All eyes will be on newly appointed finance minister Enoch Godongwana when he delivers his maiden mid-term budget vote in Parliament tomorrow (11 November 2021). South Africa’s agricultural sector is especially holding on to hope that the minister understands the role agriculture plays in the country.
Godongwana, who took over from Tito Mboweni in August this year, following President Cyril Ramaphosa’s cabinet reshuffle, will deliver the speech amid tight economic times, steadily rising fuel prices and continued load shedding by state power utility Eskom.
The African Farmers’ Association of South Africa (Afasa) has called for an inclusive and agriculture-centred budget vote to ensure that food security in the country remains stable.
The association’s national chairperson, Neo Masithela, says he hopes that the minister understands the critical role of agriculture in South Africa. The organisation would like to see an allocation from Treasury to continue the work that Land Bank has started, in enabling disadvantaged farmers – particularly black farmers – to establish and grow their enterprises.
The budget should take into consideration that this would be in line with the master plan for economic recovery, Masithela points out. “Even though the master plan is not finalised, the mid-term budget should take into consideration that for the growth of the industry and inclusivity, the allocation that the state puts on agriculture should be top priority.”
Invest in a sectoral revamp
Masithela furthermore says the budget should reflect consideration for the challenges that farmers had to face this year: the Covid-19 pandemic, social unrest in KwaZulu-Natal and Gauteng, and diseases that caused farmers to lose livestock and crops.
“Because of the volatile situation of the unrest, the country is sitting with a huge lack of development in the poultry industry. The hatching industry is struggling with eggs as a result of what happened in KwaZulu-Natal.” He says that the country should invest more into the historically disadvantaged agricultural sector to prevent a repeat of the current dire situation.
Then there is further need for infrastructure development, especially in rural communities where farmers are still experiencing related day-to-day challenges.
He calls on National Treasury to invest into a revamp of the critical agri sector, and adds that, although they understand that Godongwana is in a tight space, the minister needs to prioritise industries that are contributing more to the economy – and agriculture is one of them.
The Agricultural Food and Allied Democratic Workers Uinion’s general secretary, Mlamleli Pukwana, says that previous budget cuts to the agricultural department and its entities were a miscalculation on Treasury’s side.
Pukwana states, “If the minister could [rectify] the issue of [previous] budget cuts, we will really be happy.”
He says that even budget cuts to the likes of the CCMA had a problematic impact on the industry, because of delays around disputes between the workforce and employers.
Pukwana also calls on Godongwana to elaborate on how government will finance the land redistribution agenda, which is top of the agenda in the country.
“We know that the minister will be delivering this budget vote under tight circumstances such as Covid-19, that no one anticipated, and we do know and acknowledge that government had to divert money to save the lives of South Africans.
“However, the government needs to prioritise the industries and agriculture as one of those sectors that need to be top of the list. Land and food security are very key in South Africa.”
Pukwana says that they are willing to work with the new finance minister to ensure that the livelihoods of many households are kept intact.
Agri SA’s expectations
Agri SA expects the statement to be underpinned by two positive themes, says Kulani Siweya, Agri SA agricultural economist. “The first is the rate of fiscal deterioration being abated markedly.”
This slowed deterioration was brought on by a commodity price windfall that boosted revenue, as well as Stats SA’s benchmarking and rebasing exercise which had a positive impact on the fiscal ratios of higher nominal GDP.
“The second theme expected is the precarious debt outlook, though it does come at a better starting position.”
Whilst these may be positives in the short term, Agri SA says there is still some caution on the long-term view, particularly when considering that many structural challenges remain.
“Some of the things we will be looking out for include sentiments around state-owned entities and if there are any unbudgeted bailouts, as well as National Treasury’s resolve to restrain spending.”
“We believe that these, amongst others, will either set us on a trajectory of turning the tide around entirely or we will see more of the same from the new incumbent and his team.”
Siweya says that, ultimately, this week’s medium-term statement should inspire confidence once again from various spheres. “This is sorely needed in a time where investment in infrastructure has been on the decline and inclusive growth is now an imperative that’s non-negotiable.”
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