Statutory Levies on Sorghum & Citrus Fruit Industries

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Portfolio Committee on agriculture and land affairs
13 FEBRUARY 2001
STATUTORY LEVEES ON SORGHUM AND CITRUS FRUIT INDUSTRIES


Documents handed out:
Application of Statutory Measure on Citrus Fruit - National Agricultural Marketing Council (NAMC)
Application for the Continuation of the Statutory Levy in the Sorghum Industry (NAMC)

SUMMARY
Committee members heard the presentation for the continuation of the statutory levy in the sorghum industry and for the introduction of statutory levy on citrus fruit. Both applications were approved.

MINUTES
Chairperson Advocate S P Holomisa welcomed all those present and wished them a prosperous year ahead. He then introduced Mr G Rathogwa (NAMC) who proceeded to brief the Committee on the application for statutory measures to be continued in the sorghum industry and introduced in the citrus fruit industry.

Mr Rathogwa first addressed the extension of the levee towards the sorghum industry. He pointed out that the levy on sorghum would lapse at the end of February 2001 and that an extension was sought until 28 February 2002. The levy for all producers and traders, who would each pay 50% of the total levy, would be applied country-wide and would continue to be R3,10 per metric ton of sorghum. He stated that funds from the levy would mainly be used to fund research in the industry and therefore the National Agricultural Marketing Council was of the opinion that its continuation should be approved. These measures are also meant to support the realization of the objectives of the Marketing of Agriculture Act, whose aims include efficiency in marketing and an increase in viability for the total agricultural sector. The Sorghum Trust would administer the levy and Adminhouse Agric CC was nominated to carry out inspections and enforce payment. Additionally, a company code of inspection would be adhered to ensure compliance.

Opposition to the levy had come from Sorghum South Africa and the SAB. These organisations felt that producers would find difficulty in contributing if prices were low. However, prices are high at present and therefore the NAMC disregarded their objections.

Dr van Niekerk asked what the present market value of sorghum is. Mr Rathogwa responded that he does not know the numbers of market value at this point.

Mr A J Botha noted that the letter from Grain South Africa supported the proposed levee but that it should be limited to imported sorghum. Is this being done at the moment? He also drew committee member's attention to the letter from the Sorghum Association which included a concern regarding levee collection, whereas some producers pay and some don't.

Mr Rathogwa replied that the levee will apply to local and imported sorghum. He added that presently there is not a sufficient number of inspectors to regulate the entire sorghum industry. However, this December there will be an increase in the number of inspectors to ensure that all producers pay the levee charges.

Mr B A Radebe expressed a concern regarding efficient levee collection.

At this point Chairperson Holomisa interjected that the application on the table requires members only to decide if statutory levees on sorghum may be extended for another year. Committee members then approved the extension with no opposition.

Mr Rathogwa then moved to present the application on statutory measures in the citrus industry. The Citrus Growers Association (CGA) had requested a levy of 1,4c/kg on all citrus fruit intended for export. He pointed out that this amount falls within the limits prescribed by the Marketing of Agriculture Act which regulates that any levy be no more than 5% of the point of sale price. This levy is essential to sustain research and ensure disease-free fruit. Mr Rathogwa pointed out that in the past the industry has relied on voluntary levees, but that when profits are low industries tend to withdraw their support which is detrimental to long-term research projects. Government's decreasing support, in terms of funding, towards agricultural research puts the industry at risk of being overtaken by international markets. As well, voluntary levees have not worked in the past because producers often will withhold funds during difficult periods.

Mr Rathogwa noted that the Eastern Cape industry growers were officially opposed, their concern being around who will administer the levee. If administering would be conducted through a statutory trust then they will support it. But because the application stipulates that the Deciduous Growers Association oversee administration of research work, they feel it necessary to oppose. They regard research companies as concerned with profits and liable to withhold information from smaller scale businesses that are unable to pay. Despite the fact that less than 50% of the industry had been consulted in a referendum conducted by the CGA, the NAMC believe that the imposition of the levy is a matter of national economic importance, as the entire citrus fruit industry is under threat of being pushed away from traditional overseas markets.

The CGA is well suited to ensure compliance with the levee because it deals directly with citrus issues on a regular basis. CGA will therefore administer the levy but the NAMC would have observer status on its Board of Directors. Furthermore, the Auditor-General would audit the annual financial statements of the organisation.

Mr D A Hanekom expressed concern that the position of industry growers themselves are not represented in the application. He agreed with the view of growers who suggest that levees should go towards a statutory body such as the Deciduous Industry Trust (DIT) would be more representative of the industry as a whole, despite the fact that the application was put forward by the Citrus Growers Association. He observed that although any group may apply for a levee, it does not mean that that group will be positioned as collector upon acceptance of that application. He stated that the application should be maintained in order to benefit the widest possible group of affected people.

Mr Rathogwa replied that the DIT was aware of the submitted application but that no objection to it was conveyed. They are concerned about capacity and if the DIT could manage the efficient collection of levees. However, the CGA is well suited for the responsibilities of collection.

Mr van Niekerk expressed support for the original request by the NAMC and said that if the levee is intended to fund research, it should be collected by people who are familiar with "hands-on" aspects of the industry. CGA is better able to handle the practical applications for this, but members may also consider how the DIT may assist in this process.

At this point Chairperson Holosima moved to approve the application by NAMC with the additions of annual auditing statements to be submitted to the Minister and observer status granted to ensure compliance with the original intent of the application. The Committee then approved the application with no opposition.

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