Chairperson and hon members, I greet you all. I would like to congratulate the hon Minister and his team on the Medium-Term Budget Policy Statement, 2007, delivered to this House. I appreciate the opportunity granted to me to say a thing or two on it.
One of the key objectives of government is to halve the proportion of people living in poverty by 2014. Consequently, the core objectives of economic policy are to accelerate growth, raise employment levels and provide poor and marginalised communities with the necessary support to participate in the formal economy.
The role of land and agrarian reform cannot be overemphasised to achieve this objective. South Africa has a dual agricultural sector comprising of a well-developed commercial sector and predominantly subsistence-oriented sector in rural areas.
This was as a result of racial segregation laws that placed 88% of the agricultural land in the hands of white farmers while the remaining 12% supported 72% of the rural population in the overcrowded homelands. In addition, white commercial farming was protected from foreign competition and was supported by the apartheid government through a variety of measures. Post-1994, we began a process of land reform and a broad-based programme of economic empowerment of the black population in the agricultural sector. I will revert back to this point later in my deliberation.
The report of the National Marketing Council, the Medium-Term Budget Policy Statement and the SA Reserve Bank Annual Economic Report all draw our attention to the growing inflation which has been above the target range since April 2007. The biggest contributor has been the higher food and fuel prices.
The food price inflation represented by the annual growth in CPI food has increased steadily since the end of 2005. Food inflation almost reached a year-on-year increase of above 9% in July 2007. The CPI of all items excluding food items, followed a slower increase, reaching 5% by the end of 2006.
The result is that some 14 million people in the country remain vulnerable to food security and 43% of households suffer from food poverty. Much of this poverty is associated with rural areas, particularly in the former homelands. This situation is in part accounted for by the growing middle class in China and India, which needs to be fed, unfavourable weather conditions and rising international prices, alongside the competing demand for agricultural output needing to be diverted to bio-fuel production.
The growth in the fuel price has a bearing on the production cost for farmers as well as the ultimate farm-to-retail price, because transportation costs are a matter of great concern for agriculture. The price of super maize meal, for instance, has increased by 36% from December 2005 to December 2006. And this is one of the most basic foods for our own people.
The other challenge is that there is a decline in the number of farmers. According to the Milk Producers' Organisation of South Africa, the Free State has seen the largest decline in milk producers, with 80 producers leaving the industry, followed by Mpumalanga with 60, North West with 53, Western Cape with 51 and Gauteng with 30. This decline has taken place between January 2006 and January 2007.
For some of these farmers it makes more sense to sell their stock, given the high meat prices, than to keep them for milk production because of drought and the increase in the price of the main feed, namely maize.
The result is that you have fewer farmers who have to feed a growing population. In fact, this season will end with a shortage of 18 million litres of milk and, inevitably, higher milk prices. This is besides the possible irregular behaviour by the four large milk buyers or processors.
A lack of well-articulated support for small-scale emerging farmers is a cause for concern. I welcome the intervention to provide better extension services and post-settlement support to new farmers.
Most of the land that has been redistributed is performing far below capacity. Hence, agriculture is contributing less than 4% of the GDP and experiencing a decline in the number of jobs.
Our redistributive land reform is premised on the need to bring about direct benefits to beneficiaries and indirect benefits to the rural economy. According to the White Paper on South African Land Policy of 1995, redistributing access to and ownership of land to previously disadvantaged South Africans should reduce poverty and contribute to economic growth.
Where land is redistributed through land reform, agriculture is the dominant but not the only land use. However, land reform policy has not up to now envisaged what kind of land uses are to be promoted through the process of land reform and therefore what kind of structural changes in production, markets and settlement patterns are being pursued alongside the deracialization of ownership.
This is a product of land reform not being sufficiently located within a wider framework of agrarian reform. The result is that in Limpopo, for instance, 46% of the potential arable land, and in Northern Cape, 52% of the potential arable land, is reported to be unused.
Furthermore, the past decade has seen a reduction in farming as more land has been taken out of agricultural production altogether, to make way for non-agricultural land uses through conversion to game farms, our beloved golf courses and holiday estates.
The 1995 White Paper on Agriculture noted that the present structure of agriculture and rural communities is characterised by a very uneven income distribution. This problem can be addressed by broadening access to agriculture through land reform and bringing small-scale farmers into the mainstream of government technical and financial assistance.
The state has introduced a number of initiatives to support land reform beneficiaries. The key frameworks for providing agricultural support to new farmers are the Comprehensive Agricultural Support Programme of 2004 and Mafisa. The issue is the impact of this programme.
The ANC supports the Policy Statement. Thank you. [Time expired.]