Statement issued by Grain South Africa
The sorghum industry urges Finance Minister Enoch Godongwana to remove VAT from sorghum and sorghum products. This, coupled with industry efforts, will help stop the decline of this vital agricultural sector, support local economic development and improve food security.
Sorghum is an indigenous African crop, primarily consumed by lower-income households. Removing VAT would directly benefit these consumers while revitalising a struggling industry. The estimated R238 million in VAT collected annually on sorghum could be redirected to strengthen the sector, preserving jobs, and ensuring long-term sustainability.
Sorghum is a nutritious, gluten-free grain with health benefits, including high dietary fibre, suitability for individuals with celiac disease and diabetes, and a sustainable energy source. Its resilience to climate change makes it the best alternative to other staples, particularly in drought-prone South Africa. However, the 15% VAT imposed on sorghum products makes them less competitive compared to other staple products and reduces consumer choices, especially for the poor households.
Tax discrimination is a threat to sorghum sector
While South Africa is food secure at a national level, household affordability remains a challenge. The taxation places sorghum at a disadvantage against other staples, discouraging consumption and production. As a result, the industry is in decline, with lower demand affecting farmers, processors, and retailers. If the trend continues, sorghum production in South Africa may cease altogether, leading to job losses and economic setbacks.
Many other staples such as maize meal, are zero-rated for VAT, while sorghum meal is taxed, making it less competitive. The tax burden on Sorghum impacts processors’ cash flow, adding financial burdens that ripple through the supply chain. Removing VAT would enable fair competition, increase consumption, and support economic sustainability in the sorghum industry.
Sorghum VAT-zero rating will support government policy
The National Development Plan (NDP) aims to expand agriculture and create one million jobs by 2030. The call to remove VAT on sorghum aligns with this goal by:
- · Supporting small-scale farmers and commercial producers.
- · Enhancing food security through a diversified staple diet.
- · Encouraging market growth and investment in sorghum value chains.
- · Reducing financial strain on consumers, particularly in lower-income groups.
- · Promoting entrepreneurship and rural economic development.
