Govt’s compensation terms totally inadequate

Grim harvest for white farmers

Times Live (South Africa) by Ray Ndlovu

2 December 2018

Zimbabwean farmers from Chinoyi line up for release at the town prison in 2001. The 21 farmers and businessmen were arrested after clashes with war veterans and Zanu-PF supporters and were jailed for 16 days on charges of inciting public violence. Image: Reuters

Nine years after Ben Freeth was evicted from his citrus farm in Chegutu, the 47-year-old white ex-farmer is sceptical about the latest promise by the Zimbabwean government to compensate former farmers.

"We do want compensation for our losses, but not under the current very poor terms that they are offering," he told Business Times.

Freeth recalled this week how in 2009 his house was burnt down, his crops were raided by invaders and his family were forced off the property they had lived on for decades. "We did not even leave with a toothbrush between us as a family," he said.

Zimbabwean commercial farmer Tommy Bayley rides a bicycle ahead of war veterans and villagers who invaded his farm at Danbury Park outside Harare, in this 2000 file picture.  Picture:  Reuters/Howard Burditt

Now a land-rights activist, Freeth said a few farmers, out of desperation, had previously taken very small compensation packages offered by the government. "This has been paid over time and is only worth a fraction of what it should be," he said.

Freeth claims a fair amount for his losses would be about $13m (R177m).

"For lost production and other losses and damage to property since we were evicted, it would be over $6m. The property itself is worth another $7m looking at regional comparable sales in surrounding countries," he said.

Prior to 2009 about 200 farmers were paid for their improvements on the farms, but the payments were in Zimbabwe dollars and were discounted against market valuations.

Ben Gilpin, the director of the Commercial Farmers Union, this week said a small number of farmers, usually driven either by poverty or health challenges, had approached the government for compensation since 2009.

"Most offers have been in the order of 20% of professional valuations. One-off payments are unusual and are subject to a substantial discount on the sum offered. More usually payments are made in tranches over up to five years. Probably less than 50 have been paid out on this basis," said Gilpin.

"The average age of farmers at the peak of land reform was around 55. Now the vast majority are over 70 and many are unable to work. Thus the need for settlement is very real. Sadly, many have died without settlement and others are facing extreme hardship."

During his inauguration ceremony in November last year, after the fall of former leader Robert Mugabe, President Emmerson Mnangagwa promised to compensate the former farmers

"My government is committed to compensate those farmers from whom land was taken, in terms of the laws of the land," he said.

Mnangagwa's pledge is a significant departure from his predecessor, who during his time in office was widely seen to have been unwilling to deal with the issue. Observers say Mnangagwa needs to be seen to be acting on compensation in order to curry favour with the West and unlock the credit lines that the country desperately needs.

But a comatose economy afflicted by excessive government debt, little foreign investment and a high public-service wage bill, among other ills, means Mnangagwa's attempt at compensation will be a drop in the ocean.

Finance minister Mthuli Ncube, in his maiden budget speech statement last week, said the government would set aside nearly $54m to compensate former farmers.

But independent economists estimate that $10bn is needed to compensate the 4,500 farmers evicted by war veterans in 2000.

Though the land seizures took place in the 2000s, the effects are still being widely felt, with agricultural production in some commodities yet to return to the levels before the land grabs.

Tobacco has been the sole success story in agriculture, with productivity breaking the 2000 production-level record of 236-million kilograms. This year production was 252-million kilograms and earned the country $737m in foreign currency. Even so, economists said the country's GDP halved in less than a decade because of the violent land seizures.

Cash-strapped, the government is unlikely to have an extra $10bn to compensate the former farmers.

Gilpin said the recent budgetary allocation would either be used towards the claims already partially settled or to settle the claims associated with breaches of bilateral investment treaties that Zimbabwe has with other countries.

The sincerity of Zimbabwe's commitment to compensate the farmers will come into sharp focus after a US-based International Centre for Settlement of Investment Disputes (ICSID) this week rejected the government's application, made in 2015, to annul a $195m award to a German family whose property was seized in 2005.

The family of Bernhard von Pezold had investments in forestry and agriculture businesses in the country before their land was seized in 2005. The takeover of their properties was found by the ICSID to have breached the bilateral investment treaties that Zimbabwe has with Germany and Switzerland.

Through his lawyers, Von Pezold said Zimbabwe should immediately honour its obligations and promises.

"After eight years of arbitration proceedings, the Von Pezold family is relieved that the proceedings have been successfully concluded. Foreign investors will not return to Zimbabwe if it does not honor its international obligations," the statement said.

According to the central bank governor, John Mangudya, mining has overtaken agriculture as the country's primary foreign-currency earner and largest contributor to GDP.

Agricultural experts said the main challenges faced by the sector relate to high risk, reluctance by banks to lend in the absence of security, the high cost of money given the country's high risk profile, the lack of competitiveness in production and the low levels of productivity linked to a lack of skills.

The overshadowing of agriculture by the mining sector also comes at a time when the government intends in the new year to scale down on its command agriculture programme.

Ben Freeth and his son Stephen at the ruins of their farm in Chegutu, from which they were evicted in 2009.

The programme, which began in 2016, has involved the state providing subsidies for inputs to farmers with the aim of scaling up productivity, geared towards ultimate self-sufficiency.

The funding by the state of the command agriculture programme is blamed as a driver of Zimbabwe's budget deficit. In August, expenditure on the agriculture sector reached $1.1bn, against an annual budget target of $401m.

At a media briefing on Wednesday, Ncube said command agriculture had improved food security in the country.

"It has been a success, but what we are saying is that there are players that have been missing in the financing of command agriculture. It is the private-sector banks who should begin to fund command agriculture," said Ncube.