Agri SA has urged Finance Minister Enoch Godongwana to announce measures for farmers in his budget speech to help them to protect the country’s food security. An agricultural economist at Agri SA, Kulani Siweya, told Biznews that loadshedding is the most urgent threat to the nation’s farmers and they should be allocated resources to buttress them against its worst effects. Siweya said Agri SA is deeply concerned about the confluence of challenges that have come together to make food production in South Africa especially difficult at this time and although he did not want to create panic about food security, loadshedding is causing significant disruption. KFC shortages and chicken farmers are an example of the effect it has had. He called on the government not to increase sin taxes as it has a dire effect on farmers and to assist farmers with funding to enable the agricultural sector to be one of the solutions to the energy crisis. – Linda van Tilburg
Extracts from the interview below:
Loadshedding causing disruption in agricultural supply chain and its effect can be seen in shops
The loadshedding situation that is playing out currently has really caused a whole lot of disruption to the value chain for the agricultural sector. On the one hand, you find new farmers needing to irrigate in different schedules, because when it’s ideal and would be the most optimal time to irrigate, they, unfortunately, can’t because of loadshedding. Now, this in itself creates a few challenges and problems owing to the fact that some of these irrigation plants are really sophisticated – it’s not a matter of switch-on and switch-off. So, as soon as there’s loadshedding and that ends, you find farmers needing to either drive to different locations to get their systems up and running which can be costly because now they need to keep labour, for example, for overtime in order for them to irrigate. But, it also just creates inefficiencies. Then what has happened is that we find many farmers saying that now it’s affecting them, and they adjust their supply. In recent times we’ve seen it in some of the news reports with certain retailers mentioning the fact that they have now run low on supplies. KFC is running low on chicken and the reason is that poultry farmers have now had to start culling or find themselves having been challenged when it comes to culling and that has a knock-on effect on the value chain, supply and ultimately the prices of food in South Africa and that’s playing out as we have already seen at the tills.
Could South Africa develop a food security problem?
I wouldn’t want to create panic out there. We are a very food-secure country coming from a few seasons of good rains and bumper harvests. So, we are quite well-supplied when it comes to staples and other forms of it. However, with the situation that is playing out, it is creating a sense of dissatisfaction and a bit of concern for the agricultural sector. If loadshedding does continue, particularly at higher stages that we are seeing currently, it will impact the availability and accessibility of food and the example that I gave earlier on with the poultry situation. You are finding that farmers have stopped farming poultry because they can’t keep them alive because of loadshedding issues.
Calling for a higher rebate on fuel to generate electricity
The budget speech comes hot off the heels of the SONA where the president had no alternative but to paint a grim picture of the reality that we face. What we are calling for is to follow up on those commitments and promises so that the agricultural sector can be cushioned. One of them is that we are calling for a higher rebate scheme for those farmers that are now having to purchase fuel to generate electricity. As it stands right now, farmers can claim from the rebate scheme for their tractors and any other machinery that is used for farming production, but not for road vehicles. Now, they need to self-generate electricity through generators. They are not purchasing fuel for that. So, we are saying that the rebate scheme needs to be looked at, but some farmers are setting up their own self-generation units. We’re calling for incentives to enable them and assist them in the form of an incentive for the generation of electricity off the grid and on the grid.
Lower the sin taxes to help farmers
What we are also calling for is the lowering of the cumbersome taxes that are imposed on the agricultural sector. We do know about the excise taxes that are imposed on cigarettes, tobacco and alcohol. So we are saying in this budget, don’t raise those, just have a bit of sympathy on the sector itself because we are really feeling the impact of loadshedding.
It is a simple one. It is going to be the low-hanging fruit. But unfortunately, those particular commodities, whether you’re talking about the sugar industry, whether they go with a health tax, if you’re talking about the wine industry, there is a whole lot of losses that they incur just from these taxes. Now introduce loadshedding into this whole equation, it just makes the situation untenable. So, we are saying in the absence of any other form of short-term interventions, these are some of the interventions that can help to protect the viability of this sector but also ultimately ensure that food security in South Africa is protected in this regard.
The agriculture sector has availability of land and could help to solve the energy crisis
They [incentives] come in many forms. It could be a form of funding to allow farmers to play in this particular space. We’ve noted time and again that the agricultural sector stands willing to participate in the energy regime, and it’s one of the lowest hanging fruits that the government can take on, given the fact that agriculture has the availability of land for setting up this particular infrastructure and units, but it comes at a cost. So, if farmers are willing to fork out from their own pockets, let there be a tax incentive that is attached to that or alternatively, National Treasury could just have a form of funding that will enable the agricultural sector to be one of the solutions to assist in this particular regard.
