VAT to be cut on sorghum, baby food and chicken

Although the presidential working group on agriculture has no decision-making powers - its role is purely advisory - it was plain from what the minister of agriculture Lulu Xingwana said after Tuesday's meeting with the president that her own task team considering the runaway increases in the price of essential foods will be recommending to cabinet that VAT be removed from sorghum products, baby foods and chicken.

All these products are of crucial importance to the poor, and although there is actually no shortage of supply, the prices inflation is putting all of them out of the reach of the very poor.

The working group meeting the president also considered other ways of tackling the price increases. These included working to increase the amount of land under cultivation by bringing land that is currently fallow under the plough, and by encouraging commercial farmers and developing farmers to work together to increase production.

There will be no attempt to ban exports of essential items, Xingwana said. "This government has not taken any decision that would affect our farmers in terms of being unable to access other markets.

"We believe that by banning exports we actually in the long term stand to lose. Other countries like Japan have said if you are closing our access to your food or your products we are also not going to trade with that particular country."

Food prices could ease, but not yet

The working group received a report on the likely future progress of food price inflation, which the minister said would probably ease by next year.

The presenter of the report, Jannie de Villiers from the National Milling Chamber, said that the inflation in producer prices will return to single digits in the last quarter of this year, and that the increase in the price of maize will return to single digits by early next year. The reduction in the inflation in maize prices will feed into the prices of poultry and meat.

"Wheat will be a long way off single digit inflation," he said, "and rice still has another huge price increase to come." However, de Villiers reckoned that wheat and rice are not such significant items in the food basket.

The group's meeting with the president also discussed the future of the agriculture industry's strategic plan, which has been discussed intensively since 2001.

Xingwana said after the meeting that the plan is now being finalised and will be ready next month. It will be put to cabinet in July.

Also discussed was farm security and leaders of the farming organisations present declared themselves satisfied by promises of active intervention by the police and home affairs.

Published courtesy of