CFU Legal Department
Report to Congress 2011
1. Introduction
The adoption of the Multi-Currency System in February 2009 stabilised the national economy and was expected by some to markedly increase production in the Agricultural Sector. Regrettably this has yet to materialise. Although the resultant stabilisation of the national economy has brought about the availability of inputs like fertilizer seed and chemicals, and the viability of “Contract farming” companies has seen Tobacco production resurge, recovery in agriculture has remained severely constrained.
Indeed, two summer cropping seasons after the adoption of the Multi Currency System, production of wheat, maize and soya, amongst many other commodities, is still insufficient to meet local demand. The required policy reforms have not materialised or gone far enough to create the competitiveness necessary for optimal performance of the agricultural sector. To this end a substantial liquidity shortage, under investment by the private and the public sector, the inability to leverage the collateral value of land, instability resulting from an un-concluded land reform programme, a skills and technology gap, high costs of production, high labour costs, and electricity shortages amongst many other constraints are the hall marks of Zimbabwe’s agricultural sector today. It is against this background that this report is prepared.
The Commercial Farmers Union’s (CFU) fundamental principle is to promote an optimal business operating environment which fulfils our members’, and the nation’s, desire for maximum economic growth, farmer empowerment and a strong, vibrant and competitive agricultural sector. To this end, the Legal Affairs Department in the CFU includes a wide variety of issues under its portfolio including:
· Legal advice to members
- Co-ordination of Legal action taken on behalf of farmers Constitutional Application and test case regarding compensation
- Lobby and advocacy around certain policies and regulations which undermine the viability of agricultural production (e.g. ZINWA, EMA etc)
- Co-ordination with ZESA
- Providing Support to the CFU Labour Department
- Input into project proposals and policy recommendations (e.g. representations at parliamentary portfolio committee hearings and also input into CFU Way Forward short film)
- Providing support to advocacy and dialogue surrounding the CFU Way Forward proposal
What follows is an attempt to summarise the most pertinent developments in this regard.
1.1 Overview of the Political Environment, the Law and the Courts in 2010/2011 as
they relate to the Land Question
1.1.1 General Overview
The provisions of the Global Political Agreement of 2008, in terms of which the present Inclusive Government was formed, were introduced into law by way of Amendment number 19 of the Constitution of Zimbabwe. Article 5 of the GPA deals with the Land question by providing an opportunity for its resolution in a fair and transparent manner that does not undermine the land reform programme, restores productivity, security of tenure to all regardless of race or political
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affiliation, acknowledges the outstanding issues of compensation to former owners and brings about credibility, transparency and accountability to land allocations through a land audit.
Unfortunately, in spite of these undertakings by the political parties, very little progress has been made on bringing the much needed closure to the land question and renewing the Agricultural sector. In fact, there are still signs of considerable instability which is not desirable in a period of recovery, reform and adjustment to a new agrarian paradigm. The Ministry of Lands and Rural
Resettlement continues to acquire land in terms of Section 16B of the Constitution, and to issue new offer letters to beneficiaries. In spite of persistent controversy surrounding land allocations, where allegations of multiple land allocations to senior Government officials and corruption have been made, sometimes even in the media, no significant progress has been made on the issue of the land audit. The GPA reflects that all stakeholders are in broad agreement that a land audit would be desirable to bring closure to the controversial aspects of the Land Reform Programme in particular multiple land allocations.
Criminal Prosecutions of approximately 170 Commercial Farmers for contravening section 3(3) of the Gazetted Lands (Consequential Provisions) Act [Chapter 20: 28] are pending. This is in an effort by the state to expedite evictions to make way for incoming beneficiaries. Our records indicate that approximately 32 commercial farmers and 29 farm workers have been convicted whilst 8 have been acquitted. The majority of those acquitted has already vacated the farms and are precluded from returning, whilst others are simply remaining in their homesteads but cannot continue their operations.
For those farmers who are not facing prosecution and eviction, the major constraint is the high cost of production, which undermines viability, coupled with access to finance for working capital, and to update and re-tool their businesses. Current policy precludes the use of land and agricultural improvements as collateral. The only viable option to secure the working capital required is through contract farming schemes. However, the fact that this is the only viable option limits negotiating power and places the farmer in a weak position. For those farmers who are able to secure loans for working capital from financial institutions, the interest rates are prohibitively expensive and farmers must offer residential properties in urban centres as security.
