Liquor Products Amendment Bill [B22-2008]: Department of Agriculture briefing

Agriculture, Forestry and Fisheries

26 May 2008
Chairperson: Mr R Mohlaloga (ANC)
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Meeting Summary

The Department of Agriculture briefed the Committee on the Liquor Products Amendment Bill, outlining the history and content of the Liquor Products Control Act of 1989, which was administered by the Department of Agriculture, and of the Liquor Act of 2003, administered by the Department of Trade and Industry. This Bill sought to amend the Liquor Products Control Act to give effect to international obligations, to amend the composition of the Wine and Spirit Board, modify the production requirements for wine and ensure that South Africa met with international traceability requirements, with which it was not presently compliant. The amendments in relation to the Board would provide for a composition that more accurately reflected the industry, alleviated the possibility of conflict of interest and increased the size to include particular expertise. Several outdated or non-existent references were being corrected. The Department had consulted with industry. There were other ongoing discussions around other issues identified as requiring amendment, including sorghum beer, fermented products, and regulations. The Committee questioned the department thoroughly on several issues, especially its claim that these matters were urgent. The Department was criticised for not taking the Committee into its confidence earlier. There were several questions asked about issues of safety and health, the demarcation of jurisdiction between the departments, the financial consequences, whether the amendments would assist the emerging farmers or land them with a product that was unsustainable or did not meet expectations, and whether the issues of beer and sorghum beer had been fully considered. Public hearings would be held in June.

Meeting report

Liquor Products Amendment Bill (the Bill): Department of Agriculture (DOA) Briefing
The Chairperson welcomed the Deputy Minister and representatives of the Department of Agriculture (DOA) to the meeting.

Ms Wendy Jonker, Deputy Director General, Department of Agriculture, noted that the Liquor Products Act 60 of 1989, was implemented in 1990. Its objectives were to establish the Wine and Spirit Board and to regulate the sale and production of certain alcoholic products and the composition and properties of liquor products. The Act had also dealt with labelling and the import and export of all liquor products, excluding beer and medicine, prohibition on the use of false or misleading indications on liquor products and the establishment of schemes. This Act had not regulated the distribution of liquor products, which was dealt with by the National Liquor Act 27 of 1989.

That latter Liquor Act was repealed and replaced by the Liquor Act 59 of 2003, which came into operation in August 2004, except in certain provinces, including the Western Cape. This Act had fallen under the Department of Trade and Industry and was to provide for control over the sale of liquor and for matters connected to this.

The Department of Agriculture now wished to amend the Liquor Products Act of 1989 (the principle Act). The proposed amendments were to give effect to international obligations such as the Wine and Spirit Agreement between South Africa and the European Union (EU) and between South Africa and the World Wine Trade Group. They would also amend the composition of the Wine and Spirit Board,  modify the production requirements for wine and ensure that South Africa met with international traceability requirements, with which it was not presently compliant.

Ms Jonker explained the international obligations. These included the South Africa / EU Wine and Spirit Agreement, which included terms pertaining to port and sherry, The Mutual Acceptance and Labelling Agreement with the World Wine Trade Group (WWTG) to facilitate trade in wine, and the protection of geographical indications in terms of the TRIPS Agreement on Trade- Related Intellectual Property Rights agreement (TRIP). The proposed amendment would ensure that the importation of liquor products was subject to South Africa’s international agreements, thus ensuring that the agreements were honoured.

The amendments in relation to the Board would provide for a composition that more accurately reflected the industry and ensured fairer representation. The Board would be increased to 8 members who had the necessary knowledge, skills or expertise in viticulture, oenology, distilling and the regulatory environment of the liquor industry, plus 3 officials of the Department, nominated by the Minister, plus one person from the Agricultural Research Council (ARC) and one person designated by the Minister. Ms Jonker explained that currently the Wine and Spirit Board members were appointed by the Minister but the requirements were very rigid.

Ms Jonker noted that the current Act was also outdated because certain references no longer were applicable. These included the reference by the Act to nomination by the Ko-operatiewe Wijnbouwers Vereniging (KWV), which no longer represented the industry, and reference s to the Cape Wine and Spirit Institute, which, apart from no longer existing under that name, was also, due to structural changes, no longer representative of all the participants in the industry concerned.
 
