SAB Miller’s recent announcement of its parent company Anheuser-Busch InBev NV’s (AB Ib Bev) cancelling R 2.5 billion worth of investment has rattled a response from agriculture.
This follows President Cyril Ramaphosa further extending the ban of alcohol sales.
According to the South African Liquor Brand Owners Association (SALBA), alcohol alone contributed R172 billion to the economy, paying R2.5 billion per month on SARS excise tax.
“We share the President’s concern over the sudden and severe spike in positive Covid-19 cases and related deaths and understand the need for drastic measures to address it, but we are disappointed and deeply concerned by the blanket approach with regard to alcohol trade that government has taken yet again to curb the spread,” says Vinpro MD Rico Basson.
Vinpro represents about 2 500 South African wine producers, cellars and industry stakeholders. In the last 3 alcohol bans, the industry said it lost R8 billion in direct sales.
The latest ban is feared to effectively cripple the inward and backward supply chains of agriculture especially the grain industry.
Graina SA says alcohol is produced from raw materials derived from agriculture, and involves various products, including malt sorghum, malting barley, maize, potatoes, and grapes amongst others.
“Some of these products are directly dependent on breweries in terms of demand and have far reaching consequences if not processed,” noted Grain SA.
Malt barley was an important crop within the winter grain production area which had limited crop choices.
Also, the ban came at a time when the malt crop was experiencing a good season with substantial surpluses that could have boosted exports. Unfortunately, Grain SA feared that the ban will exacerbate fewer plantings of malt in the coming season.
“This directly affects producers in terms of financing profiles, crop rotation systems and the control of ecosystems. The result – significant financial pressure on an area that has already experienced a lot of pressure with droughts over the past few seasons and where agricultural debt is at high levels,” said Grain SA.
SALBA CEO, Kurt Moore, lamented government’s failure to determine the exact dates when alcohol sales should resume.
“It is prudent that the industry applies all possible post covid-19 preservation measures to keep it afloat, delaying excise tax payments is a significant factor. The industry and its entire value chain face enormous financial crisis, and its capacity to make these payments is severely constrained,” he said.
According to Basson, the alcohol industry had put forward many proposals and alternative interventions and was opposed to the outright ban.
“It is unfortunate that these proposals did not find their way into the final regulations to ensure a differentiated approach. We truly believe limitations on wine sales can be imposed in a less damaging manner that would alleviate the impact on the healthcare system and decrease transmission, while still helping to preserve livelihoods,” Basson added.
Grain SA believes that the current scenario was causing great concern among producers “as single-buyer markets are now disappearing and the agricultural sector is suffering.”