Agri SA raises flag on new transformation targets in draft water usage licence rights

However, Agbiz is studying the provisions in detail and consulting with its members to formulate an evidence-based input. File photo

However, Agbiz is studying the provisions in detail and consulting with its members to formulate an evidence-based input. File photo

Published Jun 2, 2023

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The agriculture sector yesterday warned that food security is at stake after the Department of Water and Sanitation (DWS) recently published draft revised regulations on water use licence applications with ambitious transformation targets for public comment.

The draft regulations say certain enterprises applying for water use licences to take or store water, would in the future have to allocate shares of up to 75% to black South Africans in order for such water use licences to be granted.

Agri SA said yesterday in a statement that these amendments would have a devastating effect on South Africa’s commercial agricultural sector if adopted in their current form.

These regulations were unlikely to achieve the goal of further transformation in the sector.

Achieving this goal required creating an environment which was conducive to growth and investment in the sector, and which provided meaningful support for new entrants, it said.

Janse Rabie, legal and policy executive at Agri SA, said the consequences for food security and the sustainability of the agricultural sector should these regulations be passed in the current form, could not be understated as they would have a devastating impact on the sector and its ability to provide the country with a secure supply of food.

Focusing solely on ownership, to the exclusion of all other relevant factors, would mean the loss, or partial loss, of water resources for numerous currently viable commercial farming enterprises.

Rabie stressed that this effort by the government could not have come at a worse time for the sector and the economy, which was already reeling from the impact of load shedding, rural crime and deteriorating public infrastructure.

Agri SA said it acknowledged that water belonged to all South Africa’s people and fully appreciated the importance of achieving an inclusive and fairly representative agricultural sector in the country.

“The consequences that the draft regulations in their current form will have with respect to agriculture and food production in South Africa, will be fatal as it will essentially force the transfer of ownership of the ability to lawfully use water, commercial agriculture’s most crucial input factor,” said Rabie.

The agricultural and forestry sectors appear to be the primary target of the proposed regulations. The agricultural sector accounts for approximately 60% of South Africa’s total water use. The proposed regulations exempted mining companies, the state and state-owned entities, as well as 100% black-owned entities.

However, Theo Boshoff, the CEO of the Agricultural Business Chamber (Agbiz), said it was important to note that the regulations were still in draft format and might still be amended following the public consultation period.

“Agbiz is studying the provisions in detail and consulting with its members to formulate an evidence-based input. From our preliminary reading of the regulations, we can make the following general comments but more detailed inputs will be available once the comment period has been concluded.

“While Agbiz fully supports an inclusive sector, transformation targets must be rational and achievable. The current phrasing seems arbitrary and will not benefit anyone and is likely to have negative unintended consequences,” Boshoff said.

The CEO said transformation included several aspects including the five elements contained in the country’s over-arching transformation guideline, the BBBEE Act. He said Black shareholding could not be the only factor to measure a legal entity’s transformation nor could it be it be the overriding criteria in the awarding of water licences. Section 27 of the National Water Act contains a whole list of factors that must be considered, he said.

Boshoff said as a practical point of view, using hectares to determine the size of an entity and its obligations in terms of transformation was arbitrary.

“An entity that irrigates 500 ha of lucerne may be an exempted micro enterprise under Black Economic Empowerment because it is a low value crop. However, an entity that irrigates 100 ha of high value agricultural commodities in tunnels may be a QSE (Qualifying Small Enterprises) or large entity on turnover,” he said.

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