S.Africa's land reform slows sugar sector investment

JOHANNESBURG - Uncertainty over South Africa's land reform programme meant to hand over 30 percent of farm land to the country's black majority by 2014 has slowed investment in its sugar sector, an industry official said.

Trix Trikam, executive director of the South African Sugar Association (SASA) said the industry supports the land reform initiative but so far just over half of the land has been transferred to black farmers, hindering investment.

The slow land reform programme in Africa's biggest economy has caused unease in the agricultural sector with white commercial farmers unsure of whether to reinvest in farms under claim by black farmers, he said.

"The finality of the land restitution programme is a necessity because the slow pace has meant that investment, and in particular capital expenditure on farms under claim, is sluggish due to the uncertainty that exists," Trikam told Reuters late on Friday.

After the end of apartheid in 1994, South Africa's government set a target of handing over 30 percent of commercial farmland to blacks by 2014 as part of a plan to correct racial imbalances in land distribution caused by apartheid.

The government said earlier this year it would not meet the 2014 target of transferring commercial farmland to black farmers due to lack of funds to purchase land. So far only about 6 percent of agricultural land has been shifted to blacks since 1994.

The sugar industry set up a similar programme to run concurrently with the national plan and transfer 30 percent of commercial sugarcane farms to black farmers by the 2014 -- a deadline key to eliminating the unease and attract further investment.

Trikam said the sugar industry has so far given black growers 19 percent of its commercial farms.

"Should a further 10 percent of land claims be dealt with by 2014, the target of 30 percent will be met," Trikam said.

In addition to challenges around land reform, high input costs continue to weigh on production in the sugar industry.

Kathy Hurly, director of regional services at the South African Cane Growers Association said access to essential farm inputs like fertiliser, chemicals, as well as farming equipment was not easy for small-scale growers.

"This impacts negatively on cane production as all aspects of farming, rationing, planting and harvesting, are generally performed sub-optimally," Hurly said.

"The small-scale sector is currently operating below potential, yields have dropped sharply and the number of growers in this sector had declined by 20 percent over the past five years."

According to Hurly, about 10 percent of sugarcane in South Africa is produced by small-scale farmers who mainly farm on tribal land rather than commercial farms.

South Africa's 2009/10 sugar output fell to 2.18 million tonnes from 2.26 million tonnes a year earlier on the back of higher input costs, while sugarcane output declined to 18.7 million tonnes from 19.3 million tonnes.

The 2010/11 sugar output was estimated at 2.24 million tonnes in March, and sugarcane crush was forecast at 19.12 million tonnes in the same month.

source: reuters