Other constraints further demonstrate the un-competitiveness of the local business environment. For example, local producers of many agricultural commodities such as vegetables, fruit, poultry and the like find Zimbabwean markets filled with imported goods which have been produced elsewhere at significantly less cost and in some cases are of superior quality. Also, the breakdown of some vital systems over the past years, for instance, the traceability of livestock including proper credible records, have led to the cessation of the export of locally produced meat products. These are just a few of many problems that are faced by local producers. Innovative and intelligent reform of the regulatory and policy environment focused on increasing Zimbabwe’s agricultural competitiveness on local, regional and world markets is therefore essential and urgent.
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1.1.2 Compensation of Former Owners
This issue has become more and more relevant in the many debates surrounding the land question. At international law generally speaking the following losses may be compensated when a state compulsorily expropriates privately owned property: the market value of land and fixed improvements and disturbance (which can be broadly defined as “economic loss suffered
by an owner by reason of having to vacate expropriated property”[1], although there are many other more specific definitions).
Currently, the Constitution of Zimbabwe makes provision for compensation in respect of acquired improvements to Agricultural Land only, and makes it the responsibility of Britain to pay for the Land upon which the improvements are made. The procedure relating to compensation regarding improvements is set out in the Land Acquisition Act [Chapter 20:10]. In the relatively few cases where compensation for improvements has been paid, the Ministry of Lands and Rural Resettlement has used a “Depreciated Replacement Cost” valuation method in determining the quantum (i.e. the replacement cost of an item less accrued depreciation). Also in terms of Zimbabwean law, Compensation is also payable in respect of acquired moveable machinery and materials and is provided for in the Acquisition of Farm Equipment or Materials Act [Chapter 18:23], but no allowance is made for any other consequential or disturbance losses such as the costs of relocation etc.
Unfortunately, a study of the National budgets from the years 2000 to date indicates that the Government of Zimbabwe (GoZ) has never allocated the resources necessary to adequately compensate all the former owners for the property it has acquired (i.e. the billions of dollars worth of improvements located on the 11.8 million hectares of acquired land, and the substantial amounts of acquired moveable equipment and materials). About 200 out of approximately 4,000 former farmers were compensated in Zimbabwe dollars in the hyperinflationary period prior to the adoption of the Multi Currency System. The amount of the compensation paid to those persons is widely regarded as inadequate when considering the substantial economic and property losses suffered by the individuals concerned. As reported by one of those farmers “the compensation pay out was insufficient to purchase a new vehicle let alone a new business or home”. Since the adoption of the multi currency system the GoZ has budgeted approximately US $ 5 million and US $ 2 million for compensation for improvements for 2010 and 2011 respectively.
In March, 2010 the CFU and 3 former owners who have yet to be compensated applied to the High Court (Case number HC 1961/2010) to compel the Ministry of Lands to comply with the provisions of the Land Acquisition Act and carry out a valuation of the respective properties of the former owners in question. Judgement was granted by consent and valuations were carried out. After lengthy negotiations two of the 3 former owners agreed to accept the amounts offered, which represented approximately 40 – 50% of the independent valuation of the acquired improvements carried out by the Valuation Consortium (also using the depreciated replacement cost method). The objective of this case, from the Union’s perspective, was to test Zimbabwean law as regards compensation for improvements in the new dollarized environment, and to explore the potential of some relief for those members, and former members, who are suffering severe economic hardships at this time. We believe that this case has been a success in providing many displaced farmers with an avenue to mitigate the current difficult circumstances which they may be facing. Our advice to all farmers is not to negotiate alone but seek legal representation or other council. Our doors are open in this regard.
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1.1.3 CFU & 9 Others v Minister of Lands and Rural Resettlement & 7 Others SC 81/2010
This Constitutional case was instituted in March 2010. The crux of the Applicants’ argument was that:
(i) They are being targeted for prosecution and eviction because they are white in
contravention of Section 23 of the Constitution, and
(ii) They are being denied the protection of the law in contravention of Section 18 of the
Constitution, and
(iii) They are being denied the protection of the law insofar as the taking and acquisition of their farm equipment and materials are concerned.
The relief sought by the applicants was the declaration of a Moratorium on the continued prosecutions of commercial farmers, the continued acquisition of Farm equipment and materials and the continued issue of offer letters to new beneficiaries until such time as the Respondents could show that the racial imbalance in land acquisition has not been addressed.
