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We need a social pact to secure the farming industry

- Associate Professor William Gumede

Mutually beneficial social pacts between farmers and employees will strengthen rural safety, security and peace, writes William Gumede.

Social pacts in agriculture, energy and mining, between business, labour and communities, will be crucial to lift market confidence, growth levels and industrial peace.

Where practical, commercial farmers must build social pacts with their employees – in which they provide housing, skills and profit-sharing.

Mutually beneficial social pacts between farmers and employees will strengthen rural safety, security and peace. Such social pacts at the farm level will better protect farmers against political "farmers" – politically connected opportunists, gangsters and local strongmen – who have increasingly tried to hijack farms under the guise of "restitution", "redistribution" and "empowerment".

South African President Cyril Ramaphosa has emphasised that his presidency will focus on fostering a national social pact between government, business and organised labour. After the Second World War, many Western European democratic welfare states, such as Germany, Sweden and Ireland, and many southeast Asian "Tigers" such as Japan, South Korea and Taiwan constructed social pacts between government, business and labour, in which different social partners agreed on mutual compromises to lift productivity, secure labour market peace and lift growth levels.

Social pacts at the industrial sector level, such as in agriculture, energy and mining, between business, labour and communities, will be crucial to lift market confidence, growth levels and industrial peace. How could social pacts at the farm level look like?

The first would be for farmers to treat employees with dignity, respect and as wealth creating partners. Decent housing for employees is a crucial part of dignity.

The second would be for individual farmers to partner with their employees. A key part of such a partnership could be some form of shareholding or profit sharing arrangement – in return for increased productivity, labour peace and cooperation.

The best black empowerment is quality housing, education and industrially relevant skills to adults. A farm social pact should include quality schooling for farm children. Of course, naturally, the expectation is that government should provide schooling to children.

At the moment, public schooling, except for the "Model C" schools in the former white suburbs, have all but collapsed. A turnaround of public schools are unlikely to happen in the near future. Farmers could pro-actively provide decent schooling to the children of farmworkers.

But it is also crucial that a social pact involves transferring industry-relevant skills to adult employees; skills they can used beyond the farm environment. Farmers in the same area or sector could pool their resources and establish vocational educational institutions, providing agriculture-based technical and commerce skills training.

Agriculture relevant technical training would also be a good way to absorb young people in the rural areas, providing them with transferable skills, which they can use locally or elsewhere. Such vocational training institutions could be open to local communities not employed on the farms.

Violence in rural areas affect all rural citizens. Farmworkers must be involved in rural community police forums.

Social pacts in agriculture could also be in the form of white commercial farmers partnering with existing emerging black farmers. In such partnerships, white farmers could mentor, transfer best practice experiences and share markets with black farmers.

Private financial institutions should also give easier, cheaper financing and advice to farmers.

Government's role crucial

The role of national government is crucial. Land reform must be integrated within a long-term industrialisation strategy, which diversifies production, brings new technology and expand institutions supporting the existing agriculture value-chain.

Such an integrated land reform model for South Africa would safeguard commercial agriculture, prioritising developing black farmers and employees already farming or on farms and developing agriculture-related manufacturing, infrastructure and skills.

President Cyril Ramaphosa and the ANC government must take a strong pragmatic position in public for pragmatic, rather than ideological, revengeful or emotionally-based land reform, and to counter calls for land expropriation for purely self-enriching, opportunistic and criminal reasons.

Crucially, land reform has to be conducted under the rule of law – if it is not, it could collapse the rule of law across wider society. Aspects of land reform have already been captured with incidents where farmers have been forced to transfer farms to "political farmers" (politically connected leaders masquerading as black "farmers").

On other occasions local strongmen, gangsters and vigilantes have organised themselves as black "farmers" and pressed fearful white farmers to hand over land to them. The government must firmly clamp down on opportunistic land grabs mushrooming across the country to restore order, the rule of law and peace.

Chaotic land reform could undermine market confidence in the credibility of the government's policies, undermine the value of property and disrupt the financial system – because it may disrupt the system of seeking credit based on one's assets. Foreign and local investors would in such a case move their money out of the country – and started divesting because they perceive their assets not to be secure.

Publicly reassuring them that it is not the case will help very little. The result of chaotic land reform would not only be a lack of investor confidence when the country is actively seeking investors; but a collapse of the rand, and outflow of money, skills and investment, and balance of payments problems.

All three African countries that pursued land expropriation without compensation – Tanzania, Algeria and Zimbabwe – saw their currencies, property systems and food security collapse. All had to be humiliatingly bailed out by the World Bank, International Monetary Fund and foreign donors. All three are today still among the world's largest food importers.

National government must provide active political support to the strategy of social pacts for the farming industry. Government can support such farm social pacts by providing tax breaks, political and administrative support. But provincial governments and municipalities must also be supportive.

The agricultural and rural development government institutions, SOEs and lending institutions must be cleaned up, made more efficient and less corrupt. Right now corrupt, ineffective and patronage-based agricultural and rural government departments and SOEs, whether local, provincial and national are an obstacle to any effective land reform strategy. Appointments in these public institutions must be based on merit, rather than patronage.

Government must use its foreign policy more strategically by actively opening up new markets for South Africa's agriculture exports. Broadly, the South African government must govern more efficiently, more honestly, and with less corruption to secure the necessary persuasive power to secure the buy-in of all stakeholders.

This article was first published in News24.