Axe hangs over ISPAAD, other state subsidies
Mbongeni Mguni | Friday June 26, 2020 15:37
The P600-plus million each year that government spends on the Integrated Support Programme for Arable Agriculture Development (ISPAAD) is set to be substantially cut going forward, as the economy is restructured towards long-term growth and resilience.
ISPAAD is the main agricultural inputs programme introduced in 2008 to support communal farmers. Each season, ISPAAD provides farmers with various inputs such as seeds, tillage services, fertilisers, herbicides and others in the interests of increasing grain production and promoting food security at household and national level.
The inputs are largely provided through grassroots level contractors and suppliers who sign up with the Ministry.
Taken as a whole, the expenditure under ISPAAD supports the rural economy and its associated offshoots such as the contractors and suppliers, while promoting food security.
At least, that it is what is supposed to happen on paper.
In reality, since its introduction the billions spent on ISPAAD have not translated into its lofty goals. Climate change, in its various manifestations, has played havoc with traditional farming patterns in the last decade, with running droughts experienced in nearly all the years since the 2014/15 season.
Meanwhile, audits into the inputs programme have uncovered widespread illicit conduct and exploitation of the system, with “cowboy contractors” abusing loopholes and weaknesses in the programme to bilk government of millions each season.
As a result, the annual millions of pula spent on ISPAAD have mostly gone to waste, with the public purse coughing up even more on successive drought relief measures.
Last year, government was due to spend P791 million agricultural support programmes and had planned to spend another P684 million this financial year. Under the NDP 11, which ends in March 2023, a total of P3 billion had been budgeted for agricultural support programmes.
This week, the leaked draft of the Economic Recovery and Transformation Plan (ERTP) shows that ISPAAD is inevitably amongst a “hit list” of subsidies government will be trimming down on in the post COVID-19 economy.
The ERTP will raise and pump P40 billion into various interventions supported by a new policy and regulatory framework to guide the economy in the remainder of NDP 11 and beyond.
While increased support for agriculture is an ERTP priority, the architects of the new plan believe the spending under ISPAAD has been wasteful and the new focus should be away from subsistence farmers and towards commercial activities.
“Care has to be taken not to repeat past mistakes whereby the substantial resources and support that have been provided for agriculture have largely been wasted,” the draft ERTP reads.
“Performance has been measured in terms of inputs rather than output, and there has been no significant improvement in productivity in key target sub- sectors such as beef and food grains.
“Agricultural support policy has been focused on small-scale subsistence farmers rather than medium and large scale commercial farmers.”
The draft continues: “This needs to change, so that support is provided for agriculture to become more commercial.
“This means that proposed interventions need to demonstrate positive economic returns.
“It is, therefore, proposed that support should be progressively availed to increasing the scale of production and commercialisation, with a different and social support approach to subsistence farming.
“Also, the proposed interventions need to be assessed to evaluate their commercial feasibility.”
The new economic plans to redirect ISPAAD’s millions towards medium and large scale producers, rather than the communal subsistence sector.
“The financing gap can also be filled by reducing expenditures, such as rationalising subsidies to the agriculture sector to target support for medium and large scale producers and cluster infrastructure and services, but ensuring that subsidies do not become indefinite or unsustainable and away from subsistence farmers,” the draft reads.
Although the plan promises the redirected funding will be replaced by a “different and social support approach” to subsistence farming, no details have yet been provided.
Analysts said the words “social support approach” suggested government would seek to help subsistence farmers’ upkeep rather than their agricultural exertions.
The affected farmers, however, are part of a subsect of ordinary citizens who will be directly affected by the ERTP’s new proposals.
The draft plans to enhance domestic resource mobilisation which includes lowering government expenditure and heightening revenue collection.
Part of this, the plan says, will mean greater cost-recovery and cost sharing in government so that services that were previously subsidised or free become priced.
Subsidies that were previously enjoyed in health and education could be lowered, while the costs of water and electricity will push towards cost-reflective to allow the organisations providing them to stand alone and wean off government support.
Taxes, which are currently amongst SADC’s lowest, and the wide range of tax exempt goods and activities, will also be narrowed to increase the flows to government coffers.
“Cost-sharing and cost-recovery should be revamped post COVID-19 without compromising inclusivity,” the draft reads.
“Those able to pay should bear a greater portion of the cost of providing public services by government, through user fees.”
Yesterday, finance and economic development minister, Thapelo Matsheka, told Mmegi the draft was a leak that was not yet final.
“I can confirm that it has been leaked and actually it has not even reached my desk,” he said.
“It had been shared for consultative purposes before being leaked.
“That draft still needs to go through my desk officially, then to Cabinet and then Parliament.”
Matsheka said it was expected that the draft ERTP would appear in Parliament as a supplementary budget. Parliament is due to sit in July although dates have not yet been announced.