Ahead of the much anticipated mid-term budget vote by minister of finance Enoch Godongwana on 1 November, agricultural economists have warned that should the proposed financial cuts be implemented, that could lead to reduced productivity and hamper projects aimed at food security and development.
Senior agriculture economist at First National Bank commercial Paul Makube said the proposed budget cuts are scary. He added that if the intention is to rationalise the public service, infuse efficiencies, eliminate moribund projects, and reallocate resources to areas that would spur growth, then they may be beneficial.
‘Do not touch agriculture’
“Budget cuts should be elsewhere and not in agriculture. The country is facing enormous challenges such as deteriorating infrastructure, poor municipal services, access to new markets, and the frequent outbreaks of animal diseases and plant health issues.
“Food security has recently come under threat following the outbreak of the highly pathogenic avian influenza (HPAI). Disease outbreaks such as the foot-and-mouth disease (FMD) and HPAI do impede international trade with huge financial losses to farmers,” he said.
According to Makube, the agricultural sector is in a critical phase and it is in times like this that resources are channelled to agri institutions to come up with lasting solutions to animal health in the country.
“On this score, critical agencies such as the Onderstepoort Biological Product (OBP) and the Agriculture Research Council should not be disadvantaged by these cuts,” he said.
Makube believes the modernisation of the OBP and increased partnership with the private sector to produce vaccines should be expedited given the emergencies regarding the diseases the country is facing.
“We do not expect cuts in projects in the agriculture space given the challenges that we face that pose a threat to food security,” he said.
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Unavoidable cuts
Meanwhile, Nedbank senior economist Issac Matshego explained that national treasury needs to keep expenditure under control because of the sharp fall in taxes collected. He said in the first five months of 2023/24 tax collections are down by 0.7%, spending on the other hand is up by 9.1%.
“So, the gap between income and expenditure is wide, which necessitates spending cuts. The departments and provinces will decide which expenditure to cut in order to meet the higher-than-budget public sector wage bill,” he said.
Agbiz senior economist Wandile Sihlobo told Food For Mzansi that the prospects of budget cuts are worrying but understandable in an economy that faces numerous challenges.
“Still, it will be helpful for us to wait for the mid-term statement on November 1st to form a view on the effects of the weak fiscal space on agriculture,” he said.
Policy direction
Transvaal Agricultural Union of South Africa general manager Bennie van Zyl said the proposed budget cuts are a huge challenge for the country, adding the baseline of stabilising a country is food security.
“If you do have food on the table then you stabilise your country. Therefore, the most important role player that any country has is commercial farmers producing food for a market. South Africa’s population is already about 68% urbanised, so we need farmers who produce food for a market. From the government side, they have a very important role to play.
“Government needs to make sure that we support those farmers in production by creating for them the necessary infrastructure and then bring their produce to the markets and exports markets,” he said.
He expressed that the country was already experiencing an absent government when it came to disaster management. This was evident with the recent veld fires where the government was absent, and instead, farmers were helping each other.
All eyes on the government
“For us, it is important that we keep the agricultural sector alive and the government has a huge role to play.
“The most important thing is that we need a sound policy environment and I think the government is busy with things that are not for the benefit of the sector. We need a sector that people want to invest in. We need a sound policy environment, and a safe and secure environment,” he said.
Meanwhile, national treasury spokesperson Cleopatra Mosana told Food For Mzansi that treasury is still busy with the budget process which involves engagements with different stakeholders, and the outcome of this process will be tabled by the minister.
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