The tabling of the annual national budget speech has proven to be one of the most anticipated events in South Africa. Along with the positive changes that are currently taking place in the political landscape, the February 2018 budget speech is set to attract not only the attention of business and individuals inside the borders of South Africa but also those outside the country.

Rating agencies will be watching the event like hawks. According to Dan Kriek, President of Agri SA, South Africa faces the risk of further credit downgrades if the budget speech is not palatable to the ratings agencies. Accordingly, the budget will have to reassure ratings agencies that South Africa is committed to maintaining the credibility of the fiscal framework and the expenditure ceiling.

According to the medium-term budget policy statement delivered in October last year, South Africa will have tax revenue shortfalls of around R50.8 billion for 2017 and R69.3 billion for 2018. By 2020/21, approximately 15% of the government’s revenue will go towards paying off debt. The country’s deficit is projected to be 61% of the gross domestic product (GDP) by 2022.

The funding of free tertiary education[2] and struggling state-owned enterprises (SOEs) are key considerations for the upcoming budget. South African Airways (SAA) and Eskom are examples of SOEs that place a significant burden on the fiscus. It is estimated that SAA will need funding of approximately R8 billion by March 2018 and Eskom around R20 billion by May/June 2018.

The budget will have to give a clear indication of the specific steps and strategies that will be used to ensure that the growing budget deficit is reined in. Subdued economic growth, limits the potential for significant tax increases without further curtailing economic growth. The World Bank projects that South African GDP growth will reach 1.1 percent in 2018 and 1.7 in 2019/20.

However, taxes are expected to rise by at least R30 billion. Agri SA hopes that expenditure cuts, particularly of wasteful expenditures, and efficiency measures will form a significant component of the specific steps and strategies to be outlined in the budget speech. Any tax increases should consider the existing burden on an already constrained tax base.

Whilst improving access to tertiary education is a noteworthy goal, improving the effectiveness of existing spending on education, for example, to improve the quality of primary and secondary education should also be considered. Steps to improve the effectiveness and efficiency of SOEs is crucial. Wasteful expenditure should be eliminated and excessive compensation to the senior management of struggling SOEs must be re-evaluated.

Unfortunately, agriculture received relatively little attention in the medium term budget policy statement (MTBPS) of October last year. Agriculture was the best performer across the first three quarters of 2017 and was the largest contributor to our 2% GDP growth in the third quarter. The MTBPS made no mention of agriculture’s contribution to economic growth nor the plight of farmers affected by ongoing droughts. Worryingly, the contingency reserve was pared down to a meagre R16 billion over the next three years. It was unclear how this will have an impact on emergency assistance for crises such as the persistent drought.

The drought situation in the Eastern, Northern, and particularly in the Western Cape remains the major risk to food production, its effect on the economy is begging to show itself and something needs to be done urgently.

Agri SA hopes that agriculture will receive greater attention in the 2018 budget. Agri SA recommends that the budget make adequate resources available to ease the impact of the drought on farmers and to provide the necessary infrastructure to help boost agriculture’s competitiveness and subsequently improve food production and job opportunities in the sector.

2 For students from households with a combined annual income of R350 000.

Issued by Agri SA, Directorate:  Corporate Liaison

Enquiries:

Dr Requier Wait, Head: Economics & Trade, Agri SA, 012-643 3400 or 073 304 0932

Mr Hamlet Hlomendlini, Chief Economist, Agri SA, 012-643 3400 or 082 957 9064

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“Agri SA therefore wholeheartedly supports the economic solutions outlined in the State of the Nation Address to turn the country around and to create a future of hope, social cohesion and prosperity for all” Dan Kriek, President of Agri SA stated.

Significant emphasis was placed on the need to create jobs, advancing transformation and establishing an ethical, caring and service orientated state fraternity at municipal level, provincial and national level. Agri SA also welcomes the announcement to clamp down on corruption in state departments as well as the private sector.

We enthusiastically applaud the practical steps outlined to ensure policy certainty, reduce government departments, grow the local economy, attract investments, boost the manufacturing sector and grow the small business environment, Kriek added.

The establishment of local economic zones, the review of SARS and state-owned enterprises, appointment of the right people as well as implementing a wide range of social and economic interventions in the small business sector, agriculture, mining, tourism and other sectors are also welcomed. Agri SA pledges its co-operation to ensure the achievement of all the outcomes related to these plans.

Prioritising the economy and the role of entrepreneurs was also a key feature of the address. Agri SA, therefore, calls on the President to seize the opportunity and exploit the goodwill on offer from local and international investors. The emphasis on promoting partnerships between business, labour, government and the public is to be welcomed as well as the plans outlined to develop our young people.

