July 25, 2020
The second ban on alcohol sales has invited a spirited defense from the entire alcohol value chain.
One of South Africa’s biggest association, Grain SA representing commercial farmers and producers, has lifted the lid on the impact of the immediate ban of alcohol sales.
“Malt barley is an important crop within the winter grain production area that has limited crop choices. This season saw good malting barley plantings and the weather contributed to a good season thus far. Unfortunately, with the new liquor ban in place, a substantial surplus can build up with limited export opportunities, which will result in significantly fewer plantings in the next season” said Dr Dirk Strydom, Manager: Grain Economy & Marketing at Grain SA.
According to Grain SA, the second ban directly affected producers in terms of finance, crop rotation and control of ecosystems, leaving the industry to face far-reaching consequences alone.
“Not only will producers’ access to markets now be reduced due to surpluses, but the risks that support will be discontinued due to financial losses of companies are becoming a reality.”
The South African Breweries (SAB) painfully looked for words to describe the impact of the second ban. It feared the second ban would threaten thousands of livelihoods that depended on the beer industry’s value chain.
“Farmers, suppliers and entrepreneurs, to SAB’s employees -all of whom already suffered from the prior ban will be affected. Moreover, it will deprive the government from an important source of revenue, when it is needed the most.”
Taking into account the economics of this ban, Grain SA further placed concern about the aftermath of this ‘instant decision’ as majority of producers were not subsidised in crop insurance like other competing countries.
“So, a producer can only farm himself out of a difficult financial position, but if the demand is taken away in good production years, the direct effect is the same as a drought – especially with limited export opportunities” added Strydom.
Moreover, the industry expects further financial pressure on producers, raising agricultural debts to record levels thus committing small scale farmers out of business.
Another player new to the party was the South African Liquor Brand Owners Association (SALBA) who attacked the South African Medical Research Council (SAMRC), for harbouring undocumented data which allegedly influenced the decision of the President.
“Based on SAMRC’s recommendations, the Government came to the sudden decision stopping all business operations across the alcohol industry, undermining the overall supply chain logistics and putting at risk almost a million jobs supported by the industry” said it spokesperson Sibani Mngadi.
For government to arrive at an instant decision was concerning for the alcohol value chain while the wheat industry “in the same production area has been waiting since 24 March 2020 for the announcement on the new wheat import tariff.
Source: Mzansi Agriculture Talk