In a budget speech that seemed like an impossible tightrope walk to match limited revenues with the urgent developmental needs of the country, finance minister Enoch Godongwana managed to bring some good news for farmers.
Although the speech was very light on direct references to the agriculture sector and land reform, farmers are set to benefit from plans announced to expedite disaster response and keep the general fuel levy unchanged.
Furthermore, measures to improve electricity supply and untangle the transport logistics crisis should help ease pressure on the sector that has increasingly suffered under load shedding, bad road infrastructure, and harbour bottlenecks.
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Logistics crisis
Godongwana referred to the Freight Logistics Roadmap which cabinet endorsed in December 2023 to tackle the nation’s increasingly unreliable logistics system. The roadmap delineates immediate actions to enhance port equipment, increase locomotive availability, and fortify network security.
Furthermore, it charts a course for boosting efficiencies, fostering competition, and harnessing private sector support.
“In this regard, third-party access to the freight rail network will be introduced by May 2024. In ports, a private partner has been secured to upgrade Pier 2 of the Durban Container Terminal.”
The government has extended a R47 billion guarantee facility to Transnet to bolster its recovery plan and fulfil pressing debt obligations.
Protected programmes
Emphasising some essential government programmes that are being protected from the pressures of austerity spending cuts, the minister pointed out that the government still supports resettled farmers through land redistribution and tenure reform programmes, which have been allocated R6 billion over the medium-term expenditure framework.
“At the same time, we were able to protect the budgets of critical programmes such as the school nutrition programme. The programme provides food to pupils in almost 20,000 schools,” he said. This programme also provides an offtake channel for many farmers.
Sin taxes
In order to raise additional tax revenue, Godongwana announced proposed increases in excise duties for alcohol products in 2024/25 ranging between 6.7% and 7.2%. This would result in price hikes for various alcohol items, including a 14-cent increase for a can of beer or cider, 28 cents for a bottle of wine, 47 cents for fortified wine, 89 cents for sparkling wine, and a substantial increase of R5.53 for a bottle of spirits such as whisky, gin, or vodka.
Additionally, tobacco excise duties are slated to rise by 4.7% for cigarettes and cigarette tobacco, and by 8.2% for pipe tobacco and cigars. This translates to a R9.51 increase for cigars, 97 cents for a pack of cigarettes, and an extra 57 cents for a pouch of tobacco. These proposed increases aim to generate additional revenue and potentially curb consumption of these products.
In addition to these “sin taxes,” he announced an increase in the excise duty on vapes, to R3.04 per millilitre.
Climate disasters
Godongwana highlighted that with the escalating intensity of climate-related disasters, a comprehensive risk management strategy is being devised. This strategy incorporates a range of financial tools such as grants and contingency funds, including the Climate Change Response Fund, tailored to the severity and frequency of disasters.
“The National Treasury is reviewing disaster response grants to improve efficiency and create incentives for disaster planning, preparedness, and risk reduction. It is also developing a climate-budget tagging framework to influence policy, planning, and budget decisions, by tracking climate-related expenditures in public budgets,” he said.
