Mr Chairman, I request the privilege of the half-hour.

The Department of Agricultural Economics has had a difficult year. Drought, locusts, inflation and the ever-increasing economic crisis in agriculture have all served to put the department and its officials under a great deal of strain. I would like to express the appreciation …

Order! The hon member for Albany referred to an economic crisis in agriculture. I do not want a crisis to arise in this Committee. Hon members must therefore please refrain from conversing so loudly. The hon member may proceed.

Thank you, Mr Chairman.

As I was saying, Sir, I would like to express the appreciation of this side of the House to the Director-General, Dr Immelman, and his staff for their efforts during the year. Then, too, thanks are in order to the department for the comprehensive report on the department’s activities which was recently tabled.

Whilst I am dealing with reports, I should like to make special mention of the report entitled Oorsig oor die Landbou which has been compiled by the SAAU for the benefit of parliamentarians. This report is a comprehensive and up-to-date account of the key financial problems facing agriculture today.

It provides valuable insights into the industry. Then, too, the Co-ordinating Committee of Control Boards must be congratulated for their initiative in organising the highly successful “Agricon” conference which was held in Pretoria earlier this year.

There is no doubt at all that agriculture in this country is at the crossroads. During my speech in this debate last year, I drew attention to the gathering storm in agriculture; and that storm is now about to break with a vengeance. As a consequence we are faced with what I believe to be the most serious crisis in our agricultural history. Despite large sums of State-funded aid, thousands of farmers find themselves struggling desperately to stay in business.

I believe that the analogy of agriculture at the crossroads is a particularly apt one. It implies that we are moving—moving from one state of affairs in the past to a different state of affairs in the future. In other words, agriculture is in a state of transition; and what we will be attempting to determine in this debate in where this hon Minister and his Government intend leading us. Where do they see agriculture in South Africa five years down the track?

Before making this decision the hon the Minister will need to take stock of our present situation. I have implied that we are facing the worst agricultural crisis in our history, but just how bad is that crisis? Let us consider a few relevant facts and figures.

Firstly, the summer grain producing areas are still reeling under the hammer-blows of a series of adverse climatic seasons. Some areas are experiencing their fifth crop failure in succession.

Secondly, a rapidly deteriorating financial input-output situation has slashed farming profits in the past two years. Input costs have risen by 36% while producer prices of crop farmers have actually remained static. Over the past ten years there has been an average annual increase of 25% in gross agricultural income, but during this period agricultural costs have risen at an average rate of 43%. According to figures given by the SAAU in their report, costs, as a percentage of gross income, have risen during this period from 52% to an all-time high of 79%. In other words, in 1975 a farmer had to spend 52 cents in order to earn R1 gross. Today, in order to earn that same rand, he has to spend no less than 79 cents.

Thirdly, the agricultural debt burden—this is a most serious position—rose from R1,96 billion in 1975 to no less than R11,4 billion in 1985. It rose by almost R10 billion in ten years. This means a staggering average debt load of no less than R190 000 per farmer, and this means that each fanner will be carrying an average annual interest payment of R38 000. Since 1980 the tempo of debt accumulation has soared from 11,8% per annum to a crippling 22,8% in 1985.

Last, but certainly not least, are the ravages of inflation. Just how deeply double-digit inflation has bitten into the profitability of farming can be gauged by studying the net farming income index over the past ten years. Measured against an index of 100 in 1975 income actually remained on a par until 1983 but, since then, in the past two years, it plunged to an all-time low of 44 in 1985. Farmers are thus more than 50% worse off today, financially speaking, than they were two years ago. Inflation is a noose which is rapidly strangling the life out of our farming community.

What is the purpose of spelling out this litany of disasters? It is simply to bring home the point that we cannot continue as we are. Something has to be done.

When we analyse what has been happening over the past decade we can see that one of the most malign influences on agriculture has been the factor which I mentioned last and that is inflation. The inflationary monetary, credit and economic trend which has been so evident in the wider South African economy has had a direct bearing on our situation. Many farmers have during this period established their farming enterprises and their management practice in terms of these inflationary trends. The controlled prices of farm products have also been adjusted according to the rate of inflation wherever possible. In other words, the current inflated price and production trends have come to be regarded as a permanent feature of our agricultural economy.

Many farmers have as a consequence purchased highly priced land as a hedge against inflation. The result has been that land prices have risen far above their value in terms of their production potential. The owners of this land could ironically now be said to have a vested interest in inflation. There are those also who carry large mortgage bonds and who rely on the artificially stimulated value of their land to provide them with the necessary security to offset their loans. Farmers have thus become embroiled in a bizarre vicious circle with a vested interest in the very condition which is choking the life out of their industry.

This is a terrible dilemma indeed. If the Government steps in now with effective disinflationary monetary policies the following is likely to happen: Firstly, the prices of agricultural products and farmland will return to their traditional relationship with other prices that existed before the inflationary spiral began. Secondly, anyone who made agricultural investments based on higher, inflation-distorted price expectations will be in serious financial trouble.

Furthermore, credit problems for those who are already heavily in debt will not be solved by one or two good income years, or by spreading principal and interest payments over a longer period. Total debt on those farms is simply too great in relation to the likely earning potential over the next few years.

Either way then we are caught in a squeeze, and it is difficult to know what will cause the most damage—allowing inflation to run on thereby dragging more and more farmers into debt they have no hope of repaying, or embarking on effective disinflationary policies which could ultimately cause banks, co-ops and other creditors to blow the whistle on their debtors.

It is interesting to see what happened in the USA. When they changed to a disinflationary monetary policy under President Reagan in 1980, the price of agricultural land fell drastically—in some states up to 50%. As a result, the traditional family farm in the USA has come under severe strain. In some places in South Africa this is already happening and there is every indication that it will continue to happen in this country if a disinflationary policy is followed.

The problem is how to make agriculture a profitable industry once more whilst limiting the damage to a minimum. If we allow untrammelled market forces to take their toll the casualty rate in agriculture is likely to be very high indeed. On the other hand, if farmers are to be protected against these forces by means of even higher subsidies and support prices, where is the money to come from? There is a very simple reason why this alternative of increased support and subsidies—even if it was acceptable to the farming community—will not present itself. The State simply has not got the kind of money that I believe will be needed if we are to be bailed out by means of State aid.

Before putting forward my own ideas on what could be done I would like to deal briefly with the formal request which was put to parliamentarians by the S A Agricultural Union. This request draws attention to the alarming rise in input costs and inflation to which I have already referred. It requests that we draw attention to the crisis in agriculture, and asks us to support an appeal which has been made to the Ministry of Trade and Industry to request the State President to appoint a commission of inquiry into the problem of inflation. The purpose of such an inquiry would be to seek out ways of breaking the inflation spiral and excising what has been described as a cancer from the body of South African agriculture.

We in these benches support this appeal and believe that it is of the utmost importance that such an inquiry be made. We have, however, drawn attention to the inherent dangers of such a policy. We believe it is important that the Government should pay heed to these dangers and come forward with policies that will protect the farming community against the dangers.

I believe, however, that even more drastic action is required. While the problem of inflation is being considered, the problem of agricultural taxation should also be investigated. There appears to be an urgent need for drastic tax reforms in agriculture. The present system makes it almost impossible for capital accumulation to take place. This means that debts cannot be repaid and reserves against the lean years cannot be accumulated. We know that the Margo Commission is investigating all matters relating to taxation in this country and, while we cannot pre-empt its findings, one hopes that it is going to take a long, hard look at agricultural taxation.

The second suggestion which I would like to make concerns the immediate problem of debt repayment which is facing many farmers because some banks are already feeling edgy about the situation and are beginning to put pressure on the farming community.

If this trend continues, I fear that many farmers who are in a basically sound position but short on liquidity might be lost to agriculture unnecessarily. We accept that there are those in the farming community who are unfortunately irredeemably lost to the industry, but we must try to throw out a lifeline to those farmers who are still able to swim. Is it not time that the Government started thinking of setting up some sort of Leutwiler-like figure who, with the backing of the Government, could negotiate on behalf of those farmers? This is a thought which the hon the Minister might like to comment on.

In closing, I would like to return to my central appeal, and that is that the hon the Minister look long and hard at inflation and at the inroads which it and its attendant evils have made in agriculture. We would like to hear what sort of safety net the hon the Minister proposes to spread if the hon the Minister of Finance embarks upon a disinflationary monetary policy. In short, what is the strategy of his department and officials in this regard?

The questions we must ask ourselves are very simple. Is out farming community important to us? If it is, have we really done everything in our power to save it from disaster? I do not believe that we have. I believe that all the factors to which I have drawn attention have to be taken into very careful account when the hon the Minister spells out the way he and his department see the future. We would like to hear the hon the Minister’s short-term plans to help farmers who are already in trouble and what he intends doing about the problems which face us in the medium-term future. I would also like to know how the hon the Minister sees the future some years down the track. What is his long-term view of agriculture and the problems which relate to it?

Mr Chairman, I request the privilege of the half-hour.

I like to follow the hon member for Albany. He is fully conversant with agriculture and in these debates on agriculture we are used to his making a balanced contribution, as he did again this morning. In my speech I shall react further to some of the matters he raised.

If one analyses the agricultural scene today, there is one predominant characteristic. This is that the economic resistance of the South African farmer is being weakened disturbingly as a result of two economic problem areas.

The first problem area is formulated as follows by the South African Agricultural Union in a telex message to the hon the Minister of Trade and Industry on 26 March 1986:

This is clear and straightforward language that everyone can understand—high input costs are the primary problem in agriculture.

The second problem area is equally clearly and lucidly formulated by no less a person than the State President in his address at the opening of Parliament this year. I quote (Hansard: Assembly, 1986, col 10):

The second basic problem area in the agricultural sector is clearly spelt out here— shrinking profitability, a growing debt burden and declining economic resistance. The State President also regards the reconstruction of agriculture as a priority in the interests of the country.

The reconstruction of agriculture ought therefore to be one of the most important themes in this agriculture debate. It is at the moment undoubtedly the focus of the earnest, sometimes stormy, debate in the ranks of agriculture, because in many cases it is a matter of survival. Therefore speakers on this side of the committee will stress certain aspects surrounding the broad theme of the reconstruction of agriculture, which will increase the economic resistance of the farmer. Thus there will be speakers that will deal in depth with the extremely adverse effects of the fast-rising input costs and the high inflation rate on profitability in the agricultural sector.

The standpoint of the SAAU that effective combating of input costs is an absolute preprequisite for the restoration of stability and security in the agricultural sector, is a correct and valid standpoint. I have great sympathy, too, for the rising feeling of frustration and powerlessness in the ranks of agriculture as a result of this situation.

I am therefore grateful that the hon the Minister of Agricultural Economics, in conjuction with the hon the Minister of Trade and Industry, has issued instructions to investigate the extraordinary increases in the price of farming requisites. I hope that this investigation will be carried out with the necessary feeling for and grasp of the distinctive problems and hazardous nature of the agricultural sector. I think this is an absolute prerequisite in these investigations, if we want to face the problem squarely and find solutions.

I am delighted, too, that the State President has granted an interview to the office-bearers of the SAAU. The influence of the high input costs and the high inflation rate on the agricultural sector will be discussed further in the course of the interview.

In fact, the SAAU is requesting a high-level conference under the chairmanship of the State President to discuss this economic problem area in the agricultural sector. This indeed testifies to the confidence the SAAU has in the State President’s insight into and understanding of matters concerning the agricultural sector. This confidence is further underlined by a statement by the president of the SAAU. This statement appears in a written submission by the SAAU to the various political agricultural groups of Parliament on 7 and 8 April this year. I quote:

We on this side of the committee associate ourselves wholeheartedly with these words. We are grateful to have a head of state that sympathises with the fanners’ weal and woe with such sincere interest and intense involvement. This engenders confidence in everyone, particularly in our sons, who have to look after that most important agricultural heritage, our family farms.

This brings me to the reconstruction of agriculture, a priority the State President himself has set, as I have indicated. The question we have to try to answer in this debate is this: According to what guidelines and on what basis can we build a more lasting security and stability into the agricultural sector?

In an important address at the opening of the congress of the South African Agricultural Union on 23 October 1984, the State President himself indicated the essential guidelines in accordance with which the reconstruction of agriculture had to take place. We can summarise these guidelines as follows: It is clear that the lack of capital formation since the seventies is now a growing problem for the farmers. It is of crucial importance that the farmers be enabled to become financially independent once more so that they will be able to deal with normal risks in agriculture, using their own funds. I should like to repeat this guideline: It is of crucial importance that the farmers be enabled to become financially independent once more so that they will be able to deal with normal risks in agriculture, using their own funds. Therefore the practicability of a system should be investigated whereby the farmers could invest surplus funds during good years, such funds being subject to taxation only in the year of withdrawal.

The State President concluded his explanation of this guideline with the following illuminating statement:

It is therefore clear that the proposed guidelines and the basis for the reconstruction of agriculture are based on the increased possibilities of capital formation.

The creation of larger capital reserves could take place in two ways. One way is by the abolition of estate duty. We are grateful for the relief the hon the Minister of Finance has already provided in this regard. The other way is by the creation, during good years, of reserves which would be subject to taxation only in the year of withdrawal.

Although this while affair is still being investigated by the Margo Commission, I want to make the following statement today: It is my considered opinion that the creation of capital reserves is the only way for the South African farmer to regain economic independence and self-respect. The proposals have already created so many expectations, particularly among beginners in agriculture, that the reconstruction of agriculture would be a virtually impossible task without the practical application of this principle.

If the creation of capital reserves is a prerequisite for the independent survival of the individual farmer, the creation of reserves is equally essential to the agricultural co-operatives. The SAAU recently had an authoritative investigation carried out into all the relevant aspects of capital formation in cooperatives. It was very clear from this investigation that the capital structure of the cooperatives is unsound, that loan capital forms too great a component of the capital structure. According to this investigation, own capital made up less than 30% of the capital, and loan capital more than 70%. During the period from 1975 to 1985, own capital declined from 27,8% to 22,5%, and there are indications that this tendency is continuing.

The investigation underlines one disturbing truth, and this is that over the past ten years the co-operatives have become increasingly dependent on loan capital as a result of a continued weakening of their financial position.

The investigation also underlines a further truth. The return on invested capital fell as low as 8%. The reason for this is the low earnings of co-operatives on the services they render to producers. This makes an important contribution in respect of combating inflation in agriculture, which is already struggling with the highest inflation rate in the economy. This however, also, jeopardises the ability of the co-operatives to generate capital themselves.

Against this background, and in the light of the crucial role a vigorous co-operative sector has to play in the reconstruction of agriculture, I wholeheartedly support the following request by the Co-operative Board of the SAAU. I quote:

1. (a) Dat die tien-jaar-belastingvergunning wat koӧperasies geniet wat produkte hanteer en wat gedurende daardie kooperasies se 1987-88 boekjaar verstryk, vir nog tien jaar verleng word; en
2. (b) dat die beperking van artikel 27(2)(f)(ii) van die Inkomstebelastingwet opgehef word ten einde kooperasies toe te laat om die terugbetaling op kwalifiserende lenings ten voile af te trek in die jaar waarin dit gemaak word.

I know that in this connection we can depend on the wholehearted support of the hon the Minister and the hon the Deputy Minister in making these representations a reality.

There is a variety of cogent reasons why the agricultural sector should be reconstructed as quickly as possible on this fixed basis of greater capital formation. I want to mention only three reasons. Firstly, the State President has committed our country and its people to constitutional, economic and social reform.

Are you talking politics now?

No. The hon member should just listen carefully to what I am saying. [Interjections.]

We are also committed to reform plans that must be supported by a strong economy, of which a vigorous agricultural sector forms an integral part, and also to reform plans that are going to set heavy demands in certain areas and in which the agricultural sector will necessarily have to play an important part.

I want to mention certain areas in which the greatest demands are going to be made in the future, demands in respect of which the agricultural sector will have to play the determining role. Firstly, as far as the provision of employment is concerned, agriculture is the largest provider of employment in our economy in regard to which in-service training and the increase of productivity offer great opportunities at a relatively low cost.

Secondly, as far as regional development is concerned, I just want to mention the following points: (a) The demands of decentralised development, of which agricultural development must necessarily form the basis; and (b) the improvement of general living standards by means of housing, family planning and education.

Here, too, agriculture has over the past years, but particularly in recent years, made an enormous contribution through the Rural Foundation which in the future will have to be much more strongly developed.

Thirdly, as far as healthy labour relations and the creation of better attitudes are concerned, agriculture also has a proud record, the beneficial influence of which could work through to other sectors. The agricultural sector will therefore, have to make an important contribution towards the efficient execution of our reform plans.

The second reason I want to mention is that if the Republic of South Africa wants to retain its leading role in Southern Africa, and wants to realise it effectively, the strategic importance of the agricultural sector will still, owing to the self-sufficiency of food and the important contribution towards increasing exports, have to be given the highest priority.

The third reason why the rapid reconstruction of agriculture is of basic importance, is that in the White Paper on Agriculture, the State has committed itself to the pursuit of one important objective, namely the maximum number of well-trained and financially sound resident owner-farmers. It remains a wonderful achievement that farmers in certain regions have managed to run their farming enterprises productively after six or seven years of disastrous droughts.

We have the highest esteem for the hon the Ministers that hold the agricultural portfolios, and for the officials of the two Departments of Agriculture which, through planning and efficient administration, made this achievement possible.

We are arguing now that the pursuit of this objective is no longer possible if the hazardous nature of agriculture is not restricted by making larger capital formation possible. Last year during the SAAU congress the hon the Minister of Finance summed up this situation impressively. I quote him:

I should like to emphasise this statement in the strongest terms. This is possible only by making greater capital formation possible. We shall thereby give the beginner farmer, who today bears the greatest burdens and lives in the greatest uncertainty, renewed confidence in the future of agriculture.

Of course the agricultural sector then has to render a quid pro quo. We should then be prepared once again to withdraw the concession whereby the devaluation of agricultural implements may be write off again in the year of purchase, and write off devaluation, over a period of three to five years. This grant has in any case made no positive contribution towards judicious financial planning; nor did it help at all to stimulate thrift.

In conclusion I want to congratulate the hon the Minister and the Deputy Minister of Agricultural Economics, and the hon the Minister of Agriculture and Water Affairs, on the positive spirit of co-operation and the goodwill they maintain with the SAAU on the one hand, and the various agricultural industries on the other. We who are fully conversant with agriculture, have the greatest admiration for the way they operate, and we thank them for this. We also want to sincerely thank Dr Dirk Immelman and his men in the department for the outstanding way they are serving agriculture and our country in the extremely difficult circumstances prevailing in the agricultural sector.

Mr Chairman, I am happy to follow the hon members for Albany and Ceres in discussing the Agriculture Vote.

Please permit me, Sir, while we are dealing with agricultural affairs, just to make the observation that it appears to me as if the tobacco they grow in Brits is a little too strong for some people to smoke.

That is nothing to brag about!

Do you approve of that behaviour? [Interjections.]

That is exactly the same medicine you gave us in Paarl! [Interjections.]

Order! The health vote is not under discussion now. The hon member for Barberton may proceed.

One cannot discuss agriculture in isolation. If one wants to discuss it fully, one cannot do so by referring only to the Vote of the hon the Minister of Agricultural Economics which is now under discussion, without also involving the Department of Agriculture in the sphere of own affairs.

I think it would perhaps have been important for agriculture in general if not only the two hon Ministers and the hon the Deputy Minister had been present at this debate today, but in particular, the hon the Minister of Finance, too, A great many of the representations made on behalf of agriculture in this debate thus far by the various speakers do not fall within the province of these two hon Ministers only, but belong in particular within the province of the hon the Minister of Finance. I therefore regret his absence.

There has been much speculation recently, and unasked advice and opinions have been expressed by people that are not always properly informed on the role our marketing boards in South Africa play. If we were to state our standpoint, I would want to say that we, apart from the genuine producing farmer himself, regard the expansion and maintenance of organised agriculture, as the mouthpiece for the farmers themselves, as undoubtedly of the utmost importance to agriculture. Furthermore, we think this could contribute towards the stabilisation and the expansion of our co-operatives, as well as the maintenance, stabilisation and refinement of the functioning and actions of our marketing boards.

An idea has begun to take root in South Africa—this leads me to think that it is also becoming the standpoint of the Government—that the State should involve itself less and less with agriculture, and in particular with the operation of the market in the case of agriculture. In other words, the standpoint is that so-called free enterprise, the free operation of the economy in the classic sense of the word, must now take its course in agriculture.

It is my view that this does not take place anywhere in the world; nowhere, and certainly not in the times in which we now find ourselves. On the contrary, there are signs all over the world that the authorities are involving themselves to a greater extent in the operation of agriculture, and that applies to the marketplace as well. In the mighty USA with its mighty economy, its colossal agricultural capacity and agricultural production, we find that the American authorities are spending astronomical amounts in the form of direct or indirect subsidisation of agriculture. If our country—which is a poor agricultural country, and is in the position in which the South African farmer in particular finds himself—is going to reduce intervention in agriculture by the authorities at this stage, at precisely this stage, then I am afraid we are looking for trouble. We shall then not only be looking for it; we shall find it, as we are also finding at present.

For years it was the policy for prices to be fixed on the basis of production costs plus compensation for the operator. I am referring in this connection to one industry in particular, the maize industry, as far as price fixing is concerned. My conclusion is that over the past two years that policy has been abandoned, not only by the authorities, but now apparently by the Maize Board, too. This is how it appears to me. Over the past two years, production costs have risen phenomenally—the figures have already been mentioned—but we are now finding that in the case of yellow maize the increase is only 5%.

It is now being argued that the producer price of the product is so high at present that the product is being priced out of the market. This could be the case, but by doing exactly this, and placing a ceiling on the price—something that is in fact happening now—the State and the authorities are intervening directly in the free operation of the market. At the same time, however, the free operation of the market, in respect of the farmers’ input costs, is being allowed free rein.

This has now brought us to a situation in which the position of the producer, mainly in the summer grain areas, has become almost impossible. This situation in which we find ourselves now has already had catastrophic consequences for the primary producer, but we are now seeing its effect on the manufacturers and the suppliers of agricultural machinery to agriculture. The latest figures for tractor sales were given on the news this morning, when it was indicated that tractor sales in March were the lowest since the Second World War. It was mentioned that only 320 tractors were sold in March. Furthermore, it was mentioned that at the beginning of the new harvest season, only 33 harvesters were sold.

I therefore want to argue that while we as farmers are being told that we are pricing ourselves out of the market as a result of the prices we want for our products, at the moment this applies even more to the manufacturers of agricultural machinery, because their market is, after all, the farmers of South Africa. The prices the farmers are expected to pay are quite simply no longer economically possible for the average farmer in South Africa.

Now the question may be: What, then is the solution? The problems being experienced in agriculture in South Africa are not exclusive to South Africa. We find almost the identical problems in Australia and to a certain extent in the USA, too, although these are of a different nature from ours. We nevertheless experience those problems. We profoundly appreciate the inputs the SAAU has made in this regard. We support, too, the representations made by the SAAU, and we are grateful that the hon the Minister has now complied with the request that an investigation be instituted into the astronomical increase in respect of the input costs in agriculture.

At the moment there is a crisis in agriculture, and it is therefore not possible to wait for an investigation to take its normal course. I do not mean this in a derogatory way but we are now in a situation in which emergency measures, perhaps radical measures, must be implemented in the short term.

In referring to the astronomical increase in agricultural input costs, I have no option but to refer—and that is why I am so sorry the hon the Minister of Finance is not present— to the reinstatement of the import surcharge in September last year, and the effect it has, and has had, on agriculture.