Ms Jonker said that currently it was only permitted to make wine from the Vitis Vinifera grape but it was proposed to do away with this requirement as it no longer applied internationally and unnecessarily impeded South Africa’s efforts to compete internationally. The amendment would allow this country to make wine from any grape and thus compete internationally. She also said that there was also a Villard Blanc project in the Northern Cape and Free State. This was a concept of a low-cost establishment cultivation and fast cash flow to enable emerging farmers to access the wine industry more easily at producer level. The proposed amendment to allow production from the grape genus Vitis would also harmonise South African laws with international legislation as currently practised in the USA, Australia and New Zealand, thereby levelling the playing fields, said Ms Jonker.

She pointed out that the amendments would also enable South Africa to comply with new legislative requirements imposed by the EU on traceability in respect of all agricultural products, to enable the industry to address food safety concerns and ensure a  quick recall of products for safety concerns and to ensure that lot marking of receptacles was made obligatory.

The Bill had been published twice for comments after consultation with a number of bodies, whom she named and listed in the presentation.

Ms Emily Mogajane, Acting Director General, DOA then told the Committee that during deliberations it was found that there were other issues to be addressed, and there were discussions between the Department of Agriculture (DoA) and the Department of Trade and Industry (DTI). These included issues around sorghum beer, fermented products and discussions around what needed to be regulated.

Discussion
Dr AI Van Niekerk (DA) asked whether the representatives who commented on the Bill participated in compiling the Bill, or had made any objections to it.

Mr S Abrams asked if the Bill focused only on wine type products, noting that one comment was that it did not go far enough. In particular he enquired if the Bill provided for products like port, vodka and brandy, which were also intoxicants. 

Ms Jonker said that the Bill was aimed at wine, spirits and alcoholic beverages.

Mr Abrams enquired for further details on the references to Vitis Vinifera and Villard Blanc and more information about the Villard  blanc  project in the Northern Cape and Free State, including whether they were privately or State driven, and what the intention was behind the project.

Mr Abram asked about the low cost vine establishment, who would assist these emerging farmers, and how this was to be done.

Mr J Bici (UDM)  asked if the low cost vine establishment would not compromise the characteristics of the wines concerned and their palatability.

Ms Jonker explained that Vitis Vinifera was the specification as to the kind of vineyard from which wines were made. ‘Vitis’ referred to the Genus and ‘Vinifera’ to the species, she said. There were 30 different other types of wine varieties, she pointed out.

Ms Jonker clarified that Vitis Vinifera was no longer an international requirement and the reason one wanted to take away the Vinifera qualification was that this would give producers a larger scope with regard to the different types of grape and wine they could produce in their vineyards. There were 5 species of grape in respect of which there were safety concerns and it was not permitted to use those five. Villard Blanc was chosen as a genus because of its low cost. In wine making the greatest cost was the initial set up cost – of buying the grapes and planting them and for the first three years it was necessary simply to cultivate them but there was no production. This particular cultivar was chosen because it was grafted on a disease-resistant rootstock so that there was little necessity to spray and therefore the cost was kept low. It was also a very fast bearer so that within 3 years it could bear at full capacity and it would not compromise the quality.

The Chairperson asked when Vitis Vinifera had been stopped as an international requirement.

Ms Jonker said she could not say exactly, but it had been a long time ago.

The Chairperson said that in that case he failed to see why the matter was urgent.

Ms Mogajane explained that the Act had been promulgated many years ago because it had been used to protect certain industries. At the time, Vitis Vinifera was the only species of grape from which wine could be made. The urgency related to enabling South Africa to comply with the South Africa/EU agreement and to deal with the composition of the Board .
She reiterated that there were also other inconsistencies in the wording.

The chairperson asked when these international agreements with the EU were entered into.

Ms Mogajane said it was 2002. The reason for the urgency was that South Africa had entered into and signed a Memorandum of Understanding with the WWPGO last year, which was ratified. Other products would be entering the South African market. They should be able to be halted if they did not meet requirements.

Mr Abrams asked what was meant by levelling the playing fields. This was a term often bandied about, yet it seemed to achieve little result.

