A JOURNEY THROUGH TIME

The

grain and oilseed industry

of south africa – A journey through time

applied for commodity clearance in order to import GMO maize of the most recent

technology released in America, because of the shortage of maize in South Africa,

while they could have imported GMO-free maize from the Ukraine at that stage.

AFMA’s application for commodity clearance to import the maize from America

was approved, despite Grain SA’s opposition.

Subsequently, Grain SA again held discussions with the Department of Agri-

culture, Forestry and Fisheries to establish conditions with which an importer

should comply before commodity clearance may be granted. Grain SA also

liaised with the Department of Trade and Industry for support, as this Depart-

ment’s policy makes provision for import substitution and also wants to prevent

undesirable imports.

The management of a GMO policy is a complex problem that can also have an impact

on the management and safety of the environment. In its pursuit of the sustainability

of agriculture Grain SA will remain involved in the debate through policy inputs.

Negotiating the diesel rebate

The diesel rebate scheme was originally introduced because most of the diesel is

used by the agricultural sector and not on public roads. However, it was abolished

in March 1997 because the system was abused, after which several failed attempts

were made by organised agriculture to get it reintroduced.

On 19 May 2000 representatives of Agri SA and Grain SA convened with the De-

partment of Finance again to discuss the matter. A memorandum that was dis-

cussed at the meeting identified several factors that justified the introduction of a

rebate on the diesel for the agricultural sector in South Africa.

The government acknowledged the merits of the petitions and a diesel rebate on

80% of the diesel used by the agricultural sector was introduced from 4 July 2001. A

producer must be VAT registered and the purpose for which the diesel is used, must

qualify for the rebate. The diesel must be purchased in the name of the producer and

the producer must keep proper record of the purchase, storage and use of the diesel,

including a logbook per vehicle. The rebate may only be claimed on the quantity of

diesel consumed and not on the total purchases.

It was to have been administered as part of the SARS VAT system and specific

information was required before claims in this regard would be paid out. When it

was announced, the total rebate amounted to 42,1 cents per litre. It meant a total

saving of roughly R300 million for agriculture, of which about R80 million was just

for grain producers.

In August 2001 Agri SA again petitioned the Minister of Finance to increase the

diesel rebate for the agricultural sector. At that stage the rebate applied to only

80% of the diesel used by the agricultural sector. The petitions pointed out that the

circumstances that had led to the reintroduction of the rebate had in fact worsened

since then. The percentage increase in the price of diesel (100%) was also com-

pared with the increase in producer prices (± 23%) from 1995 to 2000.

In his reply to the petitions the Minister pointed out that the previous diesel rebate

scheme had been abolished as a result of widespread abuse. He also pointed out

that the changes in the administration of the system were being implemented by

SARS. In view of this, the Minister decided that the rate of the diesel rebate would

not be revised before the 2004 budget. Since then the diesel rebate has been ad-

justed from time to time.

In time problems with the diesel rebate system relating to audits, administration

and fines occurred in the agricultural system. From audits by SARS it transpired

that in several cases claimants did not fully comply with the guidelines and require-

ments of the system and relevant legislation. Among other things the requirement

that logbooks should be kept for each vehicle using the so-called ‘farm diesel’ was

not complied with in many cases. Producers were under the impression that they

were complying with the requirements if they provided proof of the expenditure

and applied the 80:20 principle. However, in terms of the prescriptions they were

obliged to keep logbooks.