Order! Mr Speaker has requested me to make the following announcement:

My remarks of yesterday in relation to the Financial Mail are equally applicable in this case, and in the circumstances I have decided also to suspend the Press Gallery facilities of Finansies en Tegniek until such time as a satisfactory explanation has been received from the editor of Finansies en Tegniek, when I shall come to a final decision on this matter.

Mr Chairman I should like to begin by referring hon members to a report which was tabled this morning, the Report of the Commission of Inquiry into the Cultivar Purity and Illegal Importation of Certain Vine Propagating Material. What led up to this investigation and report dates back to the first half of 1985 when suspicions occurred in the wine industry concerning the purity of cultivars in certain vineyards in the Western Cape, especially those in which Chardonnay had been established, and the wine from such vineyards which had to be certified in terms of the wine-of-origin system. It was subsequently established by the department that the Chardonnay cultivar had in some cases been confused with a related cultivar known as Auxerrois. Since Auxerrois propagating material had at no stage been legally imported into the country it became imperative to investigate the vine propagating material which had been imported illegally, as well as related matters.

In 1985 Mr Klopper, a retired regional court president of the Northern Transvaal Division was appointed by the State President as the only member and chairman of a fact-finding commission—not a judicial enquiry—to investigate and report on all aspects concerning the unauthorised importation of vine propagating material, including its cultivar purity.

I should like to express my gratitude for the effective and tactful way in which the commissioner planned, completed and published his investigation in January 1986. It contributed to more than 90% of the illegal importers of vine propagating material voluntarily coming forward to give evidence before the commission.

Before dealing with the findings, I merely want to make a few general remarks. It is a very interesting report and I want to deal with it using wine terminology. As is the case in the true tradition of wine, the report is true to cultivar. It is a factual report such as one would expect from a judge, and is to the point. As far as its character is concerned, it reads at times like a story and at others like a tale of adventure which ends up like a thriller. As far as the bouquet of the report is concerned it leaves a tinge of disquiet in the mouth and nose, a mixture of soothing satisfaction that the facts have been exposed but also an uneasy feeling about the conduct of people in the wine industry. As far as its maturing is concerned—because maturing was mentioned—I merely want to say the following.

†In Business Day of 8 July 1987 the following article appeared under the heading “Bottling up the Wine Scandal”:

*One can therefore indeed say that it has matured, but I think it is young enough to point out the problems effectively and to give an indication of meaningful action.

I now want to refer to a few findings in this important report. The first one is that the cultivar Olasz Riesling was legally imported on two occasions, but as far as the cultivar Auxerrois is concerned it was found that it entered the country illegally and was produced under the Chardonnay label. The commission also found that at first it appeared that no foreign diseases had entered the country with the propagating material, but also that the illegal importers had created their own emergency in that they did not make every effort to acquire permits. They were also blind to the serious phytosanitary risks that were created for the industry. It was also found that the illegal importers acted for own gain and in the process build up an advantage over wine producers who had imported materials in a responsible way and through the right channels. A very important finding was that all the importers, including those who had benefited from illegal imports, would, in the opinion of this commission most probably be found guilty in a criminal court for contravening the Agricultural Pests Act of 1983 if they were to be charged. The commission was, however, of the opinion that it would be undesirable to prosecute at this stage because there were mitigating circumstances which counted in favour of the illegal importers. I can submit a few of the mitigating circumstances which the commission found to hon members. The first was that the illegal importers made a clean breast of things to the commission. Secondly, the illegal imports had not so far been accompanied by any vine diseases. Another finding which disturbed me was that the authorities had treated the illegal imports with laxity. A further mitigating circumstance was that the importing process in respect of new cultivars was, according to the commission, quite cumbersome. A further aspect was that the illegal imports had broadened the spectrum of South African wines.

The commission indicated that those who had suffered financial harm would not suffer any further harm if the illegal importers were not criminally prosecuted because they could still recoup their losses by means of civil action. A finding which also provoked controversy was that the certification of material in respect of cultivar purity was not at this stage the task of inspectors of the Directorate: Plant and Seed Control.

The State and I accept the commission’s findings. We also take cognisance of the commission’s recommendations. They will be used as a guideline for dealing with this matter in future. Yet I want to emphasise that the protection of existing vineyards against foreign diseases and of the wine industry against undesired propagating material is accorded a high priority by the department. Consequently it was with concern that I took cognisance of the view expressed in the report that the authorities had been remiss in taking action against imported vine propagating material. The necessary attention will be given to this by the department in accordance with the commission’s recommendations by way of more stringent conduct and the proposal of heavier penalties for offenders.

The one finding in the report which I found gratifying was that as far as could be established, no foreign diseases occured in the illegal propagating material.

Order! Hon members must please speak more softly. The hon the Deputy Minister may proceed.

Unfortunately this finding rests only on visual observation. Consequently the department will monitor the cultivation of illegal imported material scientifically for the possible presence of foreign plant organisms. If such organisms were to be identified there will be no hesitation in ordering the destruction of the affected cultivations in terms of existing legislation.

As regards the commissioner’s finding on the certification of cultivar purity I must point out that the certification of propagating material by inspectors of the Division: Plant and Seed Control is only possible in respect of material which is produced under one of its schemes. The other material which nurseries have cannot be certified by inspectors because they do not know its origins and have not maintained control over it throughout.

As far as the judicial steps against the illegal importers are concerned the department of Agricultural Economics and Marketing will present the findings and recommendations of this commission to the Attorney-General for his decision.

I also want to announce that in accordance with the recommendations of the commission, Olasz Riesling will now be known as Olasz and Auxerrois will in the meantime, after the prescribed evaluation process has been disposed of, be included in the official list of cultivars.

On behalf of the Government I want to convey my sincere thanks to Mr Klopper for the competent way in which he unravelled this complicated matter and for the clear guidelines which were established by the investigation for preventing similar problems in future.

I merely want to mention a few other aspects which emerged from this report concerning the controversy about the difficulty of importing propagating material; and that certain problems which obstruct the industry exist in this regard.

The import procedure is not there without reason. The procedure is there to protect existing cultivars in the country, and if there are problems in this regard, because it is too cumbersome, it is as a result of certain control mechanisms which have to form an integral part of the procedure. It usually happens as follows: An application for importing a wine cultivar is submitted to the Directorate: Plant and Seed Control. This application is submitted to an advisory committee and assessed as to whether it could contribute to the country’s wine spectrum. If it is imported it is first given to the plant quarantine station where it is tested and purged of foreign diseases. Measures are taken there to ensure that it has also been purged of indigenous diseases. This process can take up to two years.