Order! I regret that the hon member’s time has expired.

Mr Chairman, I rise merely to afford the hon member the opportunity to complete his speech.

The hon member for Barberton may proceed.

Mr Chairman, I thank the hon Whip.

In his announcement last year of the reinstatement of the 10% surcharge, the hon the Minister of Finance motivated this step by saying that that money was needed for creating employment in South Africa. But agriculture in South Africa is the largest provider of employment, mainly for the non-White population, in the whole of South Africa! Therefore to take money from agriculture now in an indirect manner—the institution of the surcharge has a direct effect on agriculture—and then to say that that money is going to be used to create employment, is counterproductive as far as agriculture is concerned.

How can one argue that if one directly increases the agricultural inputs—I am referring to price increases of imported machinery, etc—one is going to promote the provision of employment? I notice that in a country like Australia, the state has already taken the necessary steps to satisfy the demands of agriculture in this connection. I think it is absolutely essential that this measure be done away with in the short term, in the interests of agriculture in South Africa.

I want to return to the argument I have raised repeatedly in the past during debates on agriculture. I want to discuss the effect of GST on agriculture. It is all very well to argue that GST ought to be distributed as widely as possible to provide a broad base for the hon the Minister of Finance to collect funds for the State.

Linked to the dramatic increase in the prices of agricultural machinery in particular, which over a very short period have almost doubled, and linked to the tremendous increase in the rate of GST itself—the rate was initially 3% and it has now reached 12%—this has a tremendous influence on the ability of the farmer to obtain a tractor for example. Further linked to the present financial position of the farmer in general— the average farmer is no longer able to pay cash for a tractor, but has to obtain it on credit—this means that that farmer not only has in effect to pay interest on the actual purchase price of the tractor, but because he has to borrow the money he also has to pay interest on the 12% GST which has to be paid to the hon the Minister of Finance.

It is therefore my plea—I know I am going further than organised agriculture goes in this connection, but this has been my standpoint for many years—that as far as agriculture is concerned there be exemptions from GST in the short term, not only in the interests of the farmer but also in the interests of the manufacturers of agricultural machinery, to bolster their position in the market to some extent. My request is that attention be given to that GST immediately.

What use is it if we largely exempt foodstuffs from GST for the consumer because the price would otherwise be too high, but, by retaining GST on certain agricultural inputs, limit the cheaper production of foodstuffs? I therefore want to make an earnest appeal for immediate action and short-term measures, and for the present two hon Ministers to address representations to the hon the Minister of Finance to implement crisis measures in this connection.

I should like to refer to the hon the Minister’s Vote itself. I think the time has come for existing subsidies, which are in fact consumber subsidies, to be removed from the account of the hon the Minister of Agricultural Economics.

I am referring in particular to the amount that was used last year and the amount that is being appropriated this year in respect of, inter alia, the loss being suffered on maize imports. The importation of maize in the interests of the consumer in South Africa cannot after all be placed on the account of the maize producer in South Africa. One can understand that a State subsidy in respect of the export loss on maize is a subsidy for the maize producer. That an import loss, too, can be placed on his account, makes no sense. I therefore plead that changes be made in this connection to put the matter in its correct perspective.

We are appealed to time and again to divorce politics from agriculture. It is a reasonable appeal, but it does not deter an opposition party from pointing out the shortcomings that exist in respect of agriculture, or in the provisions the State is making for agriculture. It is precisely the task of an opposition party to point out such shortcomings.

After all, we know that in its propaganda documents the Government has repeatedly laid claim to everything the NP is now doing for agriculture. However, the moment one points out what they are not doing for agriculture, one is suddenly dragging politics into agriculture. I do not intend to go into this matter further today but I just want to point out that if we are being appealed to not to drag politics into agriculture, we then expect the same from the governing party.

With the greatest respect to the hon member for Ceres, I cannot join in his panegyric to the State President, which he uttered in this agriculture debate. I regard it as a direct introduction of the politics of the day to agriculture. [Interjections.] I shall therefore not react to it.

The hon member for Ceres quoted the SAAU!

That may be so. [Interjections.] Does the hon member want me to carry on a political debate now? I think he should rather remain silent.

I wonder whether the amount provided for us in the agriculture appropriation this year is a sign of the Government’s direction regarding agriculture in South Africa. Let met put it another way: Is this a reflection of the gravity with which the hon the Minister of Finance—I am not blaming the two hon Ministers of Agricultural Affairs now—is treating agriculture in South Africa?

I should like to draw a comparison. In the present Appropriation the hon the Minister of Finance is making an amount of more than R600 million available as a subsidy on suburban train and bus transport. Bearing in mind that a large number of the branches of agriculture in South Africa are almost on their knees at the moment, I wonder whether the provision made for agriculture in the present Appropriation fulfills the demands of the present crisis. My answer is “no”. [Time expired.]

Mr Chairman, I am very sorry about the last paragraph of the speech made by the hon member for Barberton, since I could really support everything he said before that last paragraph.

I want to tell him only one thing about the State President’s role. I think he knows our State President is the one person in South Africa who has understanding for the position of agriculture. We should give a person who has understanding for South African agriculture and fills such a post all the support we can. I am not talking about our three hon Ministers of Agriculture now, but specifically about the State President. [Interjections.] The hon member for Ceres was indeed correct when he said we should express great thanks for the understanding the State President has of the agricultural situation.

In a lighter vein I merely want to refer to the nonsense that took place in Brits last night and which the hon the member for Barberton spoke about as well. I am sure of one thing and that is that the hon member does not approve of it. It was barbaric conduct which no one should approve of. [Interjections.]

I want to continue to associate myself with the hon member for Barberton by saying a few words about agricultural marketing. I want to begin by making the statement that the challenge of agricultural marketing of the future lies in the handling of surpluses. All indications are, that despite the rapidly increasing Black population, South Africa will have chronic overproduction of almost all agricultural products. [Interjections.]

Order! Hon members must conduct the other arguments they want to conduct somewhere else and at some other time. I shall now allow the agricultural debate to be abused for that purpose. The hon member may proceed.

Mr Chairman, I promise I shall not allow myself to be led astray by that.

In its White Paper on Agricultural Policy, the NP Government accepted that the agricultural sector must also move closer to the ideals of the so-called free market system, viz the system of private initiative in accordance with which supply and demand factors play a greater part in the determination of producer and consumer prices.

In his New Year’s message the hon the Minister repeated this objective, and everyone is eagerly awaiting the report of the Agricultural Marketing Council in this connection. We on this side of the Committee support the hon the Minister fully in his standpoint. Unless the agricultural industry ensures that it remains competitive with other sectors of the economy, the results for the entrepreneurs within the industry can be catastrophic.

It is an economic fact that the demand for and supply of most agricultural products is relatively inflexible. Unlike in other sectors, agriculture has few opportunities to manipulate supply and demand factors. Variable climatic conditions make it almost impossible to estimate during planting time what the total harvest will be. This does not mean, however, that better planning and production management, particularly surplus management, cannot bring considerable relief in respect of the problems entailed by overproduction. Everyone should be aware of the immense sums of money the surplus of 2,2 million tons of yellow maize will cost the producer, consumer and taxpayer after a reasonably poor season this year.

No agricultural sector may neglect to do everything possible to stimulate the local demand for its product as much as possible. Indeed, there is a large market in a growing Black population as well as an increase in the standard of living of the population as a whole. World surpluses make the foreign market less attractive. In general, however, one can say there is a stagnation in the demand for food products. The best marketing experts can forget about getting the housewife in an average family so far as to buy more than one loaf of bread per day. In some cases dietary prejudices have even caused the use of products such as butter, red meat and eggs to drop. My wife refuses to let me eat more than one egg per day, and I think this business of cholesterol is absolute nonsense.

It is irresponsible!

As a result, demand manipulation will be able to make only a relatively small contribution to effective surplus management, but it may never be neglected. The challenges of surplus management, in my opinion, reside rather in the manipulation of demand factors, viz production management.

Those who are so fanatically opposed to the present control board system will probably not begrudge the agricultural sector its development of instruments for the better planning of the supply of its products in order to ensure the best possible price for both the producer and the consumer. How else can the agricultural sector compete in a free market situation with the motor industry, for example, which can plan the supply of vehicles with almost pinpoint accuracy with reference to the existing market? That is why we are not prepared to abolish the control board system.

Production management methods which will have to be considered when a new marketing strategy is planned for each agricultural product with its own unique characteristics such as perishability and storage characteristics, include the following, inter alia. In the first place lower guaranteed prices must be more reconcilable with world prices. Naturally these are unpopular methods which will have a detrimental effect on farming income and which will hit the small farmer and the farmer who gets no additional income from other sectors of the economy, the hardest hit. Such measures should be considered very carefully.

In the second place there should be measures to encourage the production of alternative agricultural products for which better markets exist.

In the third place there should be incentives such as agricultural extension for the purpose of aiming inputs at optimum rather than maximum yields levels. This instrument should enjoy a high priority in South Africa with its hazardous climatic conditions.

In the fourth place incentives such as subsidies are necessary to withdraw certain surface agricultural land from production. Elsewhere in the world such measures often lead to increased inputs aimed at maximum production on the remaining land.

Other countries with surplus problems pay part-time farmers, who are not dependent upon the farm alone for their income, not to produce. In South Africa with its hazardous climate and large numbers of Black farm-workers, for whom there is no work outside agriculture, production withdrawal of agricultural land should be considered only in exceptional cases.

In the fifth place quota schemes and permit systems are already being used to restrict production in various sectors. Quotas and permits often acquire a capital value or are discounted in land prices. Quota or permit take-overs can lead to monopolistic conditions. In this way the number of egg producers, for example, has decreased within 15 years from 6 000 to 450. I do not say that that is not a monopolistic condition already, however.

In the sixth place there are two-market or two-price systems according to which surplus production is marketed at a lower over-quota price which is normally related to world market prices. Pool schemes and surplus removal schemes are usually used in conjunction with this. One can merely praise the farsightedness and courage of the Maize Board and Nampo in submitting proposals and showing their willingness to reform the obsolete single-channel fixed-price system.

I believe more effective production management has become imperative to allow the agricultural industry to retain its place in the country’s economy.

Mr Chairman, I would like to make it clear that I thought the speech of the hon member Dr Odendaal was extremely positive, and I would like to compliment him on it. I shall also be dealing with certain issues that he raised. I think many of his ideas need further careful examination. I also want to deal with certain comments of previous speakers, and in the first place I want to refer to the hon member for Albany who, together with the hon member for Barberton and Ceres, made a very good contribution to this debate. I am very pleased to note that there does appear to have been a more realistic approach on behalf of the Official Opposition in regard to the situation of agriculture. I do not mean this in any derogatory way but it has been stated repeatedly from those benches that market forces of supply and demand must virtually dictate the policy of agriculture in this country. Whilst one accepts this in a broader sense, I think that, when one comes to analyse it in its practical sense, one realises that this is impossible. So I do welcome those aspects of the hon member for Albany’s address.

I feel that the hon member for Barberton made a very important point during the course of his speech, and I would like to support very strongly his reference to the need to remove the import surcharge on agricultural machinery and all agricultural commodities. This in itself would be of considerable benefit, and I think he made the point very clearly in regard to the problems being experienced by the agricultural machinery business in the country.

There is another point that I want to deal with briefly before I get to the text of my own speech, and that is the question of the reduction in fuel prices. I am not referring to the effects of the reduction within the sphere of agriculture only. One of the biggest problems relative to agricultural products is the transport of these products to the market place. We have consistently experienced that whenever there has been an increase in the price of fuel, an increase in transport costs automatically follows. Now we are faced with a situation where the price of fuel has been reduced very considerably, but one sees no benefits accruing to either the consumer or the producer in regard to a reduction in transport charges being passed on to both sectors. I would like to leave this as an observation for future reference.

It is impossible to do justice to such a broad subject as agriculture in the relatively short time available in this debate. I would like to associate myself though with previous speakers who expressed appreciation to those who work behind the scenes: Such as those involved in the Land Bank and the Agricultural Credit Board, those who serve on the Agricultural Credit Committees, and the officials of the Department of Agriculture. We owe them a debt of gratitude and on behalf of my party I would like to place on record our great appreciation for the work they do for the farmers of South Africa.

When studying the Budget estimates, the decrease of R160 million relating to industry subsidies and assistance stands out like a sore thumb. Here too I find myself very much in accord with the views expressed by the hon member for Barberton. I want to make it clear that in principle we in these benches support the phasing out of food subsidies. In the long term the money saved in this way can be better spent on other essential services such as housing etc. We can take cognisance too of the ridiculous situation in the EEC countries where some 70% of the total budget is taken up in providing subsidies for agricultural products at the expense of the development of the community as a whole.

The point at issue, as we know all too well, is that the agricultural industry is facing a severe financial crisis at present. I think this has been well illustrated in the debate so far. What I do want to emphasise is that I go along with the views expressed that the industry now needs all the help it can get to overcome the problems it faces at the present time. It therefore appears logical that at a time like this any savings that are made in the form of food subsidies should be transferred to a financial assistance fund in order that these funds can be utilised where they are needed most.

This House must not lose sight of the fact that the Budget estimates for the Department of Agriculture and Water Supply in the House of Assembly also make provision for reductions. These reductions are to the tune of R55 million on the agricultural credit account, and a further R62 million in subsidised interest, making a total of R115 million. I realise that that Vote is not the subject of debate here today, but I do feel that these two components should be measured together in that they reflect a total decrease of some R275 million in the overall agricultural votes.

This worries me, and it prompts one to ask whether the Government really does fully appreciate the serious plight in which many farmers find themselves. Forgive me therefore for reiterating once again that the Government must not underestimate the enormous problems that confront the agricultural sector at the present time. It is all very well for the Government to tighten the tap of financial assistance and to throw up its hands in despair, signifying the end of the road for many farmers. Rural communities and districts whose existence and survival have been built around their agricultural economy will disappear if a significant trek away from the farms does take place.

The socioeconomic problems that would result are all too obvious. This is also a point that was made by the hon member for Barberton. Whether we like it or not, it is going to take years before the economic ills that exist in agriculture today are finally eliminated.

Before moving on to the next phase of my speech, I feel it my duty to express appreciation to the Government for the financial assistance that it rendered to farmers and cooperatives during the past year. I think we are very well aware of the efforts that were made in this regard. Nevertheless, I would once again caution that the job is far from over.

I was pleased to learn that the hon the Minister, in conjunction with his colleague, the hon the Minister of Trade and Industry, is responding—and if I may emphasise, is responding at last—to the pleas of the farmers and organised agriculture to do something about the escalation of input costs.

It is no secret, whether one is a sheep farmer of not, that the farmer has been literally fleeced for years when it come to the purchase of farming requisites.

Order! I regret to inform the hon member that his time has expired.

Mr Chairman, I rise merely to afford the hon member an opportunity to complete his speech.

The hon member for Mooi River may proceed.

Mr Chairman,

I thank the hon Whip. [Interjections.]

As I have indicated, the producer has been literally fleeced for many years in that he has been in the invidious position of having to pay retail prices for his requirements whilst selling his products at wholesale prices. This is what the tractor rally in Pietermaritzburg last year was all about. My request to the hon the Minister of Trade and Industry is that he should do all he can to ensure that the investigations are conducted as urgently as possible and that any anomalies that are identified—and this is a point I want to stress—be dealt with as ruthlessly and expeditiously as possible.

Let us not lose sight of the fact that the country’s overall inflation rate is hovering around the 20% mark. The farmers’ inflation rate, on the other hand, is more in the vicinity of 30% to 35%. One must also bear in mind that co-operatives supply a high percentage of farmer’s requisites and the question one is tempted to ask, is whether co-operatives have used their bargaining and buying power to the benefit of their members, or whether too much attention has been paid to swelling the trading profits of these concerns.

Reports come in regularly concerning cooperatives that have succeeded in negotiating favourable discounts on their purchases, and yet they only pass a mere fraction of the discounts they receive on to their members.

I wish to refer once again to certain aspects of the Marketing Act during this debate. Moreover, I can find no better way of introducing the subject than by referring to the hon the Minister’s Christmas message in which he expressed certain views regarding the relaxation of control measures and the need for a freer marketing system for agricultural products. Permit me to assure the hon the Minister that I support fully the sentiments he expressed. However, their implementation is not as simple as it may sound. Greater flexibility, through the relaxation of certain price control measures, has been applied to meat and fresh milk. I regret to say, however, that it is doubtful whether these measures have achieved the success that was hoped for.

The margin between the price paid by the consumer and that received by the producer has widened considerably in both cases. This has been evident particularly in the case of fresh milk during the past 15 months, with the result that certain consumer organisations are now calling for the reimposition of total control.

I accept that free enterprise has a role to play in agriculture. However, one must not forget that this industry is highly susceptible to monopolistic practices which can rebound detrimentally on both primary producers and consumers. There is no doubt that marketing boards must be retained until a more suitable means has been found for the purposes of handling and disposing of agricultural products. With this in mind, I feel the time has come for a completely new look at certain structures within the Marketing Act itself.

Let me assure the hon the Minister that I am aware of the fact that the National Marketing Council has been conducting investigations into various marketing schemes. However, I want to point out that the National Marketing Council is, for want of a better word, part of the system. I therefore urge the hon the Minister to appoint an independent committee to investigate certain aspects—please note that I refer to certain aspects—of the Marketing Act with a view to updating the present functions of some of the major control boards so as to bring their activities more into line with present-day requirements.

I would further suggest that one of the first priorities of such a committee should be to investigate the question of whether marketing boards should be given greater autonomy in decision-making, with the resultant effect that they would have to bear greater responsibility for any decisions taken by them. I may point out that the present procedures whereby ministerial approval through the National Marketing Council must be obtained before decisions are implemented, can lead to protracted delays. At the same time a certain responsibility passes on to the shoulders of the State to back any decisions to which it gives its approval.

A further matter to which a committee of this nature could turn its attention is that of marketing. I was fortunate to attend the recent Cape Congress of the National Woolgrowers’ Association and I could not help but be impressed with the imaginative approach to marketing methods adopted by the International Wool Secretariat and the manner in which this organisation identifies the direction in which the market is moving. One questions whether the marketing strategies of our boards are addressing themselves in like manner to movements in the market place.

Mr Chairman, it is a privilege for me to follow the hon member for Mooi River. Apart from the fact that he is a personal friend, I should like to tell you what my hon benchmate has just said while the hon member was speaking. He said that with such a balanced approach one could go a long way. I should like to commend the hon member for Mooi River for his balanced approach and to tell him that we on this side of the House have a lot of respect for his kind of approach, especially with regard to the interests of agriculture.

I should like also to associate myself with the remarks which the hon member made about the free-market system.

*I should also like to say a few words in this connection. During the past few years an attack of varying intensity has been launched on the control board system by the non-agricultural sectors in South Africa and this is still taking place today. These were supported mainly by the English media. Although one does want to give some of those newspapers and magazines credit in that they do sometimes put the other side of the matter, it is a pity that an image which does not reflect the whole truth is often created. One can understand that when food prices rise, the scapegoat responsible has to be sought. It is often easiest to denounce the control board system as the scapegoat, even though most of the schemes which function in terms of the Marketing Act are surplus removal schemes, and the prices of primary and intermediary products are controlled only in the case of two schemes.

One does not want to single out any specific magazines, but there is an example of truly serious misleading reporting in last week’s Farmer’s Weekly.

In reply to a question put to the hon the Minister by the hon member for Wynberg, the cost incident to marketing boards was given, including and excluding administrative expenses. The total cost, as given by the hon the Minister, was R188 million for marketing boards. This included expenses such as research and training programmes and certain product development programmes, however, which would have had to be spent in the industry in any case, even had the marketing boards not been there. The true administrative cost was R65 million. This report in the Farmer’s Weekly was published under the heading “Control Boards cost R188 million”. That kind of thing is a great pity. Although the facts were reflected correctly in the rest of the report, it is a pity, nevertheless, that such a misleading perception was created. That was only one example. One would not like to single out this magazine, but it is an example of what often happens.

I should like to refer to two new so-called ideologies which are the subject of vigorous discussion at present, viz privatisation and the free market theory. Let me say immediately I have no problem with the Government’s principle in which it comes out in favour of an endeavour towards free enterprise, as well as an endeavour towards less Government involvement in the market place. I think this objective is one which we shall never be able to deal with finally in future, because as the economy and its various sectors develop in time and as removals and reallocations take place in the consumer market by means of its spending pattern, new demands and new requirements will develop from time to time, and the Government’s endeavour towards free enterprise will always remain an endeavour. I therefore have no problem regarding the principle of this objective.

A problem one does find, is that there is a tendency in the country to absolutise this objective of the Government. There is a tendency to want to see the free market theory as a kind of ideology which has to be enforced on every sector of the economy at all costs, irrespective of the cost of the resulting structural changes.

One cannot help getting the impression that some sectors, particularly the retail sector, see the free market theory in conjunction with the urgency of constitutional reform and that a psychosis is being created that constitutional reform cannot succeed unless the free market theory is applied fully in the same absolute terms as is sometimes necessary in the political sphere.

It is correct, for example, that the informal sector of the economy among the Black community in particular must be deregulated, but when the same absolute approach is applied in the agricultural sector, I believe we are seeking greater problems than we may have now.

I should like to refer to the hon the Minister in particular to the winter cereal industry, and especially to the inquiries of the Davin Commission, the Marketing Council and the Competition Board. Let me say immediately that unfortunately I cannot associate myself with the recommendations made by any of these three enquiries, mainly because each of them investigated only certain aspects of the industry and the operation of the scheme. With the possible exception of the Marketing Council’s enquiry, none of the enquiries considered the consequences of their recommendations on the total industry.

Even the Marketing Council did not indicate in its report what the nature of structural changes in the industry would be when, for example, its recommendations concerning the determination of producers’ prices was accepted. The Marketing Council did not try to justify the cost of the alternative it recommended. I find it a pity that even the Marketing Council is apparently prepared to abolish formal control in the winter cereals scheme to make room for informal control by a few large chain store groups in the country.

As far as the winter cereal industry in concerned, I should like to appeal to the hon the Minister to retain the status quo in the winter cereals scheme with a few adjustments. One of the adjustments I should like to recomment to the hon the Minister, is that the representation of the consumer, particularly the Black consumer, should be extended in the Wheat Board. It has become imperative for the Black consumer to be given a say in deliberations to extend the involvement of all interested sectors in the Wheat Board in that way.

An enquiry by Unisa found recently that Black consumer spending will more or less double in the next 15 years. With an increase in urbanisation of Blacks until the year 2000 from approximately 7,6 million to 26 million, it is a logical deduction that the demand for bread will increase, and correspondingly, so will the Black man’s expenditure on bread. That is why I am asking the hon the Minister to consider extending the consumer’s representation in the Wheat Board specifically also to include the Black consumer.

Mr Chairman, it is very obvious that the farmers are going through a hard time this year. The flower farmers cannot even afford to send the hon the Minister a bloom to wear in his buttonhole. [Interjections.] Perhaps some of his hon colleagues here who are wheat farmers will send him a few ears of wheat to put in his buttonhole next year.

Angora wool. [Interjections.]

During the course of my speech I would like to reply to one or two of the comments made by hon members who have spoken in the debate so far. To start with, I would like to say that I have taken note of what the hon member for Caledon, who has just spoken, said about the costs of running control boards. I think he has a very good point.

The hon member for Barberton remarked that the hon the Minister of Finance should have been present for this debate. I have no problem with that. Agriculture is the biggest single industry in South Africa. This is testified to by the fact that it has its own Minister. Perhaps the hon the Minister of Trade and Industry, too, may well have benefited had he been present during this debate. [Interjections.]

