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Budget speech makes good on SONA promise to prioritise agricultural output 

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Wessel Lemmer is a senior agricultural economist at Absa Agribusiness in Johannesburg.

Finance Minister Tito Mboweni’s Budget speech was a watershed for South African agriculture, addressing many of the major concerns of industry players and issues around food security.

Despite unique challenges, including widespread dry spells during the past decade, South African agriculture is the lowest-cost producer of a standard Big Mac burger among 57 countries worldwide. Our productivity and competitiveness are a result of the continuous investment by food producers in the latest technologies and best practices to ensure the surplus production of affordable food for domestic consumption and export.

Food producers thus ensure national food security. I expect that agriculture can, in terms of growth, continue to outperform our southern hemisphere competitors for the foreseeable future.

However, the challenges that South Africa faces are various; at a tipping point; and can impact negatively on the future growth of agriculture and our country’s self-sufficiency in food security. The Budget addressed these concerns. As a nation, and through our contributions to agriculture in the Budget speech, we can take care of the future affordability of accessible, safe and quality food. The announcements in the Budget speech addressed the priorities presented in the State of the Nation Address.

During a pre-Budget survey meeting, leading food producers indicated their concerns — especially about issues that can limit agricultural productivity and increase the cost of food production. Most of these concerns were addressed in Finance Minister Tito Mboweni’s Budget speech which supported South Africa’s economic strategy of focusing on job-creating sectors such as agriculture.

Electricity problems

Mboweni highlighted that persistent electricity problems hold back economic growth. The stable supply of electricity is our number one requirement. The latest Integrated Resource Plan, as well as the clear support of renewable energy in the SONA, show that we are moving in the right direction. However, a reliable supply of electricity is critical for food producers. Irrigation, packing, cooling and the transport of agricultural produce are severely compromised by load shedding which is now likely to be a constant for the next 18 months.

The lack of economic growth

Economic growth is critically important to improve household food security and to reduce unemployment. Despite the challenges agriculture faces in producing affordable, safe food, the industry still contributes significantly to the overall economic growth of the country. Unemployment in rural areas in conjunction with the lack of service delivery by municipalities increases uncertainty and deters investment in the rural economy.

Unemployment

Measures such as employment-creation projects with the aim of growing the economy, developing rural areas and alleviating unemployment among especially the youth are sorely needed. Learning and culture justify the R396-billion allocated. The allocations to local government to help municipalities provide basic services is important to stabilise rural economies.

Tax adjustments

In support of growth, no major taxes were increased. Instead, the income tax on hardworking taxpayers was decreased, thereby raising their disposable income. Tax had increased over the years to become the second-largest cost component next to food in consumer spending patterns. This trend has been reversed in favour of an increase in consumer spending that will support economic growth. 

Biosecurity

The livestock sector is the largest agricultural sector, but in dire need of improved traceability and biosecurity. Government support for the improvement of market access locally and globally is urgently needed. Furthermore, although weather conditions improved, producers need time to recover as the national herd needs to be rebuilt in order to optimise productivity. The allocation of R495.1-million to the Department of Agriculture, Land reform and Rural Development to improve biosecurity compliance and to support exports is greatly needed.

Market access

The improvement of port infrastructure and logistics needs to be addressed to increase exports and lower logistical costs.

Industrial strategy

The highly successful primary agricultural sector supports an equally successful agro-processing industry that justifies government support for industry development. The proposals under consideration from the International Trade Administration Commission in terms of the poultry industry are welcomed.

The R500-million set aside for disaster management to respond to the impact of floods and the ongoing drought is appreciated.

The 2020 Budget speech was a watershed moment in South Africa’s history. As a nation, we can alter global perceptions of our country by the wise and decisive implementation of the allocated budget to agriculture in favour of increased investment to further future growth and food security. DM

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