After that it goes to the National Institute for Vine and Wine Technology where it is tested in various regions. The material is planted to establish what the yield and the resultant quality of the wine is. Only then is it compared and judged and if this test is successful the cultivar is referred to the Cultivar Exemption Committee which then places it on the official cultivar list. The prime source is then kept at the plant quarantine station where it is kept disease-free. Afterwards some of this material is given to the KWV for propagating purposes. When these maternal blocks have been established and propagated at the KWV, grafts and shoots are given to the nurseries, after which they then go to the producer.

In a certain sense it is cumbersome, but on the other hand one must incorporate these protective measures in order to prevent imports, illegal or otherwise, from being detrimental to the existing industry. Consideration is being given to the streamlining of this procedure. Scientific methods make this possible and in the meantime shortcuts have been found which do not expose the current industry to any further risk.

The fact that it was cumbersome was no excuse for those who brought the material into this country illegally, for had we not been fortunate in that no harmful material came into the country we would have found ourselves in a far greater dilemma.

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

Although there have been many investigations and recommendations since the late seventies, and although many special steps have been taken and many emergency measures have been introduced—which are gratefully acknowledged—the truth is that the financial position of the farmer has continued to deteriorate alarmingly. I just want to mention a few figures to explain the financial position of the farmer.

If we look at the price of farming requisites, as against those of agricultural products we note that the average annual compound increase in the cost of farming requisites was 15% between 1975 and 1985, whilst the compound percentage increase in the net price of agricultural products was only 10,8%. The cumulative effect of this was that in 1985 the agricultural producer prices were 26,6% lower than was necessary to maintain the 1975 agricultural input-output price ratio. The farmer’s net income has therefore not nearly kept pace with the increase in the consumer price index.

If we examine the farmer’s interest burden on an index basis, we note that it was R184 million in 1975, and R1 715 in 1986. On an index basis the farmer’s interest burden increased from 100 to 1 279.

Secondly, if we compare the net farming revenue with the trend in the consumer price index, having set the net farming revenue at 100 for 1975, we find that it increased to 222,6 in 1986, whilst the consumer price index increased from 100 to 400 during the same period. The farmer’s net income has decreased each year, however, in comparison with the increase in consumer prices. If we look at the cumulative effect of this smaller net farming revenue, we see that the farmers’ net farming revenue was R1 388 million or R1,3 billion in 1975 and increased to R2,978 billion in 1986. If the net farming revenue had kept pace with the consumer price index, in 1986 it should have been R5,3 billion and not R2,978 billion. This loss was not confined to 1986, because there has been a loss every year, and the cumulative effect of this backlog was no less than R12 billion in 1986. It is significant that the cumulative effect was R1 billion from 1975 to 1981, whilst it was R11 billion from 1981 to 1986. We therefore fairly reasonably managed to hold our own up to 1981, but since then the farmer’s income declined dramatically, and in contrast to 1975’s revenue of R1,388 billion, this cumulative backlog has been built up.

If we contrast this cumulative backlog with the increase in farming debt, we would expect the farming debt to have increased accordingly. The position is that in 1975 farmers’ debts amounted to R2 billion, whilst the total debt in 1986, according to departmental figures which have not yet been announced, but which have been published in the Press, was R14 billion. There has consequently been an increase in debt of R12 billion. This is precisely in line with what the increase in revenue should have been, but was not. So there is a clear correlation between the two figures, which are both R12 billion.

We must now contrast the farming debt with the capital assets of agriculture, because otherwise it could be said that although farmers’ debts have increased, their assets have also increased. We must now ascertain whether the increase in assets and the increase in debt offset one another.

In 1975 the overall farming debt, as a percentage of capital assets, was 11,8%. That increased to 25,8% in 1985, and I think the hon the Minister would agree with me that in 1987 that ratio will probably be considerably higher than 25%. It has therefore increased from 11,8% to 25%. The experts say that the critical debt burden ratio for summer crops is 16,7%. If a farmer’s debt burden ratio exceeds that figure, his affairs are in a precarious state. The debt burden ratio for meat production is 10,2%; for milk production, 17,2%; and for wool, fur and mohair production 14,5%. Already we have therefore exceeded the critical debt burden ratio.

Let us compare the increase in agriculture's fixed capital supply with that of all the other sectors. Let me refer here to page S97 of the SA Reserve Bank’s quarterly bulletin published in June 1987. The increase in fixed capital for all sectors is recorded there.

Against fixed 1980 prices, the fixed capital supply in agriculture, forestry and fisheries decreased, between 1980 to 1986, from R10 billion to R9,7 billion. By contrast that of mining and quarries increased from R11 billion to R15 billion; that of the manufacturing industry from R20 billion to R24 billion; that of electricity, gas and water from R14,5 billion to R21 billion; that of the wholesale and retail industries from R8 billion to R9 billion; that of public authorities from R70 billion to R83 billion; that of public corporations from R23 billion to R30 billion; and that of private business undertakings from R70 billion to R85 billion.

Twelve sectors are indicated here, and of these, agriculture is the only sector in which the formation of capital has decreased. That of all the other sectors has increased. So farmers’ incomes have not increased as they should have, their debts have increased and, in order to produce, they have made use of own capital, which has consequently decreased. In all the other sectors there has been an increase in capital, and agriculture has taken the most punishment from the punches that inflation has meted out to the South African economy. The farmers have been hardest hit, and they have consequently been consuming their own assets to produce food for the country.

The question is—we know the answer—what the causes of the financial decline are. It is very clearly stated in the report of the Economic Advisory Council of the State President that the effect of inflation minus the increases in the prices of products—in other words, after provision has been made for the increase in the prices of products—was responsible for 44,6% of this decline in the total increase in farmers’ debt. Higher interest rates were responsible for 32,7% and the effect of the drought for 22,7%.

What I am therefore saying is that these are factors which have affected the position of farmers. The farmers are not responsible for the inflation or the interest rate, and no one on earth is responsible for the drought. So those factors are completely beyond the control of the farmers. I therefore do not think we should tire ourselves out by saying that it is the farmers who farm inefficiently, etc, who are responsible for the problems. There are really no such people left in agriculture; they have already been phased out.