Mr Dlali echoed this question about the levelling of the playing fields, saying that it was not possible to refer to levelling the playing fields if a person was secondary in the production (process) itself or did not own anything”.

Mr Bici asked what the position was prior to the levelling and what that levelling was expected to achieve.

Ms Mogajane responded that the “levelling of the playing fields” statement related to the international markets and the effort to harmonise South African laws to meet with international agreements.

Mr Abram enquired what the financial implications were for the State, if the new legislation were to be passed.

Dr Boitshoko Ntsabele, Director of Food Safety and Quality Assurance, DOA, said that as far as the Department had evaluated, there were no financial implications for the Department in terms of this process.

Mr Abrams asked if the legislation was user-friendly or whether it caused further impediments for the industry and for the broader population. He also asked if there were any unintended consequences foreseen for this Bill.

Dr Ntsabele noted that the only possible unintended consequences was that people might have trouble in implementing traceability, because the law spoke about establishing the source of a bottle of water, so that one could return it if it was unsatisfactory. This was a very complicated and expensive process.

Mr Abram asked for details about the new processes, and whether these would harmonise with policies on liquor and other legislation. He hoped that the full environment had been taken into consideration, especially since he noted that the processes would involve the Department of Agriculture, Health (DOH) and Trade and Industry (dti). He wondered if producing one piece of legislation was not perhaps premature, and so he asked how urgent was this legislation, and whether it should be passed before the final process had been completed.

Ms Mogajane said that the urgency arose from the fact that South Africa had signed the SA/EU agreement and needed to comply with the requirements of the Memorandum of Understanding with the NWWP. It was also necessary to deal with the composition of the Board, and redress the fact that, for instance, members of KWV were no longer applicable. The existing Act also made reference to non-existent departments, such as the Department of Agriculture and Economics. which also no longer existed.  In addition, South Africa did not want to see its market being flooded with wine products from overseas which were of an inferior quality to its own.

Mr D Dlali (ANC) asked about labelling, noting that this issue had been considered in relation to genetically modified organisms. This labelling issue could be linked to traceability.

Mr Dlali felt that the capacity of the Board was problematic.

Mr Dlali asked, if beer and medicines were to be excluded, whether the SA Breweries had any objection to the legislation.

Mr Dlali enquired about the problem of structural changes in the industry and the fact that the Board was no longer representative of participants in the industry. He asked if the intention in changing the Board was to ensure representative.

Mr Dlali referred to the suggestion that low-cost vine establishment and cultivation was intended to assist emerging farmers by giving them easier access to the wine industry at producer level. He asked how this would assist if they did not own farms.

Ms Jonker said the intention of the project was to give emerging farmers an advantage because the wine growers would bear the costs of planting the grape in the first 3 years. The idea was that in the first 3 years that wine would be used as a distilling wine from which one could make spirits.  Currently South Africa imported all its distilling wine from the overseas market.

The emerging farmer project had already started although presently these farmers could not make wine, because they were hamstrung by the Vitis Vinifera limitation, they were hamstrung and could not sell the wine.

Mr Dlali also asked what was meant by “food safety” and “food security”.
 
Mr J Bici (UDM) remarked that Members of the Committee had asked that they receive documents early but that this had not been provided. It did not assist the Committee if due notice was not given.

Mr Bici asked whether the present Bill had been harmonised with other Departments because the amendments did not affect agriculture alone.

Ms M Ngwenya (ANC) asked about the proposed composition of the Board to include members with expertise in viticulture, oenology, distilling etc and what areas these covered.

Ms Ngwenya then asked what was intended in relation to sorghum beer.

Ms B Ntuli asked what the term meant “ to provide for the sale of liquor and matters connected with that”. She asked for indications of the link between the two Acts, where the loopholes were in the existing Act and why the Committee had not been advised of them. .

Ms Ntuli referred to the statement that the proposed amendment sought to ensure that the importation of liquor products was subject to South Africa’s international agreements. She had thought that the Liquor Act under the jurisdiction of the dti had dealt with that. Once again, she was not told where the problem lay in the existing legislation.

Ms Mogajane said that South Africa was currently a member of the Office for International Viticulture (OIV). It was a standard-setting body, for food safety aspects and wine products. There was another organisation known as the New World Wine Producers Organisation (NWWPO), which included countries such as Australia and New Zealand.

