A shortage of capital exists to fund operations and production in the agricultural sector since many emerging farmers do not own their land and subsequently cannot provide security for loans.
Transferring title deeds to farmers already cultivating land will therefore enable access to finance by way of security for long-term loans.
This according to the country's largest agricultural lobby group, AgriSA, which released its annual Transformation Report, which, among other things, outlines challenges facing emerging farmers.
The report, released this earlier this week, also notes that the high cost of irrigation systems and other basic agricultural equipment is hampering production.
But the group, along with its corporate members and 25 affiliated commodity organisations, are trying to tackle this problem head-on. Together, AgriSA says it has spent about R331-million in the last financial year on development initiatives for emerging farmers.
These efforts, they claim, have benefited 108,307 farmers.
Earlier this year, Parliament made a landmark decision, passing a motion to begin a process of reviewing section 25 of the Constitution, which deals with property and land expropriation. The ANC took a resolution to begin the processes for land expropriation without compensation at its national conference last year, but the decision came with clauses.
The party wants to expedite the process without it taking a toll on the economy, food security and agricultural production.
In a previous interview with HuffPost, AgriSA's chief economist Hamlet Hlomendlini explained that the banking sector only extends loans to farmers based on a number of indicators.
My biggest fear about land expropriation is that the ANC comrades will be in charge of redistribution. Money will have to change hands, creating a black market for land. Resources meant for the poor end up with the wealthy and politically connected (Estina). It's a zero sum game.— Siphamandla (@Sowellnomics) April 21, 2018
Therefore, if AgriSA found that because emerging farmers don't own land and thus cannot provide security for loans, then rolling out land expropriation without compensation based on leases may be counterproductive if the financial sector is not consulted.
"They look at the land as security against borrowing. Expropriation will mean land as a resource won't serve that purpose for the banks. Farmers have been spending money on capitalisation. If you expropriate that land, what will happen to the investments they made? The uncertainty is causing panic in farming communities, and farmers are holding back on making further investments," Hlomendlini said.
"Economically, this decision is irrational. Government will be cutting channels to developing farmers by giving people land without the money or resources for production. The whole model for banks extending loans to the agricultural sector will have to change."
While the private sector continues its developmental initiatives, academics believe government is failing with implementing land reform.
It is argued that the #LandExpropriation policy must be executed so that more black people can own property, but it is evident from the policy docs of both @MYANC & @EFFSouthAfrica that the intention is for the @GovernmentZA to own the land, not private individuals. @afriforum— Monique Taute (@monique_taute) April 24, 2018
Fin24 reported that researchers from the Plaas Institute for Poverty, Land and Agrarian Studies at the University of the Western Cape believe land reform under the ANC has regressed.
Plaas research reportedly found that 2.3-million people had been displaced from farms since the advent of democracy and that of these 940,000 had been forcefully removed off the farms where they lived.
This is reportedly believed to be linked to the perception of farmers that land reform would be implemented by giving labourers rights to land which they lived and worked on. Plaas believes this was coupled with a backlog in land claims that had stood in the tens of thousands for nearly 20 years.