Farmland Prices Remain Exorbitant

Although government’s policy on restricting foreign land ownership has reduced potential demand for commercial land from foreigners, Namibia still fails to keep abreast with galloping land prices making it difficult for the state to meet its targets for land acquisition.

To date, the government has redistributed 2.4 hectares of land out of a target of 5 million hectares to be acquired by 2020 for the resettlement programme.

The Minister of Lands and Resettlement, Alpheus !Naruseb, expressed concern saying the prices for urban land are also seriously affected by skyrocketing prices making it difficult for people to afford decent housing in urban areas.

“The pace of land acqusition and redistribution has, much to the frustration of the masses, been painfully slow. The prevailing high prices of commercial agricultural land have been identified as a factor inhibiting access to land by the target beneficiries of the land redistribution programme,” he stressed.

!Naruseb said in November 2010, his ministry requested the Food and Agriculture Organization of the United Nations (FAO) to assist in the investigation of commercial agricultural land prices in Namibia.

The findings of the study was released yesterday by Fleefort Muzyamba, a FAO consultant who was part of the study initiated by the lands ministry.

The report indicates that government’s policy on restricting ownership as embodied in the Agricultural Land Reform Act is likely to have inhibited the supply of land as land owners would not be willing to offer their land in the first place due to the risk of not being able to achieve a sale price of their liking.

The report also pointed out that in 2008, after the lands ministry decided to permit negotiations on land prices between land owners and government valuers before government made counter-offers, the number of farms offered to government increased slightly.

“This is because the owners would in essence withdraw their offers if they were not happy with the price which government was willing to pay for the land. This increase in supply has had a tendency to reduce pressure on prices,” the report states.

Additionally, in 2010, the ministry engaged land owners across the country urging them to offer land to the government for sale.

According to the report, the total number of farms owned by foreign nationals is approximately 212.

The report established that in terms of size the total number of farmland owned by foreigners is approximately 1.3 million hectares which translates to 3 percent of total farmland.

“It appears that of the total land owned by foreigners, the majority of that land (52 percent) is located in the !Karas Region, which is one of the less productive areas in Namibia,” the report says.

Further, it states that a number of farms were owned by close corporations as of May 2011, with total hectares amounting to approximately 6 million or about 15 percent of total commercial farmland in Namibia.

However, the report suggests that if the Agricultural Land Reform Act is not effective in monitoring transfer of farms via the transfer of the controlling interest in these close corporations, then a substantial number of farms are not available to the government through its preferent right to purchase farms.

The report also shows the statistics on farms offered to government for sale farms withdrawn by owners exempted consented to for instance for sale to foreigners and waived by government to facilitate the Affirmative Action Loan Scheme (AALS).

At the same time, the report suggests that government should consider buying more land that is offered to it.

Statistics obtained show that 40 percent of farms offered to government were waived for various reasons such as not meeting the suitability criteria, failure by government to accept offers within the stipulated timeframe and recently running out of funds to buy more farms.

While it is acknowledged that some farms are too small for resettlement, records show that more than 400 farms of more than 3 000 hectares in size have been waived since 1996. The rate at which farms are waived, the report says, would significantly make it harder to achieve the targeted 15 million hectares of land to be acquired by government by 2020.

“As evidenced in this report, the government’s preferent right to purchase commercial agricultural land created some distortions to the land markets resulting in more farms being sold at higher prices than before. However, the study found that approximately 14 percent of the farms transacted from 1985 to 1995 were sold at high prices and that was before the coming into effect of the government’s preferent right to purchase commercial farms. Therefore, there is no guarantee that revoking the state’s preferent right will immediately result in all farms being sold at normal or low prices,” suggests the report.

Therefore, the report says, if the government’s preferent right and the AALS were stopped, prices may reduce but not to the levels (in terms of high or normal) that they used to be prior to the implementation of government’s land redistribution policies.

Further, without workable alternatives, it indicated that the removal of these policies might even make the pace of land redistribution slower and possibly result in the use of expropriation as a means to acquire land at a faster pace by government.

Source : New Era