Government's plans to redistribute one-third of white-owned farms to blacks by 2014 look increasingly like a pipe dream as the gap between escalating land prices and national treasury allocations for farm purchases keeps growing.
This is likely to fuel fears that the post-Polokwane ANC could push for drastic measures such as large-scale expropriation at below market value prices to be able to afford land reforms.
To reach the 30% target, 20,4m ha must be added to the 4,2m ha handed over since 1994. Land affairs officials estimate this would cost another R60bn.
WHAT IT MEANS
 Redistribution targets may be missed
Treasury has other spending priorities
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Their request was turned down. "For electricity, yes. For land, not a chance," says a treasury official.
Instead, the restitution programme was allowed to reclaim the R1bn it surrendered last year due to underspending.
The redistribution and tenure reform programmes were allocated an extra R900m over the next two years.
This means a total extra allocation of less than R1,9bn will be available to buy land - about 3% of the actual amount needed.
Overall, budget allocations for land reforms have increased dramatically over a 10-year period, from R500m in 2000/2001 to R5,4bn in 2010/2011, mostly for land acquisition. The lion's share goes to restitution, peaking at R3,1bn in 2008/2009 and dropping to R1,3bn in 2010/2011 as the programme winds down. 
This may be enough to settle all land claims by 2010/2011, but is woefully inadequate to secure tenure rights for an estimated 1m farm tenants or distribute enough white farms to establish a sizeable community of black smallholders and commercial farmers.
Moreover, the Communal Land Rights Act, the law expected to unlock the economic potential of former homelands by privatising 16m ha used by 21m people, is nowhere nearer being implemented, though draft regulations were gazetted this month.
This year R27m will be spent on small pilots, increasing to R31m by 2010/2011. Four years ago land affairs wanted R700m/year for a full-scale roll-out, mostly for surveying costs. Treasury says no new requests were made. "The traditional leaders aren't in favour of giving their subjects ownership of the land," says one official.
The discrepancy between what is needed and what is available was not lost on land affairs minister Lulu Xingwana. She told parliament last week that her plans to redistribute 5m ha to farmworkers within a year were realistic but she warned that lower land prices were needed.
Xingwana promised government would increasingly move away from the willing buyer, willing seller principle, a cornerstone of the 1997 white paper on land policy. Her department pledged to amend the document by March 2009.
Proposals to curb price escalation and land speculation being considered by cabinet include taxing under utilised farmland and placing a ceiling on the amount of land a single person or entity can own. The Expropriation Act is also being revised to give her department greater powers to force farmers to sell land for redistribution.
But international experience also shows expropriation is more expensive in the long run because of protracted legal battles, and because it provokes needless hostility from land owners.
Rising land costs have certainly played a role in government's failure to meet targets, particularly with restitution, where the state is a captive buyer. The land claims commission spent R2,8bn on land alone in 2006/2007, at an average cost of R4 800/ha. This is almost 40% more than restitution's average cost per hectare (R3 500) since 1994.
But administrative inefficiencies must share the blame for the department's inability to spend R150m of its land buying budget in 2007/2008. Anecdotal evidence abounds of farmers unable to sell their properties for land reform because officials don't have the capacity to process claims quickly or conclude complex land transactions.
Skills shortages are being taken seriously by the department. Its administration budget almost doubled from R220m in 2004/2005 to R430m in 2007/2008, though R40m will not be spent in the current financial year because of staff vacancies.
The department's Proactive Land Acquisition Strategy (Plas), which allowed provincial offices to buy large numbers of farms, then lease them to newly settled farmers, with those showing enough aptitude given the option to buy, was previously expected to dominate medium-term spending but is now being scaled back. After jumping from R308m since its launch in 2006/2007 to R847m in 2007/2008, the Plas budget will remain almost constant in the medium term, whereas the budget allowing black farmers to apply for land grants goes up more than fivefold, from R505m in 2007/2008 to R2,7bn in 2010/2011.
Treasury officials say Plas fell out of favour because the provinces were buying land without first identifying future farmers, in effect creating state farms. "Practicalities dictated this shift away from Plas," says a treasury official. "You will never find a government official becoming a successful farmer." Plans to set up a state-owned land-holding entity or parastatal have also fallen away.
Treasury is also studying a proposal to revise the size and structure of land grants. Aspirant farmers are eligible for a grant of between R20 000 and R100 000, depending on how much they contribute. These amounts have remained static since 2001, despite land price hikes. The revisions are likely to increase the grant size substantially, and offer larger subsidies to applicants earning less. The proposals are expected to go to cabinet at the end of the month.
The Land Bank, mandated to provide emerging farmers with loans to top up their grants, did not request an additional allocation after its R700m capital injection disbursed in October 2007. The bank is facing a precarious future after losing R2bn in equity in five years, mostly through bad debt write-offs, and going through a series of scandals, with senior executives implicated in fraud, improper loan approvals, financial mismanagement and other irregularities.
This week ANC MPs told parliament the Land Bank needed a drastic overhaul or should be shut down after agricultural co-operatives indicated they were moving wholesale loans worth billions to commercial banks. Mutterings have been heard in treasury corridors that the bank should move from the agriculture to the finance ministry. "But there are no immediate plans to do this," says one official.
In an effort to reverse the trend of failing land-reform farms, R500m has been allocated in the next three years to train 5 000 agricultural extension officers. The money will be disbursed by provincial agriculture departments through the Comprehensive Agricultural Support Programme (Casp).
Historically, provinces have a dismal record of spending their Casp grants, though this is improving. In 2006/2007 the worst offenders were the Eastern Cape, which spent only 35%, KwaZulu Natal (36%) and Mpumalanga (54%). Other provinces spent most of their allocations, or overspent.
Officials are hoping to streamline farmer support spending with a strategy launched this week that moots the creation of a local agency to co-ordinate the confusing array of grants and services land-reform beneficiaries are entitled to.
But critics, including some consulted in creating the strategy, say it runs the risk of compounding the red tape and inefficiency that is rendering much state support ineffectual. Instead of letting farmer representatives make disbursement decisions and be held accountable by the auditor-general, the agencies will be headed by local land affairs and municipal officials with little incentive to ensure grant money is spent efficiently. They fear a repeat of discredited rural development agencies in former homelands that became notorious for profligate spending and corruption.
