Equity in natural resource use : farm land resource utilization and land value trends in the Free State under LRAD

English: The demand for land as an economic asset represents a source of identity and a symbol of citizenship in South Africa. This symbol has become an important factor, guiding policy development. South Africa's current ownership and use of agricultural land is the inevitable outcome of decades of policies favouring white commercial farmers. The need for land reform was clearly identified in the new South African Constitution (Act 108 of 1996, Section 25). In the process of redistribution of land to previously disadvantaged communities in primary agriculture in South Africa, it is vitally important that issues such as the productivity of the land and infrastructure on farms are considered since not only do it affect the income potential of the land, but also the value of the land, which is in turn important to, for example, gain access to credit. The primary objective of this study was to provide a clear picture of equity in agricultural resource use in the Free State Province (FSP). This study shows that there are currently no proper systems in place to monitor the ongoing process of land reform in the FSP. There are no apparent correlation between land prices and the potential of the resources in the FSP when investigated on an aggregate level. There is also a poor correlation between different sources that provide information on land prices. This situation renders it very difficult to make specific conclusions on the equity in natural resource use. It was furthermore shown that records being kept by Land Affairs Offices are in general incomplete to the extent that such records could potentially provide a skew picture of the current progress being made by the land reform programme. These problems and shortcomings of the data available to measure the progress made in redistribution of land and resources led to the development of a hedonic pricing model that attempts to isolate the transaction characteristics that have the most significant impact on the price paid for land under LRAD in the FSP. The hedonic model shows that Rent, Size, Location of the land and the Type of enterprise significantly affected the price paid for land. The analysis also reveals that the current aggregate information on Land Capability is not optimally suited to link farm prices to the potential income the farm can generate. Rental values of land will serve this purpose much better. Finally, the results obtained from this study provided no evidence that land transferred were only in areas of low quality resources nor that such land was overpriced.