Against this background, with the farmer’s income, his profit margin, having decreased dramatically and the farmer, in fact, having operated at a loss, with his debts having increased and with the causes for all this being known, we in the CP should like to make a few recommendations. In the short term the special measures adopted by the authorities—ie the 6-year, 10-year and 22-year schemes—should not be relinquished. They have served a purpose and have helped the farmers. We are telling the Government that the establishment of those schemes is gratefully acknowledged.

I take it that the chairman of the Agricultural Credit Board has addressed the agricultural groups of all the parties about the scheme involving the R400 million in assistance so that we all have the information at our disposal. That scheme cannot really get off the ground. There are disappointingly few applications. There have only been 82 applications, 62% of which were unsuccessful, and thus far only R3,5 million of the funds have been allocated and utilised. That amount, the R3,5 million is equal to one week’s interest. Agriculture’s interest debt increases by R4 million in one week. The result is that the scheme is not getting off the ground.

The chairman of the Agricultural Credit Board has proposed that these funds be employed for buying up the farms of those farmers who are on the point of being sequestrated, or whose position is such that they are going to be evicted, and this should preferably be done, in terms of section 28, in such a way that they are not sequestrated. We most strongly support the proposals that those farms be bought up. That would cause the least possible disruption. One has the person who knows the farm right there on the farm and one does not have to involve any new people. We want to support the idea that the hon the Minister should consider employing the R400 million for that purpose.

Our third proposal is that the Margo Commission's recommendation be accepted, ie that of abolishing tax on capital goods and means of production for agriculture—for other production sectors, too, but for agriculture in particular. We want to give that recommendation, the strongest possible support, and we suggest that it should be accepted, because that would reduce production costs and could counteract the rapid increase in food prices.

We want to ask the hon the Minister to really make an effort, in conjunction with his colleague, to give attention to the levies and tax on diesel which are now being consolidated and in regard to which the farmers are now expected to claim back certain amounts. There is utter chaos in regard to this matter. We want to ask the hon the Minister to raise the matter with his colleague so that those arrangements can be improved and streamlined. The matter must be given urgent attention so that farmers can recover their money within 14 days after having submitted their claims. The hon the Minister himself knows that the money with which we buy the diesel is borrowed money on which we have to pay interest.

We also want to ask that the co-operatives be placed in a position to claim on behalf of the farmers. This would remove the administrative burden from the farmers’ shoulders. What is more, the co-operatives would have to be very careful, because the farmers who are already hanging on for dear life, are going to be sorely tempted, when they receive their little cheques and have to take them to the co-operatives, even though they borrowed the money from the co-operatives. It would therefore be a good thing if the co-operatives could do this. The money could then simply be credited to the farmer’s account.

I also want to tell the hon the Minister that we suggest that since the maize crop is smaller than was expected, and exports are therefore going to be smaller, urgent attention ought to be given to the making of a final payment due to the smaller loss.

We also want to make the following suggestion, and that is the Agricultural Credit Act should be amended to make provision enabling the board to decide that the interest for farmers whose debt burden is already equal to or higher than the agricultural value of his assets, in other words, whose debt is greater than his ability to pay be frozen that he need no longer pay any more interest; that he then be placed under management—in this connection the co-operatives could also be considered—and that in the future he can pay off his debt with the profits he makes until he reaches the level where he can again pay normally. Then his affairs need no longer be placed under management and he can again start paying interest. If that is not done, and if those who have already gone beyond the level at which they are able to pay, are evicted, the financial institutions are not going to recover the money those people now owe. They are going to get less. If those people are given a period of grace, however, and no longer have to pay any more interest, they will get all their money back. All they would lose would be the extra interest on that money until such time as repayment of the capital recommences. They would not have obtained that money in any case, because the farmer would no longer have been in a position to pay that interest.

But if that scheme were to be given favourable consideration, farmers who are being forced from their farms, as a result of circumstances beyond their control, could be kept on those farms, thus causing no disruption in agriculture. And the creditors could also recover their money over a slightly longer period. That is what could be done in the short term.

I also want to make a suggestion for dealing with this problem in the long term. We are relating this to the maize industry and the wheat industry, but that is merely by way of illustration. It can be made applicable to any industry, to any area, because it is the basic principle that is relevant.

We think there are three major problems that have to be eliminated in agriculture in order to revitalise it and the first of these is overall inflation, which is very clearly the chief cause of the financial difficulties in which the farmers have found themselves. In this respect I merely want to say that farmers have been hardest hit by inflation, but I think that if we want to overcome inflation once and for all in South Africa, the sphere in which this can most vigorously and efficiently be done with successful results is specifically in agriculture.

The second problem that has to be eliminated is that of the farmer’s profit margin. It must once more be restored, but we are not asking for it to be restored to its level in 1987, before the problem began. We are asking for it to be restored to the level in 1981, when there were only a few minor problems. We believe that the end of the drought is in sight and that there will again be some good years, and if we could restore the farmer’s profit margin to the 1981 level, this could be the dawn of a wonderful future for agriculture which would serve as an example for the South Africa as a whole.

The third problem that has to be eliminated is the prices that soared to such heights owing to inflation. Although the farmer’s prices have not increased sufficiently, prices have rocketed to such an extent that this has given rise to consumer resistance. We shall have to break down that resistance to bring foodstuffs within the reach of consumers once more.

Solving these three problems will need a dramatic effort on the part of the State over the next few years until the situation has normalised. If consumer resistance could be broken down so that foodstuffs were within the reach of consumers once more, this would extend the local agricultural market and we would suffer fewer losses on the overseas market.

I merely want to focus hon members’ attention once more on the commercial consumption of maize in South Africa. In 1983-84 we consumed 7 million tons of maize in South Africa. There was a gradual increase until 7 million tons had been consumed, and that was not primarily due to increases in income. The actual reason was an increase in the population. Since 1983 the country’s population has increased, but the consumption of maize decreased from 7 million tons to 4,9 million tons in 1986. As far as white maize is concerned, during those three years consumption decreased by 16,9%, the consumption of yellow maize by 42,3% and that of all maize by 29,3%.

Our argument is that if we could again restore the price to the 1983-84 level, there could again be an increase in consumption. If there had not been that decrease since 1983, and there had been a normal increase such as that up to and including 1983, we could probably have had a present-day local consumption of 8 million tons of maize.

