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Budget Realities for Agriculture & Rural Communities

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“Government takes with both hands and then gives back with just one.” This is Francois Wilken, President of Free States Agriculture’s response to Minister Tito Mboweni’s 2021 budget. Wilken said minimum wages to increase to 16%, ESKOM tariff increases of also nearly 16% and fuel price increases together with the increased fuel tax are greater than inflation increases, with very little relief from the 2021 budget, and which will push up food prices.

Rural communities and farmers are frustrated with services delivery and infrastructure problems. The Minister sadly said nothing of how the basic services will be repaired other than mentioning infrastructure’s importance to the economy and that it is in need of repair. The fact is that farmers are in some cases not able to get produce to markets. Basics infrastructure is needed to create and sustain jobs.

“Nothing was said of Tax rebates for communities that are forced to fix public infrastructure or to incur expenses related to improving farm safety, yet we will continue to lobby for this.” Wilken says.

Free State Agriculture (FSA) welcomes the allocation to the Department of Justice and Constitutional Development to improve business processes and fight against crime and corruption. “We trust that this allocation and Justice Modernisation Programme will contribute to the safe and conducive environment necessary for the agricultural sector to flourish in the Free State and South Africa.”

The Minister seemed to steer away from divergent and divisive political ideologies, yet making clear that this is not an austerity budget, pledged R100bil for state job creation projects through the public employment programmes & Presidential Youth Employment Initiative. This continues to keep citizens dependent on the state for employment.  He also said, off the official budget script, regarding COVID support funds that he likes the idea of Government buying in equity stakes and not just dishing out grants as “gifts”.

1409 Restitution claims were budgeted for to buy in the budget period. To date government has spent over R200billion on Land Reform since 1994. This could have bought all the land claimed in South Africa for those who sought to farm and own property. To date, very few restitution beneficiaries are farming and almost no land reform beneficiaries have received their title deed for the property they live and / or farm on.

FSA accepts the marginal increases in social grants which, although increasing dependency of the electorate on the state, also increases the spending power of nearly ¼ of our citizens to buy products produced by agriculture.

The Land Bank, like Eskom, SAA and other state-owned entities, is a failed and bankrupt entity whose goal is no longer to support loans in the agricultural sector for development and growth but a political mandate of elite upliftment and cadre deployment where corruption is rife. FSA is of the view that state funds rather be used for highly subsidizing credit to be provided to historically disadvantaged individuals through the existing banks on free market principles, and so everyone has fair and equitable access to cheap capital to get started in agriculture. “We do not believe that the state should own a bank or monopolize an industry because of disastrous political influences.” says Wilken

“Agriculture has certainly proved its worth to the national economy through its resilience despite also battling the natural elements. Although not acknowledged in the budget, we welcome the reduction in companies tax and the smaller increase of tax brackets, so hence not being milked dry through stifling taxation!” says Wilken.