MUCH ADO ABOUT NOTHING
Agriculture department denies it’s imposing race-based quotas on exports
Weekend reports suggested that the government had slipped in new rules to bar farms that were ‘too white’ from exporting to the UK and EU.
Weekend reports that South Africa had stealthily introduced new BEE rules that would effectively bar farms that were “too white” from exporting produce to the European Union and United Kingdom have been roundly dismissed by industry bodies, a leading agricultural economist, and the Department of Agriculture, Land Reform and Rural Development.
The reports, carried in Rapport and City Press on Sunday, claimed that the government quietly published new rules in the Government Gazette, in terms of which farmers must meet certain BEE requirements to obtain export permits for Europe, which would affect wine, fruit, dairy, nuts, sugar, jam and other agricultural products.
They asserted that only agricultural businesses with an annual turnover of less than R10-million were exempt from the requirements, “but there are few export farmers who produce on such a small scale and fall below that threshold”.
For other farmers, the reports interpreted the regulations as meaning that qualifying small enterprises with annual turnover of between R10-million and R50-million – which had less than 51% black-ownership – would have to undergo BEE verification with an accredited SA National Accreditation System verification agency and comply with elements of the AgriBEE sector code.
Large enterprises, which had an annual turnover exceeding R50-million, would need BEE verification before they could export, it claimed, adding that the agriculture department had published the new rules on the export of agricultural products in the Government Gazette on 31 October and 1 November.
The DA and the farmers’ body, Saai, have described the “new” restrictions as dealing a serious blow to investor security, job creation and growth in the agricultural sector, prompting the former to lodge a complaint with the trade offices of the EU and the UK.
In June, Saai brought a formal Promotion of Information Act application against the Department of Water and Sanitation over its determination that 98% of all water rights belonged to white people. This was after the department proposed a new water bill which could force white farmers to cede 25 to 75% of their farms to black beneficiaries to obtain water licences.
It was open for 60 days for public commentary, which has now closed.
Commenting on the report, the agriculture department said it had recently published two gazettes outlining the procedure for exports from the Southern African Customs Union and Mozambique to the EU and the UK, to take advantage of preferential Tariff Rate Quotas (TRQ) for certain agricultural and agro-processed products.
The weekend newspapers, it said, misrepresented the information about the procedure and annual application for export permits.
A department statement said, “In June 2016, South Africa and other countries in the Southern African Development Community signed the Economic Partnership Agreement (EPA) with the European Union. After Brexit, South Africa then signed an additional EPA with the UK. Both agreements provided preferential and duty-free access to the EU and UK for agriculture and agro-processed products.”
It said about 96.2% of South Africa’s exported agricultural products were duty-free, while 2.5% enjoyed partially free access to the EU and UK. Those that were partially duty-free – for example, wine, juice, dairy and sugar – were offered TRQs.
Each year, the department publishes requirements for the permitting system: the allocation of these quotas takes into account the market share of the applicants; the quota applied for; the total available quota; the number of applicants and the BBBEE status of the applicant.
“These requirements are not new, and there is no threshold or level that an applicant must reach to be awarded a permit. The BBBEE status of the applicant is but one factor that must be considered in conjunction with all other factors.”
The department said that given the sensitive nature of the discussions, they appealed to political parties to refrain from “making incorrect comments as these may harm the sector’s prospects as these agreements are reviewed”.
Agricultural economist Wandile Sihlobo poured cold water on claims that race-based criteria were being applied to exports.
He said it was critical that the meaning and intent of regulation and policy were clearly articulated and communicated in a way that was commonly understood.
“The reality is that these requirements are not new and mirror the previous years’ requirements. There is no new BEE threshold or level that an applicant must reach to be awarded an export permit.”
SA Wine, which promotes the wine and brandy industry, has also issued a circular to its members, to reassure them that nothing had changed.
“A few important factors must be borne in mind to contextualise the requirements… These requirements are not new and mirror the previous years’ requirements. It is therefore not a new requirement.
“There is no threshold or level that an applicant must reach to be awarded a permit – the BBBEE status of the applicant is but one factor that must be considered in conjunction with all other factors; under the AgriBEE Sector Code, entities with a turnover of less than R10-million are Exempted Micro Enterprises and are deemed Level 4. They merely need an affidavit to this effect and not a verified certificate,” said SA Wine.
“The scope of the notices and gazettes do not apply to all exports but merely to those products… This excludes fresh fruit but still applies to several of our key exports… to the EU or UK under the preferential Tariff Rate Quota.”
SA Wine said that given the sensitive nature of the discussions, it was vital that public comments were made from a factual and contextualised point of view.
“Factually incorrect or sensationalist media articles may harm the sector’s prospects as these agreements are reviewed. We therefore urge all parties to refrain from such reporting, devoid of the correct facts and context.” DM