The major problem began when the authorities decided to do away with the Maize Board’s margin. Hon members will recall that one year the subsidy on the margin was done away with. I cannot quite remember which year it was. The consumer price of maize jumped by R50, but the maize farmer’s price did not increase. As a result of that jump, during that year the consumption of yellow maize dropped by 24% or 25%.

What year was that?

I shall tell the hon the Minister in a moment.

Did that not happen during the previous year?

No, the consumption decreased when the margin was abolished.

Our argument is now that if we could again dramatically reduce the consumer price on such a basis, we could again stimulate an increase in consumption. We are therefore saying that the farmer’s margin should be restored, and we want to suggest that it be restored to the 1981 level. From 1981 to 1986 input costs, on an index basis of 100, increased to 202, whilst the prices of agricultural products increased, on the same index basis, from 100 to 168. That gives a difference of 16,8. So if we wanted to bring it to that level, the prices of agricultural products would actually have to increase by 16,8%. I am now using the maize price as an example, but this applies equally to the other agricultural products.

We therefore want to suggest that the end-point subsidies on maize, bread and so on which are paid to bolster the industries, should no longer be paid at the end-point, but should rather be employed at the starting point or point of production. So as to make this fair, to facilitate an even distribution and to make this easier to handle, we suggest that this should not be linked to the product, for example to the tonnage per hectare or to the tonnage delivered, but to the number of hectares cultivated. That is simple, because every farmer cultivates a certain number of hectares of land. That means that if we want to restore the farmer’s margin, we should subsidise, by R75 per hectare, the production costs of those maize producers cultivating 4 million hectares of land. That is 16,8% of production costs of R450,00 per hectare. The farmer’s margin would then be restored.

Then, however, we have still done nothing for the consumer. We want to suggest that the farmers be subsidised by a further R85 per hectare, a subsidy which would then benefit the consumer. The farmer would therefore receive a subsidy of R75 plus R85. This would amount to R42,50 per ton so that the consumer price could accordingly be reduced by R42,50. This means R160 per hectare.

I see the hon the Minister is shocked; because he is leaning back in his bench. That is going to cost him R640 million for the maize industry. Let me tell him, however, that on a crop of 8 million tons and a consumption of 5 million tons, he has to export 3 million tons at a loss of R200 per ton. That amounts to a loss to South Africa of R600 million.

Our normal average crop is 9 million tons per year. If we have to export 4 million tons, we are losing R800 million per year. If the State continued to subsidise the Maize Board’s margin, as has been done in the past, it would have cost the State R488 million to subsidise 8 million tons of maize at a margin of R61 per ton.

Let me tell the hon the Minister that throughout the world at present governments are making dramatic efforts to sustain agricultural production. If the Government of the Republic of South Africa does not realise that it will have to intervene—this does not involve astronomic amounts—agriculture will never overcome its problems and inflation will never be combated. If the same figures were applied to wheat, the subsidy would be R300 million. Let me point out, however, that in 1984 the wheat subsidy was R268 million. That was at the end-point, because this is not passed down to the consumer in order to keep costs down. We are therefore saying that this could be applied to any industry until such time as that industry has recovered.

The State has, of course, traditionally intervened as far as staple foodstuffs are concerned, and that has a ripple effect. The great danger is that spoilers will now climb on the bandwagon and try to get out a harvest if farmers are to be subsidised by R160 per hectare.

So at certain cardinal points price control will have to be implemented. Fuel is already controlled, fertilizer would have to be controlled, perhaps one would have to look at the control of cattle fodder and certain agricultural products would also have to be controlled. The price of maize would have to be controlled up to the final stage, that of retail packaging. The price of milk and eggs would also have to be controlled. I also want to suggest that if we were to control the price of staple foodstuffs, it would have a ripple effect. We would therefore be able to curb the increases in the price of eggs and milk, etc.

I think that we should also harness the efforts of the co-operatives in a concerted drive towards combating price increases. I just want to quote to hon members from a letter I received. The members of this particular co-operative requested the co-operative to examine the prices of spare parts, and dramatic results were achieved. In 1985 the cost price of a clutch plate was R346. A year later, in October 1986, it had increased to R1 500. The co-operative set to work initiating negotiations. By November 1986 it had reduced the cost price of that clutch plate to R202. [Interjections.] What we therefore need now is a co-ordinated effort on the part of co-operatives with a view to doing what that co-operative has done.

I also want to say that I think that the consumers of South Africa as a whole should make a co-ordinated effort when that R900 million is employed to combat inflation. We must initiate a consumer campaign and start bargaining. What I am saying is that we would then decrease prices dramatically, combat inflation and again place South Africa in a position in which we would be able to farm again, the consumer would have a new lease of life and our economy would be placed on a sound footing.

I saw how shocked the hon Minister was when I mentioned all this to him.

And he is not easily shocked!

I want to ask the hon the Minister not simply to wave aside what I have told him today. The people who gave me this information are involved in agriculture and they mean well. The hon the Minister knows these people and they helped us with this proposal. We do not claim credit for it. I, too, was shocked, as the hon the Minister was, when I heard this for the first time. I am asking the hon the Minister to get over his initial shock so that we can again discuss these matters, because what we have spoken about here is of major significance. The hon the Minister must not dismiss it, because we must examine this dispassionately. We have here the potential to save South Africa’s economy and revitalise the country. What we are saying to the hon the Minister is that we are prepared to co-operate in an orderly, constructive, forceful effort to put South Africa back on its feet. [Interjections.]

Mr Chairman, it is a pleasure for me to follow the hon member for Lichtenburg. I must be honest and admit that he took me a little by surprise today. I did not expect him to behave as calmly and responsibly in this debate as he did. [Interjections.] I have therefore prepared the wrong speech. To start with I want to congratulate the hon member on his appointment as the chief spokesman on agriculture on that side of the Committee. I believe that many of the things the hon member said will and should receive the serious attention of the hon the Minister. In my personal capacity I certainly agree with many of the things the hon member for Lichtenburg said. As regards some of the other things he said, the question which I asked myself was whether we would be able to afford them. However, these are matters we shall certainly have to look into.

I do not think we can let this debate on agriculture pass without referring to the fiftieth anniversary of the Marketing Act. From time to time, nowadays more frequently than in the past, severe attacks have been launched on the system of regulated marketing. I suppose it is justified that specific criticism is sometimes voiced against this system of regulated marketing; as a matter of fact, I think control boards and the management committees of marketing boards will be the first to admit that there is undoubtedly room for improvement in their organisations, as is the case in every other sector of the industry.

