Govt policy triggered exorbitant farm prices

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WINDHOEK – Government policy and the Affirmative Action Loan Scheme (AALS) have been singled out as factors that are mainly to blame for exorbitant farm prices, according to a report on agricultural farmland that was released in Windhoek yesterday morning.

A study of commercial agricultural land prices in Namibia was conducted by the Ministry of Lands and Resettlement in conjunction with the Food and Agriculture Organization (FAO) of the United Nations. The report on the study was made public yesterday by the Minister of Lands and Resettlement, Alpheus !Naruseb.

The study commenced in November 2010 and interrogated commercial land prices in the country from 1985 to mid-2012. It noted that the government was buying the highest proportion of farms at a high price followed by recipients of the AALS.

The study was divided into two periods – covering 1985 to 1990, before independence; and post-independence, from 1995 the year the Agricultural Land Reform Act was passed, to mid-2012.

“It was found that once the government buys a farm at a given price, such a price would be considered to be the market price by land owners, estate agents and government valuers alike who would base their estimates around such a previous price achieved,” explained the executive summary of the detailed report on how farm prices are influenced by government policies.

“A considerable percentage of farms were purchased at high prices by Affirmative Action Loan Scheme buyers. Thus the prices at which AALS buyers were purchasing the farms were also considered to be the market prices by land owners, their estate agents and government valuers,” further states the glossy 112-page report.

“Land owners made offers based on comparison to the prices of other farms previously sold to AALS buyers who were purchasing land at high prices,” it elucidated on the impact of government policy on agricultural farm land prices that are beyond the reach of many.

“The government decides at which price to buy farms through voluntary acceptance of the negotiated price with a land owner. Thus government is responsible for setting the prices of land offered to it which it is interested to buy. Normally, these prices at which government buys the farms set precedence for future transactions as sellers will make reference to these prices. In this sense it can be concluded that government has been to some extent responsible for the high prices as it has voluntarily accepted high price offers and voluntarily purchased expensive farms,” further states the report.

In areas where AALS-backed purchases were active such as in Omaheke, Kunene, Otjozondjupa and Oshikoto regions “the proportion of farms sold at high prices is greater”.

“The government’s preferent right to purchase land and the Affirmative Action Loan Scheme came into being in response to the high demands for land that came after Namibia attained independence in 1990,” summarised the report on one of its findings.

“After independence the selling of farms was normal, however in 1995 the prices started to increase at high pace outstripping both inflation and potential earning, which was due to the high demand of people needing land as they were affected by the apartheid era and other discriminatory laws that could not allow blacks to own land for free,” it states.

Prior to 2004 government had budgeted an amount of N$20 million per annum to purchase farms but after 2004 the budget was increased to N$50 million per annum.

Further, amounts of approximately N$20 million per annum collected in land taxes began to be deposited into the Land Acquisition and Development Fund from 2005 onwards and hence were made available for the purchase of farms. However due to the slow pace of acquiring land funds accumulated in the Land Acquisition and Development Fund, it states.

This build-up of monetary resources made it possible for government to buy farms at high prices from 2008 onwards before such funds got exhausted in 2010/2011, it says.

At the launch, !Naruseb said although there was a substantial review of the land acquisition budget, it has failed to keep up with the escalating land prices making it difficult for government to meet its target of 15 million hectares by 2020.

Ten million hectares is to be acquired through AgriBank’ AALS and 5 million hectares through the National Resettlement programme – however currently only 2.6 million hectares has been acquired.

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