Dawn Meats Group

South Africa - Farmers entitled to R9 billion in subsidies

03 Jun 2010

Substantial scope still exists for an increase in government support in the form of subsidies and other financial help to South African farmers, said minister of agriculture forestry and fisheries Tina Joemat-Pettersson during her budget vote speech to the National Council of Provinces delivered at parliament in Cape Town recently.
“It is important that we review and refine the implementation of our commitments to the World Trade Organisation (WTO). Our country has not fully utilised the provisions of the agreement with the WTO,” said Joemat-Pettersson.
“In total, the policy space available for South Africa in price and production distorting support may be as high as R11?billion. South Africa has not made use of this support since the year 2000.”

She said agricultural support notified to the WTO recently has been around R6?billion to R8 billion a year, which was non-trade or production distorting. This support was all classified as green-box support by the WTO and included expenditure in relation to agricultural research, training and extension services, pest and disease controls, veterinary services and disaster aid.
The WTO further provided for up to R2 billion in direct price-support, just over R500 million for export subsidies and input and investment subsidies to resource-poor producers in developing countries.There was also a provision for a de minimis support.
 “This support is not included in the WTO’s amber box provided it is below a certain threshold,” she said. “Under South Africa’s current commitments as a developed country, this threshold is approximately 10% of the gross value of production. The available amount under this provision can be as much as R9?billion per year, which may be used for price and production-distorting support.”
Joemat-Pettersson said she was convinced that considerable space existed for an increase in the level of tariff protection, as for most products the boundary rates were considerably higher than the rates currently applied.
“However, applied rates can only be increased at the Most Favoured Nation (MFN) level and not at the level of bilateral agreements,” she said.
 She added that the department was limited due to the bilateral trade agreements South Africa has concluded with EU, the Southern African Development Community and the European Free Trade Association. – Denene Erasmus
… but we don’t have the money
Agri SA welcomed Minister of agriculture, forestry and fisheries Tina Joemat-Pettersson’s acknowledgement “of the limited government assistance enjoyed by the agricultural sector in South Africa,” but said there was little hope that she would be able to do much about it.
“Given the limited budget it’s unlikely if not impossible that a significant direct contribution is really on the cards,” said Agri SA deputy executive director Johan Pienaar.
According to Pienaar commercial farmers received only “limited tariff protection as well as a refund on diesel fuel.”
“There are probably a host of reasons why this is so: fiscal issues, political perceptions of a “fat cat” sector not requiring any support, consumer orientation (cheap food policy) and a reluctance to increase import tariffs. The wheat industry is a typical example,” he said.
However, the DTI had recently come up with a trade policy framework which Pienaar said was very supportive of a specific agricultural trade and tariff dispensation.
“I think food security considerations were responsible for this different attitude,” he said.
Free State Agriculture president Louw Steytler said government could start by implementing the potential non-trade and production distorting green-box provisions.Pienaar said a clear trade and tariff policy for the agricultural sector was crucial.
“Even amber-box assistance for farmers in the form of import tariffs and export support is possible given that we are well within our General Agreement on Tarrif and Trade (GATT) commitments,” he said.
 He added the “extent government wishes to put flesh to the bone is up for discussion with the minister and President Zuma.” – Sean Christie

Source: farmersweekly.co.za

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