My colleague the hon member for Albany has already pointed out the difficult financial position in which farmers find themselves. In this respect I would like to identify four issues today, as well as a few steps I think we could take with regard to all these issues. Perhaps my suggestions will help a little.

The first issue is obviously drought. There is no doubt that we have recently suffered the most prolonged and devastating drought in living memory. One of the factors have have aggravated the effects of the drought has of course been the incorrect farming systems in many parts of the country. While I am speaking on this topic of drought, I may just mention that we on this side of the House are grateful for the assistance the Government has given to farmers in drought-stricken areas. However, the Government finances are limited and of course it cannot go on doing so indefinitely.

In regard to the drought, I would like to suggest that we make sure in future, by some or other means, that correct farming methods are applied. I realise that this is largely the responsibility of the hon the Minister of Agriculture and Water Supply, but I think it is high time we went ahead and looked at land-use systems and ensured that people did comply with whatever the land-use classifications may be. I know that this is being attended to but I think that, in our country, it needs to be attended to much more urgently.

The second issue to which I should like to refer, is the question of credit. We in this party believe that far too much credit is being advanced to agriculture by the agricultural co-operatives. Very often these co-operatives have not granted credit on the basis of sound financial planning in agriculture. This is also borne out in the annual report of the Land and Agricultural Bank of South Africa. I refer the hon the Minister to page 13 of this report. I quote:

Of course one of the problems with the Land Bank is that they finance co-operatives under cash credit loans which among other things they use to finance farmers for their production requisites and also to buy their own, trade requisites. What has actually happened is that farmers have been unable to repay the co-operatives, the co-operatives in turn have been unable to pay the Land Bank back, and this has placed a severe strain on the Land Bank because they have to find money to finance carry-over debts. We believe that in future the financing role of the co-operatives should be reduced and, because financing logically rests with commercial banks, their role can be increased. I would like to hear the hon the Minister’s response to the idea of the role of the Land Bank as an agricultural bank being expanded so as to allow the Land Bank to finance farmers directly in respect of their farming requisites. What this of course would mean is that it would be possible then for the Land Bank to ensure that loans were given on a better planned basis—they could be given on a basis of sound future financial planning.

The third issue I wish to deal with is inflation. This has been covered adequately by my friend the hon member for Albany but I would like to emphasise what he said and add a few points. Price stability is a basic factor underlying our whole economic system. Our trading partners like Japan, America and West Germany have zero-rate inflation this year and the trouble with inflation is that it is destroying our competitive position and it also means that banks and co-operatives get burdened with very, very shaky loans because the temptation with inflation is to buy on credit now and pay back later with cheaper money. Of course, if inflation subsides it can happen that debtors and creditors, ie fanners and co-operatives, are left on the verge of ruin. It is this one factor that makes us doubt, when it really comes to the church, the willingness of the Government to really attack inflation because, if they do, many people who are overextended with debt have got a vested interest in inflation right now, and are obviously going to get hurt. Therefore, stopping inflation is going to hurt many people. I appreciate that this is not something that the hon the Minister can attack on his own but we hope that he will use whatever influence he has at Cabinet meetings and on his colleagues to emphasise the importance of inflation and how inflation is currently devastating the agricultural sector.

The fourth point I wish to raise is the question of agricultural policy. On this issue I will reply briefly to what the hon member for Ceres said earlier today and also to what the hon member Dr Odendaal had to say. One of the problems with our agricultural policy, as I see it, is that policies in the past have been aimed at the symptoms of the problems in agriculture and have often not been aimed at the root causes of our problems.

One of the main problems in agriculture is the low return on capital and management. This has not only been the case in recent years because of the drought and the poor crops. I have been working on study groups for long enough to know that there has always been a low return on capital on and management in agriculture. The natural reaction from fanners to overcome this has been to ask for higher prices—obviously higher prices result in higher returns—and by that mechanism to somehow increase profitability and increase the return on capital and management in agriculture. However, by increasing prices above a market equilibrium level we have distorted clear signals which the market has given us. We have also caused a misallocation of resources and the necessary adjustments have not been made to agriculture. Our problem is that we have too many resources invested in agriculture. Policy should actually be aimed at removing resources from agriculture so that the resources left behind yield a better return.

These policies of increasing prices have of course stimulated production. This has led to surpluses and then we are saddled with the problem of trying to export many of our surpluses at a later stage at a loss.

In a nutshell then, what should our policies be? Firstly, we must design policies that will allow adjustments to take place and that will allow and encourage resources to move out of agriculture. The first area that I would like to identify in this regard is taxation. The point has also been raised by my colleague the hon member for Albany. Tax incentives may often encourage people to invest in agriculture for reasons other than farming. Here I can mention the special write-off provisions that farmers have. I hasten to add that we are not against a levelling system of tax in agriculture because of the variability of output. We are on record in the past as saying that we are very much in favour of a levelling system.

Order! I regret to inform the hon member that his time has expired.

Mr Chairman, I rise to give the hon member for Pietermaritzburg South the opportunity to continue his speech.

The hon member for Pietermaritzburg South may proceed.

Mr Chairman, I would like to thank the hon Whip for allowing me to continue.

The first mechanism that we should look at for removing resources out of agriculture is the tax system.

What about capital? That is also a resource.

Yes, that is a resource. I will come to that in a moment. This topic was covered by the hon member for Ceres earlier today. He said that we must look at some way of accumulating capital in agriculture. The only way in which we can accumulate capital is to increase profits, and that one does by increasing one’s returns on capital.

We believe that we have too much capital invested in agriculture right now and policy should ensure that we do not encourage further investment in agriculture at the present time.

Are you arguing that we have an overinvestment in …

… agriculture? Yes, I am arguing that.

The second set of policy measures which I believe we should look at is to reduce the risk factor in agriculture. That is one of the biggest problems in agriculture. We on this side of the House have made an appeal in the past to the hon the Minister to investigate a futures-type market. The hon the Minister replied to me on this subject last year and I had a careful look at what he said. I am not saying that the hon the Minister was wrong but I still believe there is some merit in having a look at a futures market. There are certain modifications that can be made to the system. It will not cost us any money because there are many good academic brains in the country who could undertake such a project and they could very easily report back to the hon the Minister. I appeal again to the hon the Minister to appoint a small committee—it can be a private committee—to look at the feasibility of this idea with the view to reducing agricultural risks. It does not have to operate on exactly the same basis as the Chicago Board of Trade; there are many modifications and variations of it. We would like to have this investigated as a policy package for future agriculture.

Finally, I would like to make brief mention of the one-channel, fixed-price schemes. A futures market will obviously not remove all risks. Prices should be allowed to fluctuate, and I feel it is very important that this actually happens as fluctuating prices have one result that we do want—the stability of incomes. In poor times prices should be allowed to rise so as to compensate farmers for poor crops, and in good years prices will obviously drop. Fluctuating prices in the long term also cause resources to be allocated to the correct areas so that there is no distortion in resource allocation.

The four points I have raised relate to longer-term policy, but what is to be done now? We need a very clear commitment that we are going to put the problems of agriculture right. Agriculture itself is obviously not going to be able to repay the debt I mentioned. Somewhere along the line somebody has to pay. We on this side of the House believe that the market mechanism should be allowed to work. This might seem rather harsh and some farmers and co-ops will be hurt in the process, but I believe we can do here what has been done in other countries. Imaginative schemes should be designed that can help the people who are hurt. I think, for example, of relocation allowances for farmers, special training programmes and even direct grants and subsidies for those who are too old to do anything else. We do not like the fact that some people will be hurt, so we must find a way of helping them.

Increased prices and subsidies are not going to help in the long run. We also do not think that the taxpayer should help, unless it is clear that his contribution is going to result in a long-term solution.

What I have suggested may sound rather harsh but there are ways of overcoming this. What we do need is a very clear determination to deal with the root problems of agriculture.

Mr Chairman, we welcome it when hon members highlight the problem areas in agriculture and submit ideas to assist the hon the Minister in a period which is a difficult one for our industry. The continued existence of many of our fellow-farmers is at stake, and that is why we are very much in earnest in discussing these problems today. We must not be oversensitive regarding criticism, and the will to welcome positive inputs must exist.

We on this side of the Committee are fully aware of the problems in the agricultural sector at the present stage. We are very pleased to see that the farmers and the cooperatives are beginning to offer increasing resistance to the exploitation that does exist. The difference between the sum of money the producer gets and the price paid by the consumer is one of the things the farmer cannot be blamed for.

I see the contribution of the hon member for Pietermaritzburg South in this light. We admit he is an expert in the sphere of agriculture, and I think the four points he advanced are indeed the problem areas we have to consider in this country’s agriculture.

The last assertion he made was that the producer should be subjected directly to the free market, but it has been proved in the past that this caused misery for agriculture and the farmer. We shall have to retain a degree of protection in an industry which is subject to agricultural conditions over which the farmer has not control, but caution will have to be practised in that respect.

I should like to express a few ideas specifically about the red meat industry. The beef producer is probably going through the most difficult period this century. During the past five years of drought the shoe has begun to pinch, and one must now look critically to obsolete practices, as other hon members said too. Practices that have to be subjected to a close scrutiny are inter alia the present marketing scheme, the associated rules and regulations, the increased production and marketing costs, the import of meat from neighbouring states, the national grazing strategy, the research into and consumption of red meat, the allegation that red meat is a health hazard, and the per capita decrease in the consumption of red meat.

Between 1972 and 1982 our country’s population increased from 23,5 million to 30 million. The cattle herd decreased during this period, however, and at present numbers less than 8 million. This is mainly the result of drought and of farmers’ higher financial obligations. The consumption of red meat increased, however, from 160 000 tons to 500 000 tons in the same period. This is a considerable increase in consumption. The per capita consumption decreased during this period, however, from 24,9 kg to 21,2 kg per annum. In addition, a decrease in the red meat consumption of Whites took place. [Interjections.] My colleague, the hon member for Rustenburg—I do not know whether or not he is a good friend of ours— asked about cholesterol. We must talk about that too.

At the moment the Blacks are the greatest consumers of red meat in our country. In 1970, 60% of the red meat was bought by Whites, while only 40% of the red meat is bought by Whites at present. In our future marketing planning we shall have to concentrate on the non-White market in particular. We shall have to take their living and working conditions and circumstances into account in the planning of marketing outlets.

At present there are 6 158 retail butchers in our country, but 5 718 of them may not prepackage meat. Only 440 or 7% of them have the right to do so. In terms of their present licences, café owners and general dealers must be allowed to sell prepackaged meat across the counter. All retail butchers must obtain the right to package meat and determine the price so that red meat can be readily available.

Cafés do not need a permit to sell chicken. One of the problems is that red meat is not freely available at present. It should be available to the public everywhere and at all times, and fresh and frozen red meat should be sold freely across café counters at all times.

Meat shortages and high prices can presently be expected in the short term because of the reduction of stock numbers as a result of the drought. To ensure that sufficient quantities are available, we will have to continue importing red meat from neighbouring countries as is the case at present. The trade agreements are an important reason for this recommendation.

I want to conclude by saying that the most valuable possession of the red meat industry and of the cattle farmer is the pasture. Pasture must be used with great discretion. Fewer cattle of a better quality on better pasture will place the producer in a better position. The national grazing strategy must be seen as a measure to increase the farmer’s net income and not to decrease it. In addition, established pastures can give red meat production a boost in that the number of cattle can be retained while the natural veld is given a chance to rest.

Mr Chairman, we listened to a number of very serious speeches this morning. One cannot but again the impression that each hon member who rose here this morning to speak about agriculture, really did so with great earnest. Nor do I believe anyone can dispute the factual statements made here. I listened well, and I could not catch any hon member making a statement which was untrue or with which I could not agree. Unfortunately I do not have the time during the 10 minutes I am going to use now, to respond to individual speeches.

To begin with, I want to associate myself with the hon members, and there were a whole number of them, who expressed their thanks towards our officials, the Land Bank and the hon the Minister. They proved there is appreciation for what is done. I want to add my thanks to organised South African agriculture. In the past two or three years they have made exceptional efforts to achieve something for their members and to facilitate the task of those of us in the Ministries and the departments of Agriculture and to make it possible for us to take certain decisions. The relationship between the Ministry and the department on the one hand and the South African Agricultural Union on the other hand, is excellent. We always look forward to regular meetings with them.

I also want to express my appreciation towards the marketing boards, known earlier as control boards, and their staff. We are aware that especially those marketing boards which have to sell our products abroad have had to do their work in notably difficult circumstances recently, as is still the case now. Without any exception, the marketing boards which operate on the overseas markets, deserve our praise and appreciation. I am absolutely convinced that when this difficult period has passed, we and all our industries will be much better marketers than was the case previously.

†The hon member for Albany referred to the crisis in the South African agricultural industry, and he also pointed out that South Africa does not find itself alone in this situation. He mentioned countries like Australia and Canada where there is a similar crisis. I cannot remember all the countries he mentioned, but if I wanted to I could add a whole list of them, including the EEC and the USA. All of these countries are experiencing an agricultural crises to varying degrees.

*One wonders why agriculture is experiencing a world-wide crisis. If I were to answer that, my answer would be a dual one. In the first place, we tend to forget that there is something such as an economic cycle. Whether or not we want to know it, we are at a very low point in this cycle at the moment. We are not the only ones in that position, however. The whole of the Western world has experienced a similar slump. We do not know how long we will be in this trough. It is also true, however, that the cycle has a greater effect in agricultural economics than in other industries. That has always been the case. That is the one reason for our agricultural crisis. We cannot get away from it. Some people say, with all the modern mechanisms at our disposal, that this cycle should have been sorted out a long time ago. We have not yet succeeded in doing so, however, and we simply have to accept that.

The second point is that our problem started shortly after the Second World War. It is an old problem, therefore. What happened? After the Second World War, almost all the countries in the world told themselves they never wanted to experience a food crisis situation again. Everyone got a great fright too, when a group of 10 met in Rome a few years ago—I cannot remember the exact date anymore—and decided the world had sufficient food left for only 16 or 17 days. The people remembered the theory laid down by old Malthus in the 17th century, viz that eventually the world would come to an end as a result of a lack of food. The Western countries told themselves they had to prove to Malthus wrong. What did we do? Schemes were designed by governments in all Western countries to stimulate food production. Those schemes were subsidised and governments spent money on training and on research into new techniques, etc, with the sole purpose of producing more food. We succeeded very well. The whole world’s agricultural industry succeeded very well in producing more food.

Something else happened at the same time. The economies of those people who were actually supposed to buy the food, the Third World countries which have such an immense shortage of food, collapsed. The buying power disappeared, and today we have surpluses.

In addition it is interesting that the problem we identify with reference to our agriculture in South Africa, viz a price ceiling for products on the one hand and rising input costs on the other, which threaten to crush one to a pulp, is exactly the same problem the Australians, the Americans and the EEC have. They have the same problem.

In the minute I have left, I want to broach another matter quickly. This afternoon several speakers pointed out the impossibility of a complete free market system as far as agriculture is concerned. I want to make it very clear that it has never been the idea of either the hon the Minister or the Government to establish a complete free market system. Perhaps there is a perception in the public at large that we want to do away totally with these regulatory measures we have. That is quite wrong, however. That was never the idea.

This department administers 25 regulatory Acts—they are all of a regulatory nature— including the Marketing Act. What is the purpose of all these Act? The purpose of these Acts is to support agriculture. That is the purpose in respect of agricultural standards. One cannot maintain standards which are so essential, particularly if one has to compete in the outside world, unless one has the regulatory measures to do so.

I am talking now about standards in respect of the product itself as well as standards in respect of marketing actions. The Chileans, who give us strong competition in Europe, were here a while ago and they told us they had the production, but not the marketing system; they envied us for having a marketing system.

We must also take regulatory action in respect of the health of our cattle, which is important in respect of the preservation of our resources. We need regulatory measures. We do not want to have an unnecessary number of these, and if we can do away with unnecessary things, we do so. Some of them are absolutely essential, however.

We have all become masters in identifying problems. It does not matter whether they are agricultural or political or whatever; everyone knows how to identify the problems.

We are also spelling out the problems we have identified from all sides of the Committee today, but the great challenge is solving those problems. That is why we welcome practical recommendations, whether they come from our own ranks or from the side of the opposition, on how we can deal with the problems.

Mr Chairman, I should like to agree with the hon the Deputy Minister that this debate is being conducted in an attitude of very great seriousness and that contributions are of high quality.

In the first place I should like to put a request to the hon the Minister. After reading the minutes of the Standing Committee on Finance, it appeared to me that if my colleague the hon member for Barberton’s motion that subsidies and import losses be transferred to another department because they actually represented consumer subsidies were rejected, I should request the hon the Minister to effect an amendment to certain figures appearing in the Budget next year. According to the minutes, R110 million of the R249 million indicated as a maize price subsidy in last year’s figures was required to cover import losses whereas such an item actually appeared in that specific Vote. Only R40 million of this year’s maize subsidy of R119 million is actually such a subsidy; the rest of the finance is to be applied for import losses, repayment of loans and so on. If that figure could therefore be reflected in the Budget in that way, it would facilitate the study of these matters. My request to the hon the Minister is to see whether he could effect this.

I think it has become clear up to this point that the greatest problem manifesting itself in agriculture today is the enormous escalation in input costs. From 1984 to February 1986 cropping input costs increased by 36% for instance, whereas prices remained constant.

Before reverting to this, I wish to say that today and previously it was pointed out that the amount appropriated for agriculture had, decreased. Speakers on the opposite side of the Committee indicated that this should actually be attributed to lower subsidies, the revolving fund and the application of funds after the damage suffered in consequence of Domoina.

In the first place I wish to say that if subsidies had been omitted from the hon the Minister’s appropriation this year and last year, the appropriated amount in round figures would have remained constant to within one million rands because subsidies declined by R158 million and the total appropriated by R157 million; the amount appropriated therefore actually remained the same.

I wish to say something in general on subsidies. Not one of us likes subsidies and it would be ideal and wonderful if the entire economy could function without a single subsidy. This must be the ideal for which one strives but it is true that subsidies are not paid only on agricultural products; there are subsidies in various other spheres, as transport, housing and many other affairs come to mind. All the other subsidies are increasing; Government appropriation for all other subsidies is rising but the one subsidy excepted is that on agricultural products.

Consequently, in the light of the enormously high input costs and our experience of the worst drought this century, I wish to ask the hon Minister why that decision was taken now. I believe there would have been better times to do this. Why agriculture and not the rest?

I therefore wish to say to the hon the Minister in all seriousness that this is an indication and actual proof that agriculture is the first victim of the policy of redistribution of income. I believe hon members of the Government party are democrats, they are entrepreneurs, as appears from the discussion today, so I wish to point out that agriculture is the first victim of this and more victims will follow as a result of this.

As regards Domoina, which is put forward as a reason, I want to say this took place in a single day and people’s entire possessions were obliterated in one fell swoop. Drought took five years in certain parts of summer grain areas and especially western maize-producing areas to do what Domoina accomplished in one day. Because it took place over five years it is not as visible and there is no sympathy.

I learnt yesterday that steps were being taken to evict 172 farmers between Hartbeesfontein and Lichtenburg. I assume that was decided before the hon the Minister’s colleague spoke to the banks; I hope so. I wish to take this opportunity to thank the hon the Minister that he spoke to financial institutions and I hope no steps will be taken against these people as a result. If it should happen that only a quarter of these farms come onto the market, land prices would hit rock bottom. At compulsory auctions of farms these are already almost a third of what they have been; these prices are going to hit rock bottom and all farmers will be insolvent. Neither will it end there; it will affect all industries supplying agriculture and those processing agricultural products. We could then experience a collapse in South Africa worse than that of 1933.

In consequence, I wish to request that discussions be held with not only banks but other financial institutions. I again want to request that the matter of the moratorium be examined; I know this has to take place in individual cases but we are experiencing disaster here—a Domoina spread over five years. When a disaster like Domoina takes place, the entire population is dismayed; everyone is dumbfounded by the losses which have been experienced. The drought situation takes place too slowly and people are not as aware of it. As soon as we regard it in this way, it will be possible to organise teams, conduct surveys and take all kinds of steps. My question is therefore whether it is not possible to apply special measures to enable applications to be submitted and negotiations held with creditors. Not all people are going to be involved in this; it will affect only a certain number as I am referring to those farmers who have no more collateral.

Thirdly, I wish to repeat that I believe representations from the SA Agricultural Union should be regarded very seriously. I am not implying hereby that we support price freezing but we do say we think it should be examined; it should be investigated. The SAAU requested inter alia that a conference be held to examine this. I think it is worthwhile again to institute an expert, thorough inquiry into the matter of a temporary price freeze under correct conditions and in certain changed circumstances in South Africa. This does not mean only a price freeze of input and production costs; it means that all prices should be frozen temporarily, salaries too—everything.

The reason for my saying conditions have changed is chiefly of a twofold nature, the first phase of which is the inflation rate which is running at 20% and above at present. Every economist says and knows that when that level is reached, it becomes exceptionally dangerous because matters can get out of hand and become uncontrollable. In the light of this alone there is good reason to attempt establishing whether this is not worthwhile.

Because our trading partners’ inflation rates are low at the moment, one may assume that there are changed circumstances. That is the second facet of my reasoning behind this statement. I believe the most important argument which may be put forward against price control is that a damming-up takes place if prices are controlled while inflation escalates overseas. The moment price control is lifted, the wall bursts as it were and one is exactly where one would have been if it had not happened. Of course, this case is different. [Time expired.]

Mr Chairman, the hon member for Lichtenburg will pardon my not responding to his speech. I wish to use the time at my disposal to comment on the wool industry and perhaps to paint a more positive picture of it.

In comparison with the total agricultural sector, the South African wool industry is currently experiencing an exceptionally good season for the second successive year. The record proceeds of R402 million for last year’s clip meant a real increase of 25% in the price of wool for the first time in many years. Although as in the previous season exchange rates caused wool prices to soar to new record levels during the first half of the current marketing season, the hardening of the rand has caused them to plunge again since the beginning of the year. The extensive drought over the past number of years in most wool-producing areas has caused a decline in the numbers of wool sheep, particularly merinos, with a consequent decrease in wool production. This fell from 107 million kg in 1982-83 to 98 million kg during the past season. A further decrease to approximately 93 million kg is expected for the present season. Since the beginning of the season there have been good rains over most wool-producing areas and the number of drought-stricken areas has actually dropped from 193 in 1983 to 45 in March this year. It is hoped that a higher production per sheep owing to improved grazing conditions will result in an increased clip next season.

The present marketing system for wool has been current for 14 years. Thanks to the inherent flexibility of this scheme, changes may be made continuously to keep pace with the rapidly changing conditions on international markets with a view to marketing wool as cost-efficiently as possible for the farmer. Like any export producer the wool industry has recently had to face up to fluctuating exchange rates which continually demand quick decisions to gain maximum advantage from the market.

At present South Africa exports more than 80% of its entire wool clip and the industry works very closely with Australia, which produces similar wool, in fixing the international reserve price on wool. It therefore follows that domestic wool prices are not only influenced by the rand-dollar exchange rate but also by the movement of our currency against the Australian dollar and the monetary units of the countries purchasing our wool. Thanks to intensive efforts by the Wool Board itself and in co-operation with the International Wool Secretariat, the wool industry has not experienced any problems in selling our wool so far regardless of the dramatic political and economic developments of the past year.

