Message from Agbiz CEO Dr John Purchase

Dr John Purchase

As predicted, 2016 has been an extremely challenging and tumultuous year for the agribusiness environment and farmers alike.

Not only did the prevailing drought of the previous years continue its devastation over much of the country, but a declining economy and resultant constrained consumers led to dampened demand and declining output.

Given additional policy uncertainty and the country’s deteriorating political economy, agricultural Gross Domestic Product (GDP) and agribusiness confidence were in significantly negative territory for the most part of the year.

In addition to domestic uncertainity were unexpected international events, such as Brexit and the election outcome in the United States, both of which will likely carry longer term implications for South Africa’s key agricultural export markets.

However, in the last quarter of 2016 there was evidence of some recovery in the Agbiz/IDC Agribusiness Confidence Index, and with good rains falling in key production areas, this has indicated a potential turnaround situation. The situation around the country’s broader political economy however remains a major concern.

Given deep and fundamental political divisions in government and the governing party, threats of rating agency down-grades to sub-investment grade, as well as given an especially uncertain global political and economic environment, these ‘green shoots’ could prove to be but an empty promise. Thus, the agro-food food system and consequently also the country’s food security, remains at risk.

Legislation

In 2017 the agribusiness environment will be faced by various challenges in terms of engagement with key land reform legislation.

These challenges include:

  • Revision of the Expropriation Bill in Parliament, following the Bill’s return to Parliament;
  • The possible introduction of the Regulation of Land Holdings Bill, which proposes land ceilings and the prohibition of agricultural land ownership by foreigners, into the legislative process; and
  • Revision of the Restitution of Land Rights Amendment Bill by Parliament, after having been suspended by the Constitutional Court.
  • Finalisation of the Extension of Security of Tenure Amendment Bill currently in Parliament.

Other critical pieces of legislation that will feature in the legislative process and impact on the agribusiness environment will be:

  • The Carbon Tax Bill;
  • The National Skills Development and Sector Education and Training Authorities (SETA) policy revision;
  • The Border Management Agency Bill;
  • The Liquor Amendment Bill;
  • New legislation governing the water environment and giving effect to the cabinet-adopted National Water Resource Strategy Version 2 (Water Amendment Bill & Revision of the Pricing Strategy for Water Use Charges in terms of the National Water Act, 1998);
  • The implementation of the new and more onerous AgriBEE Sector Code, once finalised and that will replace the 2012 Sector Code; and
  • Implementation of the recently announced national minimum wage.

Additional and critical policy and legislation impacting on the agro-food industry will no doubt surface in 2017 and will be addressed by Agbiz. A positive aspect is that the so-called CEO Process, initiated by Minister Pravin Gordhan, can assist in creating an environment for strong and inclusive growth in the broader agro-food sector.

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