VAT on sorghum threatens industry, farmers warn

Farmers are calling on Finance Minister Enoch Godongwana to remove the value-added tax (VAT) from sorghum products to save the struggling agriculture industry.

Godongwana will deliver the budget speech in the National Assembly on Wednesday.

The call for tax removal on sorghum products comes from farmers’ association Grain SA and is supported by the TLU SA.

Call for tax removal on sorghum products

Grain SA senior economist Corne Louw said: “This 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 benefit 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,” he said.

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Louw said sorghum was 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.

He said its resilience to climate change made 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 poor households,” he said.

VAT imposed make them less competitive

“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.”

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Louw also said many other staples such as maize meal, are zero-rated for VAT, while sorghum meal is taxed, making it less competitive.

He complained that while South Africa was food secure at a national level, household affordability remained a challenge.

According to Louw, removing the tax would support the National Development Plan aim to expand agriculture and create one million jobs by 2030.

Removal would support National Development Plan aim

He believed that removing the tax would play a role in supporting small-scale farmers and commercial producers and enhance food security through a diversified staple diet.

“It will encourage market growth and investment in sorghum value chains, reducing the financial strain on consumers, particularly in lower-income groups and promote entrepreneurship and rural economic development.”

TLU SA chair Bennie van Zyl said his association supports Grain SA’s request because it would assist the sorghum industry to continue producing and prevent job losses.

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“It will enable them to get the sorghum products cheaper to the consumers. The farmers will be able to sell cheaper products and increase the demand,” said Van Zyl. “This is a positive request and we strongly support it and hope the minister will look into this.

Food security is more crucial than a lot of other issues and we believe the minister should look into proposals like this and also focus on the issue of infrastructure to make sure that what the farmers produce can get to the market.

When asked about the farmers’ tax exclusion request on sorghum products, agricultural economist Wandile Sihlobo did not say whether he supported the farmers’ request or not.

Need to save industry

Instead, he said there was a need to save the sorghum industry as it was scientifically proven that it was nutritious.

Sihlobo said he was aware that the sorghum industry had not been doing well recently.

“There is a need for innovation to ensure that sorghum product consumption continues and save the industry from declining,” said Sihlobo.

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