Ms Ntuli asked the Department to elaborate on what was meant by “structural changes within the industry”. She noted that there were SA Breweries, the Wine Industry and the sorghum industry, and she wanted to know what exactly was meant.

Ms Ntuli said that most references to sorghum beer were take to mean that produced by the big companies. The popular traditional sorghum beer was mentioned nowhere. She was not talking about “township concoctions” but the traditional sorghum beer that was used by her great grandparents, which could be given to a child”. The Committee needed time to consider the whole sorghum beer issue. Some of the brews were quite unhealthy, and far too intoxicating, and regulation of its manufacture was needed.

The Chairperson asked why this issue resided with Department of Health, asking whether it really was a health issue.

Ms Mogajane agreed that the issue of sorghum beer was of concern but added that there had been numerous debates about “how far to go” in an Amendment Bill, because there were issues around beer, for example, which fell under the Liquor Act and hence under the control of the dti. Dti dealt with the sale and retailing of liquor, the Department of Health was responsible for the labelling of all food substances while the Department of Agriculture was responsible for food safety aspects of Liquor.

Ms Mogajane said that during the debates and consultations, the issue of beer was raised and consideration was given whether to include it or any or all other fermented products. There were some serious concerns about safety of, for example, sorghum beer, and that was why it was felt that the DOA, together with the Department of Health, should come up with a new policy that would address all these aspects. The 1989 Act had focused mainly on wine but it was hoped to have a wider process. Beer was defined only in the dti’s Liquor Act. Discussions had been held with members of the community, who had asked about sorghum beer made in the villages, and the policy would need to address how far the definitions would go. When she had worked in the Mafikeng municipality some of the villagers had pointed out that beer could be produced from a variety of substances, and that was why the guidelines would be needed. It was inconvenient that Department of Health dealt with labelling and that food safety was under DOA. The policy must define public health and safety in respect of all products with more than 1% alcohol.

Mr A Nel (DA) commented that the Committee should liaise with the Department and come up with an amendment with regard to the safety aspect of beer, seeing that the Minister had described this as urgent.

The Chairperson queried the “new process” mentioned at the end of the Department’s presentation. This should have been mentioned up front, before even tabling the amendment, as it may have answered many queries. The policy must inform the law, and not the reverse.

The Chairperson wanted to know about the consultation process and how far it had proceeded.

Ms Jonker replied that the industry had participated in the compilation of the Bill. The Department had included their comments in the final Bill and they were satisfied with the proposals.

A Member asked whether the input from stakeholders during discussions with the Department had been in writing or verbal. If they were in writing, then he asked why the Committee had not received a copy.

The Chairperson asked who specifically dealt with the food safety aspect of beer.

Ms Mogajane replied that no one dealt with it and it was for that reason that there was a major debate when DOA consulted with the beer industry. The DOA concluded that the safety aspects of beer and other fermented food products should be dealt with simultaneously with other measures, to ensure compliance with international instruments.

The Chairperson asked the Department to explain what was meant by a liquor product.

Ms Jonker replied that it was any product with an alcohol content of more than 1% but which was not beer or medicine.

The Chairperson asked why, in that case, beer was excluded as it had an alcohol content above 1%. This Bill did not seem to be addressing the fundamental issues. There was a lack of a policy framework and more work was needed on the basics. 

Hon Dirk du Toit, Deputy Minister of Agriculture, conceded that the Chairperson was quite correct. These matters had come before the Committee because they involved urgent principles. However, a complete review of the Liquor Products Act was needed, but that would be a lengthy process as it involved many old problems, some from the old-style apartheid legislation. That Act had attempted to ensure the interests of the large farmers, and some other groups in the wine industry to ensure wine quality. Some of the presumptions in the Act in relation to offences probably would not pass Constitutional muster. Therefore he had instructed the Department to deal with the most pressing amendments, pending a review of the whole policy and incorporation into that of beer products. Although there were discussions around beer, at the moment there was no quality testing of it. He did not know of any other country where the product was released without being tested. At this stage, however, the sole purpose of the Bill was to bring the legislation into line with international agreements and deal with the Board and the inconsistencies hindering implementation.