However, such a bold vision cannot be tarnished by excluding anyone or a particular community. The plans announced by the President should be inclusive of all the people of South Africa regardless of race, colour, religious creed, national origin, ancestry, sex, sexual orientation, age or physical constraints.

The National Constitution demands of all of us to build a united and non-racial society and to nurture the talent and honour the contribution of all our people. South Africa remains a highly divided nation and it is through honouring the dignity of every South African, inclusivity and mutual respect that this divide can be bridged.

However, Agri SA is highly concerned with the contradictory statements related to acknowledging agriculture as the biggest contributor the past quarters in terms of economic growth and job creation, whilst in the same breath calling for the expropriation of land without compensation. Not only does it subvert the letter and spirit of Section 25 of our National Constitution, but it also entrenches the perception that the governing party has no regard for the founding principles of our newly founded democracy.

The question also remains: From whom will land be expropriated and to whom will it be given? Such populist statements will do more harm than good and contradicts the underlying theme of the State of the Nation Address to grow the sector through investment to unleash its fullest potential.

Agri SA, therefore, appeals to the President to rather desist from such populist rhetoric and to engage with the commercial agricultural industry to find amicable solutions to the land question.

Agri SA is developing its own land transformation plan that will be commercially driven and will aim to increase national production significantly without having to change the constitution – Omri van Zyl (Executive Director) added.

“Undermining the notion of private ownership and still expecting the private sector to enthusiastically embrace partnerships between themselves and the state will not happen” van Zyl added.

It is through win-win partnerships and policy certainty that the vision of a safe, productive and content South African society can be realised.   

 Issued by Agri SA, Directorate:  Corporate Liaison

Enquiries

Mr Dan Kriek, President Agri SA, 082 944 0566

Mr Omri van Zyl, Executive Director, Agri SA, 082 417 5724

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Click HERE to read the full report by Wandile Sihlobo

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I keep a close eye on the Zimbabwe agricultural sector because of its potential impact on regional demand. Since the collapse of the sector after the land reform programme in the early 2000s, the country has been one of the key markets for South African maize.

On average, South Africa’s maize exports to Zimbabwe accounted for nearly a third of overall maize exports between 2001 and 2017, according to Trade Map data. This came to a halt in October, when Zimbabwe banned maize imports after a recovery in domestic production to 2.2 million tons – its largest harvest in 23 years.

However, this season’s production estimates point to a lower harvest.

Recent data from the US Department of Agriculture shows that Zimbabwe’s 2017-18 maize production could reach 1.2million tons, 46% lower than last season’s bumper crop. This is largely due to a reduction in area planted, lower yields in some areas and unfavourable weather early in the season.

The expected decline puts the country in a net importing position, but it might not require the large volume seen in the past couple of years as the expected harvest is still higher than some years before the drought of 2015-16. Moreover, if the Zimbabwe Grain Marketing Board is to be relied on, there are about 500 000 tons of maize from the previous season. This means the total supply for the 2018-19 marketing year could amount to about 1.7 million tons.

Given that Zimbabwe’s annual maize consumption could vary between 1.8million and 1.9million tons, the country will still need to import to supplement domestic supplies, so the government would have to lift the maize import ban. This presents a small window of opportunity for South African farmers and traders to exploit.

The volume available is not large – about 720 000 tons, according to national supply and demand estimates committee data. The rest of the estimated 2.4 million tons of maize exports for the 2018-19 marketing year is yellow maize, which should flow to the world market. A large share of white maize exports may go to other regional markets.

It is worth noting that there might be limited competition in the 2018-19 marketing year in traditional African export markets from countries such as Zambia and Malawi. They are set to record a decline in maize production.

South Africa will also record a decline in production from last season’s record, but there will still be large supplies. This week, the crop estimates committee lifted its estimate from last month for 2017-18 maize production by 2% to 13.2 million tons.

Considering the domestic annual maize need of about 10.8 million tons, on the back of expected production coupled with an opening stock of 3.7 million tons, South Africa could see maize exports exceed the aforementioned estimate of 2.4 million tons in the 2018-19 marketing year, which ends on April 30.

Overall, the key fact is that Zimbabwe will again be a net importer of maize in the 2018-19 marketing year.

Most important, South African maize traders and farmers will have to look further afield for maize export markets, as the surplus might not all be absorbed by regional markets.

Sihlobo is head of agribusiness research at the Agricultural Business Chamber. 

Source: Business Live

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Every farmer, land owner and disappointed beneficiary or aspirant beneficiary of land reform, who had been delivered to these land officials, know this. The High Level Panel of previous president Kgalema Mothlante wrote this in its report, and
no one knows why their findings are being ignored by the ANC in its position on Expropriation without Compensation.