The attacks on these marketing boards usually arise out of ignorance or a kind of popular misconception. There is something I consider even more dangerous. We must accept and realise that there are certain interest groups to whose financial benefit it would be if the system of controlled marketing in South Africa were to be dismantled. We must therefore not always see only a constructive motive behind criticism; we must realise, when this system is attacked, that there is sometimes someone behind this who will benefit financially from its being dismantled.

The main objective of the Marketing Act is certainly still that the difference between the price the farmer receives for his product and what the consumer pays for it must be as small as possible. A second objective is that there must be a constant flow of agricultural products to our South African markets, and thirdly that there must be control over the quality of the agricultural product.

It is alarming that in spite of everything that is being done in terms of the Marketing Act, the share which the primary producer, the farmer, gets of the price which the foodstuff earns in the retail market, has declined. In 1980 the farmer got 53% of what his product earned in the retail market. This percentage has declined—in 1986 to 47%. If one considers that the wheat value of bread is approximately 35%, whereas it is only 8% in the USA, you will start to get an idea of precisely how big a role controlled marketing, in terms of the Marketing Act, has played in South Africa, to the benefit not only of the farmer, but I feel to the even greater benefit of the consumer.

We are waiting with great interest to see how the recommendations contained in the Report on an Investigation into the Restructuring of Agriculture are going to be implemented, where practically and financially possible. I do not think it is appropriate to discuss the many financial assistance schemes for farmers under this Vote. A discussion of this will certainly be more appropriate under the own affairs Vote, Agriculture and Water Supply.

I therefore want to confine myself to the discussion of a few factors which gave rise to the unacceptably high debt burden of farmers. According to the report of the Economic Advisory Council of the State President the increase in the total agricultural debt during the period from 1980 to 1985 was R7,6 billion. It is interesting to note that the increase was made up as follows: As a result of inflation, 47%—the hon member for Lichtenburg referred to this—as a result of interest rates, 31%; and as a result of the drought, 22%. If these figures are assessed superficially we can very easily underestimate the effect of the drought. However, the fact remains that in certain areas, particularly in some of our summer rainfall field cropping regions, as well as in some of our livestock grazing regions, the effect of the drought has been far greater than is apparent from the figures at first glance.

According to climatologists it must be accepted that in some of these regions a natural phenomenon, which recurs every 300 to 500 years, has taken place. This can therefore be described as an extremely rare natural disaster in these regions. In these regions, assessed separately, the effect of the drought on the debt burden will in my opinion be even more important than the other two factors together. I am making this point because in assessing the factors which gave rise to the large debt burden, the exceptional climatic conditions could be underestimated and agricultural policy might not take this sufficiently into account.

In the determining and formulation of agricultural policy the state can and should expect the farmers themselves to undertake financial and other management planning in order to combat the effect of a so-called “normal” drought. However, when the state must act during such an exceptional natural phenomenon as the present drought, which has almost run its course, I feel that the guidelines which apply to financial assistance after similar natural disasters, such as flood damage, should also apply. What I am therefore advocating is that a sophisticated drought evaluation system must be developed to ascertain when a drought can really be described as a disaster. Steps can then be taken to deal with a disaster properly after a disaster area has been identified.

The second factor which contributed to the increased debt burden was inflation. The hon member for Lichtenburg elaborated for a while on this aspect. Forty-seven percent of the increase in the debt burden can be ascribed to this factor. The inflation problem, as it affects agricultural inputs, can only be addressed to a slight degree on the basis of agricultural policy. In this connection I do want to say that I feel that the State must give serious consideration to abolishing the surcharge which is intended to protect certain South African industries. [Interjections.] I think the time has now come when some of those industries no longer need that protection.

I am also of the opinion that the provision of certain basic raw material has to a certain extent become monopolised. It must form an integral part of the South African agricultural policy to keep the Department of Agriculture and Industry constantly informed of suspected monopolistic activities which affect agriculture and which can contribute to inflation.

Order! I am sorry, but the hon member’s time has expired.

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

The third and very important factor which contributed to the increased debt burden in agriculture was interest. I should like to dwell on this. The Economic Advisory Council of the State President ascribes 31% of the increase in the debt burden to this factor. I am convinced that although we could not do anything about the effect of the drought, and could do very little about the inflation factor by way of the agricultural policy, we must take a more penetrating look at the effect of interest on the increase in the debt burden of farmers.

A fact which is frequently overlooked is that one does not pay interest if one does not incur debts. Agriculture is a risky industry because climatic conditions in particular cannot be predicted. As a result of low yields farmers are frequently compelled to incur debt to stay in production. Consecutive poor yields can cause production credit to accumulate to such an extent that the interest burden exceeds the eventual paying capacity of the farmer. Consecutive poor yields will then lead to a disaster which in my opinion should rather be handled by means of subsidies than by means of loans. Exceptional circumstances will however have to give rise to such an agricultural policy.

It is however true that other factors sometimes make a greater contribution to the accumulation of the debt burden than unfavourable farming conditions. I want to mention a few of these factors. The first factor is the overestimation of the average production potential of a region or farm, which gives rise to unrealistic inputs. I do not want to elaborate on this, but I think it is very important for our farmers to know this.

A second factor is overcapitalisation in the form of fixed improvements, and their obvious financial implications. A third factor is the use of expensive methods of financing, particularly for the purchase of implements. In the fourth place there is the purchase of additional land at prices far above the incomeyielding capacity of the land.

I should like to deal with the last two causes of the accumulation of farming debts—expensive methods of financing, and the price of agricultural land. As regards expensive methods of financing, I want to refer to a single incident. A couple of years ago a farmer bought a tractor for R8 000. He made use of hire purchase financing. He only made the first relatively small payment. He used this tractor for two years without making a single further payment. After two years had elapsed this financing organisation took the tractor back as a deposit on a tractor costing R18 000, without any down payment or additional payment. This process was repeated a number of times, and eventually the farmer ended up with a tractor costing R130 000. This happened in practice. Eventually the farmer had a tractor costing R130 000 on which only a first payment on the R8 000 for the first tractor had been paid.