This season wool prices were almost 32% higher during the first half of December last year than in the corresponding period last season chiefly owing to the weak rand. Following the hardening of the rand since mid-December, wool prices have declined perceptibly but they were still 17,4% higher at the end of March than during the previous season. The Wool Board increased the advance payment to producers early in January this year and made an interim payment of R37 million to wool producers. This decision is in accordance with Wool Board policy to pay the producer his money as soon as possible.

Wool remains one of the few agricultural products which may be exported profitably. In the case of other agricultural products we are facing either surpluses in the world market or prices have increased to such an extent domestically that is is unprofitable for us to export production. The past two years’ drought indicated how vulnerable agriculture was regarding food production. If one examines the prospects of our grain industries in particular, it is clear that sales on the international market seem anything but promising.

Against this, farmers running sheep for wool experience no problems with their two products—wool for export and meat for the domestic market. I may say in this regard that the inclusion of wool sheepfarming in traditional grain-producing areas in contributing largely to stability there. The inclusion of the stock factor will not only spread farmer’s risk but it can also make an important contribution to the improvement of their cash flow position. Thanks to the marketing scheme and strong stabilisation fund of the industry which currently stands at R105 million, the industry could succeed in great measure in minimising the influence of fluctuations in the world market to individual producers.

I have already pointed out that over 80% of our clip is marketed overseas annually. One of the most important reasons for our successful competition against the larger wool-producing countries like Australia is the good name our local clip has established for itself over the years. Thanks to our good classing and preparation, our wool is still in good demand worldwide and it often happens that we even earn a premium for our wool above other countries.

Export earnings of the wool industry amounted to R420 million last season, as I have already mentioned, which means the contribution of the industry to agricultural exports increased by almost 23%. Expectations are that total export earnings will be even higher this year. As the wool industry depends very little on imports, this means exceptionally valuable net currency earnings for the country especially under current economic conditions.

Unfortunately this positive picture of the industry which I have just sketched has a negative side as well. The industry is one of the founder members of the International Wool Secretariat which acts worldwide to promote the demand for wool and carry out research and development work. This organisation is financed chiefly by wool farmers from partner countries and in some cases with Government assistance. Wool farmers in South Africa pay almost 4% of their gross income to the IWS.

Nevertheless it is true that the weak rand which benefited the local wool market contributed to a considerable increase in international obligations for the industry. The obligations of the industry to the IWS for the current season will rise to almost R20 million this year—that comprises 4,8% of our total exports and equals two thirds of the total budget of the Wool Board.

Although the State has agreed to contribute to expenses incurred abroad by the industry, this will be only 14% in effect during the 1986-87 financial year in consequence of the rand-collar problem.

A further negative aspect is that the Wool Board is one of the numerous organisations in the country saddled with a foreign loan but the dilemma can be handled thanks to the fact that the wool industry is export-orientated. This loan was taken up in times of poor wool prices and high domestic interest rates and originally meant large savings for the industry. The dramatic weakening of the rand decreased the initial advantage; so far no loss has been realised and the advantage will still amount to approximately R10 million at the end of the season. [Time expired.]

Mr Chairman, we know the wool farmers are the people who have struck it lucky because at the moment fine wool is certainly one of the most profitable branches of farming. Furthermore, they have the added advantage of their mutton, of which we cannot produce nearly enough. I think the fact that the wool farmers are so successful is to some extent attributable to the fact that their industry is well organised and that their product is well marketed.

†I want to speak to the hon the Minister in his capacity as the Minister who is responsible for the general affairs aspects of farming. In that sense he is the senior Minister on agriculture. We in this party do not like the tricameral Parliament at all but since he is responsible for agriculture in general I want to turn his mind to that more particularly. Thus far in the debate—this happened last year as well—the difference between this discussion and the debate on the responsibilities of the hon the Minister of Agriculture and Water Supply—the Minister for White Agriculture—has been difficult to distinguish.

The White Paper on Urbanisation has this week been given to South Africa and this House. I believe it is a paper which should concern agriculture very seriously. In fact, in paragraph 6.13.2 it says:

It then goes on—I do not have time to read everything in ten minutes—to mention a number of other areas where the State President will expect the Minister responsible for agriculture to promote development. It also says in paragraph 6.14:

Obviously one hopes that they will be successful.

I believe that the hon the Minister needs to consider this matter very clearly because throughout this White Paper, particularly in the sections dealing with development and rural development, there is constant mention of a strategy or a plan.

I have just been rereading the White Paper on Agricultural Policy which the hon the Minister’s department produced and it seems to me that there is a need for the hon the Minister to consider investigating from his point of view the whole question of rural development. I want to suggest that if he does decide to institute such an enquiry— and we have not had such an enquiry since the 1930—he should give absolute priority to such a report for the following reasons. Firstly, urbanisation is going to bring enormous development and a demand for agricultural products which should be maximised. In our new towns and in our new cities there is going to be a fantastic growth in demand for agricultural products—not just for food but also for development and construction.

Secondly, development which is agriculturally related can come—this is referred to in the White Paper on Agricultural Policyin smaller towns and large villages so that the smaller towns can become big towns and the large villages small towns. The White Paper on Urbanisation stresses the fact that if urbanisation is going to succeed one needs a reasonably big town which can offer urban facilities. Development can come in towns such as Harrismith, Aliwal North, Greytown, Mtubatuba, Bergville, Somerset East and Matatiele—one can list many of them— which are smallish towns and where an urbanisation strategy can be applied.

Paragraph 9 of the hon the Minister’s White Paper on the Agricultural Policy of the RSA stresses agriculture’s contribution to regional development. I believe that this hon Minister should act swiftly to appreciate that the White Paper on Urbanisation can propel South Africa within one generation into the 21st century. It can generate development and opportunities which are undreamt of for this country.

The third reason is that farm labourers will now be free to leave farms if they do not want to stay there as they will not be subject to influx control. I believe that it is the responsibility of the hon the Minister to consider how conditions on farms such as schools, transport, health and community facilities can be improved and provided.

The fourth reason is the most important one and I believe that the hon the Minister and his department will have to stretch their minds on this issue because it is a new development. The population pressure on the overcrowded but fertile and potentially highly productive homeland areas in the eastern parts of our country particularly, will be reduced as people leave for the towns. This will improve the opportunities for agricultural development. Thanks to the sensible new policy a paragraph in the White Paper on Agricultural Policy will be contradicted. Here the hon the Minister says:

The hon the Minister must listen to what I am going to say.

I am listening!

Or course there will have to be vertical expansion among the White commercial farmers. I am addressing the hon the Minister of Agricultural Economics as the hon the Minister for general agricultural affairs who is responsible for the broad agricultural needs of South Africa and not just the White commercial farmers—the hon the Minister of Agriculture and Water Supply for White affairs looks after that. It is the responsibility of the hon the Minister of Agricultural Economics to produce more farmers who will now have more land to feed more people.

I believe the key is that the hon the Minister must apply principles of commercial agricultural policy in these areas. One has to get rid of one’s colonial mentality because if one reads paragraph 10 on page 10 of the White Paper with the heading “The Promotion of Agricultural Development in Southern Africa” one finds that it smacks of a colonial mentality. Bilateral talks are mentioned and the attitude is one of “we will give them advice”.

What we have to say is that those Blacks farmers—most of them will be Black—are our farmers who must be drawn into our commercial agricultural sphere. Then I believe we can produce enormously increase quantities of food in these areas.

I believe that the hon the Minister should appoint a commission as a matter of urgency to develop a strategy which will exploit the enormous opportunities for rural agricultural development which the Government’s urbanisation policy will produce. I know that it is soon for the hon the Minister to give a statement but in terms of the White Paper on Urbanisation he is instructed to do certain things and I believe that he owes South Africa a response so that we can know how this department is going to respond to that. [Time expired.]

Mr Chairman, I want to react briefly to the ideas expressed by the hon member for Pietermaritzburg North on the role agriculture has to play in regional development and decentralisation. In this entire strategy the position of agriculture is structured in such away that it is in fact making a contribution to the process. It is not really necessary for me to quote from a document about what agriculture should do. Agriculture has already been incorporated into the process. In this respect agriculture makes its inputs into the regional development advisory committees—the so-called RDACs. People from the agricultural sector serve on these committees, which make inputs on available resources for agriculture and the potential for expansion, so that community development is also able to take place in the rural areas.

I want to elucidate this point further. I think South African agriculture is playing a tremendously important role in the rural areas in creating a community life for Whites and non-Whites. One need only think of the part agriculture is playing in the provision of education through farm schools. I am aware of the fact that many of our farmers have modernised their labour relations by establishing their own advisory committees in order to become involved—as it is expressed— in activities and development among their labourers. Agriculture definitely plays a very important part in this connection, but this is perhaps a debating point we can argue further at a later stage. I just wanted to react to this, because the point which the hon member mentioned is very important.

I should like to refer to a few general matters, the first of which is the question of the input costs. We are fully aware that this problem is accumulating very rapidly, particularly so during the past two season’s and to such an extent that inflation in agriculture at present is far higher than the rate calculated on the basis of the consumer index. There is no doubt about this; the figures are available.

Another fact in this connection is that the gap between gross and net income is widening all the time. In other words, one’s gross income rises, but one’s net income remains level; or rather, it is declining.

Therefore the problems in agriculture are systematically becoming bigger and bigger. Perhaps the hon member for Lichtenburg made a good statement by saying that the situation was not the same as it was after the Domoina disaster, because we were actually dealing here with a creeping situation. For five years it has gradually been creeping up on a person. When we introduced the first aid schemes—the 20 plus two years—we believed that the rains were going to come again the next year. We then extended the schemes. We even enlarged and adapted them, but again it did not rain. In some places it still has not rained after the fourth or fifth year. In some way or another we shall have to start taking drastic steps.

One of the steps we have to take, is to look into this problem of input costs. What happened in the economy? Because we have a low turnover of agricultural products and agricultural input supplies, the competition in this sector has also declined—so much so that if an analysis is made of the fertiliser industry it will be found that only two large firms in South Africa are manufacturing nitrogen. It will be a little difficult to understand how they can compete with one another in a free market system.

We shall have to look into such matters, and that is why the Cabinet Committee has discussed this matter in depth. The hon the Deputy Minister who spoke here made a lengthy study of certain facets which make in imperative that we look into this matter now. That is the background to the Press statement which I issued in conjunction with the hon the Minister of Trade and Industry.

I think one of the hon members asked whether it was solely the task of the Ministers of Agriculture to look after this matter. No, it is not our task only. We are co-ordinating properly, and on 29 April, I think it is next Monday or Tuesday, we are having a joint meeting with the SAAU, the hon the Minister of Finance, the hon the Minister of Trade and Industry and the Ministers of Agriculture, under the chairmanship of the State President, inter alia to discuss this very difficult problem. The hon the Minister of Trade and Industry telephoned me to say that he had now formed an interdepartmental committee on which members of his department, or rather the Council for Trade and Industry, as well as members of the Department of Agricultural Economics and Marketing would have representation.

It is no use simply checking the invoices of the suppliers, one must check that invoice at the outlet point, at the co-operatives and the shops where the farmers buy. These are the places we shall have to investigate, and the investigation is not all that simple. We want to try to dispose of this matter as quickly as possible.

This problem emerged this year during the Lanvokon Conference when Prof Cassir— Lanvokon requested him to give specific attention to this matter—arrived at the conclusion that the prices of agricultural machinery in particular had recently risen to such an extent that they were not even reconcilable with the exchange rate in South Africa. It therefore appears that many of these price increases can be tied in with the motivation of companies simply to push up the prices because South Africa imports are affected by the unfavourable exchange rate. At this moment there is nothing which upsets our farmers more and hurts agriculture as much in the short term as input costs. This is a matter of great concern to the Government.

I had expected more ideas to be expressed on the matter of the free market. We have been hearing about this for the past two years. I really want to request that we understand one another clearly now about what our standpoint should be in respect of the free market in agriculture. There is no such thing in South Africa; there is no such thing in America and there is no such thing in the EEC either. Nowhere in the Western World does it happen that one does not have some form of State interference or other in agricultural marketing. That is the way it is in South Africa, and that is the way it will remain.

We have a Marketing Act, and it is a good Act because it has been examined several times and is constantly being amended. Let us leave the Marketing act aside, however, and look at the individual schemes. The National Marketing Council is at present engaged in its investigation and I hope that we shall be able to table what will probably be quite a few of these amended schemes next year, so that we can debate the meat scheme, the wool scheme, the milk scheme and the rooibos tea scheme with one another. There is State intervention at various stages and in various ways in all of them, and in regard to some of them there are even built-in subsidies.

Before the proceedings are adjourned for lunch, I want to say that we have problems with the one channel fixed price systems. I am talking about maize and wheat. There is no doubt that we will have to make ceratin adjustments. We have been caught napping by the question of cost-plus, and by the market. I hope the time passes quickly, otherwise I might say a dangerous thing now.

Go ahead.

The market-oriented price—please not, I am saying the market-oriented price—of yellow maize is at present not R225. Let us admit this candidly to one another. The loss we are suffering on the export of yellow maize at present, amounts to R100 per ton. The exports barely realise R100 per ton. Secondly, maize is no longer able to compete. Maize is no longer able to compete with grain sorghum on the stock feed market, nor with barley and third-grade wheat in the Western Province. This is a fact. It is unfortunately a fact, and I am myself a yellow maize producer. We are going out of the market. Thirdly, one must ask oneself whether the time has not arrived to reconsider the maize subsidy. Specifically, yellow maize must also be subsidised.

Business suspended at 12h45 and resumed at 14h15.

Mr Chairman, before business was suspended, I had observed that our marketing problem was mainly inherent in the fixed price systems which we developed over a very long period in South Africa. To do away with these fixed price systems now would actually be a mistake, particularly because agriculture at present is very sensitive owing to the financial situation in which it finds itself at present. Most of these fixed price systems, such as those applicable to wheat and maize, are systems that are 50 years old. The entire structure of our agriculture was therefore developed around this system. I am thinking for example of the grain silo industry in South Africa, which provides storage facilities for approximately 15 million tons of all types of South African grain. These silos have been constructed at specific, strategic places, and if one were to change the system, one must bear the infrastructure in mind and therefore be very careful about how one is going to deal with the situation.

I should like to react as well as I am able to a few of the speeches made by individual speakers. As usual the hon member for Albany made a very positive speech. He pointed out to us the tremendously difficult circumstances in which agriculture finds itself at present. He wanted to know where agriculture was going. We shall have to formulate a policy which can be put into operation over the short, medium and long term. He then asked whether the co-operatives must blow the whistle again. If I understood the hon member correctly, that is what he had in mind.

I asked what would happen if they did.

Yes. I think the hon member made a very important observation; more important perhaps than he himself realised.

The co-operative movement in South Africa is so firmly established in the agricultural sector that we shall quite simply have to accept it the way it is, with all its faults and failings. For example if one considers the services rendered today by the agricultural co-operatives in connection with the provision of agricultural requisites along, one finds that the amount involved in that aspect alone in 1980 was R1 478 million. In 1984 this amount rose to R2 533 million. What makes this statistic even more important is the fact that the debits, that is the money the members owe the co-operatives, expressed as a percentage of the turnover in farming requisites and services, was 56,2% in 1980. In 1984 it had increased to 88,1%. This demonstrates that the members’ debits during this period must have increased tremendously. If something were to go wrong financially with the co-operatives today, we would have complete chaos in this country. The amount which members owe the co-operatives at present totals more than R2 000 million, and if the co-operative’s members had to be liquidated, it means that this amount is an asset of the co-operatives that has to be realised. This would mean the liquidators would have to buy out the farmers to be able to realise these funds. Thus the co-operatives are deeply involved in this matter. We shall not be able to help agriculture if we do not also help the co-operative movement.

I want to admit at once that under the circumstances the activities and managerial ability of some of the co-operatives do perhaps fall short of the mark, but we are investigating the position and we regard it in a serious light.

I think the hon member for Ceres also referred to the co-operative movement. I have the statistics in front of me. The position of their own fund has weakened tremendously in recent times. The statistics I have are only average figures. I have not even abstracted the statistics for the summer cereal areas, but the fund of the overall co-operative movement in South Africa stood at 31,5% in 1980, which was at least not too bad. It has declined, however, and at present it is 28,6%. The position of the movement’s own fund is therefore deteriorating, and many of our co-operatives have a liquidity problem. I think the co-operatives must play an integral part in the building up of agriculture in South Africa.

The hon member referred to a very important facet, and I should like to react to it.

The hon member spoke about land prices.

If I understood him correctly, then what will happen the moment one begins to combat inflation in South Africa and one succeeds in containing it, is that land prices must inevitably drop. If land prices drop, this affects the solvency position of the South African farmers, which is their security. After all, we know that most of the more than R40 000 million invested in agricultural assets today consists of land and fixed investments. If such a situation were ever to develop, one would have to examine it very carefully. I can just inform hon members that I received the American figures during the lunch break, which are as follows:

The problem at the moment in the USA is that farmers are leaving the land on a large scale, precisely as a result of the fact that the most important asset of the farmer has been jeopardised.

The hon member for Ceres discussed the economic viability of agriculture and referred in particular to the capital formation capacity in agriculture, which is very low at present. He referred to various methods. He pointed out inter alia that we would have to consider tax-free investments, which we have been arguing about for years. The Margo Commission is looking into this matter at present. My information—and I think the hon member knows this—is that there are some difficulties and certain problems in this connection. This type of system was apparently applied in Australia, and the Australian Government experienced major problems with it because it allegedly afforded people a method for evading tax. Other people therefore invest in agriculture simply to cause this kind of tax evasion to occur. However, I do not think one should always compare the South African situation to that of another country. I think we must develop a system that is adapted to our special circumstances.

The hon the Minister of Finance has already announced that considerable relief is being envisaged as far as the abolition of estate duty is concerned. This is one of the methods according to which the farmers themselves can allow capital development to take place within their own undertaking. There is, however, a third area in which capital formation must occur. It is also a very important area, namely the area of the co-operative movement.

What I have in mind now is the idea which the hon member for Zeerust expressed here, namely that we should see, when the ten years have expired, whether we can effect a further extension of these concessions to the agricultural co-operatives, thus enabling them to improve their capital position so that they can develop their own capital because they are at present experiencing major liquidity problems.

There is a third area as well on which capital formation must take place—an area we should not forget—and that is within the marketing boards themselves. I have had a few years’ experience of marketing boards, and I want to tell hon members that if one has a marketing board which does not have a sound, strong stabilisation fund, one is creating major price risks for the producers who market that particular commodity. [Interjections.] We shall simply have to examine this matter and we shall have to make it a condition that a marketing board may not have a deficit on its stabilisation fund. Otherwise it cannot carry out its function of price stabilisation, and that creates major risks for the farmers. Consequently this is an aspect we shall have to look into very seriously.

I have already mentioned certain aspects raised by the hon member for Barberton—I do not want to refer to them again—but there are others as well to which I should perhaps react. The hon member mentioned the question of the surcharge on tractors. The hon member’s argument was that the object of the surcharge was to create employment. At the same time one is producing, with a tractor that one imports, products—particularly in the case of staple products—which one in turn has to subsidise. This seems to be contradictory.

For many years the hon member has been agitating for consideration also to be giver to the abolition of GST. We know that the argument has always been that one would have the benefit of being able to write off GST as well as the price of the tractor in the same year in which one bought it. Consequently this is a tremendous tax concession. But I know that there are few farmers in the summer cereal regions who are in a profitable position. Consequently this concession will not help. The Margo Commission is at present investigating this matter. Perhaps I should also just mention that the SA Agricultural Union directed a request to the Department of Trade and Industry, via my department, for us to abolish the surcharge on certain imported agricultural products, particularly in respect of inputs. This is being considered at present; at this stage, unfortunately, I am still not able to give the hon member a reply to that question.

I want to tell the hon member that his argument that we should delete the amount for food subsidies from the budgeted amount of the Agricultural Economics Vote sounded like a good argument. In fact, I argued that way myself. The impression is sometimes created that many of these marketing boards and social organisations handle the food subsidies. Actually we are only the post office. We must think a little further. In the wheat and maize industry, food subsidies also have a bearing on the market situation. In this respect I think it suits the control board system that a better assessment can at least be made about the effective subsidies on the market situation. There was many a day, however, when I also argued as the hon member did. I think we must be careful, but I shall nevertheless watch the situation closely.

The hon member Dr Odendaal said agriculture should be more competitive in respect of other sectors, and I agree with him.

I think he also referred briefly to the two-market system, which we were not able to apply. An Nampo pointed out, the application of the two-market system would definitely have been able to bring about, in considerable measure, a solution in regard to the change of structure in the summer cereal area. At present 4 million hectares out of the 6 million hectares of the total summer cereal areas are involved.

If one were to introduce that system immediately, and the situation this year was such that a farmer had to receive a price of R100 per ton for a certain product of his— let us say it is maize—which had to be sold on the export market, there would not only have been a collapse of the market, but a large amount of that maize would have had to be processed into a series of other products, instead of the farmers being able to put it on the market. This would then have created further surpluses. Apart from the method of implementing this two-market system, it was not possible for us to agree to it.

In addition I want to say that with the price gap which is at present opening up between the producer price and the selling price of maize, we are going to have the situation in any event that one is going to hold back a large amount of one’s grain, particularly maize, on the farm. I maintain that the sucking pig and the free-range chicken is going to be seen on farms again, because with the equalisation of the producer price and the selling price during the past decade, the production of poultry and of pigs had become a factory industry. [Interjections.] It is no longer a farming enterprise. What is more, farmers are being subsidised with public money to do this.

This is a movement which is related to the change in the structure of grain-producing regions, and we shall have to watch the situation very carefully.

The hon member for Mooi River, as usual, made a positive speech. He referred to the situation in regard to milk. When we lifted the control measures on milk, a gap opened up between the producer price and the retail selling price. This is a fact. We have had talks with the milk distributors on several occasions. They allege that they had built up a backlog of I do not know how much when we controlled the retail price of milk, and they are now reducing the backlog. Owing to the change in the maize price we shall also have to consider the position of the dairy farmer. We shall definitely have to make an adjustment in their case. It will be interesting to see what these people are going to do. I spoke to a few of them.

What is happening to the market now, however, is that we are at present allowing distributors to enter the market on a large scale. The position we have reached is that it is virtually only the formal registration that still has to be done. According to the policy of this Government we now want to see whether we can deregulate certain of these activities, and we now want to try and make it possible for some of the smaller distributors to enter the market. I can see no reason why every town in South Africa, every little place, should have pasteurised milk which has been packaged in a certain way and transported in a certain way. [Interjections.] We are investigating this matter, and I think this will eliminate the problem to a very large extent.

The hon member went further, and I hope I did not misunderstand him. He said that the marketing boards should be more autonomous. Is that correct?

Yes.

I am afraid the hon member made a rather dangerous statement when he said that. I have had experience of these 21 councils. They are like wild horses. The National Marketing Council has a terrible task keeping these people in check. We always argue that agriculture forms the basis of our economy. If one gives these people free rein however, one is going to have a distortion, not only in one’s production, but also as regards competition on the market. I think it is essential that one should make that co-ordinating mechanism an integral part of the 21 different boards, with all their schemes. I am not saying, however, that there should not be autonomy. We are in the process of rationalising. We have succeeded in bringing the smaller boards under one administration, for example the Potato Board, the Dry Beans Board and the Grain Sorghum Board. There are many teething problems. We are in the process of seeing whether we can do the same with the fruit industries, which are highly developed, sophisticated and specialised industries. But it is not so easy to bring these industries under one administration, but attempts in this connection are being made.

