development
Association, a land reform organization, told PolOff
September 23 that he believes that the independent auditor
prices are often tilted in the farmers' favor; the (largely
white) auditors have long-standing relationships with the
(largely white) commercial farms, so they err on the side of
over-valuing farms slated for restitution or redistribution.


6. (SBU) COMMENT: By pursuing the expropriation claim, the
South African Government sending a signal to white farmers to
play ball on land reform. Land remains an emotional,
political issue in South Africa, and the Government needs to
show progress. The transfer of land from the white farmers
to blacks is moving slowly. While many South Africans are
impatient with the pace of reform, we believe that
Zimbabwe-like land seizures remain highly unlikely. The
Constitution and legal framework protect property rights, and
the Government is committed to reform through market-based
transactions. END COMMENT.

--------------
Background on Land Reform
--------------


7. (U) South Africa's land reform program has three planks:
restitution, redistribution, and tenure reform. Each is
summarized below:

-- Restitution: Significant progress has been made on
restoring land to those who filed claims under the
Restitution of Land Rights Act. Of the 79,693 claims lodged
before December 31, 1998 (the cut-off date for such claims),
80 percent have been settled. Most of the settled claims
were in urban areas (e.g., District Six and Sophiatown). The
more difficult rural cases (like the Leeuwspruit farm) have
not yet been settled. Most of the remaining rural claims are
in Limpopo, Mpumalanga, and KwaZulu-Natal. The Government
wants to settle all restitution claims by 2008.

-- Redistribution: At the end of apartheid in 1994, white
farmers held 87 percent of the commercial farm land. The
Government committed to transferring 30 percent of the land
to black farmers by 2014, but has succeeded in redistributing
only 4.2 percent by the end of 2004. The Government supports
redistribution through grants and other mechanisms to
encourage black farmers to purchase land on the market. Some
have criticized the "willing seller/willing buyer" process as
slow and ineffective.

-- Land Tenure Reform: Parliament passed the Communal Land
Rights Act (CLRA) in 2004 to provide increased tenure
security to those living on traditional, tribal, or community
land. Most of this land is in the former "homelands," where
30 percent of the population live and poverty is most
serious. Implementation of CLRA is a politically-sensitive
issue because it challenges the power of local traditional
leaders, and is only now beginning.

TEITELBAUM