The application was only opposed by the Minister of Lands and Rural Resettlement. The Hearing was held in September, 2010 where the applicants’ case was argued by Advocate de Bourbon who presented his submissions with very little interrogation from the Bench. The Respondent was represented by Deputy Attorney General Machaya. Judgement was handed down by the Chief Justice on the 26th November, 2010. The Court was unanimous in its decision holding that the application was to be dismissed with costs.
An independent and impartial observer, Hon Mr Justice D.G.Scott, a retired Judge of Appeal from South Africa, was arranged by a South African Civil Society organisation called Afri-Forum. Afri-Forum’s interest in this matter stemmed from the fact that its work involves championing legal actions in the region which have the potential to advance and promote the rule of law. The observer was furnished with copies of the court papers and attended the Hearing. His report concluded as follows:
“It is clear that the numerous disputes of fact on the papers and the conclusion of the Court with regard to the statutory authority of the Minister to issue offer letters precluded the granting of the primary relief sought by the applicants. But I cannot agree with the comment of the Chief Justice that the application ‘is devoid of any merit, and is an abuse of court process’. On the contrary, in my view the judgment is flawed in several material respects. The applicants established, in my judgement, their entitlement to some form of alternative, albeit lesser, relief.”
2. A note on the Current Status of the SADC Tribunal
A short communiqué issued after the Extraordinary Summit of SADC Heads of State and Government on the 20th of May, 2011 stated that the Summit had received and considered a report commissioned many months earlier (the report was prepared by a panel of experts tasked to enquire into the legal validity and jurisdiction of the Tribunal. The report, by all accounts, concluded that the Tribunal was indeed a validly constituted body and did have the necessary jurisdiction over the SADC member states). Nevertheless, the Summit, according to the communiqué, renewed the moratorium on the Tribunal and directed that all the Tribunal Judges (or Members) whose terms of office expired in 2010 and 2011 were not to be re-appointed.
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The summit further tasked the Ministers of Justice/Attorneys General to “initiate a process aimed at amending the relevant SADC legal instruments and Summit a Progress report at the Summit in August 2011 and a final report to Summit in August 2012”.
The decision by the summit has caused some confusion amongst many stakeholders and met with fair criticism from several civil society organisations in SADC countries. It has also been reported that the Judges of the Tribunal view the Summit’s decision as illegal and are seeking compensation for their dismissal.
2.1 Developments, relating to the Ministry of Water Resources Development and
Management (MWRDM) and the Zimbabwe National Water Authority (ZINWA)
Since the adoption of the Multi Currency system the Union has received many complaints from members about the High cost of Water. It is reported that ZINWA is charging a fee of about US $ 12.00 per mega litre plus an additional US 1.06 (representing the ZINWA levy) per mega litre for Water allocated from State owned dams by Agreement. (It should be noted that all dams on acquired commercial farms are considered to be state Water and are managed by ZINWA in this way irrespective of the fact that they were built by former farmers or the state). In light of the many other high variable costs of production, and other indirect costs, this amount has massively impacted on the viability of all farmers who rely on supplementary or full irrigation.
Mention must also be made of the promulgation of Statutory Instrument 21 of 2011 in February of this year. This sets out the fees and rates to be levied by sub catchment councils for various permits required for the commercial abstraction of surface and ground Water, including the total allowance for watering of cattle at US$ 1 per mega litre.
In April of this year, the MWRDM convened a meeting of Farmers’ Union representatives from the four registered Farmers’ Unions, representatives from 3 of the 7 Catchment Councils, Representatives from the Ministry, including the permanent secretary, and ZINWA, including its Chief Executive Officer, and the Minster, Hon S.S. Nkomo. The purpose of the meeting was to discuss the Ministry’s concerns about the poor uptake of Water from State dams and the lack of payment of water fees and rates by farmers. The Representations from the four Unions unanimously called for a review of the various fees and charges, particularly the fees relating to Water by Agreement. It was also made clear to the Ministry that Water uptake was severely constrained by insufficient electricity supply and the other viability limitations in the sector. The Minister undertook to review the fees after consultation with experts from within the Ministry. He further suggested the formation of a committee comprising representation from all the Farmers Unions, MWRDM, ZINWA, 3 prominent Catchment Councils and The Ministry of Energy. The purpose of this committee was to address the various issues discussed at the meeting. It is the Unions intention to pursue this suggestion.
