The Department of Water and Sanitation has announced a new pricing strategy that will gradually eliminate the maximum allowable water price increases for certain sectors, such as agriculture.
By Nico van Burick
The new strategy was announced in the Government Gazette in June, following more than a decade of development, and is expected to be introduced by April next year, pending approval by the Minister of Finance.
The Citizen reports that this led to a parliamentary debate on Wednesday, expressing concern that it could result in possible increases in food prices and pose a danger to vulnerable farming communities.
Government Justifies Policy Shift On Infrastructure Grounds
Dr. Sean Phillips, Director General of the department, says the policy shift can be technically justified. He warns that the limits on price increases prevent adequate maintenance of irrigation infrastructure. He says that since the apartheid era, there has been a limit to the increase in the price of irrigation water in particular and that it was probably the policy of the apartheid government to support white farmers by maintaining low water prices for them.
The department also moved away from irrigation in general as a category in its new pricing strategy. The classification now distinguishes between agriculture that affects food security and industries that do not.
Janse Rabie, AgriSA’s head of law and policy, says they participated in the consultation process and argued that the limits on maximum allowable increases should be kept unchanged, but this was not accepted.
“We argued that price shocks in the structure should be prevented, but we did not win the argument. At least there are mitigations that the government is trying to fit into the new pricing strategy, including that there will be a gradual phasing in.”
Industry Voices Strong Opposition To Pricing Changes
He points out that the new pricing strategies will only be introduced next year, after which the prices for the 2027 financial year will be negotiated. The strategy was very focused on water infrastructure, which is just one of the elements in the basket of factors that determine how the tariffs are compiled.
He says it is not possible to predict the exact impact on the sector, but there have been no severe price shocks in recent years.
Bennie van Zyl, general manager of TLU SA, believes this is unacceptable. “The state constitutionally claimed the water that was initially part of a farmer’s property without paying for it, and now it becomes an ever-increasing burden for the farmer in terms of its sustainability. Where will it end? How does he pay for something that has traditionally been his right of ownership? The cost component on the input side for a farm only becomes an ever-increasing risk for the farmer.
“The importance of food on the table for stability in South Africa cannot be underestimated. It is an established right that is increasingly being eroded and taken away, and making you pay for it too. If the government has not fulfilled its responsibility in maintaining infrastructure for 30 years, it cannot now unilaterally impose it on farmers. This is the result of mismanagement, and now the producers and consumers have to pay for it.”
Consultation Process Launched For 2026/27 Tariffs
Meanwhile, the department stated in a press release it had initiated a public consultation process with water users regarding tariff increases for the 2026/27 financial year.
The objective of the proposed tariff increases is to ensure that water consumers cover the costs of managing and maintaining the resources.
Discussions will include the South African Association of Water User Associations (SAAFWUA), the African Farmers’ Association of South Africa (AFASA), AgriSA and Business Unity SA (Busa). Sector organisations will be able to provide input on the increases and discuss budgets, debt collection and account issues with the department.
