Agri SA says booze ban ‘is creating corporate carnage’

Agri SA has said that the ban on the sale of alcohol “is creating corporate carnage” and has urged the government to reconsider it “to allow the agricultural sector to continue contributing towards economic growth”.

The organisation said it was “gravely concerned about the impact” the ban would have “on the entire alcohol value chain stretching from wine, barley, hops, fruit and maize farmers to glass manufacturers and processors”.

In a statement on Tuesday, AgriSA said: “The South African Breweries (SAB) is the only beer producer that procures almost 100% of the ingredients locally for their operations are severely constrained by the current ban. This spills over to farm gate where farmers will not have off-take for their produce. The same is happening in the wine industry where many sellers are under severe financial pressure.

“In the face of Covid-19, the cancellation of R5 billion in capital investment by the world’s largest brewer, ABInBev, will have an adverse impact on the economy. The decision to cancel investments comes after the loss of 12 full trading weeks in which SAB has lost 30% of its annual production.

“The wine industry has already lost R3.3 billion in sales revenue and 117,000 jobs because of the ban. More than 800 small alcohol manufacturers are facing bankruptcy.”

Director of Agri SA Omri van Zyl said the cancellation of investments of over R15 billion “poses a massive threat to the sustainability of the industry” and the country’s economy.

“Farmers will be harvesting barley towards the end of the year, raising uncertainty amongst farmers about the coming season. Barley is mostly produced in one region – Southern Cape, this will have a major impact on their regional economy following a devastating drought last year. The carry-over of barley stocks will have a negative impact on the tonnages produced next year. Farmers are expecting good yields this season, but still need follow-up rain in the next month to complete a good harvest.”

Agri SA’s head of corporate chamber Mihlali Xhala said the ban was not helping the country’s economic recovery.

“The industry is willing to abide by strict protocols, but the sudden ban does not make sense. Illicit alcohol trading is shooting through the roof and government is losing billions in tax and excise income” said Xhala.

(Compiled by Makhosandile Zulu)

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