2.2 Issues concerning Electricity Supply – the Wheat Farming Clusters
Electricity shortages have been severe in the past year. This has hampered the whole agricultural sector. The most prominent agricultural commodity which has been affected by this shortage has been wheat. The Zimbabwe Electricity Supply Authority in an effort to address this problem engaged with the Farmers’ Unions and Agritex to establish winter wheat farming Clusters. These are areas predominantly concentrating on wheat production which will be exempted from load shedding for a minimum of three 12 hour blocks per week. In practice members have reported that power supply in these areas has improved more significantly than this but is still not ideal.
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The CFU has met with representatives from the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), (a subsidiary of ZESA Holdings responsible for the transmission and Distribution of Electricity) on a number of occasions to ensure the inclusion of our members in this scheme. We have also requested
Whilst we are grateful to ZESA and ZETDC for this initiative and we understand the many challenges which they must overcome to improve service delivery, we nonetheless feel that there is a long way to go in bringing optimal electricity supply to commercial farming areas. To this end the CFU recently, upon invitation, submitted a report to the Parliamentary Portfolio
Committee on State Enterprises and Parastatal Management who was conducting a series of public hearings on the service delivery of ZESA. The following recommendations were made in the report which was submitted:
1. ZESA must design and implement a plan to service each customer with a pay as you go meter using reasonable tariffs. The Tariffs must balance the interest of securing sufficient revenue to develop the required power generation infrastructure and the need to ensure the viability of business in the economy.
2. Government must seek out substantial investment in sustainable power generation infrastructure in public private sector partnerships.
3. In the interim ZESA must design a rational strategy to engage with each and every agricultural customer in a participatory process to resolve billing disputes with threats of disconnection being a last resort.
4. ZESA must disconnect without fear or favour any customer who is willfully failing to pay reasonable electricity bills which are not in dispute over estimated amounts.
5. ZESA must take steps to bring its transmission and distribution infrastructure, electricity supply and safety standards in line with international norms.
6. ZESA must provide maximum support to repair crews so that they repair faults as soon as possible.
7. There is need for an Electricity safety awareness campaign in farming areas.
8. The Law enforcement Agencies must priorities the theft of cables and other infrastructure by fostering the creation of neighbourhood watch schemes and other community based infrastructural protection programmes.
2.3 The Environmental Management Agency
The Environmental Management Authority (EMA) is a Government Agency created in terms of the Environmental Management Act [Chapter 20:27]. EMA’s mandate is to enforce the provisions of the Act and the various statutory instruments issued by the Minister of Environment and Natural Resource Management.
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Since February 2011, a number of Dairy Farmers have reported that EMA has been robustly enforcing the provisions of SI of 6 of 2007 (as read with SI 4 of 2011) Environment and Natural Resource Management (Effluent and Solid Waste Management) Regulations. These regulations require that any person who discharges effluent into the Environment must do so under a licence or run the risk of being fined up to US $ 5,000-00.
Unfortunately, the licence fees for the discharge of Dairy “Effluent” will be a minimum of US $400 dollars per year (assuming that the lowest category of licence, namely the “Blue” licence, is used). For medium to small scale dairy farmers this is unsustainable.
Unfortunately, the very noble ideals of the polluter pays principle and environmental protection appear to be undermined by what most farmers perceive as a mere money gathering exercise which potentially will damage the development of the Dairy sector.
Other legislation of interest is the regulations the Storage of “Harmful Substances” which would include agor chemicals and fuel. It remains to be seen how this will broadly impact on the Agricultural sector but some farmers have reported that they have been obliged to pay as much as US $600 for storage of chemicals. This legislation is controversial and stands to be criticised as it seems to apply simply to storage and not to the actual application of the chemical or its impact on the environment. Moreover, the licence fees seem to be arbitrary. The question is how were these figures determined and was there a process of stakeholder consultation in coming up with the fees?
The Union has made efforts and will continue to make efforts to engage with all stakeholders who have an interest in these issue including EMA and the Ministry.
M. Carrie-Wilson
Commercial Farmers’ Union Legal Adviser
11 July 2011
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[1] See http://www.tdslaw.com/media/files/articleexpropriationafh2.pdf
[1] See http://www.tdslaw.com/media/files/articleexpropriationafh2.pdf