The Agriculture Business Chamber (Agbiz) has welcomed the identified prioritisation of agriculture, following the 2015 Budget Speech by Finance Minister Nhlanhla Nene on Wednesday, but notes that his speech was “vague on what is meant by its support of agriculture”.

In a media release on Thursday, Agbiz said the revitalisation of the Land Bank was definitely a good step forward for the agricultural economy. Industry organisation Agri SA president Johannes Möller too hailed the funds allocated to provinces to enhance agricultural development and to increase access to finance for emerging farmers.

“We welcome the intended organisational review of the Land Bank with a view to supporting emerging and commercial farmers. This institution remains of paramount importance as a financial intermediary in the sector,” he noted in a statement on Thursday.

However, Agbiz expected the impact of other aspects announced in the budget speech, such as the review and possible drop in the diesel rebate, the increase in the fuel levy, and the increase in electricity prices to have a greater negative impact on South Africa’s agriculture industry, especially in light of the inefficiencies of State-owned enterprises.

With regard to the fuel levy, even though Agbiz considered the increase of 80.5c/l as an option to boost government income, it believed the rise to be too much. The chamber stressed that the fuel levy increase would inflate the end price of consumer goods and would adversely affect the competitiveness of the country’s entire economy.

Further, the chamber emphasised that the energy crisis would have a deeper impact on growth than expected by government, as the underperformance of industries was not only owing to underinvestment, but mainly, South Africa’s insufficient energy supply.

Agbiz was also concerned about “certain issues, which were mentioned casually, without putting light on the detail,” referring to the budget suggesting that government expenditure would be increased above inflation.

The chamber highlighted that Nene also did not provide clarity on other issues, such as the allocation on land reform and the Agriparks, which President Jacob Zuma mentioned in the State of the Nation Address.

However, Möller said Nene’s repeated reference to the National Development Plan (NDP) in the budget speech provided some level of policy direction as it had appeared that the plan, which had previously been declared as the cornerstone of government policy, had “lost some traction in recent times”. Agbiz welcomed the support in the budget for the implementation of the NDP.

Möller admitted that the Minister had an extremely difficult task to deliver a budget speech amidst serious economic problems and very subdued economic growth, adding that if Nene succeeded in achieving the content of the budget speech it would indeed be praiseworthy.

Agbiz considered the Minister to be overoptimistic on the ability to achieve the 2% gross domestic product growth expected by government from such a constrained economy, especially as analysts had forecast growth of 1.4%. “The attempt to balance the income versus the expenditure is good, but the roll-out at ground level and the inefficient use of scarce resources remains a major concern,” stated the chamber.