By Paul Makube, Senior Agricultural Economist, FNB Commercial

The Finance Minister has finally delivered the much-anticipated budget which was generally positive and hopefully sets a path to further economic reforms. Budget 2023 was done under an extremely difficult economic climate and the positive windfall in revenue collection of R1.69 trillion for 2022/23 which is R93.7 billion and R10.3 billion above the estimates of the 2022 budget and the 2022 MTBS respectively.

There are several positives for the agriculture sector and the first being the required allocation to deal with the energy crisis as loadshedding has started to impact negatively on food production thus a potential threat to food security. A total debt-relief of R254 billion will go a long way in enhancing operations and ensure a speedy recovery to its energy fleet. Crumbling infrastructure in terms of roads, rail, ports, as well as poor services at municipal level have been a bone of contention and the allocation of R351.1 billion for transport and logistics is welcome but implementation is key.

Agribusiness will benefit from being included in the refund of the Accident Fund levy for diesel used in the manufacturing process given the huge costs associated with operating generators for extended periods due to load shedding. Further, the general fuel levy and the Road Accident Fund levy has not been increased thus alleviating pressure due to the already high fuel costs.

The troubled sugar industry will breathe a sigh of relief as the Health Promotion Levy has been kept unchanged for the next two years which provides room for further engagement and further allowing the industry to explore more product diversification.

On energy reform, the agriculture sector had already embraced alternative energy with various solar installations in various farms and packhouses. The announced reforms of a reduction of taxable income by 125% of the cost of an investment in renewables with no thresholds to project size is a bold move that will accelerate adoption in the sector.

The consumer was also not left behind as the combination of tax relief of R13 billion including no increase on the general fuel and the Road Accident Fund levies will provide some relief.