In a planned policy turnaround that is stirring fierce controversy, the Department of Agriculture is considering a return to statutory controls over agricultural products.
Such a move, prompted by government concerns about food prices, would reverse the policy that has been in place for 10 years and that was finalised by former agriculture minister Derek Hanekom after 1994.
The policy has been to liberalise agricultural markets by dismantling commodity control boards and exposing the sector to global markets.
South African agriculture is now the most free in the world, receiving no subsidies and experiencing no government interference. Only import tariffs in accordance with World Trade Organisation regulations protect the sector.
But an official document drawn up by the Department of Agriculture and approved by the department’s executive committee has thrown the status quo into doubt. It calls for the Marketing of Agricultural Products Act of 1996 to be overhauled.
A return to some statutory control of agricultural products is envisaged, together with the creation of an ”independent national statutory institution representative of all major commodity groupings in the sector, to carry out the functions that the market would not be able or willing to do on its own”.
Described by agriculture Director General Bongiwe Njobe as a discussion document, the 11-page report calls for the remaining schemes and boards to be closed down as soon as possible. Some schemes and boards have continued on an ad hoc basis since 1994 with the approval of the minister of agriculture, advised by the National Agricultural Marketing Council (NAMC), which is constituted in terms of the Act.
Since the farming sector got wind of the document, Njobe and the agriculture department have come in for heavy criticism. Particularly concerned is the grain and oilseed industry, which has experienced unprecedentedly high prices in the past six months.
Njobe said it was to be expected that ”vested interests” would be worried, given that two government processes — an investigation into food prices and the discussion around agricultural marketing and price-setting mechanisms — were under way.
”The state cannot afford to have such a volatile market,” she said. ”It is all very well to say that if food prices go up, consumers must pay, but this worsens poverty.”
Njobe said that when food prices rose this year, radical ideas about interventions were put forward by some Cabinet members. The department had to argue in favour of a more comprehensive approach to the problem, including the food-price investigation under way.
”The government is looking at dismantling the remaining boards and looking at the NAMC, which has basically fulfilled its function. The Section 7 committees have no muscle to work in the interests of South African producers.”
The NAMC has the power to establish these committees to investigate aspects of agricultural marketing. Chief among these have been investigations into the fresh produce markets, the wheat-to-bread chain, the impact of deregulation and investigations into the red meat, dairy, deciduous fruit, wine and ostrich industries.
Njobe said: ”We want to discontinue the remaining schemes and have more say about the application of funds in the commodity trusts.” She was referring to the trusts created for each commodity when the boards closed down. The remaining board assets were transferred to these trusts.
The document describes the NAMC as ”a state organ with no real purpose, by denying it any decision-making or executive powers, and handing assets to the commodity trusts”.
The government wants ”strong public representation in the trusts … represented by persons suitably qualified in business issues but who are not farmers themselves”. The document suggests that the public representatives in the trusts should be the same members representing the public in the NAMC. This has raised an old fear in agricultural circles that the government wants to get its hands on the assets of the trusts and use them for purposes that would not be in the interests of commercial agriculture.
The document flatters the old control boards, stating that they exercised enormous development capability in establishing white agriculture.
”The suspension of their protective and beneficial schemes had left the South African agricultural industry in general, and the emerging sector in particular, more exposed to the ravages of the market than in any comparable economy in the world.”
The document criticises the existing Act of 1996, saying it recognised the need for a national marketing council but failed to define its role and therefore the authority needed to fill it.
The Act, says the document, removed statutory regulations and services but failed to set up an alternative delivery system to meet the real needs of farmers. It also ”acknowledged development obligations but left them to market forces and the goodwill of rivals in the established sector”.
Finally, ”it vested all decision-making powers in the minister and therefore managed to create a large amount of administrative work for her office, while also concentrating state influence on the market more than ever before”.
The document said: ”The emerging black farmers will no doubt wonder at the cruel coincidence by which [the] government lost all its influence on the market just as they anticipated their own place in the sun.”
Hanekom’s approach was that apartheid-style state assistance to agriculture should not be perpetuated in the new era for white or black farmers.
The document calls for the amended Act to ”make provision for the special and differential treatment of the developing sector of the industry, with particular regard to the allocation of funds, exemptions from obligations and benefit from promotional activities”.