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

The post Agri SA’s expectations for the 2018 budget speech appeared first on Agri Limpopo.

“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

The post Agri SA Media Release: State of Nation Address appeared first on Agri Limpopo.

“An attack on the agricultural community, is an attack on food security and the government’s objectives to develop the economy”, Mlengana said. “The agricultural sector contributes to development in and of the country”.

Mr. Kobus Breytenbach, the chairman of Agri SA’s Centre for Excellence: Rural Safety, expressed his appreciation for this recognition.

“It goes without saying that the agricultural community must be effectively protected, as nearly 34 000 farmers and their farm workers provide food to almost 55 million people daily,” Breytenbach said.

However, Boeta du Toit, vice-chairman of Agri SA’s Center for Excellence: Rural Safety says that a summit can’t be held, if there is not real action being taken.

“There is a lack of effectiveness, which prohibits the implementation of policies, the protection of farming communities and the development of farmers. Various departments and other state institutions fail to comply with their policy responsibility and this must be addressed urgently”.

“The government cannot succeed in achieving its goals without the private sector’s investment. The agricultural sector’s contribution is therefore important to stimulate economic growth” said Mr Mike Mlengana.

In conclusion, Breytenbach says: “We must acknowledge the contribution of the agricultural community by creating safer communities, their involvement in local organised agriculture and their cooperation with the police to promote rural security.”

Agri SA will continue to engage with government regarding the importance of rural safety.

The post Agriculture D.G.: “Productive Agricultural Land will not be Taken” appeared first on Agri Limpopo.

Agri SA wants to make the following clear: The Mayor of the City of Ekurhuleni cannot simply announce expropriation without compensation (EWC) of property without following the correct legal process. This applies to all spheres of government; municipal, provincial and national.

“To suggest that property can summarily be expropriated without any compensation is to seriously undermine South Africa’s entire legal framework,” said Omri van Zyl, Executive Director of Agri SA. “Politicians do not get to make legal pronouncements, our Courts do.”

 Any expropriation can only be done for a legitimate purpose in terms of specific legislation that grants a power of expropriation, and the constitution requires just and equitable compensation and entrenches the right to contest any dispute around expropriation in court.

The courts retain the authority to decide what the level of equitable compensation must be, in accordance with relevant legislation and the constitution.

For the sake of legal clarity – land can be expropriated for housing purposes and that the compensation amount be less than the market value, provided that that is just and equitable. But, the court will have to be satisfied that compensation is just and equitable having considered all relevant factors. 

“It is necessary to emphasize that our Courts are the final arbiter of what compensation should be awarded for expropriated property,” said Annelize Crosby, Head of the Land Centre of Excellence at Agri SA. “A zero-compensation amount is only likely in very exceptional circumstances. It is in the national interest that our courts develop guidelines and give certainty regarding what is just and equitable compensation.”

Agri SA wishes to reiterate that it will get involved in test cases on this issue.  Agri SA is also getting more information on the particular properties through its affiliation in Gauteng and will respond accordingly.

Enquiries:

Omri van Zyl

Agri SA, Executive Director

C: 082 417 5724

Annelize Crosby

Agri SA, Head: Centre of Excellence – Land

C: 082 388 0017

The post Agri SA Media release: Ekurhuleni Mayor cannot expropriate without compensation (EWC) outside due process appeared first on Agri Limpopo.