“Government has a plan to respond to drought” – Gordhan

Minister of Finance Pravin Gordhan assured South Africa that government had a plan to respond to the drought and set the country’s ailing economy on a new path.

“There is no doubt that we are in crisis and that we have to do extraordinary things to meet the challenges we face,” Gordhan told journalists during a press conference on the 2016 Budget.

In his Budget speech, Gordhan confirmed that government had a plan “to protect South Africans from the effects of the drought”. The drought saw food inflation jump from 4,3% in June 2015 to 7% in January 2016.

“Funds have been reprioritised to respond to the impact of the drought on the farming sector and water-stressed communities,” said Gordhan.

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Government’s drought response was detailed in the Budget Review, which indicated that R1 billion would go to drought relief in 2015/2016.

The funds consist of

  • R502 million from the department of water for drilling boreholes and buying water tankers;
  • R318 million from the department of agriculture for activities such as moving cattle herds to state farms and transporting safe drinking water to drought-affected areas;
  • Another R187 million, from the department of rural development, will be used to distribute animal feed.

The Budget Review also referred to the 2016 Division of Revenue Bill, which proposed changes to disaster-relief grants for provinces and municipalities:

“These grants, which previously provided only for the rehabilitation of infrastructure damaged by disasters, will also provide for operational costs incurred by provinces and municipalities to distribute water.”

Responding to a question from Farmer’s Weekly during the press conference, Gordhan said government was in ongoing talks with the farming sector to assess its needs.

He did not refer to a report presented to government by the Drought Task Team, comprising a number of agriculture organisations, which indicated that in a ‘best-case scenario’, the total fiscal outlay required from the 2016/2017 fiscal year to effectively respond to the drought would amount to more than R7 billion.

“We will take what measures we can to assist the agriculture sector as well as those who will be worst-affected by food price increases,” said Gordhan.

He announced that Land Bank had set aside a concessionary loan facility to assist farmers affected by the drought.

Johannes Möller, president of Agri SA, released a statement commenting on the budget, in which he said Agri SA had expected “more and firmer commitments” from Gordhan when it came to dealing with impact of the current drought”.

“There seems to be some level of ignorance as to what commercial agriculture require[s] after the current drought to remain the basis for food security of the country,” said Möller in the statement.

Referring to the report presented to government by the task team, he said the farming sector could not be accused of not being on top of the economic realities of the country.

“We have demonstrated this presence of mind when we approached government on drought relief measures in recent times.

Our request for state guarantees aimed at a certain portion of debt that may arise out of the current drought was clearly done with the cash flow position of government in mind,” said Möller.

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