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Eastern Cape MEC for Agriculture, Mr Max Mamase,
The Honourable Mayor, Mr Mpakathi,
Director-General for the Department of Land Affairs, Dr Gilingwe Mayende,
Provincial Director of the DLA,
Member of Parliament, Mr Bengu,
Farmer associations represented here today,
New farm owners,

I greet you all.

The Eastern Cape Department of Land Affairs has for the past few years been busy preparing for the large scale disposal of state owned freehold agricultural land across the Province. That hard work is starting to show its fruits.

As a result, we are looking at the possible disposal of some 85 000 ha of state land during the current year, 2001 and also hope to transfer a substantial amount of this land approved for disposal by the end of March 2002.

As of 31 March 2001 already, we have approved the disposal of some 35 000 ha in the Eastern Cape.

Already approved for disposal are phase 1 of the Port St Johns farms, amounting to some 1 500 ha, a further 4 500 ha at Beestekraal and over 9 000 ha at Umnga Flats, all in the Transkei area.

Let me say that of importance to us today is that this current phase of disposals is at the request of long established farmers on these properties who after physical farm inspection have shown themselves to be qualifying farmers.

Some, if not most, of these farmers have been farming these particular pieces of land for 10 or, in some cases, 20 years. For much of this time they have been seeking to buy such farms in order to secure their property, to be able to invest with confidence and intensify and expand production and to be in a position to raise loans finance for this purpose.

When they achieve this, they will be able to generate additional employment on farms as well as other economic spin-offs in the areas of marketing, retail and processing.

It is also important to note that most of these farmers are in a position to purchase these farms without any financial grant assistance from government.

I was impressed by the fact that all the submissions made to my office were made on the express direction of the farmers that they want to acquire the farms and that they are capable of raising the necessary finance for the purchase price and transaction costs.

In determining the sale price of the farms, the insecure tenure that the lessees have operated under and legitimate expectations they had, were taken into account. The functional or productive worth of the farms has been the starting point.

Another impressive point is that farmer associations that we have been dealing with have expressly requested DLA to proceed with the disposal of the farms and not to wait for the availability of grant financing in terms of LRAD.

They have done so even when the provincial department of agriculture from time to time suggested that all state land disposals should be accompanied by grant assistance.

This is one of the strong points that have driven us to consider these projects without hesitation because it became clear that these were farmers who are determined to succeed.

However further phases of state land disposal will certainly be assisted by the availability of LRAD grants, particularly in cases where former farm workers and other less well-off previously disadvantaged farmers are the preferred buyers of particular farms.

To date only 7 out of 34 purchasers of the Port St Johns farmers have come up with the purchase price and it is these 7 farmers that we will give their Deeds of Transfer today.

A further 15 have indicated in writing that they wish to take up the offer we have made to sell to them; we hope they will come up with their purchase price soon.

We have been in communication with both Uvimba and the Land Bank and we have provided them with information on who the potential buyers are and the approved sale prices. Purchase prices paid cash to the conveyancer to date range from R4 000 to R108 000.

At this point, let me also state that the Department of Land Affairs is aware that a number of the other buyers who have not paid up are able to pay but have not come forward to do so because of possible mistaken and misleading information circulated around that the farms will be given to the farmers and that grants will be given for production purposes.

Let me emphasise that the sale prices that we have offered are the lowest prices which government can consider.

On top of that, these properties are disposed of in terms of State Land Disposal Act (Act 48 of 1961), which requires that State property be sold at market value. It is not government policy to alienate state property for free. National Treasury specifically requires that State assets be disposed of at market value.

On the question of transfer cots, the law states that the buyer of any property pays transfer costs. Any statement to the contrary is a clear misrepresentation of DLA policy.

In line with DLA's Land Reform Programme, it is recommended that these farms be sold to the current lessees who have been farming them, under difficult and uncertain tenure, for a considerable period of time. The leasehold form of tenure has had two very adverse effects on agriculture, namely:

* It has discouraged the development of the farms, including the establishment of perennial crops such as bananas and other fruit crops, which are highly potentially the most suitable crops for the area. This is so because such crops incur high establishment costs, which are only redeemable after a number of years and which cannot be considered without a long-term tenure security

* It has prevented the farmers from being eligible for normal credit finance and the farmers had to rely on short-term crop finance by Tracor and later Transkei Agribank, both of which have no certain future and have no funds available for this service.

The overall effect has therefore been to preclude any development or diversification into perennial crops and, latterly, to drastically reduce the scale of production of even annual crops.

This situation has however changed for these farmers who accepted our offer, as they will be able to get into business ventures they always wanted to take up.

The buy-back clause included in this agreement is meant to safeguard the interest of the State against property speculation. The Department has come to this view because Port St Johns is being resuscitated as the tourist attraction it used to be. It is on the virgin Wild Coast and attracts hundreds of holidaymakers during peak seasons.

With the SDI development, the Department of Land Affairs has received numerous inquiries countrywide from people who want to purchase these properties, subdivide and sell them at exorbitant prices to property developers for cottage construction and/or seaview holiday apartments. Some smallholdings in this vicinity have already been developed along these lines.

To avoid property speculation, should the new farmers decide to sell the property within 10 years from the date of registration, the State shall have the first option to purchase the property at the same price it was bought, and the value of beneficial improvements made by the owner with an adjustment for inflation based on the consumer price index for that area.

Agriculture is identified as one aspect of this development. This had led to a sharp increase in interest shown by outside investors into agricultural properties and potential in Port St Johns.

You are becoming owners of high value land, an opportunity sought by many in this country and abroad. I am confident that you will continue to prosper and become an example to others. The fact that there are outside investors who have interest in your businesses should be your strong point.

To those who are still hesitating, take this as an example, these farmers will from today have secure tenure and be able to get into better investment ventures.

Take this example and be advised by it as it will not only benefit you but also your children and grandchildren.

Amandla!

Issued by Ministry of Agriculture and Land Affairs

5 May 2001