Agriculture sector worried about lack of its importance in mini budget

Cape Town - Agriculture received relatively little attention in Finance Minister Malusi Gigaba’s mini budget, according to Agri SA.

"There was no mention of agriculture’s contribution to economic growth, nor the plight of farmers affected by ongoing droughts. Worryingly, the contingency reserve has been pared down to a meagre R16bn over the next three years," Agri SA said in a statement on Friday. 

"It is unclear how this will impact on emergency assistance for crises such as the drought and the recent outbreak of avian flu."

According to the Cape Chamber of Commerce and Industry, nearly 49% of businesses in Cape Town say the drought and the water crisis has now become a threat to their survival.

A survey also found that the crises had caused 23% of responding firms to postpone or halt new investments in their businesses.

Agri SA, however, welcomed Gigaba’s call for decisive leadership and the need for government to improve its productivity and decisiveness.

"We also welcome the focus on actions to combat constraints to economic growth. These constraints include policy uncertainty, governance challenges, a constrained fiscal framework and rising government debt, as well as political uncertainty," it said.

Land Bill

However, Agri SA is concerned that the Regulation of Agricultural Land Holdings Bill is cited as one of the measures Gigaba mentioned to boost confidence and growth. Agri SA and other commercial lenders and industry stakeholders have been warning against this proposal for the past six years.  

The proposals from the bill include restrictions on foreign ownership of farmland, as well as the imposition of land ceilings on farm ownership.

Land ceilings are a redistributive measure intended to limit the size of landholdings to make more land available to subsistence, smallholder or emerging farmers.

"While such an approach may be well intended, it will not deliver the desired results and it will create far reaching negative consequences," cautioned Agri SA.

"These consequences will in the end hurt those the policy is intended to help. Imposing land ceilings will curb investment, productivity and the future growth of the sector that is responsible for national food security."

The organisation pointed out that competing on the international stage required economies of scale. Limiting the size of landholding has many practical complexities.

Focus

Agri SA recommended a focus on policies that would boost investor and consumer confidence, and promote economic growth.

It said it was concerned by the lack of clear implementation actions in the minister's speech.

READ: Budget in a nutshell

On a sectoral level, agribusiness confidence remains relatively positive following a robust summer crop harvest. However, policy uncertainty is a key risk over the foreseeable future, according to agriculture business chamber Agbiz.

It said reference to the contested Regulation of Agricultural Land Holdings Bill as part of Government’s Inclusive Growth Action Plan does little to allay fears around policy uncertainty in the sector. Agribusinesses remain concerned that the bill will not achieve the accelerated land redistribution and inclusive growth that the country requires.

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