Trends in South African agricultural land prices

[摘要] English: In recent years, concern has been expressed over rising agricultural land prices in South Africa. A major concern was that this situation would impede the successful implementation of the on-going land reform programme. This study aimed to examine the trends and draw conclusions about their determinants against the backdrop of recent policy developments to restructure the agricultural sector and empower the black population to participate more effectively in the nation's agricultural economy. On the basis of a comprehensive literature review, it was established that land issues have played an important role in past and present configuration of the economy and politics of South Africa. In South Africa as elsewhere in the world, agricultural land prices are central to how land enters the political and economic equations for which reason they are important subjects for research as well as developmental interventions. Despite the implementation of far-reaching governance reforms and agricultural restructuring over the past 12 years, no recent model of farmland prices has explicitly considered these new issues. This study therefore employed cointegration analysis to model the long-run and short-run dynamics of the relationships so as to identify the key determinants as well as attempt a tentative forecast within the constraints imposed by limited data availability to the extent that the available time series permits. To that extent, this study contributes in an important way to the debate and provides a basis for more sophisticated and focused work in the future. Building on previous structural modelling of farmland prices in the country, but using much expanded and some new time series spanning forty-nine years, it was possible to establish clear patterns of relationships between real farmland prices and a range of macro-aggregates, including real interest rate on debt, the rate of inflation, real Gross Domestic Product (GDP) per capita, among others. The results suggest that real farmland prices have strong positive relationships with real GDP per capita and real farm debt per hectare. The importance of real net farm income and the real exchange rate of the rand were also demonstrated. Although the inflation rate was found to be positively related with real farmland prices, the relationship was found to be insignificant. Overall, strong policy effects were confirmed by significant structural breaks in the series. But the fitted error correction model suggests that the systems rapidly adjust to its long-run equilibrium, with most of the deviations being corrected within the next year. While there is no basis to conclude from the results that rising farmland prices are hurting the land reform process, there is no question that sudden increases in prices generate uncertainties and call for measures to ensure greater stability. Actions to moderate the impact of price increases on smallscale and emerging farmers should therefore be explored, particularly by making redistributable agricultural land more abundant and accessible to small-scale farmers unable to compete in the unregulated land market. This will include drawing from the existing pool of state land and purchasing indebted farms for redistribution. Adjusting the rate of interest to keep consumption spending in check can have additional benefits in land price stabilization. Importantly, a fixation on rising agricultural land prices may be diverting attention from the crucial support needed by newly settled farmers to make agricultural land more productive through improvements in the input delivery systems, extension services to enhance the knowledge base of new entrants into the farming business, rural road networks, etc.

[发布机构] University of the Free State