SA: Budget misses opportunity to boost farming, say agricultural associations
‘The further allocation of R10.5 billion to SAA is a setback as these funds could have been channeled to industrial development.’
Although lauded for certain aspects of the medium-term budget policy statement tabled by Finance Minister Tito Mboweni on Wednesday, associations in the agricultural sector remain sceptical whether the budget will adequately support the farming industry.
The agricultural industry is one of the largest employment contributors to the economy.
According to AgriSA, the sector accounts for 4.6% of the total labour force in South Africa and is primed for investment to increase employment.
AgriSA said in a statement on Wednesday that, following President Cyril Ramaphosa’s address highlighting agriculture as one of the key sectors to kick-start South Africa’s embattled economy, it expected the Treasury would “be more robust in its support for the industry”.
“The reprioritisation of fund locations, such as a R5 million deduction from the Ilima/Letsema projects grant and the R980 000 reduction for the land care programme grant does not bode well for this objective alongside market entry for smaller players,” AgriSA said.
Agricultural organisation TLU SA said it did not believe Mboweni’s economic plans “are the correct route to turn the South African economy around”.
TLU SA said it was imperative the private sector be allowed to “provide momentum” and that “continuing to create an unfavourable investment climate” would not improve the economy.
SAA and Land Bank
Both AgriSA and TLU SA denounced additional financial support for SAA.
“The further allocation of R10.5 billion to SAA is a setback as these funds could have been channeled to industrial development and localisation as per the Reconstruction and Recovery Plan set out by the president,” AgriSA said.
In addition, the associations remain sceptical of the further R7 billion allocation for the Land Bank.
For AgriSA, the allocation was welcomed, however “more could have been done”.
But for TLU SA, “even after the initial lifeline of R3 billion for the Land Bank, it still could not produce the desired result”, said TLU SA president Henry Geldenhuys.
“The funds are not being channeled in the form of input costs for farmers. The agricultural sector now needs R10 billion to start the next production season and we are not convinced that the Land Bank will be able to fulfil that role timeously.”
State spending and retirement funds
Mboweni’s plans to cut state spending “and get a grip on corruption” were praised by TLU SA, “but whether it is going to happen, remains to be seen”.
The government’s commitment to cut its wage bill by R310.6 billion over four years, including R36.5 billion in 2020, was welcomed by AgriSA, “as this shows intent to alleviate pressure on the public purse”.
But TLU SA said the government should not use pension funds to repay the country’s debt, which in their opinion, is a “red light”.
“It sounds as if the government thinks the economy can be turned around by investing more in the lives of South Africans. The South African economy can only be turned around if favourable policies result in trust,” Geldenhuys said.
AgriSA reiterated the importance of “effective implementation”, especially in light of Wednesday’s mini budget.
This, it said, “remains critical in the quest for a prosperous economic future for all”.
(Compiled by Nica Richards)