The hon member for Caledon referred to the Davin Report and said inter alia that he did not agree with certain recommendations made in this report. Inter alia he expressed the idea that if one were to abolish the form of control we had at present—which has developed over many years—then one was handing it over to the supermarkets—I think that was the word he used.

I want to say once that we will have to look at the recommendations contained in the Davin Report very carefully. The recommendations in the Davin Report consisted fundamentally of two parts. The first was that one should consider the extent of subsidies, because we had reached a situation in South Africa where we were subsidising the cost of bread by approximately 30%. Because one’s percentage subsidy was so high, and one’s consumption was increasing, the amounts required for bread subsidisation were assuming astronomical proportions. We are talking about R300 million, and if we had not scaled it down, it would by now probably have amounted to R400 million. In that way one reaches a position where it is no longer a foodstuff eaten only by the underprivileged, but one is even subsidising people who do not need it. The Davin Report therefore recommended inter alia that we should move in the direction of direct assistance to communities and places where physical hunger was actually prevailing.

This year we consequently made such an attempt, while the Department of National Health and Population Development created the necessary machinery by means of which these communities could be identified. In this way we helped more than 600 000 people. This is only the initial stage. I think, though, it is a facet which we ought to take further. We are therefore moving in the direction of more direct assistance, instead of allowing subsidies to soar.

The hon member for Pietermaritzburg South raised quite a number of matters. I cannot reply to each one of them separately. Nevertheless I do want to react to one particular matter. Last year the hon member referred to the question of a futures market. We have obtained a great deal of expert advice on this matter. We have obtained the advice from, inter alia, a person such as Prof Bullock, who opened one of our agricultural conferences this year. He is an absolute expert in this field. He examined our entire agricultural marketing system and arrived at the conclusion that our price fixing method—the way in which we determine a price at the beginning of the year for a particular product for that year—does not make it possible at this early stage to establish a futures market. However I want to agree with the hon member for Pietermaritzburg South when he argued that there were definite advantages attached to such a futures market. It can afford people the opportunity to discount specific possibilities in a market. This in turn stimulates people to enter that specific market. Consequently this is a good idea.

I want to conclude by referring to the hon member for Lichtenburg, who is not present at the moment. He spoke about the banks. I just want to mention that the hon the Minister of Agriculture and Water Supply will himself elaborate on this matter at a later stage. He held talks with the banks, and during the discussion of his Vote he will report on this in detail. All he told me was that the talks had been very positive. Consequently I want to thank him for the particular zeal which he displayed in getting those financial institutions together in the way in which he did.

Mr Chairman, I think that covers most of the points that have been raised here so far.

Mr Chairman, if there is one thing sticking out like a sore thumb in this debate it is the seriousness with which South African farmers as well as we who represent them here in conjunction with the hon the Minister and his department view and attempt combating the problem of high input costs. It is truly encouraging to be able to participate in a debate like this and to realise that this matter is viewed seriously.

In the past the small grain industry in the Western and Southern Cape was a reasonably steady farming industry in spite of changeable weather conditions. It was possible to absorb periodical poor years—“dry years” as they are known to us as farmers— by means of income obtained during successive good years which resulted in the small grain farmers being reasonably independent economically.

In recent times, however, there has been great concern in the ranks of this industry because the profit margin is currently dwindling increasingly even in good years—to such an extent that the small farmer can no longer afford to experience poor years. This is a disturbing phenomenon when one notes that the staple food producer who is expected to feed the population at fair prices is beginning to fear his own failure. There is no doubt that continuously rising input costs are the primary cause of the financial dilemma of the small grain farmer. In consequence, agriculturists and agricultural leaders generally welcome the investigation which is currently being instituted at Government behest by the Department of Trade and Industry into the exceptional increased in the costs of agricultural inputs. It was a pleasure to be informed by the hon the Minister today that agriculturists would also be present at that inquiry.

Interesting figures on wheat, as compiled by the Wheat Board on 22 April 1986, run as follows: The increase in production was 8,59% in 1981 and the producer price R241,40 per ton. In 1982 the production cost per ton doubled to R16,49 against an increased producer price of only R275 per ton. In 1983 production costs rose by R13,25 compared with a producer price equal to that of the previous year so there was no increase in the producer price. In 1984 production costs per ton increased by R6,30 and the producer price to R299 per ton. 1985 saw production costs rising to R40,83 per ton as against a producer price of R325 per ton. The increase in production costs therefore ran to 19,9% whereas the rise in producer prices was only 8,7%—and that at an average inflation rate of 16,2%.

The producer price remained unchanged in 1983. In that year the Wheat Board paid an amount of R48 million from the wheat reserve fund to producers to assist in relieving financial implications of the drought—so the farmer subsidised himself.

Important components of production costs include the following: Interest, depreciation and maintenance of fixed capital goods, 33,2%; fertilising, 21,8%; fuel, 11,1%; seed, 7,6%; pest control, 6,8%; labour, 6,1%; sundry, 15,4%.

If we take brief note of the escalation in prices of commodities wheat and barley producers have to face, we see the following increases of which I shall mention only a few. Diesel rose by 30,2% from 1984 to 1985; by 19,6% from 1985 to 1986. Petrol rose by 46,1% and 15,8% respectively in the same years. Fertiliser rose by 29,9% and 41,4% respectively in the same years. Fungicides rose by 12,4% and 11,4% in respective periods. We can continue in this way and prove that there is a phenomenal increase in expenses small grain farmers have to incur to be able to keep their industry afloat.

We find a striking example of the effect ever-increasing input costs have in conjunction with poor harvests on the small grain producer in the recent history of the wheat and barley-producing areas in my constituency. Winter grain producers in the Rûens area of the Southern Cape experienced a poor year in consequence of drought conditions in 1984. In the following year, 1985, the same area was most adversely affected by abnormally rains during harvest. This just shows that we are always bound by extremes in South Africa—droughts which devastate us on the one hand and quite frequently floods and overabundant rain at the wrong times on the other hand which also have adverse effects.

The decline in the quality of grain in the lower unit prices of that produced resulted in a dramatic slump in farmers’ incomes to the extent that the three grain co-operatives involved in the area estimate a total loss of R20 million on one harvest.

We also find unavoidable carry-over debts at all three these co-operatives. The debt of the first co-operative amounted to R835 000 in the 1984-85 season and R3,738 million in that of 1985-86. The debt of the second cooperative rose from R280 000 in 1984-85 to R2,37 million in 1985-86 whereas the third co-operative owed R3,9 million in 1984-85 and R6,3 million in 1985-86. In the 1985-86 year of harvest three co-operatives in this area had carry-over debts totalling in excess of R12 million excluding carry-over debts for the purchase of capital goods.

The question arising from this is whether the entire matter of assistance to producers suffering successive failed harvests in consequence of climatic conditions but in which the situation cannot be regarded as one of general disaster, should not possibly be reconsidered. The fact is that the producers concerned who in most cases do not qualify for the consolidation of debt under the Directorate of Financial Assistance experience serious cash flow problems and their co-operatives are often not inclined to grant them further production credit because of high interest rates. If co-operatives actually do this, it is usually at very high risk. In the light of this situation the furnishing of timeous help to such producers in the form of interest subsidies on their carry-over debts for instance … [Time expired.]

Mr Chairman

Now for a bloodbath!

Look out for locusts!

The hon member says: “Now for a bloodbath” and another hon member speaks of locusts. He is quite right that if there is a little time left at the end I wish to talk to the hon the Deputy Minister of Agricultural Economics about the locusts and the fact that the department failed to take steps against them and so destroyed the economy of a large part of the Karroo.

While I am talking about locusts, I want to complete my point by saying I regret the Government was not prepared for the outbreak of the plague of locusts. If one thinks we had to discover in February this year that the department was looking for its locust officer in Kimberley who had died in May of last year, one realises there is something radically amiss which should not be so. I shall leave it at that and do not want to enlarge on it but one remains concerned about what will eventuate if further outbreaks occur in September or October. Those remarks were just incidental as the hon back bencher referred to locusts when I rose.

The hon member for Swellendam referred to cost increases in the grain industry. Of course, there are such increases throughout the agricultural spectrum and not only in cropping. We heard recently—I think it was 14 days ago—that the price of veterinary medicine from Onderstepoort had risen by 50%.

Vaccine, not veterinary medicine.

Yes, vaccine, Veterinary medicine from private companies rises weekly but the hon the Minister has no control over that.

There are cost increases but the tragedy in agriculture today is that the producer price remains low. This has been discussed at length today and I do not wish to repeat it except to say there are incredible cost increases week after week even if the fuel price has dropped.

I wish to confine myself chiefly to the Department of Water Affairs this afternoon. At the outset I wish to congratulate the Director-General and his staff heartily on the very fine annual report we have received. I greatly welcome the change in the method of compiling the report. It is a very illuminating and readable report besides being well-produced with all the photographs and especially maps it contains. It creates a fine total image of the activities of the department and I therefore wish to congratulate the hon the Minister and his department on this report.

It is a great pity that so little time is devoted to this important department. We are faced with a situation that form ten o’clock this morning until 5.30 this afternoon we have to debate on two departments—Agricultural Economics and Water Affairs. Gone are the days of the previous dispensation when we had the opportunity of spending an entire day—sometimes it was even a little longer— in discussing only agriculture in the Committee. We could also talk about water affairs for a full day plus a few hours on the next. The situation today is that we have to combine these two important departments within the time limit of one.

Order! I wish to bring it to the hon member for De Aar’s attention that the Water Affairs Vote will be put after the one that is now being discussed. The hon member referred to agriculture at the beginning of his speech but the Water Affairs Vote will be put next.

Try locusts!

The hon member sitting at the back there has a locust brain! [Interjections.] Hon members know the ways of a locust: It immediately excretes everything it absorbs.

Mr Chairman, I obviously have the difficulty that we have only three speakers in consequence of the Whips’ arrangement. Two of the speakers have already spoken on agriculture and I should now like to talk about water affairs. [Interjections.] With your permission, I shall discuss agriculture and deal with the role of water affairs in it.

Order! The hon member may irrigate the crops a little; we shall not mind.

We shall irrigate them.

I have referred to the short time devoted to these two important departments. Whereas one now has one Minister for both of them, I think each of these departments justifies its own Minister. I believe the State President will have to examine this situation in future and perhaps consider appointing two Ministers for these two departments.

One is concerned that the slice these two departments receive from the hon the Minister of Finance’s entire cake is far too small. We simply do not have sufficient money available for inter alia the development of water resources.

On examining the situation, one realises the provision of water is a very important factor in the entire system of South African agriculture. There should be an 8% growth rate in the development of water resources for agricultural purposes and for urban development.

What has the position been since 1975? Discounting the Orange River project and the P K le Roux and Verwoerd Dams, we find the graph of available amounts falling. The amount available for the development of water resources has decreased greatly and we have negative growth instead of a growth of 8%. We are in the process of creating a backlog in the development of water resources which will be responsible for a severe setback to agriculture in future. We shall ultimately pay very dearly for this.

I wish to appeal for more money to be made available for the development of irrigation because this provides very much more consistent production than dry-land farming. It is very important to the Republic for economic as well as strategic and political reasons that we ensure our ability to provide adequate food at a fair price to the population in future.

The Department of Water Affairs will always play a very important part in the process of food provision. Every effort will have to be made to keep farmers on the land in order to produce food. The Government will have to pay urgent attention to the excessive escalation in input and marketing costs, of which high rail tariffs form an important part for instance.

This situation is so serious that it is of no avail merely to say we are examining it. I think the Government will have to come to a definite decision about the farmers of South Africa and announce it as soon as possible. It should become operative before the end of June this year. [Time expired.]

Mr Chairman, at the beginning of his speech the hon member for De Aar added locusts to the miseries of the South African farmer and he is quite correct in this. He also referred briefly to the problem of input costs. I should like to use that as my text this afternoon in conjunction with what other hon members had to say about it, especially the chief spokesmen of the various parties.

Just don’t water it down!

It is true that the South African farmer is in a desperate financial position at present. Hon members put forward all the reasons and were explicit as to detail.

[Inaudible.]

The hon member for Uitenhage is knowledgeable on many matters but knows very little about farming.

Consequently I do not wish to pause at details but preferably revert to the broad statements that a farmer’s position today has been caused by recessionary conditions experienced worldwide, drought and natural disasters, together with the problem of interest and exchange rates. Input costs are caused by some of these.

The South African farmer is no stranger to natural disasters such as drought, hail, wind, flood and frost damage. He has learned to live with them but there were better days in agriculture when we could absorb these. It is becoming increasingly difficult for the South African farmer to cope with this situation. It is fortunate that the Government attempts to help but I wish to state categorically that no government can assist all farmers to survive 100% at all times therefore it is unfortunate that some farmers go under.

We are discussing interest rates. All right, they have already plunged by almost 10% but the important factor is the damage they have already done. They have already caused numerous farmers to fail while some are still going under.

Perhaps we of the older generation have good cause for confession. At one stage we advised the younger farmers: “Go forth, develop and expand. Improve your farm and land because you are using an expensive rand which you will ultimately repay with a cheaper one.” Before we could say Jack Robinson, interest rates had exceeded 25%. Let us confess that we tempted many young farmers into excessive spending. Now those very generous lenders of the past are demanding their money back, which is aggravating the situation.

The hon member for Barberton said—and I should like to associate myself with him— that input costs were actually the greatest curse in agriculture today. It is true that some of the reasons put forward for this are incredible. In the first place the exchange rate is held responsible for a large number of these sins. The poor exchange rate is blamed for many matters. If I am to be honest, the South African farmer is suffering today in great measure from something which is basically a fraud in the sense that the farmer is told these costs are contributing to his misery but it is not really so. Exchange rates, interest rates, fuel prices and heaven knows what else serve as excuses. Permit me to cite a singe example. If a 25 kg drum of Hyvarx cost R760 in 1984 and a year later the same drum cost R2 866, I want to ask how on earth this is possible. If one compares the interest rates of the two years, adds the inflation rate and a little extra profit and takes the fuel price into account, one sees at the end of the calculation that someone has deceived the farmer somewhere. The farmer is flattened in the process and has no answer and no defence. Where are the people who increased prices and hid behind fuel price increases, high interest rates, exchange rates and the weak rand value now that interest rates have declined so much and the fuel price has also dropped? Where are their decreases now? [Interjections.] If the effect of these decreases and improvements is so slight, the reverse of the coin should appear the same and increases should not have such a great effect on input costs. I believe the South African farmer has been made to look a fool in this process.

Agriculture has controlled itself. Many prices of products—actually I should say all product prices—have risen by less than the inflation rate. The maize price has increased slightly but not much; it remains much lower than the inflation rate and there was no increase last year. Wheat prices increased either very slightly or not at all and the wine price has maintained a single-figure increase over many years but these other items are running away with us.

I wish to admit honestly that we in agriculture have failed to play our part in curbing the price of products to the consumer. I wish to refer to the wine industry here. The bottle containing the wine costs more than the wine itself. One can also examine what manufacturers of cartons are doing. The hon the Minister referred inter alia to milk. I am now telling hon members the consumer in South Africa is no longer buying an agricultural product; he is buying packaging. Unfortunately much of this packaging is either in the hands of a monopoly or a cartel. We shall have to solve this serious crisis which is being experienced in agriculture; I believe intervention is essential. If ever the Competition Board has had a duty, this is it.

Recently the Co-operative Board of the SAAU held an in-depth discussion on the problem of input costs. I wish to take the liberty of saying on behalf of this board and my fellow farmers that we have done enough talking about this at this stage. Steps now have to be taken which will influence the farmer’s position fundamentally. Consequently I wish to request very seriously that we seek ways and means—whether we use the Competition Board or another statutory board—to do something as soon as possible. I request the Government and specifically our hon Minister and all involved to scrutinise this closely to enable us to do something as soon as possible. I know this cannot always help but it will certainly be of comfort in the end.

Mr Chairman, the hon member for Wellington spoke about higher input costs, and I agree with him. However, I am certain that the farmer can still afford a windmill. [Interjections.]

†Mr Chairman, I also want to talk about high input costs because this has been the refrain throughout the debate on this Agricultural Vote. I know that the hon the Minister of Agricultural Economics has a meeting with the hon the Minister of Finance in the fairly near future, and I hope he will discuss the subject which I intend to talk on, with the hon the Minister of Finance.

Section 23C(1)(b) of the Insurance Act of 1943 prohibits financial institutions which lend money on mortgage loans from forcing the borrower to insure his life for the amount of the loan with a specific insurer. The reason for this is quite simple. When someone is lending one money, one is in a position where one is absolutely prostrated. If the money-lender will lend one the money provided one insures through his insurer, one can only agree because one needs the money. This is specifically forbidden by the Insurance Act.

However, section 21(5) of the Land Bank Act of 1944 suspends the provisions of the Insurance Act in that the Land Bank or an insurer controlled by it is exempted from the provisions of the Insurance Act. Consequently section 23C(1)(b) does not apply to loans granted by the Land and Agricultural Bank of South Africa to farmers.

The result has been that the Land Bank has registered a company called the South African Mortgage Insurance Company Limited—Limited, Mr Chairman—which is, I understand, a wholly-owned subsidiary company of the Land Bank.

Yes.

The hon the Minister agrees. Because of this, the bond application form of the Land and Agricultural Bank had the following clause inserted:

Thus it is apparent that the farmer who borrows money from the Land Bank is forced to use the Land Bank’s own insurance company, even if the insured life is already covered by other insurance with other companies. Even if that is so, such insurance is not acceptable. He is forced to take out new insurance, and the older he is the more expensive this becomes. This is bad enough, but what is worse is the fact that the rates being charged are far in excess of those of competitive insurance companies.

Let me quote some figures given in a speech at the East Cape Agricultural Congress last year by a farmer, Mr Vic Breetzke. He said that a 25 year old person taking a reducing term policy for R10 000 over 22 years through the Land Bank, would have to pay R 82 per annum for that R10 000. The same gentleman, Mr Vic Breetzke, checked up with the Old Mutual and discovered that the same 25 year old person, taking out a policy for R10 000 over 22 years—the same deal— would pay R24,42. He would pay R24,42 as compacted with R82. This is an astonishing difference.

There might well be slight differences within the policies concerned, but the fact remains that the farmer can get adequate cover through the Old Mutual for R24,42 to cover the reducing term of that loan.

I went further. Yesterday I phoned the Land Bank in Cape Town. They told me that a 25 year old person who takes out a policy over 25 years—not 22 years, but 25 years—would have to pay R80,92. I also phoned the Old Mutual yesterday, and they quoted me a figure of R22,20. The figures that Mr Breetzke supplied at the East Cape Agricultural Congress appear to be well justified.

This means that some Landbank policies cost almost 400% more than those offered by one of its major competitors. Moreover, the farmer has no choice. He has to go to them. What is more, he has no choice of policy, because the Land Bank does not offer the same wide range of policies that the professional life insurance companies offer.

For instance, if he wanted to go to the Old Mutual and take out a life term with profits to cover his death, then the same 25 year old could pay R40 more than he would pay to the Land Bank—he could pay R121 per annum—and after 23 years the value of that policy would be R69 000. Moreover, if he died in the course of that life term, then his beneficiary would get R126 000. Once again, I must say that the farmer would be offered a far wider choice.

I maintain that this whole system is very wrong and that it can go a long way towards offsetting the advantage of a Land Bank loan. What is worse, is that in this way the Land Bank is abusing the privilege of State funds. They get the money from the State and they force the farmer to insure through them. This is not the end of the matter, however.

When did the Land Bank ever get money from the State?

Originally, Sir. [Interjections.] Does the State stand behind the Land Bank or not? Is it a State institution or not?

You said that the Land Bank gets this money from the State.

Yes, I was under the impression that it was abusing the privilege of State funding. [Interjections.] Very well, but it does not alter my argument. This is not the end of the misuse of this privilege. There are 502 employees of the Land Bank who obtain loans for housing from the Land Bank. I am informed that recently the Land Bank informed all staff with loans that in future they must insure through Price Forbes Volkskas. This meant that some staff had to discontinue long-standing arrangements, often to their disadvantage. As brokers, PFV are meant to secure the best deal for the insurers whom they represent. I have seen actual invoices showing that a former insurance company was charging 1,5119%, whereas the PFV rate which the employee was now forced to pay was 1,92%. This represents an increase of 27%. Since I acquired this information, the Land Bank has sent out their circular No 7/86 which effectively increases the rate which the Land Bank employee has to pay.

There is a large sum of money involved in these loans. At the end of December 1985 there was R24,5 million involved. There would be owners’ equity and escalation, and I believe that the insurance must be for at least R30 million. At 2% the fees would be R600 000 per annum. I have no objection to the Land Bank making arrangements with a broker for their staff, but that arrangement must be voluntary and not compulsory. There is dissatisfaction among staff members as a result. That is the problem and I would like to suggest some solutions in the interests of the farmers of this country.

Firstly, section 21(5) of the Land Bank Act should be repealed in order to give the farmer and the Land Bank staff the right to choose the insurance company with whom they deal. Adequate arrangements can be made to protect the Land Bank’s loan interests, just as every other financial institution makes similar arrangements.

My second suggestion is that the farmers who are presently bonded through the SA Mortgage Insurance Company Limited must be given the right to terminate their insurance with that company and place their business elsewhere. In other words, they have been forced to take out insurance at a higher rate, and I would estimate that some R19 to R20 million is paid in premiums by the farmers of this country in respect of these loans.

Thirdly, I believe that the SA Mortgage Insurance Company should either be sold on tender to a life insurance company or should stop taking new business and gradually wind down. The first option is infinitely more desirable, provided that adequate security is given to both the farmers and the Land Bank. I see not reason why the State should have set up and continue to operate a life insurance company in competition with the private sector. This is, in effect, against the preamble to our Constitution, which encourages private initiative and competition.

The life insurance companies in South Africa are among the best and the most efficient in the world. There can be no possible justification for the State competing with them. Continue compulsory insurance by all means—that is, that the borrower from the Land Bank must insure his life—but give the poor borrower the choice as to where he places his business. It is, after all, his money that he is spending.

As at 31 December 1985, R2 275 million was owing to the Land Bank by farmers. [Time expired.]

Mr Chairman, I am rather surprised that the hon member for Port Elizabeth Central, who should know better, raised this issue under this Vote. He was discussing this issue under the wrong Vote altogether. The Land Bank is not the responsibility of this department. It is the responsibility of the Department of Finance.

I know. That is why I asked the hon the Minister to talk to the hon the Minister of Finance. [Interjections.]

I am not going to answer the hon member for Port Elizabeth Central; I think the hon the Minister will do so.

*I should like to reply very briefly to the hon member for Wellington’s speech and specifically the question of input costs which he raised. The hon member claimed that input manufacturers were hiding behind exchange rates, petrol price hikes and increased in interest rates. One may state that agriculture has long since abandoned the cost-plus principle but that input manufacturers continue working on a cost-plus basis. Whenever there is an increase in costs, they add it. I have my doubts about profit margins charged on some of these inputs and I shall explain the reasons for my doubts to hon members. The hon the Minister referred to the investigation I conducted at grass roots level. I obtained invoices from farmers—piles of them—and I invite hon members to examine them if they wish. Because co-operatives omitted certain suppliers of inputs from their transactions for instance, they pruned prices. Each time the co-operative reduces its price, prices plunge dramatically in the trade.

I identified a specific case in which the profit margin declined by 100% in negotiations with the co-operative. This prompted me to ask what was going on there. What profit did those people make before? I agree wholeheartedly with the hon member for Wellington that we have cause for suspicion about profits taken. In consequence I requested that investigation be instituted into this; that is why I now state that every agricultural industry is prepared to make its costs structure public. We are not ashamed of it and should take pleasure in doing this. We should like to see the people furnishing us with inputs being prepared to do the same.

