An Examination of the Relationships between Farmland Values, Agricultural Commodity Prices, and Land Reform Issues in South Africa

Land reform is an issue that is current and hotly debated in South Africa. The policy pursued by the South African government to date to achieve restitution and equity in land ownership is to promote the willing seller willing buyer regime. But progress under this policy has been slow. It is claimed that part of the problem is the inflation of prices by landowners. This study investigates through the analysis of time series data the factors that influence land values in South Africa. The values of land under maize, sugar cane and deciduous fruit were examined. The empirical results show fluctuations in agricultural commodity prices, and interest rates charged do significantly impact land values. The study also found that market value for farmland differs significantly from productive value. For potential emerging farmers and Land Reform Policy makers, inflated land values act as a huge barrier to their success.