Govt to hike farm subsidies

Cape Town – The country's farmers were assured this week that substantial space exists for more government money to be lavished on them in the form of subsidies and other financial help. 

Tina Joemat-Peterson, the Minister of Agriculture, Forestry and Fisheries, said that the country has by no means fully used the provisions of the World Trade Organisation agreements and that substantial scope exists for an increase in government support to South African farmers. 

"In total, the policy space available for South Africa in price and production distorting support may be as high as R11bn," she said. 

"South Africa did not make use of this support since the year 2000." 

She explained that agricultural support notified to the WTO recently has been around R6bn to R8bn a year, which is non-trade or production distorting.  

This support is all classified as green box support by the WTO and includes expenditure in relation to agricultural research, training and extension services, pest and disease controls, veterinary services and disaster aid. 

It also includes expenditure by other departments such as the Department of Education under the school nutrition programme, classified as domestic food aid. 

"There are various other provisions in the green box," the minister went on, "related for example to environmental programmes and certain income support measures that South Africa has not made use of. Under these provisions, South Africa may substantially increase its support to the agricultural sector provided certain rules are adhered to." 

Direct price support is classified as amber box support by the WTO. In this regard, the upper limit for South Africa is just over R2bn, and was last used in the year 2000. 

She said she expected this provision to be reduced substantially once the Doha negotiations are concluded. 

But there is also money that can be used outside the amber box. 

"In addition to the amber box, WTO rules provide for a de minimis support. This support is not included in the amber box provided it is below a certain threshold," the minister told the house. "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 R9bn per year that may be used for price and production distorting support. 

"In addition, South Africa has not made use of the provision of just over R500m for export subsidies. Article 6.2 of the Agreement on Agriculture provides for input and investment subsidies for resource poor producers in developing countries. This provision is uncapped. South Africa has not made use of this provision and there seems to be substantial space for supporting our farmers in this regard." 

In addition, Joemat-Peterson said, she is convinced that considerable space also exists for an increase in the level of tariff protection, as for most products the boundary rates are considerable higher than the rates currently applied. 

"However, applied rates can only be increased at the most-favoured-nation level and not at the level of bilateral agreements," she warned. "An analysis, on a line-by-line basis, will be required to establish the actual policy space for agricultural products". 

The department will have to look closely for room to manoeuvre in the limited space constrained by the bilateral trade agreements between the European Union with SADC and EFTA.

- I-Net Bridge