I consider this kind of behaviour by a financial institution to be irresponsible. I would like to define it as high-pressure marketing of credit. I feel that the case I referred to is a typical example of this. If this kind of provision of credit gives rise to certain losses for suppliers of credit, because they never took the paying capacity of farmers into proper consideration, that organisation has no-one but itself to blame.

I now come to the matter of land prices. The aggressive or high-pressure marketing of capital, particularly in the early eighties, was in my opinion one of the main reasons for unrealistically high land prices. I feel there is a degree of justification for the statement that in a certain sense farmers served as fronts for financial institutions to invest reserve capital in agricultural land at virtually any price.

The fact is that in 1980 the market value of land was 150% of its productive value. What happened in 1984, however? In 1984 the market value of land rose to 240% of its productive value. This increase is, inter alia, an indication of the great pressure brought to bear on farmers by certain financial institutions to make use of the large reserves of credit which were available. The role which this kind of transaction played in the years 1980 to 1984 in increasing the debt burden of agriculture must not be underestimated, particularly if it is taken into account that this money was lent out at relatively high interest rates. In my opinion these institutions did not take sufficient cognisance of the paying capacity of their clients, and in that respect they acted irresponsibly.

It is true, for a variety of reasons, that the market prices of agricultural land are higher than the productive value of that land in all comparable countries in the world. However, if the difference is as great as it was in 1984, when the market value was 240% of the productive value, I maintain that this is a phenomenon which South African agriculture cannot afford. Responsible people in banking admit that it is essential to take the productive value of the land or the paying capacity of farmers into consideration when granting credit.

I recommend that the agricultural policy should be aimed at informing these organisations in a regulated way regarding the paying capacity of individual farmers. In some regions it has been proved that 60% of the farming units can be described as uneconomically small. In the North Western Cape the Burger Committee is at present dealing with this matter, and 22% of the farmers in the regions have indicated that they would like to leave the farming industry voluntarily if they could settle elsewhere.

This presupposes the regulating of South African agriculture, and inter alia that the consolidation of too small farming units must be promoted further by a specific agricultural policy. In this consolidation process it is desirable for socio-economic and other reasons that the small farmer or young entrant should be placed in a position to purchase land on a sound economic basis. However, if the market prices of land are pushed up to the present level by certain market forces, it is impossible to get a financially meaningful consolidation process under way.

The State could play an indirect but very important role in exercising a stabilising influence on land prices, and at the same time help to keep farmers settled on farms. Here I am referring to the use of a part of the R400 million made available for agriculture. Exceptional economic conditions are prevailing in agriculture at present, and for this reason serious consideration must be given to using a part of the R400 million to purchase land forced on to the market by insolvency auctions at a realistic agricultural value. In this regard I am associating myself with the representation of the hon member for Lichtenburg. Selected and deserving farmers who are frequently liquidated by circumstances some of which are beyond their control should be placed back on the farms with 100% ACA loans, by making use of section 28 of the Agricultural Credit Act.

This strategy may in future prove to be one of the most effective ways of promoting the accepted policy of reconstructing agriculture.

Mr Chairman, listening to the hon member for Fauresmith and the hon member for Lichtenburg, one becomes aware of the terrible problems that confront the farming industry in South Africa. So many of those problems are arising now because of the growing burden of debt of the farmers, and I do not believe that this Government has done enough to analyse why we got into this situation in the first place.

I believe that this has to do with major errors in farming policy.

At this stage I should like to come back to the maize industry in particular and talk to the hon the Minister about that. I raised this whole question of the production and marketing of maize in South Africa in a debate earlier this session. I believe that the fixing of a maize price, as has been done over countless years, and control by the Maize Board, are at the base of a large percentage of the troubles and difficulties that are being experienced by the agricultural industry as a whole at the present time.

In the first instance, the fixed price has encouraged many farmers to grow maize on unsuitable land. The hon the Minister knows that. In good years this has meant that there has been tremendous overproduction and a necessity to market a substantial percentage of the crop outside South Africa at a loss; and, in bad years of drought, as we have had recently, crops on unsuitable or marginal land have failed and the farmers involved in countless instances have been forced off the land.

In the second instance consumers have been forced into a situation where they are paying far more for maize and maize products than they should be. Much of this has to do with input and costs to farmers but it must be remembered that much of the consumption of maize is by the farmers themselves because maize is the main energy feed in the meat, dairy and poultry industries, so the price of maize affects the price of meat, milk, butter, cheese, chickens and eggs—in fact, most of the main sources of protein available to consumers. The fact that it is the staple food of a large section of the South African population means that the price of maize and related products has serious political implications as well.

When I raised the matter previously I said that in much of South Africa maize can be and is being produced at not much more than half the controlled price, and this statement was not contradicted by the hon the Minister at that stage so I can only assume that it is substantially correct. I would say that at present, in good years when there is no drought, on suitable land—taking into account input costs at the moment—maize can be produced for not much more than R105 or R110 per ton. [Interjections.] Hon members may laugh but I can back this statement up if necessary. To meet the input costs for the farmer on marginal or unsuitable land the fixed maize price is in the region of double that figure. So there are many farmers on that kind of land who need a price like that in order to survive. Add to that the Maize Board’s having to cover export losses because of overproduction and we find that the consumer is then paying in the region of two and a half times what the production cost is on suitable land. Add to that the mark-up from the millers and we are faced with the horrifying situation where marketing and processing makes up in the region of two thirds of the final buying price for maize meal.

This ridiculous situation has been brought about by a major policy mistake made by this Government. They encouraged farmers to grow maize on unsuitable land that would have been better used for grazing. I believe this policy has been a disaster.

What is your solution?

I am not sure about a solution. [Interjections.] Having made a mess of it, it is up to the hon the Minister to get us out of this mess.

In replying to me in an earlier debate, the hon the Minister accused me of being out of touch. I want to tell him that this Government is responsible for a policy that has come very close to destroying large sections of the farming industry and has forced many farmers off the land. He just has to look around and he will see that that is exactly what has happened. Why have farmers left the land? Because of a mistake in policy.

Are you a farmer?

I want to ask the hon the Minister what is being done about maize production and marketing. What is the Government doing to ensure that consumers—and the bulk of them are farmers themselves as far as the maize industry is concerned—get a square deal? I do not want an answer to the effect that I am out of touch which the hon the Minister gave me last time. The hon the Minister knows that I am talking about very real problems. I wonder whether he has the solutions because the whole thing is one monumental mess which is going to be almost impossible to sort out and it is no good denying it. I do not have a solution at the moment but I am not the Minister of Agriculture. [Interjections.]

