Leaders in the agriculture sector agree that minister of finance Tito Mboweni has a mammoth task ahead of him as he tables a special emergency budget this week in response to the effects of the coronavirus pandemic.
The virus and resulting lockdown have had a devastating impact on the South African economy. There is an urgent need to focus on grassroots development in agriculture to enable the country to create jobs and grow us out of the recession, role players in agriculture say.
Mboweni will on Wednesday, 24 June, table a supplementary budget which will set out a financial framework in response to the pandemic. This has been necessitated by Pres. Cyril Ramaphosa’s earlier announcement that government would spend R500 billion to support the economy following the outbreak of the coronavirus, says Mboweni’s office.
Chairperson of the African Farmers Association of South Africa (Afasa), Neo Masitela, believes the minister will have to increase the budget allocated for agriculture, despite the fact that dwindling tax revenues are making expenditure hard to afford for the country.
“Until the government understands that we will not be able to (contribute) to the socio-economic development of the country without the agricultural industry, we will continue to struggle,” he says.
Masitela adds that government is responsible for the optimal functioning of the Land Bank. The Land bank, he says, is crucial in the development of agricultural enterprises.
“If they (government) assist the ailing Land Bank, that will indirectly support the economic drivers of the country.”
Government should contribute more to agricultural programmes, research, and employment opportunities, Masitela adds. This will allow a higher chance for young, unemployed graduates to find employment in the sector.
President of the World Farmer’s Organisation (WFO), Theo De Jager, says historically, government’s response to crises in the agricultural sector has lacked severely. “What agriculture expects and what it deserves are planets apart.”
According to De Jager there are several areas of concern in the sector that need to be mitigated at a grassroots level. Education, he believes, should be the focal point of minister Mboweni’s address.
“You cannot train excellent young farmers and farm managers if you do not spend on the training. We are supposed to groom a new generation of prospective farmers, especially those who are the beneficiaries of land reform and did not have the luxury of growing up on a farm. They need world class education, but it is simply not there.”
De Jager says he is eagerly anticipating Mboweni’s insights on the land reform policy.
“Last year we had a very small budget compared to the ambition of government to transfer land. Government is so far behind on finalizing transactions – I mean there are transactions that have been signed in 2007 and they are still hanging.”
Chief executive officer of the Agricultural Business Chamber (Agbiz), Dr John Purchase, has agreed with Mboweni’s call for a zero-based budget.
This means that an entirely new budget will have to be drawn up from scratch and expenditure will have to be justified in terms of necessity. This is necessary in a country where government expenditure is an area of concern, he says.
“We need to cut down on our expenditure and we need to stimulate inclusive economic growth in the agricultural sector so that we can generate more taxes so we can increase our revenue.”
Projections indicate that the national GDP output will only get back to normalcy in the year 2024, Purchase says. Infrastructure development paves the road towards inclusive growth in agriculture, he adds.
“One of the most important matters that was raised by minister Mboweni – and we share that concern – is that government expenditure is weighted far too much towards the wage bill and too little towards infrastructure investment. That needs to be corrected, because if you want to get the economy growing you need to invest in infrastructure such as your ports, roads and rails, electricity and even technology.”
Agri SA’s deputy executive director, Christo van der Rheede, is apprehensive about the government ability to restore the economy and still honour its financial obligations.
“The biggest fear is that South Africa will face bankruptcy and then we will have to be bailed out by the International Monetary Fund and the World Bank, who come with very stringent conditions. We are already in junk status, we cannot afford a complete collapse of the economy,” Van der Rheede warns.
According to Van der Rheede, the government will have to show transparency to build trust with the private sector in order to fight for the economic prosperity of the country.
To jumpstart the economy, he says, “The government needs to make major investments into infrastructure and primary sectors like agriculture and mining, because those industries are the big job creators.
“Unemployment is the biggest driver of poverty and hunger in any country, so we must get millions of people back into their jobs,” he advises.