Mr Dlali said that with regard to the issue of urgency, it should be recalled that for the whole of this term from 2004, there had been no Bill. Only now did a Bill appear at the very end of the Parliament. He believed the claims of urgency should be rejected. 

Ms Ntuli asked for clarity as to whether there had been a Board, if the referencing was outdated, and if there was one, she asked what had been wrong with it.

Mr Du Toit said that the present Act provided that the board should be appointed by the Minister and had to consist of representatives nominated by the KWV, the Cape Wine and Spirit Industry, two officers of the Department and not more than two persons nominated by the Agricultural Research Council (ARC), plus a person determined by the Minister.

Ms Mogajane added that industry was thus effectively nominating people, so they were both referees and players at the same time. The new proposals would envisage having experts in the field who would safeguard the public health issues.

She stressed again that the main urgency lay not so much in the Board, but in meeting the requirements set by the South Africa/EU wine and spirit agreement of 2003 and the mutual acceptance and labelling of the WWTG, done last year.

Advocate SP Holomisa (ANC) asked by when the agreements must be complied with.

Ms Jonker answered that it was immediately.

Adv Holomisa asked what the consequences were of not promulgating this Bill, seeing that the South Africa/ EU agreement had been signed in 2003.

Ms Mogajane answered that a delegation was to meet this weekend to finalise some of the outstanding issues on the South Africa/EU agreement. The issue most affecting this country was the new WWTG agreement, and that was the one which was urgent, she said.

Ms Ntuli asked, should this amendment not be passed, how it would affect this parliament.

Mr Dlali said there was something the Department was not telling the Committee. Surely the Department should have foreseen what was needed in terms of their legislation and should not now suddenly claim urgency. He was most opposed to a piece of legislation being pushed through without proper consideration of the consequences, as had happened with the Prevention of Illegal Eviction Act four years ago.

Mr van Niekerk pointed out that last year there had been a problem with the EU norms. He asked if this was a similar matter, whether some aspect of the EU agreement had changed, and whether the wine exports were in danger.

Dr B Ntsabele accepted that the timing was problematic, but he felt that regard must be had to the intentions of the Department. It was trying to ensure that South Africa complied with instruments acceded to, on which it must deliver. For this reason he believed that the Committee must not be too harsh. The international trade in wines was at issue. South had to ensure that it protected itself and prevented a deluge of overseas wines flooding the local markets that did not comply with local standards of quality. That was what levelling the playing fields was all about. Although the agreement with the EU was an issue separate from the agreement with the WWTGO and the OIV, there was a certain degree of interdependence and interconnectedness, and that was why it was necessary to align all the agreements. He cited the example that South Africa needed to protect labels such as “Nederburg” from passing off by others wishing to adopt this brand name.

Mr Abrams asked how it was possible to encourage people to plant cultivars, without first checking whether there was a market for what they were producing. He was quite opposed to asking people to do something that would create expectations that might later not be met. If the Department had been upfront with the Committee in regard to negotiations, letting it know of the possible consequences, and what it was doing to address that, then the matter would be very different. Instead the Committee had been faced with a fait accompli. He did not feel that the Department was being serious. Whenever Annual Reports were presented, he had the impression that this was merely an exercise to be got through, by showing some slides and reporting the rosy picture. Unless the Committee was more fully involved the problems would escalate. Government was not visible at this most urgent time when refugees were suffering and it was civil society and individuals who were sustaining the communities.

Ms Mogajane asked if she could reply to Mr Abrams’s question in writing within two weeks.

Mr Abrams said that Committee Members needed to see all legislation being administered by the Department, in order to meaningfully address the issues.

The Deputy Minister commented that he was pleased to see these robust processes in Parliament.

He reiterated that the main point, as he saw it, had to do with the change in the Board. Where previously, the board represented those with large interests, the process of transformation could start. SA Breweries was already providing a team to assist in the rewriting of the entire Act. A policy must be found around beer, and there would be continuous consultation with Parliament. Sorghum beer would have to include cultural recognition, and regulations must not be made piecemeal.

The Chairperson thanked the Honourable Deputy Minister and said he thought there was a case to be made for the amendments. The Committee would look further into the issues. The Committee would hold public hearings in June.

The meeting was adjourned.

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