I should also like to respond to the hon member for De Aar’s speech. The hon member alleged here that the department was not prepared for the plague of locusts. That is untrue; that statement is devoid of truth! Over the years the department has developed a system aimed at controlling locusts. This was maintained over the years although there were no locusts for some time. Now the hon member claims we were not even aware that a locust officer appointed by us had died! How was Pretoria to know the man had died if no one informed it of this? Why did the hon member for De Aar not inform the department?

He was the chief locust officer of Kimberley!

Why did the group of farmers in that vicinity not inform Pretoria? [Interjections.] No, Sir, the hon member should not make such wild allegations here and then claim the department was unprepared for the outbreak of the plague of locusts. That is absolute nonsense! [Interjections.] I wish to tell hon members that farmers from that hon member’s constituency to whom we sent teams to combat locusts, told them at the end of the day after they had finished work that there was nowhere for them to sleep. [Interjections.]

Order! I am not prepared to permit as many interjections as have just been made here. The hon the Deputy Minister may proceed.

Mr Chairman, locust control cannot be operated successfully if the attitude of our farmers, our producers, is not right.

If every man is not prepared to examine his land for locusts, we cannot control the plague. Hon members may ask the hon member Mr Van Staden what happens on unworked land without owners. Locusts hatch there and the first indications one has are when they start flying to the neighbours. It is every farmer’s responsibility to inspect his land for locusts.

The department was prepared; it made equipment and insecticide available on a large scale but I do not know whether we have had such a plague this century. In addition one has logistical problems and I wish to inform hon members that farmers in general are very satisfied with our handling of the situation at this stage. We are in the process of developing a new strategy for the possible prevention of a future plague. The hon member for De Aar is talking nonsense in saying the department was not prepared. [Interjections.]

I should also like to refer to the speech of the hon member for Vryheid who spoke on meat marketing. If there is one scheme that has often been in the news over the past year or more, it is the question of meat marketing. We South Africans like meat; we like a piece of good meat and we like buying it at a fair price. I now wish to tell hon members that the steps taken by the Meat Board were handled excellently by it in relieving the very difficult situation in which we found ourselves of having had a drought and that there was an oversupply of meat. I sometimes had reservations myself whether it would work— I admit this—but fortunately it worked well. Currently we do not have a significant meat surplus but it is a fact that South Africa remains a net importer of meat—we cannot escape this.

I should like to communicate a few details to the House on that part of meat marketing under my control—which was delegated to me—namely the slaughter of meat; the abattoirs. Until about a year ago there was a great deal of concern about the entire question of abattoirs, especially from our rural areas. I wish to inform hon members that a great measure of calm has set in about the abattoir industry. Recently I have had a minimum of representation about abattoirs and I shall furnish hon members with the reason. We proceeded to set a date on merit for every rural abattoir by which it has to comply with requirements. We no longer have a general cut-off date which I think has created great calm. Our success in the privatisation of abattoirs has exceeded expectations; we were discussing privatisation this morning and it was said that one should not take it too far. Here is a particular industry, however, in which privatisation works. Do hon members know how successful we have been? We did not introduce legislation; we did not issue regulations; we merely conducted discussions through conviction. In this way we have achieved the following results which I should like to mention. Today we have six municipal abattoirs in the country falling under the largest grade A class; there are also 11 private abattoirs in the same class in the country. We also have the South African Abattoir Co-operative operating ten abattoirs which are obviously the ten large abattoirs in controlled areas. We have thirteen municipal and two private abattoirs in the grade B class whereas there are 31 municipal and eight private abattoirs in the grade C class. In getting to the smaller towns, there are 46 municipal and 22 private abattoirs in the grade D class; only a year ago there were 53 municipal and 18 private abattoirs in the grade D class so a movement in favour of private ownership has occurred.

We find grade E class abattoirs in the very smallest towns and it is precisely about these abattoirs that the greatest concern arose. Let me add immediately that the people of those small towns were concerned as they were afraid of losing their abattoirs but we reassured them and told them to continue operating them. We requested them, however, if it were at all possible to transfer those abattoirs to the butchers to operate themselves. Do you know, Mr Chairman, what the position is now regarding small abattoirs in the grade E class? We have 51 municipal and 111 private abattoirs in this class—a total of 162. We now have 311 abattoirs in this country which we should compare with the number even a year ago. Last year there were still 324 abattoirs in the country so a considerable measure of rationalisation has taken place.

Consequently the current situation is as follows. The number of abattoirs under municipal ownership totals 147 whereas the number in private possession amounts to 154. Numerically there are more abattoirs in the hands of people in the private sector than in the possession of municipalities at the moment. In addition, all white-meat abattoirs—that is farms dressing poultry—are in the hands of people in the private sector.

This brings me to the point raised by the hon member for Vryheid who said we should permit more packaging. Whenever a municipal abattoir passes into private hands, however, the butcher concerned does his own slaughtering and he also has the right to process and package; it is as simple as that. I put it to the hon member that we shall make considerable progress as we have the abattoirs transferred to private ownership because we shall then find the processing of meat taking place on an increasing scale.

I should also like to put a further point in conjunction with this. We are continually being requested to relax control over the abattoir industry; to permit the flow of meat to take place with a greater degree of freedom. Consequently we appointed the Van Rensburg Committee which has submitted its report and this is now in my possession. I also appointed an interdepartmental committee which reported on rationalisation within the department as well. We appointed the National Productivity Institute which conducted investigations for us at 14 abattoirs and provided us with numerous results. We shall soon start applying recommendations which come down to the fact that there should be a freer flow of meat. The meat trade itself is delighted at this but at the same time I put it to the meat industry that when it obtains a freer flow of meat, it should also concede that we relax as regards the ownership of butcheries. The reply to this is always: “Oh, no! Please, Sir! We will have overtrading!” You see, Mr Chairman, when in begins to affect a man’s own pocket, he argues that all control measures should not be abolished. When it suits him, he says: “Relax” but, when it affects his own pocket, he immediately says: “No, wait a bit! Retain some control.”

Only the other day, Mr Chairman, I heard representations from the Moslem Meat Traders which is a formidable organisation in the meat trade. It requested me fervently to prevent the Meat Board from granting so many licences as it was concerned about the problem of overtrading.

We have to be realistic in our view on agriculture. There is one statement in particular I should like to make before resuming my seat. When agriculture finds itself in a difficult situation, the question arises whether we can still afford as many luxuries as we felt entitled to in the past. Can we afford a duplication of information services any longer?

When my vineyard is diseased, I may call upon any of seven organisations for assistance. I ask whether we can afford this. We shall have to look into it. A further question which arises is whether we can still afford to permit poor bookkeeping systems. Has the time not come for us to force farmers to keep their books correctly? Because of computer systems available today, every farmer can be linked to such a system. It provides no problem and will not cost him a great deal. We shall then be able to obtain good information which we may apply in the interest of the agricultural industry.

If we wish to apply schemes to save agriculture, they will cost money. I ask today: Will all in this House support us if we increase taxes a little to save agriculture? I should also appreciate replies from hon members of Opposition parties on this.

Mr Chairman, it is a great pleasure and a great privilege to follow the hon the Deputy Minister of Agricultural Economics and of Water Affairs. The hon member for De Aar made an attack on the hon the Deputy Minister, and I merely want to tell the hon the Minister he handled the hon member well. As I said on a previous occasion, there was great co-operation from the department in my region as far as locust control was concerned. I do not know, therefore, what went wrong in De Aar. I think they must have a poor representative. [Interjections.]

I also want to refer to the hon member for Port Elizabeth Central. He made an attack on the Land Bank a moment ago, and the hon the Deputy Minister rightly remarked that the Land Bank falls under the control of the Department of Finance. I received information from my hon colleagues that at a stage an offer had been made to private companies for them to provide farmers with insurance. They did not want to, and so the Land Bank designed its own system. I merely want to comment on that by saying the PFP and certain private organisations normally act in such a way that if an idea which has come from Government circles does work, they—the PFP and other organisations—like to take over that idea.

In addition I want to mention that the hon member for Lichtenburg sketched the situation of the farmers in his constituency in a very calm way earlier this afternoon. We appreciate the way in which he did so. I should also like to mention that the information he gave in connection with farmers between Hartbeesfontein and Lichtenburg who are experiencing problems, has come to our attention, and with the aid of the Deputy Minister of Land Affairs and Development we could succeed in arranging a meeting in Hartbeesfontein for 30 May 1986. The hon the Minister of Agriculture and Water Supply will be present to try to answer farmers’ questions and also to listen to proposals. I mention that just for the information of the hon member.

During the course of my speech I should like to refer to the deteriorating position of our farmers in the summer sowing areas, with specific reference to the part played by high input costs in this connection. The recent drought, along with the high input costs, as well as interest rates and inflation, is taking its toll. The position of a large group of our farmers has become extremely hazardous. Their position is so serious that I fear a large number of evictions will take place. A further decrease in the number of farmers can be to the great disadvantage of the rural areas and even of the country. I know the Government is serious about preventing this process as far as possible. With the assistance we have received from the state in the past, we have managed to keep many people on their farms. With reference to that I want to convey the sincere thanks of the farmers of South Africa to the State President and the Government in particular.

Having said that, however, I must also issue an immediate warning that if an even greater effort is not made this year, this investment the State has already made in agriculture will be lost. It is important to dwell on certain figures for the moment. According to information I have obtained, the debt ratio in the farming sector has weakened gradually, from 11,5% in 1975 to 26,5% in 1985. The short-term component of this debt burden has increased considerably, from 28,5% in 1970 to more than 54% in 1985. A part of this short-term debt has developed in such a way that it will not be easy to repay it in the short term, and therefore it has assumed a long-term character.

Many farmers, particularly in the Western Transvaal, find that their security for loans has already been exhausted or is becoming exhausted quickly. According to a figure supplied by the South African Agricultural Union, agriculture’s total debt burden amounts to approximately R11 500 million, upon which R2 280 million has to be paid in interest. Interest remains payable throughout, and has been capitalised to a great extent.

Various factors have led to the abovementioned situation which the farmers are experiencing today. I have mentioned that harvest losses as a result of the drought were a contributory factor, but the immense cost increase during the past year has played just as important a part in placing the farmers in the hazardous position they are experiencing today. The farmers have experienced this cost-pincer since 1975 because the prices of farming requirements have increased faster than the prices of products. It also appears that the price index for farming requirements increased by 19% in 1985, as against the increase in product prices of 8,6% and a general inflation rate of 16,2% which rose to as much as 22% in February 1986.

We shall also have to identify the fundamental causes of inflation again and we shall have to try to rectify matters. One of the fundamental causes of inflation is the unfair increase in the price of farming requirements. In certain cases one can describe these as increases which have taken place by leaps and bounds. According to information I obtained, the following items increased on average by the following percentages from December 1984 to December 1985: Fertilizer prices by 28%; certain weed-killers by up to 64%; certain insecticides by up to 69%; tyres by between 20% and 30%; prices of tractors by more than 40% in certain cases; and the prices of certain tractor and implement parts increased by between 30% and 50%. Fewer tractors and implements were sold, and it seems it was then decided to make money out of the sale of parts for agricultural equipment and implements.

Against this background, I should like to thank the hon the Minister of Agricultural Economics and of Water Affairs and the hon the Minister of Trade and Industry for ordering an inquiry which will be conducted by the Board of Trade and Industries. I should like to ask the body not to take months before reaching a finding, but if necessary to publish a report, in accordance with which action can be taken, as soon as possible. I also want to refer to the committee announced by the hon the Minister this afternoon which will be established between the two departments and which will involve the officials of the Department of Agricultural Economics. I should like to ask him whether it is not possible also to ask the South African Agricultural Union to nominate four representatives who are in the profession to serve in that committee as well. This is not a new principle. When the maize farmers asked some time ago for their proposal in connection with a better marketing system to be investigated, we gave the Jacobs Committee permission to extend their committee temporarily by four members. I also want to appeal to co-operatives, when they suspect a company or body which supplies agricultural requirements of taking unfair profits, to report this to the Trade and Industries Board immediately supporting the report with invoices.

Co-operatives and farming associations as well as study groups, must continue to negotiate the best possible prices for their members. The free market mechanism must be utilised fully. The immense increases of input prices and inflation in agriculture in relation to South Africa’s competitors abroad will also result in the weakening of its competitive position as an exporter of agricultural products, despite the rand’s present favourable exchange rate. Given the risks agriculture is subject to, along with the high level of inflation, the industry will become a beggars’ industry which will always be dependent upon the State. This is not a desirable situation and we shall have to take quick action to prevent this from happening. The problem will not be solved merely by increasing the prices of products, but will have to be followed by quick and effective action to restrict unnecessary increases in respect of input prices to the minimum. Input suppliers will also have to explain their price increases more specifically in future. The hon the Minister of Mineral and Energy Affairs explained the reason for the increase in the petrol price in great detail the other day. Our farmers are also prepared to be perfectly frank about the price increases of our products; indeed, we have been explaining them in great detail for years. The time has come for input suppliers to be as frank about their prices, to tell us why the prices are increasing and to explain every fraction of every cent to us.

Mr Chairman, it is a pleasure to speak after the hon member for Schweizer-Reneke and I have no problems concerning the topic he spoke about. In fact, I want to speak about the same topic and support him in what he said.

In the first place I want to make a remark about what was said by previous speakers, particularly as far as the locust problem is concerned. The Press seized on the locust plague and sometimes hon members in this House also refer to it as if the relevant department had not been ready with measures to combat the outbreak of the plague.

I want to refer to the department’s annual report. In the first place I want to congratulate them on its brevity in comparison with many annual reports which are so thick that one simply does not have the time to read them, even if one wants to. That report contains everything it should, and I want to congratulate them on it.

We read in the annual report that the Department of Agriculture has been combating locusts since 1984. This includes the district of Kimberley, which means the locust official, who is no longer there according to the hon member for De Aar, did make good arrangements for them to proceed with the combating campaign. Page 22 of the annual reports says:

The point I want to make is that when we talk about locusts, we are actually talking about knowledge of the subject and involvement in it, and not about how much poison and how many pumps and bakkies are ready to combat the locusts. A locust plague is not a simple matter; it is complex. One always thinks one must kill the locusts as quickly as possible, using poison, which should be available, but methods using poison also influence the ecology. One must take the influence of poison on the balance in nature into account and I request that that be inquired into.

I see in the Karoo that the meercats have begun to dig up and eat the eggs laid there by the locusts. Because of the drought, however, the number of meercats has diminished. The pupa of the CMR beetle which eats the flowers, also lives on locust eggs. If one kills all these natural pests only by scattering poison, one upsets the balance. In the end the Government then has to pay for something nature could have helped to control. This is not an aspect to be dealt with carelessly; one has to be careful in dealing with it.

As far as the locust plague is concerned, I want to say that we must see in future, with the experience we have gained now, how we can put the information into practice to establish an effective organisation in which the farmers will be more involved. If the farmers are not involved, the Government will have to do the combating alone, and it is not possible to do it alone. I think a meaningful discussion between the department and organised agriculture should take place in this connection.

I also want to talk about input costs today and refer specifically to aspects of this in my constituency. It is a constituency which on the one hand is ravaged by drought and on the other hand is next to a river where there is sufficient water and where farmers can cultivate their products under irrigation. The one has sufficient water, therefore, but the other has too little. The one has experienced drought conditions, but the other has not.

Both these groups of farmers have the same problem, viz financial problems. The one group’s problem results from the drought, but the other group cannot ascribe its problem to the same cause. Something has been to the disadvantage of the second group as well therefore, viz the cost of inputs. We can say that the river farmers are also experiencing a drought as a result of the input costs.

We are so inclined simply to trace all problems in agriculture back to drought conditions, but in the case of financial problems we find the input costs and not only the drought conditions have played a part too.

It has been pointed out clearly that the problem resides in that the price of the farmer’s product has risen more slowly than the price of the article he needs to produce the product. The gap has narrowed and as a result it has become more difficult for farmers to survive periods of crisis. In the past, when the gap was wider, they could easily survive bad harvests using their own capital. To solve this problem, therefore, either the price must rise or the input costs must drop. This does not seem easily attainable in today’s circumstances.

If the price of the product cannot rise, the other alternative is to start producing the product as efficiently as possible. To manage that, one will have to purchase products selectively, but we have a problem here. There is conflict between the principle of the farmer who wants to purchase the product as cheaply as possible, and that of the producer who wants to sell it at the highest possible price. The problem concerns the cost-plus approach. Although it is even applied in agriculture with the price-fixing of certain articles, it is not applied in the same way in trade. In trade it is not a question of adding something to the basic cost to make a reasonable profit, but it is the cost plus a fraction of what the industry can afford—in other words, above and beyond the cost factor, they look at the industry. A higher profit margin is introduced into an industry which looks profitable than into one which does not appear to be doing as well. In the one case they load the price and in the other they do not want to load it too much; they prefer to bring it down. We shall have to learn a lesson from this, because if we continue in this way, we shall annihilate one another. Each person in this country—whether he is a farmer or is involved in trade—will have to ensure that we do not try to take such great profits that the industry can no longer keep its head above water in the end, because eventually that will be to everyone’s disadvantage.

The second way of trying to improve the situation is to keep the cost of the product as low as possible. One wants to bring about a better utilisation of one’s inputs, therefore. That is possible, but it requires more knowledge. By doing this, the farmer will have economic production and not maximum production.

Speaking of the Orange River, water is one of the most important production factors. I do not want to speak about water since its will be discussed later, but I do want to point out that water makes up part of the problem regarding the input costs. The availability of water determines to what extent the other inputs which have been purchased can be utilised to the maximum. If there is a shortage of water, for example, and a water allocation drops from 100% to 80%, it means that the other inputs cannot be utilised to the same extent either. This creates a problem, and I think it should receive attention, because there are problems in this connection along the Orange River and according to farmers this is a rather serious disadvantage in that it hampers their efficiency in supplying their product.

I do not want to say anything else about water, although we have to discuss its future at a later stage.

I want to mention something which is very dear to me. During the week I had the privilege of attending the wool congress in Port Elizabeth.

Did you buy a car?

No, I did what I went there to do.

The wool industry has become bogged down in a problem as a result of a decision, which seemed to be the right decision at the time, which was taken in the past. In the course of time we realised it had been a mistake. This industry did not run to the Government to get it out of its dilemma the way many other industries do. Instead this industry looked at its own situation and made its own plans to get out of this trouble.

They have always done so.

That is quite correct. They have always done so. When problems developed concerning the repayment of a foreign loan, they did not run to the Government. No, they told their producers: “We have a problem; let us solve it.” This industry is now imposing an additional levy of 10% on its producing members, and by doing so they are solving their own problems. I should like the State and the department to take cognisance of the responsible way in which the wool industry has dealt with its problems.

Reference was made here to utterances made by the State President. I had the privilege of hearing the State President when he spoke to the wool farmers. He did not talk politics, and once again I realised that the State President has a very deep-seated knowledge of agriculture, that he can speak to farmers in a language they understand, and that he understands their problems. In my opinion this was done in an excellent way that day. I now want to broach a last point … [Time expired.]

Mr Chairman, I should like to reply to a few of the last hon speakers.

The hon member for Swellendam referred to his own region where great problems were experienced during the past year. He referred in particular to the Rûens area; as far as I know, a request has been directed to my hon colleague to examine their financial position and I think this is currently under consideration. I wish to tell him that he is going to have difficulties but he will have to put his case very well to my hon colleague—perhaps he will succeed.

I actually consider it necessary to say something about the Land Bank. The hon member for Port Elizabeth Central referred to the role to be played by the South African Mortgage Insurance Company. Before getting to that, I think one should take a general look at the part the Land Bank has to play in South African agriculture in its entirety. One could no doubt discuss this at length but I wish to make only certain comments on it. The Land and Agricultural Bank of South Africa is indivisible from nearly all financing and marketing activities in agriculture. The hon member for Pietermaritzburg South remarked that he wondered whether it would not be preferable for the Land Bank to deal with farmers itself and negotiate loans with them itself instead of giving all its loans to co-operatives. I do not think this will work, however, because the Land Bank is not structured in that way. Over the years—for the past 40 or 50—such a relationship has developed between agricultural co-operatives and the Land Bank that this bank regards co-operatives as the very channel by which to do its financing for production etc. The Land Bank is also the very organisation which supplies agricultural co-operatives with the necessary collateral. It is true that it takes collateral as far as it can—and I believe it sometimes takes more than is necessary—but that is Land Bank policy.

If the Land Bank itself had to finance individual farmers, it would come into competition with the private sector. It would be in competition with merchant banks and have to establish branches in every town and within every area. This would increase its costs enormously whereas the co-operatives, with their cash credit accounts and allocations they receive from the Land Bank, obtain the necessary collateral and allocate that money themselves. A co-operative does not use only Land Bank money; it has money of its own as well. If a co-operative allocates money to a particular farmer for production input costs, it is better able to judge what inputs the farmer should make. It is also better placed in terms of co-operative legislation and the statutory pledge to collect that money. It also forms part of the security which passes to the Land Bank so there is an entire chain of financing from the Land Bank to the farmer—as regards his input costs as well.

The Land Bank also has a very important part to play in marketing activities. It finances most purchases by boards and it has to provide money timeously. The greater the harvest, the greater the provision it has to make in cash credit accounts for the purchase of harvests for which it obviously also requires collateral. When risks become increasingly great owing to droughts in recent years, the Land Bank was used in conjunction with co-operatives as a channel by which the State could assist farmers. I think it was two years ago that the collateral of a number of farmers in South Africa was such that agricultural co-operatives no longer saw their way clear to financing them. Nevertheless the Land Bank was prepared to finance them but with an attendant Government guarantee. The agricultural co-operative, the farmer and the Government therefore have to take one another’s hands in this process.

I recall that we found ourselves in a crisis situation two years ago, especially in the meat industry. Whenever a drought occurs, there are surpluses of certain commodities. There is too little grain but more milk and meat than the consumers of the country require. The reason for this is that farmers require a cash flow. They turned their shrivelled products into milk and meat with the result that there were large surpluses during that period. The stabilisation funds of the respective control boards were unable to accommodate these exceptional circumstances adequately. Once again the channel for financing was via the Land Bank and again with Government guarantees. We purchased surplus meat in this way for instance. At one stage we had a meat surplus of 120 000 carcases in cold storage valued in excess of R100 million. The stabilisation fund of the Meat Board could not carry this as it was not geared to it; it was a totally unforeseen situation. The Land Bank did the necessary financing with the aid of a Government guarantee and subsidy. The Land Bank also runs an insurance scheme for the individual farmer. It is true that insurance legislation does not apply in this case, which I think was one of the hon member’s problems. This is a scheme which has been operative for many years. I was involved in this too and it is a scheme which was underwritten 30 or 35 years ago. It had a reassurer in the private sector but the reassurer went bankrupt. With the co-operation of the Registrar of Insurance, the Land Bank made inquiries whether there were any company in the private sector prepared to do the underwriting. No one was interested in consequence of the high risk such an insurer has to carry. The first company, which shall be nameless, went bankrupt; it went totally bankrupt.

When was that?

It was in 1963 to be exact. The hon member can check on its history.