The ANC government could not meet any of its land reform targets since 1996, simply because it never budgeted to buy the land it identified for transfers. Underspending of budgets, legal battles lost with costs, and suspicious transactions such as Mala-Mala, where a billion rand had been spent on a shady deal to benefit everyone involved but the intended land claims beneficiaries, are only a few stones in the shoes of land reform which are covered up by blaming the constitution.

The ANC now wants to “test “ the constitution by expropriating 139 farms for different reasons and in different circumstances, to see how close it will allow the state to expropriate without compensation. It expects landowners and their representatives to take the matter to the courts, which will apply the “just and equatable” principle to determine compensation.

Agri Limpopo fears that the ANC is holding a gun to the heads of the judges, who know that the party will use their judgements as an excuse to change the constitution when the outcomes don’t go their way. The ANC is not clear on whether they expect all, or most, or only some judgements to limit the state’s powers to act beyond what is just and equatable before they use it as an excuse
to change the constitution.

The real judges in these 139 expropriation cases will however not be the judges in the courts, but investors both locally and internationally, and South Africa will read their judgements in the growth statistics and gains or losses in the rural jobs
markets. The ANC is yet to regain the moral high ground for embarking on this trajectory of expropriation without compensation, given its sad recent history of state capture, failing basic services and parastatals, and massive job losses under its watch.

Agri Limpopo is clear on this issue: government needs to be honest with itself and all stakeholders about land reform and what they really mean by it, ensure that the state does have the capacity to seen their plan through, do proper budgeting and see to it that budgets are spent on what it is intended for, stop the deviding rethoric based on false assumptions of land theft and populistic racial jargon.

Agri Limpopo has a long standing record for promoting the implementation of the amended model for land reform in chapter 6 of the NDP. Time wasted on searching somewhere else for solutions to failed land reform, could have been better spent if the High Level Report and the NDP were searched for the answers and time was spend to build onto much work already done to fine tune the model of chapter 6.

Enquiries:
Dr Theo de Jager – Chair of Agri Limpopo’s Agri Development committee 082 332 2110
Willem van Jaarsveld CEO Agri Limpopo 082 451 7913

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Click HERE to read the full report by Wandile Sihlobo

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Agri SA again appeals to South Africans to contribute to Agri SA’s drought disaster fund in any way. Contributions have ranged from feed, diesel, trucks and financial donations and remains welcome. Since 2015, thousands of farmers and farm workers have benefitted from the fund. Agri SA is thankful – these communities need all the help we can give.

Agri SA could, with the help of various donations, make more than 200 deliveries of feed in drought areas to date. Food parcels and water were delivered to farmers, farmworkers and rural areas in 2016.

“Agri SA collaborates with other non-governmental organisations and role-players so as to help more people,” said Christo van der Rheede, Agri SA deputy executive director. “This cooperation is crucial to ensuring that drought aid is distributed as cost-effective, transparent and fair as possible.”

The Agri SA Drought Disaster Fund ensures that farms remain in production and that jobs and food security are protected.

“Let’s stand by our farmers and their workers by supporting them in their time of need.”

For more information visit Agri SA’s website at www.agrisa.co.za

For donations to Agri SA Drought Disaster Fund:

Agri SA

Bank: ABSA

Account Type: Cheque

Account Number: 40-6854-0775

Branch Code: 632 005

Reference: RAMP

 Enquiries:

 Christo van der Rheede

Agri SA Deputy Executive Director

C: 083 380 3492

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• The Kingdom of Saudi Arabia is an important player in global agricultural trade, ranked the world’s 20th largest importer of agricultural products in 2017. Therefore, last week’s engagement between South Africa and the Kingdom’s Minister of Agriculture is of particular interest, as it focused on key areas that South Africa is already perusing as a way to ignite inclusive growth within the agricultural sector. These are areas of trade, investment, capacity building, research and development in the field of agriculture.
• From a data perspective, although expanded in the third quarter of last year, we expect South Africa’s agricultural economic growth to have contracted by roughly 4%-5% on a quarter-on-quarter seasonally-adjusted annualised rate in the fourth quarter of 2018.
• After registering a notable decline in January 2019, South Africa’s tractor sales could somewhat recover in February.
• South Africa’s weekly grain trade data is due for release on Thursday, 06 March 2019. This will mainly be maize and wheat. In terms of maize, we expect South Africa to be a net exporter in 2018/19 marketing year, with about 2.3 million tonnes (white and yellow maize). Looking ahead, South Africa is likely to remain a net exporter of maize in the 2019/20 marketing year which commences on 01 May 2019. The exports, however, could decline by half from the 2018/19 marketing year to about 1.1 million tonnes

In terms of wheat, we expect a 36% year-on-year decline to 1.4 million tonnes in South Africa’s 2018/19 imports.

Click here to view the full report.

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