There sits the hon the Minister of Agriculture. He is the man who has to sort it out and I do not believe he is capable of doing so. [Interjections.]

I must say that I am getting sick of hon Ministers failing to answer adequately matters that are raised in the House, as the hon the Minister did last time, on the excuse that there is insufficient time to answer. Debate becomes an absolute farce because hon Ministers ride roughshod over any legitimate questions put to them. They are evasive and I believe the whole system of parliamentary democracy is in jeopardy, because of the way Parliament operates at this time with a Government that will not answer questions put to them across the floor of the House. It is just not acceptable to say that there is insufficient time. Time must be made so that the people of South Africa can get answers to legitimate and vitally important questions that are raised.

I want to say to the hon the Minister that he must tell us about all the measures being taken to sort out the whole problem of maize production, or overproduction, and maize marketing. His incompetent Government has brought the whole of agriculture in South Africa to the brink of disaster and like Nero, he fiddles while Rome is burning. Years of mismanagement as a result of misguided policies have resulted in chaos which I must say is being taken advantage of by the hon members of the party on my right.

We have the ridiculous situation of hundreds, if not thousands, of maize users being forced, for example, to act illegally by “over-the-fence” buying and selling. I can hardly think of anything more calculated to encourage overproduction than the forced export levy. Stock farmers, dairy farmers and chicken farmers are being forced to grow their own maize in order to put them in a competitive situation with others who are growing maize. If they do not grow their own maize, they are going to have to pay the export levy on top of their production costs and this they are unable to do because it puts them right out of the price structure. Stock farmers, dairy farmers and chicken farmers have to compete with other producers growing their own maize and, if they do not compete, if they do not grow their own maize, they have two alternatives: They buy “over the fence” illegally or else they go out of business.

It is going to take major steps if any order is going to be created out of this chaos and we need to know what is being done. I should like the hon the Minister to take the time to tell us what is being done about this. So vast and complex are the problems that I wonder whether this hon Minister and his Government have the ability to solve them, but at the very least the hon the Minister must spell out the steps that are being taken at the present time.

I may add that the answer suggested by the hon member for Lichtenburg is not adequate. When he talks, firstly, about subsidising at farming level on the quantity of land used per hectare, I can think of nothing more calculated to bring about a further situation of overproduction, thus compounding our problem. When he talks about control of prices, we obviously have a totally different philosophy from the socialistic philosophies of the party on our right. We do not believe in those sort of controls. It is controls of that nature that have got us into trouble.

We want less control. Nobody is suggesting for one moment that the agricultural industry can do without control. World-wide we know that it has got to have control. What we are arguing about, and what my quarrel is with the hon the Minister, is the sort of control. I believe that his and his Government’s philosophies are totally mistaken. They have followed the wrong path over a period of years, and this is what has brought the agricultural industry into a situation of near disaster. [Time expired.]

Mr Chairman, I must say that this is the first time I have had the opportunity to follow upon the hon member for Bryanston speaking on behalf of the agricultural industry. I have a lot of respect for him but, unfortunately, it seems as if the hon the Minister was correct when he said the hon member was slightly out of touch. I am not a maize farmer, I am a wheat farmer.

A weak farmer?

I know pretty well that it is well-nigh impossible to produce a ton of wheat or maize at R110. I do not think it is possible, but I will not speak on that. There are other hon members who can do that.

I agree with the hon member when he says he objects to the kind of control which the hon member for Lichtenburg suggested. I agree with him on that point.

*The idea of deregulation is to get away from rigidity, and I want to tell the hon member for Lichtenburg that the only thing that will happen when we start subsidising agriculture on the producers’ level is that this will be discounted in high land prices.

†This will only distort the position much more than at present. I agree with the hon member for Bryanston on that point.

*As regards control and free competition in South Africa, I think this is something all of us, including the agricultural sector, should strive for. We are in the midst of reform in the constitutional sphere, and as is the case in the constitutional sphere, people and groups want to absolutise certain solutions as the only and complete solutions both in the constitutional and the economic spheres.

When food prices increase, the agricultural sector and the marketing boards are blamed. The blame for high food prices is laid on regulation and control, because this has ostensibly resulted in monopolies. In the process there are discourses ad nauseum about the so-called fundamental contradiction in the endeavour of marketing legislation and that of the Free Market Foundation.

The free market theory is presented as being the absolute and complete solution, whereas the marketing and control board system is presented as being the absolute and complete problem in agriculture. Unfortunately the free market theory and the justified quest for this are elevated to a kind of ideology in the process, and it is intellectual to take part in this. In economic reform, just as in politics, we cannot use models and solutions that are being absolutised, especially not in South Africa, because the realities of our population structure, our different standards of living and our rural conditions cannot be undone by theories.

The agricultural industry probably includes the greatest variety of private enterprises, because there are 65 000 farmers who can be regarded as individual farming factories. The Meat Board alone has to deal with the products of 25 000 different farming units, which are really farming factories. These farming factories produce products of varying or different quality. Marketing boards will have to remain part of the system in the foreseeable future to bring about order in the system and to get the products of these farm factories to the markets in an orderly way.

Deregulation should promote economic activities, and not hinder them, but I want to tell the hon the Minister that if deregulation in agriculture is taken too far, we shall be heading for more problems than we have at the moment. Last year the EEC paid out 12% of the consumer price by means of agricultural subsidies. In South Africa our agricultural subsidies are equal only to 1,4% of the consumer price of agricultural or food products.

I want to refer specifically to the wheat industry. I want to repeat a previous warning against an unnecessary overreaction to regulations and an oversensitivity about the bread subsidy to the consumer. We must accept that basic food and its price, especially as far as bread and maize meal are concerned, have a certain political connotation. One would like to support the hon the Minister’s attempt to reduce the political connotation involved. On the other hand the Government also has a political responsibility to govern in the interests of the country for the sake of economic stability in the winter grain sector of the agricultural industry. The phasing out of control in this industry will not necessarily lead to the advantage of the consumer and the producer, nor probably to the advantage of the milling and the baking industry.

The hon member for Fauresmith broached the question of the difference between what the producer receives and what the consumer pays. In the USA the difference between what the producer gets for his wheat and what the consumer pays for bread is 92%, whereas in South Africa it is only 64%. This speaks volumes for the soundness and effectiveness of the control in the winter grain industry.