As a result of the costs of maintaining such a scheme, this was investigated and it was found that the Land Bank itself could undertake such a scheme and administer this itself. As I recall, this company, the South African Mortgage Insurance Company, has only two or three officials. The rest of the administration is undertaken by the Land Bank itself with a resultant saving in the entire process. Since this company withdrew and the Land Bank instituted this scheme under the South African Mortgage Insurance Company, premiums to farmers of 45 and younger have decreased by more than 60%. In addition, the claims ratio amounted to approximately 72% over the 31 years. Hon members are aware that the claims ratio is the basis on which the viability of a particular scheme can be evaluated. I do not know if there is a company which could accommodate this claims ratio under these specific circumstances. Wait a bit, the hon member should not sit shaking his head; he should consider that old people, even those suffering from a disease, do not have to submit a medical certificate. That is why the risk and the claims ratio are so high because we help even those farmers who are getting on in years and in respect of whom the risk is exceptionally great to obtain mortgage insurance.

I requested the manager of the Land Bank to supply me with a few facts and I should like to present them to hon members. The policy is for the insurance and the loan to be regarded as a package when the farmer takes up a loan. This is a condition so the hon member is quite right in saying: “It is compulsory.” That is quite right. [Interjections.] Do hon members know what is not wrong? If a farmer of 20 were to take up a loan from an insurance company, the fees would amount to 18,532% against the charges of 14,774% in the case of a Land Bank loan including insurance. This is still cheaper so it is good business even if it is compulsory.

Then give the farmer the right to choose. That is all I am asking.

Sir, the farmer has little choice because he will definitely choose on the basis of where it will cost him least. The insurance plus interest is cheaper to him at the Land Bank.

Farmers are also requesting it from the Agricultural Credit Board now.

Yes, they now want the same scheme from the Agricultural Credit Board. I am pleased to have been able to inform the hon member. He seems to be satisfied now.

Not at all. [Interjections.]

I wish to make a few general comments in the brief time at my disposal.

I wish to thank hon members heartily for a very responsible debate conducted here this afternoon. I have been participating in agricultural debates for many years and I cannot remember one in which so many illuminating ideas have been expressed as during this debate. This encourages my department and me to work even harder and I wish to tell hon members there must be few Ministers whose doors are as wide open as those of my colleagues and mine. We also have difficulties. It often happens that one becomes emotionally involved in our farmers’ problems, especially in the case of my hon colleague who deals with financing and the eviction of farmers. We have the interests of agriculture at heart and we agree agriculture should receive greater priority for building up this industry.

A number of suggestions were put forward which we may apply in the short term. There is the question of the surcharge and GST; it was suggested that we would have to examine input costs. I wish to inform hon members that we shall probably have to deal with input costs very rapidly.

The hon member for Schweizer-Reneke said he was concerned that we were not consulting the South African Agricultural Union in this inquiry. I wish to tell him that we have regular contact with the SAAU. The fact that my department is represented in that committee of inquiry necessarily means that we shall liaise with the SAAU and I believe we shall progress in this respect.

One task remains to us as Ministers of Agriculture and that is to bring the priority of agriculture to the attention of the State President and in this way to bring it to the attention of the State President’s Priorities Committee as well in order to determine the short, medium and long-term finance required from Government funds to place agriculture on a sound footing again.

Vote agreed to.

Vote No 19—“Water Affairs”:

Mr Chairman, it is really a great pleasure for me to participate in this debate on water affairs. I was raised on a farm where it was my father’s ambition to store every drop of water that fell on the farm. He had experienced so many droughts in his lifetime that he was determined to safeguard the farm against drought 100%. Before his death he did succeed in doing that to a great extent and it set a very great example to me as a young man. In fact I inherited his obsession.

You also used to bath in a zinc bath, didn’t you, Errol?

Yes!

†I should like to use the very short time at my disposal to discuss the Seventh Supplementary Report on the Orange River Development Project which was tabled recently. Since part of that report involves my own constituency, Albany, directly, and since it also involves a part of the Sundays River Project in the Eastern Cape, I am sure that hon members in this Committee will understand if I sound just somewhat delighted and also excited about this report. [Interjections.]

At the outset I should like to express my own personal thanks and the thanks of my constituents to the hon the Minister for the part that he played in getting the scheme off the ground. I also want to thank the Director-General, Mr Du Plessis, and his department for all the work that they put into the report and into these schemes. I also think it is fitting to place on record one’s appreciation and thanks to those many individuals and also organisations who, over the years, have done their best to promote the merits of these particular schemes and to keep interest in them alive.

The Lower Fish River Scheme, which is of particular interest to me, serves three basic functions, and this is what I believe makes it so exciting as a scheme. The first of these functions will be to irrigate some 1 500 hectares on the Republic bank of the Fish River. This, in fact, means a trebling of the irrigable land on that river.

Secondly, it will supply the city of Grahamstown with 6 million megalitres of domestic and industrial water annually, thereby alleviating the chronic shortage of water from which that city has suffered for many years. This has tremendous significance when one considers how many possibilities it will offer for the upgrading of life for so many people in Grahamstown and in the surrounding area. Grahamstown has a large Black population of approximately 60 000 people. There are now schemes afoot to upgrade the life of the people in the Black townships there—in fact, even the White town itself is short of water—because in the past there has just been no way in which we have been able to lay water on to those Black townships which is, after all, one of the basic requirements of a decent life. All this now becomes possible with the advent of this scheme.

Thirdly, the scheme is going to supply 1 440 hectares of irrigable land on the Ciskei bank with water. This too will be of great benefit to hundreds of Ciskeian families who will be employed on and involved in Tyefu and other irrigation schemes. Some time ago, when I discussed this scheme with the hon the Minister, together with other interested parties, he made the statement that from a political point of view the co-operation between the RSA and Ciskei on agricultural matters was a very important development as well. Therefore, it goes beyond just the provision of water to a neighbouring state.

The cost of this particular scheme will be an estimated R75 million. This includes a 6 million megalitre off-course storage dam, a 5 000 metre long tunnel, a 12 kilometre long canal and a 5 metre high diversion weir in the Fish River. This scheme is going to provide job opportunities for significant numbers of labourers at a time when the need for jobs in the Eastern Cape is at its greatest. Therefore, the importance of this indirect benefit also cannot be overstated.

I feel particularly jubilant about prospects for the farmers of the Lower Fish River. Those who know the area will agree that it is not the easiest of land from which to wrest a living. It is subject to severe heat in the summer—and very often this heat is accompanied by drought—and in the past the high degree of salinity in that Fish River water has prevented using even what little water there was available. This is very frustrating, because given the depth of alluvial soil in that region the possibility for agricultural potential is there. Now, with this scheme, that will be able to be realised.

Mr Chairman, my time has expired. I wish I could have spoken for longer but I am sure the hon members of this Committee whose constituencies are affected or concerned with the remaining schemes in this report would also like to have something to say. Once again, my thanks to the hon the Minister and his department.

Mr Chairman, the hon member for Albany referred specifically to the water which was being diverted from the Orange River to the Eastern Cape. I should gladly like to support him in what he said. We look forward with great expectation to the water that area will receive. In the course of my speech I shall be referring extensively to the Orange River project.

I should like to join the hon member for De Aar, in extending a word of sincere thanks and appreciation to the department for this beautiful report which they made available to us this year. As the hon member said, it reads easily and contains a great deal of information which is very valuable to us.

Secondly I should like to congratulate the department and thank them very much for the immense task which they are performing in order to provide the national economy with every drop of water it consumes everyday. Under South African conditions it is indeed an immense task and it undoubtedly requires the highest measure of dedication and skill. It is certainly not for us to prescribe to the Minister and his officials how they should carry out this responsible task.

So if I take up the cudgels for our irrigation farmers today it is a humble attempt to engender a better understanding in the hon the Minister for their particular problems. It is a fact that the irrigation farmers in some of our schemes have to carry on their farming activities under extremely unfavourable conditions, so much so that many of them are facing disaster. I must add however, that the drought has had certain positive results. It makes farmers more aware of the need to save; in other words, it teaches them to strive for the highest possible crop yield per unit of water.

We also welcome the improvement in communications which has developed between irrigators and the leaders of irrigation research projects as a result of the drought. The Water Research Commission supports 14 of these projects, it is generally accepted that water is delivered to industries at an insured delivery of 100%. In the case of irrigation on the other hand, the operating norm is of such a nature that the full quota must be supplied on a stable basis for at least 70% of the water years. In the remaining 30% within which restrictions are in fact necessary, attempts are made to supply at least 70% of the quota. That is the ideal, however, which is of necessity worked out according to averages.

We find that in unfavourable conditions it often differs from reality, mainly because of our particular climatic pattern. I should like to illustrate this with an example. When we take a look at the Vaal complex it appears that the annual flow over the past seven years has been considerably less than the average. This has led to restrictions, with extremely deleterious consequences for the irrigation farmers—much more so than for industries and domestic consumers. When there is a lack of water, it is after all the farmers who have to be the first to limit their consumption. To mention only one example, I refer to the following. The restrictions on the farmers in the Vaalharts was after a normal year in 1982 when they received 100% of their quota—42% of their quota in 1983, 50% in 1984, 60% in 1985 and a meagre 25% during the present financial year. This reminds me of the farmer who tried to teach his donkey to survive without food and water. Just when the donkey had almost succeeded in doing that, it died. I make so bold as to say that those farmers cannot continue under these circumstances. I should like to make an urgent appeal to the hon the Minister to treat those farmers’ problems sympathetically.

When we look at the actual apportionment of the water of the Vaal scheme we find that irrigators received only 22% of their quota during 1984-85. During 1985-86 this figure was 23%, and after this year’s drastic restrictions I wonder whether they will receive even 11% of it.

As far as future development in terms of the Orange River project is concerned, a variety of high-priority schemes have already been identified. For example—the hon member for Albany also discussed these schemes—there is the lower Fish River scheme, which is 4 000 ha in extent, as well as the lower Sundays River scheme, which is 11 000 ha in extent, the Orange-Douglas scheme, which is 10 000 ha in extent, the Orange-Riet River scheme which is 25 400 ha in extent and the scheme at Neus/Augrabies scheme which is 22 000 ha in extent—a total of 108 400 ha. When one takes this into consideration, together with the unexercised rights, the question arises whether the potential of the Orange River has not already reached the optimum limit of safe supply. Now we also know that very serious consideration is being given to the Lesotho Highlands scheme.

The question which now occurs to me is whether such a transfer of water from the Orange River to the Vaal River complex would not in future have serious consequences for the consumers of water from the Orange River. Hence my serious warning in this regard, Mr Chairman. We must not aggravate our problems.

The estimated total surface area under irrigation in this country is approximately 1 007 660 ha. It is further estimated that another 300 000 ha can be placed under irrigation, mainly under the Orange River complex—as already indicated—the Pongola, the Umfolozi and the Olifants River schemes. The latter scheme is situated in the Cape. Apart from these few exceptions we have in my opinion reached the point where we must stabilise existing schemes and ensure adequate quantities of water. As in the case of other sectors, irrigation farmers, with their high production and capital inputs, cannot afford to have more than one bad harvest or half a harvest. The hon member for Prieska referred to this. They cannot survive periods of crisis. This is proved by the fact that the State already has to subsidise the farmers in certain schemes in order to keep them on their farms.

Of course it is not only the farmers who are affected, but also the other dependents on the farm. In fact the entire community is affected. In this regard it is interesting to note the sentiments expressed by the late Minister S P le Roux in 1970 in an addendum to the Viljoen Report on water affairs. As a member of that commission he signed the report under certain conditions. Although he supported the effective use of our limited water resources in the national economy, he nevertheless issued a very strong warning that irrigation had to continue to occupy its rightful place and that it should be expanded proportionately in order to ensure a balanced development of the country.

Apart from the cardinal role of food production, he also emphasised the cultural and the balanced spiritual influence of a healthier farming element in the nation and made an appeal for the conservation and expansion of this element. It is no wonder that he expressed strong disapproval of inter alia the reduction of water quotas to irrigators.

Where do we still have surplus water? This is a subject on its own and unfortunately I do not have time to discuss it this afternoon. In my opinion we must cast our gaze on the rivers flowing eastwards. One of our most impressive engineering achievements is surely the Tugela/Vaal pumping scheme which pumps water from the Tugela to the Vaal complex. I believe that the department is now in the process of expanding it. Maybe the planners must be encouraged to transfer more water from these sources to our drier western regions in future. [Interjections.] With these few thoughts, Mr Chairman, I should very much like to support the Water Affairs Vote.

Mr Chairman, the hon member for Humansdorp will excuse me if I do not speak about the same aspect of the Vote he did.

In my considered opinion, the job of the hon the Minister of Water Affairs must be one of the most interesting and challenging posts which exists in the Civil Service today. Yet I think it is one of the most difficult posts to do justice to. Proof of this statement is that the provision of sufficient water for the RSA, the unemployment problem and the political situation in the country, form the three greatest priorities of our country.

In light of the great water shortage which exists in the country—after all, South Africa is a very poor country as far as water is concerned—it is easy to understand why the hon the Minister is endowed with absolute powers in terms of the Water Act No 54 of 1956. It is true, however, that the more absolute one’s powers, the greater one’s responsibility. Furthermore the decisions which the hon the Minister has to take as regards provision of water in this country, are significantly exacerbated as a result of the fact that the data according to which he has to make a decision, is of such a technical nature. He therefore has to rely completely on his officials to make the correct calculations and then to provide him with the correct figures. As a result of the extremely technical nature of the data, the hon the Minister has no defence. That is why he is fortunate that he has officials of the calibre of this department’s Director-General, Mr Du Plessis, and his colleagues.

The extent of the hon the Minister’s powers are reflected in the following facts. The hon the Minister can change the course of a river. He can also transfer water from one basin to another. Difficulties can arise, therefore, if the people living alongside the rivers feel their rights are being restricted. In addition, the hon the Minister has absolute power of disposal as regards public water and even as regards the use, in certain cases, of private water as well as subterranean water—which I did not realise before having read the Act. Besides that, the hon the Minister has the absolute right to introduce water restrictions and to introduce differentiated restrictions between various consumer sectors. As the hon the Minister knows only too well, this is an issue which has already caused much bad feeling.

With the publication of the Raubenheimer Report, a new matter has emerged, making the task of the hon the Minister even more difficult. The Raubenheimer Report recommends, for example, that:

In other words, industry must have preference over agriculture as far as water consumption is concerned.

On the other hand, according to section 4 of the Water Act of 1956, it is stipulated that:

1. (a) any right to water which at the commencement of this Act has been lawfully acquired, is possessed and is beneficially exercised by any person;…

That is where the problem lies. On the one hand there are the interests of the community, society and the State and on the other hand there are the vested rights of the riparian farmers. This is especially the case in respect of the PWV area where the tension between the interests of these two interest groups is very prominent.

The question now arises as to the extent to which the hon the Minister has the moral right to restrict the vested interests of the riparian farmers to supply water to other communities and sectors of the country without those farmers’ being compensated for the curtailment of their rights. Can the absolute powers the hon the Minister has in this regard be interpreted, for example, as giving him the right to restrict the irrigation rights of a riparian farmer, who lives along the upper reaches of a river, for example the Vaalharts River, to supply water to farmers who live along the lower reaches of that river? Is it or is it not an intrusion upon the rights of the farmers along the upper reaches of the Vaal River? This is the kind of questions the hon the Minister constantly has to contend with.

Another dilemma he has to contend with is that certain farms along the Vaal River, west of the confluence between the Vaal and the Klip Rivers, have never in human memory had a shortage of water. On these farms there are pools which are several kilometres long, but as a result of the establishment of the emergency water scheme between the Vaal Dam and the Grootdraai Dam in this areas in 1983 to supply water to the power-stations in the Eastern Transvaal, the irrigation rights of these farmers, who have always had a free water supply, were restricted so that they retained only 25% of their water rights. This happened despite the fact that there had always been water on those farms. What has happened here, therefore, is that farmers have in fact been deprived of the rights as riparian farmers, rights which were given to them in terms of the proclamation of the Vaal River, so that water could be supplied to the power-stations in the Eastern Transvaal. It is a foregone conclusion that the power-stations in the Eastern Transvaal must enjoy the first priority and that water should be supplied to them in the first place. I have no objection to that. The question simply arises as to whether it is fair to restrict the rights of farmers without compensating them for doing so.

This situation of rights which are being alienated will increase as the water shortage in the PWV areas becomes more intense. As the need for water increases in the PWV areas, that need will move closer and closer to the average water supply potential which exists above the Vaal Dam. This will in effect restrict the rights of the riparian farmers because they have to receive preference, given to them in accordance with legislation. Everything revolves around the question of what will be done in that situation.

In the same way that citizens of a country have a responsibility towards the State, the State has a responsibility towards its citizens.

With the establishment of the emergency project to supply water to the power-stations of the Eastern Transvaal, the Director-General of Water Affairs, who was the Director-General at the time, will have to agree with me that the farmers in that areas have given their utmost co-operation and have not complained about the problems that arose as a result of the fact that entry upon their land without notice often occurred. Nor did they complain about other matters. Now that we have to be compensated for the servitudes which have been placed on our land, it seems that the directorate is unwilling to compensate us as we should like to be compensated.

The problem related to the registration of servitudes revolves around two matters in particular. In the first place, a farmer may not refuse to submit his title deeds so that servitude on his land can be registered. When on is paid out for the servitude which is registered on one’s land, however, one is paid out according to three categories. If the land is permanently under water, 100% of the value of the land is paid out. If the land is under water once in ten years, 66% of its value is paid out and if the land is under water once in 100 years, only 16% of its value is paid out.

When servitude is registered on the land, however, only a servitude for storage of water is registered. This means that if other works are constructed along the river which could influence the incidence of the flooding of one’s land, are added, one cannot submit an additional claim to the directorate, because a servitude has already been registered for storage of water on one’s land. One has no choice in this matter; one simply has to submit one’s title deeds for the registration of the servitude, because it is illegal not to do so.

Another matter I should like to raise is the fact that the expropriation of our land is subject to the Expropriation Act. It determines that as a farmer, I am a willing seller, which I am not at all. When the price of the ground is being determined the price of land which is being sold to Escom, for example, is not considered, because the point of departure is that Escom buys land from people who are not voluntary sellers. On the other hand, the price of land has been dropping in my area since 1981 and therefore the price that will be offered for our land will not be fair to us as farmers. [Time expired.]

Mr Chairman, I have very little time at my disposal but there are a few matters that I would like to raise. May I say at the outset that I wish to compliment those responsible for the annual report of the Water Research Commission. I think it is very interesting and gives a very clear picture of what the commission is doing.

May I suggest to the hon the Minister that he could perhaps give some thought to the standing committee being briefed from time to time on certain specific aspects relative to the work that is being done by the Water Research Commission. Other standing committees have had the opportunity of meeting certain project personnel, and I feel that this would be equally welcome in the case of the Standing Committee on Agricultural Economics and Water Affairs.

I want to touch very briefly on a problem that has arisen in my constituency. The hon the Minister is very much aware of it and I do not want to make an issue of it in this House. I want to refer to the Mooi River-Umgeni pipeline that was constructed about 18 months or two years ago and which traverses certain farms in the Nottingham Road and Mooi River areas.

The reason why I raise this point here is because I feel that there are certain lessons which could be learnt from the experiences of some of these farmers. It is quite clear that the department itself must be much more critical of the manner in which pipelines are constructed; in other words, the contractors themselves must comply with the requirements of the department to the absolute letter.

The hon the Minister has very kindly consented to meet a deputation of the people who are affected, and I am sure that he will realise from the evidence that will be submitted to him that the department must exercise far greater control over the manner in which contractors carry out their work.

It is a well-known fact that water is a constant commodity in terms of volume and that the country is confronted with an ever-increasing demand from both industry and agriculture. The result is an ever-increasing need for the more efficient utilisation of water resources.

Above all, I think we are reaching a stage, as a result of the development of Escom throughout the rural areas and into the farming community when the utilisation of water is going to come under very severe strain. I see it as essential, therefore, that the utilisation of water be developed on sound lines so that there can be fair and equitable distribution.

To achieve this, the formation of irrigation districts under the control of irrigation boards must be treated as a priority. What worries me, however, is that the procedures involved in the formation of these boards are subject to considerable delays. I have referred this matter to the hon the Minister of Agriculture and Water Supply, but there is a problem involving the two departments concerned with water. The Department of Agriculture and Water Supply has to refer certain aspects of applications to the Department of Water Affairs, and this is a procedure which obviously brings about a delay. I appeal to the hon the Ministers and their departments to put their heads together and try to rationalise the procedures in order to obviate delays.

Mr Chairman, the hon member for Mooi River is a very sensible and pleasant person and it is a pleasure to follow him in the debate. He really is a gentleman and I hope he will sit on this side of the House one day. [Interjections.]

The excellent annual reports of the Water Research Commission and the Department of Water Affairs to which reference has already been made, stimulated me to reflect and to formulate points of view concerning the development and use of ground water in South Africa.

Since the Water Research Commission plays such an important part and because I studied their report in detail, I should like to begin by making a few observations about them.

In my opinion, the Water Research Commission is one of the most successful research enterprises in South Africa. Even according to South African standards it is a small organisation, but it has a very interesting research philosophy and it gives very good results.

I can summarise its philosophy as follows: It is an organisation which specialises and makes use of experts. It only works on projects which are of importance to South Africa and it co-operates with people from other organisations. It makes use of all disciplines. The Water Research Commission does not try to do everything itself, but mainly contracts out the research to firms, the Institute for Groundwater Studies, university departments as well as the Department of Water Affairs.

Interest in subterranean water increased tremendously during the recent drought and many experts have expressed themselves on this topic. One cannot agree with all the statements and claims, however, and I want to mention two examples.

The total volume of ground water which we are using in South Africa at the moment is about 10% of the total water consumption, compared to 80% in Israel. Some foreign experts say we must simply bore deeper—a few thousand metres deep—to trace large sources of ground water. Our formations differ fundamentally from those in Israel, however, even though our climate is similar to some extent. Our ground water does not occur at depths of thousands of meters, but mostly at levels shallower than 50 metres. The advice of foreigners in this regard therefore is of no value to us.

It has also been said that ground water can solve all the problems in the respect of the need for water in this country. I quote from a recent newspaper report. One cannot agree with this either. Experts are of the opinion that the maximum limit on the volume of ground water we can use in South Africa, is only about 20% of our surface water.

We in South Africa have only a small number of dolomitic and primary aquifers. The rest of the country is dependent upon the store of subterranean water in small aquifers and systems of aquifers of which the surface may range between one hectare and a few thousand hectares. On average these aquifers—I refer to the semi-arid areas such as the Karoo—cannot supply more than 1 liter of water per second from a borehole. The greater part of the country has very little subterranean water. The subterranean water is concentrated in dolomitic and primary aquifers.

The biggest problem in connection with subterranean water is to determine what its safe replenishment rate is in a certain area or complex or system of aquifers from which water is pumped. In other words, one has to determine how much water can safely be drawn from it. A very small precipitation, let’s say of 15 mm, gives a very small replenishment of the subterranean reservoir. Only when one has a heavy precipitation, can 10% to 15% of the deposit be added to the subterranean reservoir. In many dry parts it may happen that one gets a significant replacement only once in 15 years. Between those periods the water table sinks gradually and in that way creates a storage capacity for the next precipitation.

During the past droughts, a considerable amount of work was done to determine how much water was being stored in the West Rand dolomitic compartments, for example. The experts’ answer is that it is approximately half the volume of the water in the Vaal Dam. It is interesting, however, that its supply is almost 1% of the average supply from the Vaal Dam in the Vaal River. When the compartments are pumped dry, it will take some time to replace the water fully.

In the first place, the storage capacity of the dolomitic compartments is therefore an emergency water supply which can be used at times when the surface water is not sufficient to supply the demand. Naturally one can draw water on a continuous basis, but we should see it primarily as emergency water.

