The amount of compensation farmers are paid for land expropriated by the state should be as close to the market value of their properties as possible, Agri SA argued on Wednesday.

Briefing Parliament’s Public Works Committee during public hearings on the Expropriation Bill, which is meant to replace the 1975 Expropriation Act, Agri SA’s Annelize Crosby praised government attempts at providing a clearer, more legally sound process of expropriation, but said they had serious concerns about how the compensation to farmers affected by expropriation would be calculated.

“We are a little bit worried about how this will be implemented and whether the compensation that is going to be paid is going to be as close as possible to market value…,” Crosby told MPs.

“We try and make the point that even though the Constitution allows for factors other than market value to be taken into account, and for less than market value to be paid, from an economic perspective that would not be a sensible thing to do because it would impact on the banks’ kind of interest rates that they would charge, their appetite for risk in the sector.”

Crosby said if banks were loathe to invest in agriculture, it could have a serious effect on food security.

Crosby said in addition to compensation for financial loss, farmers should also be paid out in the form of “solatium” – compensation for the emotional trauma attached to losing one’s land, and business.

“The farmer not only loses his house, but his livelihood and his linkages to markets and input suppliers, etc,” said Crosby.

“If you expropriate a farmer and he has to start all over again in a new location, he has to find new input suppliers, establish relationships, find new markets, he has to move his livestock at a substantial cost and that has to be compensated.”

The Cape Chamber of Commerce and Industry was completely opposed to the bill, with chamber President Janine Myburgh saying it was unconsitutional and “ill-conceived “.

“Should this legislative process proceed any further without radical modification and alignment to the Constitution, foreign direct investment in South Africa will be severely curtailed and discouraged,” Myburgh said.

“As an attorney, I am getting numerous queries for an opinion from businesses wanting to invest in South Africa, but are being extremely cautious and not doing so in light of the proposed bill.”

Myburgh said businesses were concerned about the fact the bill did not guarantee market value compensation for their properties.

“The new bill is still unclear on the issue of interest payments. The issue of market value is not guaranteed and a value determined by the State Valuer will be paid,” she said.

The bill, read together with attempts by government to set a cap on the amount of land farmers could own, would be devastating, Myburgh argued.

“The combined effect of this legislation and the new legislation proposed would undermine land values making expropriation easier and less expensive, setting the scene for the large scale dispossession of productive land.”