The Minister of Agriculture, John Steenhuisen, has proclaimed his commitment to enhancing the sustainability, profitability, and viability of South Africa's agricultural sector, signalling a shift towards progressive mechanisms in addressing the challenges posed by climate change.
Speaking at the annual State of the Beer Economy event at the Caledon Farm Research and Development Facility in the Western Cape yesterday, Steenhuisen outlined the pivotal role of research and mechanisation during key international forums such as the G20 and G7 Conferences of Agricultural Ministries.
“Research and development, and mechanisation are key to improving yields,” he stated, emphasising how these elements are essential for enabling farmers to thrive in an increasingly unpredictable climate.
He expressed concern that, until now, agricultural initiatives have often devolved into mere “tick-box exercises” rather than the serious, well-supported frameworks necessary for fostering agricultural growth.
Highlighting the agricultural sector’s potential for youth employment and economic stimulation, Steenhuisen stressed the importance of collaborative partnerships between the government, private sector, and community organisations.
“The agriculture department on its own, the community on its own, cannot achieve goals unless there is a strong area of partnership,” he said, reiterating that the Agriculture Master Plan was critical for fostering these relationships.
In partnership with the beer industry, specifically with South African Breweries (SAB) leading the charge, Steenhuisen noted that the agricultural economy supports approximately 38 000 households within the industry, featuring substantial investments that bolster local farmers and contribute to food security.
SAB has invested in building and expanding its two commercial barley malting facilities in Alrode and Caledon and its hop processing facility in George. These agro-processing facilities serve local and regional markets.
SAB has also invested in and developed an agriculture research and development centre in Caledon, piloting new farming techniques, technologies, and crop varieties to accelerate agricultural development and supporting farmers across South Africa.
SAB’s CEO Richard Rivett-Carnac backed this assertion by declaring that his company sources up to 95% of its raw materials locally, significantly impacting economic growth and job creation.
For instance, the local barley production has surged by 60% since 2017, with an impressive 324 000 tons produced in 2023 alone, contributing R1.4 billion across four provinces.
“Beer is not just a beverage of moderation; it’s a critical driver of economic growth. By empowering our value chain, including commercial and small-scale farmers, we are not only strengthening our supply chain but also investing in South Africa’s future through our agricultural impact,” Rivett-Carnac said.
The development of various hop varieties and sourcing of non-GMO maize also signifies a broader commitment by SAB to sustainable agricultural practices, having contributed R754 million to the national GDP.
Aron Kole, managing director of FarmSol Holdings, echoed the sentiment of partnership in agriculture, illustrating how collaborating with large producers like SAB helps equip developing farmers with necessary resources and market access.
However, challenges remain.
Charlene Louw, CEO of the Beer Association of South Africa, advocated for more substantial government support to stimulate growth among smaller, emerging breweries.
Louw lamented the lack of funding opportunities for SMMEs in the alcohol sector, suggesting that government policies too often overlook potential economic benefits in favour of restrictive regulations.
“A lot of the SMEs that I deal with have knocked at government funding agencies but get turned away because they are in alcoholic business. The government needs to do more to create an enabling environment for business, regardless of the type,” Louw argued.
“What we're faced with is a government that has taken a policy stance to not fund alcohol companies and not wanting to fund them to grow and scale themselves. They put higher taxes on alcohol thinking people are going to drink less, but all that does is that the smaller players shut down and jobs get lost. And that's a missed opportunity, but there is still a lot of room for growth for this industry.”
This sentiment was echoed by industry players who cautioned that excessive taxation and stringent regulations could inadvertently drive consumers towards illicit markets, posing an even greater threat to small businesses.
The beer industry recent complained about its sustainability amid ongoing economic pressures on the back of excise duties of between 6.7% and 7.2% on alcohol, saying the duties deviated from established excise policy and have resulted in beer tax burdens exceeding the targets set by this policy.
A new report by Oxford Economics Africa titled “Double the Pain: The burden of unpredictable excise taxes and high inflation on beer in South Africa”, has found that above-inflation adjustments to excise duties, that are not in line with current excise policy have pushed beer tax burdens above excise policy targets.
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