Two thirds of the surface of our country is dependent upon ground water for domestic use, stock-watering places, limited irrigation on farms and as water supply for smaller municipalities. In total, more than 100 towns are entirely dependent on ground water. Ground water is of considerable value, if used cautiously. One could, for example, refer to De Aar—it is a well-known example— which, when the Orange River project was planned, would have liked to have water from the Orange River. The department was far-sighted enough, however, to say that they should look in the region of De Aar first and fully develop the ground water there. Today De Aar receives all its water from ground water sources around the town. The much more expensive water from the Orange River is not led there, therefore.

A fundamental problem which I should like to address in conclusion, is the question concerning irrigation using ground water in the Karoo and whether it should be encouraged. The Karoo has no large subterranean aquifers, the replenishment rate is weak, and ground water is the only consistent source of water in that area. In my opinion large irrigation projects should not be allowed or encouraged in the Karoo without properly determining the safe ground water supplement in the area. It is simply not acceptable to me that someone can sink a borehole and pump away his neighbour’s domestic water and livestock water which has been used for that purpose for generations.

I should like to associate myself with the hon member for Heilbron in referring to Chapter 3 of the Water Act. According to that, in our legal system ground water is a private matter in this country. The question now arises as to whether or not we have reached a point in which public interest demands that the State also become involved in the utilisation of ground water. It is already the case in the legal systems of other countries.

Mr Chairman, it is a great pleasure for me to speak after the hon member for Pretoria East. This hon member always speaks with some authority on this matter. He touched on many aspects, inter alia the entire matter of ground water, which must serve as an important supplementary source for our surface water.

The hon member also referred to the work being done by the Water Research Commission. I should very much like to associate myself with this. One must really pay tribute to these people for what they are achieving with limited means with regard to a wide range of matters concerning water. It is always a great pleasure for me to receive the report of this commission to see how they have progressed.

There is an old song which goes: “Kinders moenie in die water mors nie want die ou mense wil dit drink”. If that applied in the old days, it is even more applicable today. Our water resources are becoming ever more limited. If I fill this glass with water in Pretoria, one third of the water in this glass would have been through a sewerage system at least once. I see the Chairman got a bit of a fright.

It seems to me he will have to add a little brandy to it.

What is interesting, is that the one third which has already gone through the sewerage system is the best quality water in that glass.

There is brandy in it.

The researchers tell us that by the year 2000 not only one third will have gone through the sewerage system once. The entire contents of the glass will have gone through a sewerage system. The only difference is that we may not be able to fill the glass. There will not be enough water for that.

Then you will have to add KWV!

Then we will have to add something, as the hon member for Paarl said. [Interjections.]

But we cannot joke about this matter. It would be extremely shortsighted to incur great capital expenditure to supplement the country’s water resources, and then not guard against this valuable water’s usefulness being adversely affected by pollution. It is quite possible for us to recirculate the water, as we are in fact doing, but it is extremely expensive.

Under the Water Act we accepted a principle, namely that the person who pollutes the water, must also pay to purify it. This means that local authorities who are major water consumers, are compelled by legislation to purify their water so that the water flowing back into the dams will be of a good quality.

We had hoped by means of a regulation to place a restriction from 1 August 1985 on the phosphate content of discharges in seven sensitive catchment areas. On the grounds of economic considerations delegates from the municipalities came to see us. They said that they could not meet the high requirements which had been set. For that reason we gave dispensation.

At present we only apply the regulations in the Vaal River catchment area, up to the Vaal Barrage, and in the Hartebeespoort Dam catchment area. About a week ago—I cannot remember exactly when it was because time passes so quickly—hon members probably saw a programme on the Hartebeespoort Dam which was shown on television, and dealt with the strange quality of its water. It is green, slimy and it is causing all manner of problems. This is caused by an enrichment which takes place during the utilisation of the water which then flows back into the stream.

We would very much like there to be no pollution in the water which flows back into the stream, because this is an extremely expensive practice. For that reason I think that everyone who uses water—including industries and agriculture—is under a grave obligation to keep that water which flows back into the streams as pure as possible.

Sewerage discharges which are dumped into rivers, form an integral part of the water resources which are utilised for water-supply by institutions such as water boards. It is also possible—if I understand it correctly— to allow approximately 70% of the water which is used in the urban and industrial areas to flow back into the stream.

On the other hand, agriculture consumes the water. There is little flow-back into the streams. Nevertheless it is a source of concern that in the supply area of the Rand Water Board, for example, there are 72 sewerage purification plants which are operated by 35 separate local authorities and bodies. These plants are each a potential source of water for local supply.

On the other hand it is also a potential threat to the quality of the Water Board’s raw water resource, if those plants are not operated correctly. For that reason the Rand Water Board, for example—and not only that board—should give serious attention to taking responsibility for the operating of sewerage purification plants in its supply area with a view to the eventual establishment of regional plants.

We also have problems with sea outfall pipes. As regards my friends in Natal, I am sorry that the hon members who addressed representations are not here at the moment. As far as sea outfall pipes are concerned, the danger of pollution also exists for our marine life.

†Unlike for inland waters, it is not practical to lay down statutory standards for sea discharges. The reason for this is that the oceanographic and biological properties of coastal waters change rapidly. The quality standard applicable at every discharge point must therefore be determined on an ad hoc basis. It is, however, a strict requirement that sea discharges shall not harm marine life. I want to make that very clear.

We have to a certain extent succeeded in reducing the sea discharges to such a level that they are not harmful to marine life. However, I have rioted specific complaints from local authorities along the Natal South Coast regarding the discharge of a certain type of effluent at Umkomaas. [Interjections.]

Although monitoring in this case has also proved that marine life is not harmfully affected, the complaints deal mainly with the undesirable aesthetical impact of the discharge.

*The water bubbles and foams and looks pink, and the people feel this is ugly. We do not want this either. That is why we have laid down strict standards. The position can be rectified; it is just a question of costs.

The Whip is indicating that I must sit down now. I should also have liked to say something about the artificial making of rain, but will leave that for another day.

Mr Chairman, I take pleasure in following the hon the Deputy Minister. I want to take this opportunity to convey my thanks to the hon the Minister of Water Affairs, the hon the Minister of Agriculture and Water Supply, the hon the Deputy Minister, the Director-Generals and the officials for the sincere spirit of co-operation which we again got from them last year. I also want to convey my thanks to the chairman of our NP study groups and his board of management for the guidance which they give, for their spirit of co-operation and for the great work they are doing in the interests of our farmers in South Africa. [Interjections.]

I want to associate myself with previous speakers, and also express my concern today regarding the rising production costs. We are grateful for the Government’s concern about this, and for the positive action, in that an investigation has been called for in this connection. On this occasion I can only express the hope that the Board of Trade and Industries will look into this matter impartially and objectively. I should like to support the proposal by the hon member for Schweizer-Reneke that farmers should also be appointed to the inter-department committee. I am appealing to the hon the Minister to give attention to this too.

I should now like to say a few words about the Pongola River. It forms the border between my constituency and that of the hon member for Ermelo. I want to talk about the Pongola Settlement, and later on also about the so-called Railway Valley. This is a strategic area, between the Empangeni-Richards Bay growth point, Mozambique and Swaziland. It is important for us to keep the farmers in this area, rather than having to re-settle farmers there later at great expense. It is important for us to ensure the stability of this region.

As far as the water-supply of the Pongola Settlement is concerned, I want to take this opportunity to express my sincere thanks to the hon the Minister for reacting favourably to the representations which the hon member for Ermelo and I addressed to him on behalf of the Cane Growers’ Association of Pongola, and that a new dam is going to be built in the upper reaches of the Pongola river. We want to ask that the Department of Water Affairs’ study which is being carried out in this catchment area to determine the effect of the planned dam on the rest of the system, be speeded up.

Lower down in the Pongola River we have the Pongolapoort Dam. This dam was built in 1971 at a cost of R25,07 million. I read the following in the editorial of The Star of 2 April:

In the first place this dam has been in existence for 15 years now, and not 30 years. It does not do the reporting of The Star much credit. The Star goes on to describe this dam as a white elephant, as the Official Opposition also does from time to time.

But let us take a look at this so-called white elephant. Recently we had cyclone Domoina in that part of the world. Water flowed into that dam at a rate of 13 000 cubic metres per second. If that dam had not been there, thousands of people on the Makatini Flats would have drowned. Consequently I think we are justified in calling the writer of this article a racist! He describes this dam as a white elephant, but if it had not been there this would have led to a major disaster on these Flats.

What is more, if one were to build that dam today, it would have cost us R137 million, compared with the R25 million in 1971. The writer of this article goes on to say that the dam has not yet been used in 30 years. In the 15 years the dam has been in existence 2 000 ha on the Makatini Flats have already been placed under irrigation, owing to the fact that water for irrigation purposes was allocated to kwaZulu. Rice, cotton and maize are already being cultivated there under irrigation, and individual Black farmers are being settled on this land.

The net amount of water constantly flowing into this dam from the Pongola River is 920 million cubic metres per year, of which 490 million has been allocated to kwaZulu. The remaining 430 million cubic metres was allocated by the previous Minister of Water Affairs for use in the White part of the RSA. Depending on the catchment area study we will eventually determine how much of this water can be utilised in the so-called Railway Valley.

This Railway Valley is the area which stretches from the Pongola River, past Mkuze and Bayala as far as Hluhluwe. This is a region between 25 000 and 30 000 ha in size of the most fertile land in the Republic of South Africa, situated in a sub-tropical, frost-free area in which every product imaginable can be cultivated. The farmers’ associations of Bayala and Northern Zululand have been campaigning since the sixties for irrigation in this fertile valley. The water is there. We have a limited rainfall in that area, which varies between 600 and 700 millimetres, which is very poorly distributed in the summer. We feel that since the water is there and we have the fertile land there, the department must take another look at certain parts of our country which should never have been put to the plough.

There are certain parts of our country which are so risky that farmers are faced with big problems year after year. The Government and the country as a whole are also wrestling with those problems. Speaker after speaker today have emphasised the problems our farmers are experiencing. A major cause of this is that there are certain parts of our country being cultivated which should never have been cultivated. Now the farmer finds himself in that dilemma. We must now find a solution. How are we going to get them out of that dilemma? The farmers must continue to produce; they must continue to plough to see whether they cannot redeem their debt burden. Consequently if we want to help the farmers get out of that problem situation, they will have to be assisted financially to bring about a change in land utilisation. One must then have recourse to areas like this, where one can produce at a very low risk.

This Railway Valley can serve as a larder for the developing growth points, like Empangeni, Richards Bay, Ermelo, Newcastle and Secunda. We must produce food in these areas for the growth points. A large variety of crops can be cultivated here, like vegetables, lucerne, fodder, wheat, legumes, cassava, sub-tropical fruit, nuts, cotton, rice and many more. Any crop one can think of can be cultivated there.

Work can be provided for thousands of Zulus here. The Chairman of the Bayala and Northern Zululand Farmers’ Association. Mr Gert Gauche, recently arranged a meeting with some of the Zulu captains and 800 of their followers in that region, during which they also made the serious appeal that this area should be developed so that we can produce food and provide work for the increasing population in that area.

In consultation with the regional office, all the formalities have been complied with to establish an irrigation board. We are now waiting to hear what volume of water can be made available to us in this area so that the irrigation board can be established formally and a profitability study can be carried out. The Director-General has told me that this will take another year or so, but this is unacceptable to me. I think we expect a speedier reply so that we can get to work.

In conclusion I am inviting the hon the Minister and the Director-General to visit that area with me as soon as possible so that they can see the potential of that area for themselves.

Mr Chairman, in the few minutes granted to me I should like to make representations on behalf of 660 irrigation farmers on the Vaalharts State water scheme, together with their families, and between 3 000 and 4 000 Coloured and Black workers’ families, as well as thousands of casual workers from the adjoining Bophuthatswana. My appeal is also concerned, besides that large number of farmers and workers, with a highly developed infrastructure of schools, churches, towns and commercial undertakings which must not be allowed to go under.

The survival of that wonderful area—the largest irrigation area in the southern hemisphere—is being threatened because of the repressive water restrictions over the past number of years. My present representations are not concerned with water restrictions but with another aspect of water supply, ie the water quota which has been granted to the Vaalharts irrigation area.

In speaking now about the water quota which was allocated it is necessary that I compare the average annual rainfall figure and the average annual evaporation figure of the two biggest State water schemes. The average annual rainfall figure for Vaalharts is 477 mm, or only 72% of the average annual rainfall figure of Loskop, which is 661 mm. The average annual evaporation rate for Vaalharts is 2 003 mm, while the average annual evaporation rate for Loskop is only 1 561 mm. We therefore have a considerably lower rainfall figure but also a considerably higher evaporation rate at Vaalharts than is the case at Loskop. Nonetheless, the water quota for the two schemes is exactly the same, namely 77 000 cubic metres per ha per year. There may possibly be other factors. I concede that there is another factor which is also at risk as far as the allocating of water quotas is concerned. Yet it is strange, when one compares these two important aspects, that their water quota should be precisely the same.

I should therefore like to make a plea with all the seriousness at my command, for that blatant discrepancy to be rectified—not by means of a reduction in the quota of the Loskop scheme but by means of an increase in the quota for Vaalharts. I am aware of the fact that under the present circumstances an increase in the quota cannot really be of any practical significance. After all, it is no use increasing the quota when there is no water.

I am also aware of the fact that in good years the Vaalharts farmers can in fact buy extra water when there is water. Those extra purchases however are made at a tremendously inflated price. After all it is a fact that there is an optimum crop yield for every unit of water which has been applied. With the present quota the farmers of the Vaalharts cannot, even in good years, increase the optimum crop yield unless they buy extra water at the highly inflated price. Should the quota of the Vaalharts therefore be increased, it would mean that in the years when there are in fact sufficient amounts of water available, the farmers will in fact be able to increase their crop yields without additional increased costs.

I therefore make a plea, Sir, for the quota please to be increased. When the canals are full again, this problem will have been eliminated and this anomaly resolved.

Mr Chairman, a while ago we paid a visit to the Vaalharts area, in the constituency of the hon member for Kimberley North. Consequently I am well aware of the problems he spoke about. I am also aware of the representations received from the irrigation farmers there. It is in the main a physical problem because, as the hon member knows, the Vaalharts Scheme was laid out in 1936. The problem is that it is difficult to adjust the carrying capacity of the scheme’s canals to a higher quota.

We are aware that the producers in that area also modernised their methods. With the high potential cultivars which exist today, they can increase their yields if they can get more water. Their yields will then compare favourably with those of the other schemes. The present 7 700 cubic metres of water per hectare is too low, and we are investigating the entire matter.

A matter we are treating very seriously nowadays, is the water-deficient areas which are assuming prodigious proportions in our country. Our remote towns and rural communities in particular had their own schemes with their own dams and boreholes, but after the tremendous drought these schemes began to fail. Demands are now becoming insistent for these water-deficient areas to be incorporated in a larger water scheme in some way or other. We cannot allow many of these infrastructures to collapse owing to a shortage of water either, because this would be in conflict with our entire policy of decentralisation.

If one makes calculations regarding certain areas, it becomes apparent that if one were to bring water from one’s existing sources—everyone usually thinks of the Orange River Schemes, because there is a great deal of water behind the wall and everyone wants to use some of it—one would get a cost increase of approximately R3 or R4 or even more per cubic metre of water. These people would not be able to afford this at all.

As long ago as 1983 an interdepartmental committee was appointed to investigate water provision to the arid areas. The drought in the North Western Cape and parts of the Orange Free State again emphasised the vulnerability of these communities which are dependent on subterranean water resources. Because the subsidies for water-supply schemes to the smaller communities only constitute one third of the capital costs and the subsidies do not bring the price of water down to a level which is within the paying capacity of the communities, this investigation was undertaken.

This committee is going to publish its report soon and we shall submit it to the Government. We shall definitely have to take important decisions in this connection within the next year, otherwise these rural areas are going to deteriorate because they are not getting water. I wanted to bring this matter to the attention of the Committee because I feel it is very important.

The hon member for Albany expressed his thanks for the Lower Fish River Scheme and for the benefits which it has for his area. He also spoke about the water supply to Ciskei. The hon member was quite correct when he said that the aim of the scheme was also to provide employment opportunities in the Eastern Cape, which is a major problem for us. We have already held discussions with Ciskei. It looks as if we have made good progress with them as regards the scheme as a joint project.

The Cabinet has decided that the Department of Water Affairs must take action in the establishment of permanent water commissions which will also involve our neighbouring states and the national states. It is becoming increasingly important for us to enter into certain agreements with each other across the borders as regards the water and water resources in South Africa. We are in the process of negotiating with many states, and the permanent water commissions are playing a very important role in this connection.

The hon member for Heilbron touched on a very sensitive matter here. This is a topic which I approach very carefully. One must be careful not to play off water for irrigation against domestic and industrial water. I think we would be skating on extremely thin ice if we were to do that.

It is already extremely difficult to make a proper and fair division of water resources between these two important consumers of water. We know that the agricultural irrigation programmes are the so-called consumptive consumers of water, whereas industrial and domestic consumers are not consumptive; in other words, the water is circulated, as my hon colleague said—you purify it, and you place it back in the stream. We already have a situation in this country that more than 70% of all available water is used for irrigation. I think hon members know what the figure is.

We must also be very careful as regards the cost advantage. I think it is in the interests of the country that this should be the case. On page 76 of the report hon members will see that only the operating expenditure of irrigation schemes is paid. But even the operating expenditure does not cover the full cost. There is a loss of approximately R25 million.

In the case of the industrial sectors the cost includes operating expenditure, capital redemption, interest, etc. The levy on this sector is such that an additional revenue of R46 million is obtained from it. This is paid into the trading account of the department. Agriculture benefits a great deal in this entire process, and because this R46 million is paid into the trading account this also contributes towards supplementing the shortfall in the cost of irrigation water. I just want to say that we must be careful not to play off these two consumers in South Africa against each other.

The hon member also spoke about the Water Act, and I want to tell him that at present the department is rewriting the Water Act. It is an extremely complex process, and the information I have at my disposal is that the courts are complaining that the Water Act has now been amended to such an extent that they are experiencing problems in issuing charge-sheets. Actually the department draws up these charge-sheets itself. We are looking at the entire Water Act and it will most probably be tabled next year. Then we can discuss many of these matters which the hon member has raised.

The hon member for Humansdorp also referred to the shortage of water and the Lesotho Highlands Water Project. One of the matters causing concern with regard to the Lesotho Highlands Water Project is the plan to allow the water in the upper reaches of the Orange River to flow into the upper reaches of the Vaal River by means of the Slang River. Eventually four large dams are going to be built in Lesotho. It is alleged that the surface under water, together with the dam basins in Lesotho …

Order! The hon member for Springs may not read a newspaper in this House.

… will cover one third of the country. Now the question is whether one will not reduce the amount of water in this way, because the water is now going to be shifted to another catchment area. We say that this will not be the case. Calculations have been made by hydrologists and engineers, and the fact is that the amount of water is not being increased, but the potential to provide water will be increased. Consequently I do not think that this worry of many of our farmers in the lower Orange River area is justified.

The Raubenheimer Report is available. It is an interdepartmental report, which was made under the chairmanship of Mr Braam Raubenheimer. The Cabinet is at present looking at certain of the recommendations, and I shall be able to give more particulars in this connection next year.

The hon member for Mooi River complained about a pipeline constructed by the Department of Water Affairs which passes through a certain area. Let me tell the hon member that I shall be meeting a deputation about this. The problem with these kind of constructions is that the Department of Water Affairs makes use of contractors, and they do not always have control over these contractors as far as the damaging of the farmers’ grounds and the cutting of their fences, etc, are concerned. I fully understand the hon member’s problem.

The hon member for Pretoria East touched on a very important aspect, that of subterranean water. As hon members know, there is a directorate of geohydrology which focuses its attention chiefly on pursuing investigations into the presence of subterranean water in our dolomitic areas, particularly in the PWV area. These investigations are particularly aimed at the possible utilisation of this subterranean water source for emergency provision during times of drought. This is what we are present busy with.

During the past year 138 exploratory drill-holes were sunk and tested at a total cost of R3,5 million. We achieved promising results, particularly in the Tarlton-Delmas-Bapsfontein-Klip River area. At present a feasibility study is being done by the department, in co-operation with the Rand Water Board, on the possible utilisation of this water for an emergency water supply. The Rand Water Board and the city councils of Pretoria and Verwoerdburg will shortly begin reclaiming this dolomitic water on a small scale. Investigations and exploration work instituted two and a half years ago by the Department of Water Affairs, has shown that when the inflow into the Vaal Dam falls short, the dolomitic formations could make a considerable contribution to water provision in the PWV area.

About 80 exploratory holes that have been drilled in different widely scattered spots, could supply a quarter of the requirements of the Rand Water Board for approximately one year; which is considerable.

The aim is that the investigation and the drilling will continue, and based on our expectations we hope that it would eventually be possible to provide as much as half of the requirements for up to a year. Although the supply of dolomitic subterranean water would be far from exhausted after a year’s abstraction, it is thought that if the development were to be continued, unacceptable dangers of soil subsidence and sinkhole problems would arise. I think the hon member mentioned this.

After the course of three to five years— the hon member mentioned another figure in connection with this—those dolomitic cavities in our opinion would again fill up with water, under normal conditions. Apart from this role, attention is also being paid to the possibility of creating dolomitic formations in the long term by means of artificial replenishment, which would supply the PWV area with a continuous supply of water. This means that one would, as it were, be using these dolomitic cavities as a subterranean dam. And so one does not have evaporation loss, although I must tell hon members that the cost of pumping that water in and then pumping it out again for the purpose of linking it up with the system, is of course very high. We should therefore not necessarily proceed from the standpoint that this would necessarily be cheaper water. A tremendous cost is after all involved.

In this way we have spent R10 million up to now on searching for subterranean water and drilling, and we hope to continue with this project.

The hon member for Umfolozi referred to the Pongolapoort Dam. It is in fact that there is a great deal of water behind the Pongolapoort Dam which is not being utilised, and an investigation was done in that area. Needs were ascertained and the matter is being considered at present. The report is being prepared and the department is investigating in that way it can be applied. Let me just say that before the advantages of irrigation there are apparent—in comparison with the cost involved—the same criteria cannot be applied to other places in the valley. I am now speaking of Railway Valley.

On the other hand the cost and the advantage cannot be conclusively determined before the quantity of water which the department will allocate is known. We are here dealing with an extensive process that is being carried out in the catchment area study. The interest groups involved can provide the input; in fact it would be welcomed. I do not have much time available to me now, but we could possibly give hon members a positive reply on this during the course of the year.

Finally, I want to make use of the opportunity to thank hon members for the contributions they made during the discussions of this Vote. Last but not least, I want to say thank you for the contributions the Director General, the Deputy Director General and their directors-in-chief made to the functioning of our ministry.

Let me tell hon members that this is a large department. Some hon members—I think it was the hon members for Kimberley and De Aar—mentioned this. It is, in point of fact, a fully-fledged department, and it demands a tremendous amount of study and effort merely to be informed on everything that happens in the department, and to be able to make sound ministerial decisions. I want to thank the officials in the department for the assistance which they gave us. Let me assure hon members that with the assistance of the administration of the department we could reply to every query and every piece of correspondence received by us—they amount to hundreds per year, particularly because of the drought. It is a pity that we could not respond with positive assistance to all queries, but how can one give someone a positive reply when there is no water?

Vote agreed to.

Chairman directed to report progress and ask leave to sit again.

House Resumed:

Progress reported and leave granted to sit again.

Mr Chairman, I move:

Agreed to.