Oct 29, 2017 10:55:07 PM

Overview of the KZN agricultural property market in 2017

Topics: Agricultural 0

There is a strong demand for good quality agricultural land in Kwazulu-Natal, land that can be defined as land with a high productive potential based on soils, rainfall and other climatic conditions. This would refer to arable land capable of producing crops under dryland conditions (sugar cane, maize, soya beans, potatoes, etc) and irrigated land with water rights.

The threat of cheap imports and the extension of the time frame for submission of land claims is a worry for land owners, however commercial farmers are generally in for the long haul and seem to carry on regardless of these issues. The dominant enterprises within KZN are sugar cane on the coastal areas, dairy/ timber/cash cropping and extensive grazing in the Midlands, and extensive grazing/cash cropping in Northern Natal

I don’t foresee any major issues that will affect the agricultural market over the short term. We have come out of an extended drought that has impacted virtually the whole agricultural sector and farmers are generally still feeling the pinch financially. Farmers perceptions are generally positive in terms of rainfall over the next season.

The one standout industry is macadamia nuts. New tree plantings have increased from about one million in 1996 to 8 million in 2016 and currently cover an area of approximately 28 000 hectares. The industry is growing by an estimated 3 900 hectares annually. The KZN north and south coasts are well suited to this use climatically and sugar cane is being converted to macadamias in these areas. In addition, the dairy industry has grown over the last few years.

The majority of buyers seem to be existing farmers buying land in close proximity to their current operations, and hoping to benefit from economies of scale. The trend is towards expansion, with fewer small scale farming operations. There are generally few new entrants to the agricultural market since profit margins are low.

Farming is management intensive and it is necessary for landowners to have business acumen as well as a good knowledge of the industry they operate in. The land reform process has also had a multiplier effect on the demand for farming land, land owners having been bought out and re-entering the market with a resultant increase in land values.

In terms of capital growth, arable land that was selling for R10 000/ha in 2007 is currently selling at around R35 0000/ha. This represents an increase in value of around 12 to13% per annum. Similar increases would apply to irrigated land, and grazing. Sugar Cane values have increased at a lower rate of around 7,5% per annum.

Statement by

Clive Lang

Business Owner | Agricultural Specialist

Harcourts Midlands