In my opinion the assumption that control contributes to monopolies in the milling and baking industry is a superficial assumption. It is true that there are only five groups in South Africa that control 94% of the milling industry and five groups that control 85% of the baking industry, but South Africa has a small wheat industry. We mill approximately two million tons. Besides these five groups there are also 22 individual mills, 140 bakeries and 1 500 confectioneries outside this group. In the USA and Canada, between 70% and 90% of the milling and the baking industry is controlled by only 10 groups in a population 10 times larger than that of South Africa, and they mill approximately 20 million tons of grain. This means that the economic concentration in this industry is much stronger in the USA than in South Africa.

In the final instance I appeal to the hon the Minister not to overemphasise the quest for deregulation in the wheat industry in South Africa. I want to emphasise that the marketing system that functions under the administration of the Wheat Board at the moment is probably the best in the world in terms of the criteria of effectiveness and advantage for both producer and consumer. My appeal is that we shall not interfere with this system unnecessarily.

The political content and the consequences of informal control by retail chain groups will create far more problems than uncontrolled deregulation in the wheat industry can attempt to solve. If we remove control completely, the price of bread will increase by approximately 20%.

Mr Chairman, may I say what a pleasure it is to follow on that very good speech of the hon member for Caledon. I, for one, want to make it clear that I support fully his comments in regard to the system of marketing boards and their functions. I, too, am somewhat concerned about the emphasis on deregulation in regard to the functions of these marketing boards. I think this can be carried out to a certain degree, but I believe we are already witnessing the results of the relaxation of control at certain levels and in certain marketing structures of these boards. The price the consumer has to pay has gone up very considerably and is possibly out of all proportion to the increase in the price that the producer has been receiving. I therefore believe that the comments that the hon member for Caledon made were very constructive.

I want to refer very briefly to some of the points that were made by the hon member for Lichtenburg. One of the important issues that he raised was the fact that the present debt load in the agricultural sector is now increasing beyond the acceptable and the economic recovery norms. This is an extremely serious situation indeed and I am surprised at the fact that although the R400 million financial assistance scheme has now been in operation for two months, only some 82 applications have been received.

It is of concern to me, though, that only 60% of the applications that have been made have been successful. In the course of the past few weeks I have been approached by farmers who felt that they qualified for assistance under this scheme. I must say I have been rather disappointed by the reaction and the manner in which these applications have been dealt with.

I wish to deal, briefly, with the Vote under discussion. In doing so I feel somewhat reluctant to enter this debate on yet another theme of gloom and doom. There is without doubt an emergency situation emerging in the agricultural sector. There are two factors one should be looking at, namely the long-term as well as the short-term solutions to the problem.

As my time is limited I wish to deal briefly with the short-term issues only, as I see them. Let me stress that one cannot get away from the fact that to do justice to the industry and to the Vote under discussion it is necessary to evaluate once again the circumstances in which the agricultural sector now finds itself. I want to say at the outset that it gives cause for concern that the agricultural economic crisis in the country continues to gain momentum at an alarming rate.

This is happening in spite of the injections of financial assistance that have been made available by the Government over recent years. It is with great regret that I say, as a result of approaches that have been made to me, it has become increasingly evident that the relief measures have been and still are inadequate to stem the tide of impending disaster in the industry.

That may sound somewhat dramatic, but when one represents a rural constituency these factors come to light. One has only to look at the enormity of the agricultural debt of R14 billion to realise just how difficult it will be for the farming community to extricate itself from this financial mess and to recover from the wounds of the present crisis. Not only must this debt be redeemed in time, but the costs of servicing this debt are formidable at present interest rates. That is the point I wish to stress.

When one makes a rough estimate of the servicing of this debt, one finds it is in the vicinity of some R1,5 billion to R2 billion per year. In fact, I would go so far as to say that there are many farmers who will not be able to meet their interest commitments as well as their redemption obligations, unless some additional form of relief is forthcoming in regard to interest rate payments. Farmers who have taken out loans face the grim fact that their problems are being compounded by the fact that they are in the unenviable position of having to pay interest on interest, which is no less than an ongoing erosion of their assets.

My plea to the hon the Minister is this: Investigate ways and means whereby more direct attention may be given to farmers in distress to alleviate the burden of interest rates in particular.

This must become the focal point for the rendering of assistance in the various programmes that exist. Without these measures the plight of many farmers will become untenable and it will be impossible for them even to start redeeming their obligations.

I want to make it quite clear to the hon the Minister that it is not my intention to pour cold water on the assistance programmes that have been initiated by the Government over recent years. One is appreciative of the efforts that have been made. However, the financial position of many farmers is deteriorating so rapidly that a mass exodus of people from rural to urban areas is imminent and inevitable. I need hardly stress the serious implications of this trend.

I want to stress too that the time has come for the Government to give an indication as to how far it is prepared to go in its rescue attempts to stave off total collapse in the industry. Many farmers are hanging on in the hope that something may come about. I would also like to suggest that the hon the Minister instruct the Jacobs Committee to evaluate how effective the existing financial schemes have been and whether it is necessary to amend these in any way as a result of changing circumstances. As I see it, and from the reports that I have received, consideration could be given to making the application of some of the schemes more flexible on the following lines, taking into consideration the varying ecological factors that pertain in particular areas, a greater emphasis to encourage young farmers to stay on the land.

It is sad to say that farming is now becoming a dirty word. I would like to suggest too that the Jacobs Committee look at aspects of affording greater security for small farmers and establishing the categories of farmers—and I think this is important—who require special treatment.

An aspect that should also be borne in mind is the fact that the farming backbone in any area usually evolves around those farmers whose enterprises have developed on a father-to-son basis. [Time expired.]

Mr Chairman, before I come to the problem area I should like to discuss today, I just want to mention two matters. In the first place it is essential that, on behalf of the many farmers and the co-operative I represent, I thank the Government very much for the serious approach it is adopting with regard to the problems in farming. I am convinced it required a great deal of hard work to find money for agriculture this year considering the extremely difficult position of our Treasury. We also had to receive support from very high circles; it would not otherwise have been possible. We are therefore very grateful for what we have received. [Interjections.]

I should like to say a few words with reference to what the hon member for Bryanston said. That hon member made quite a fuss about how badly the Government was managing agriculture and how bad and negative the influence of the control boards was. I want to tell him two things. He should have a look at his figures and at the agricultural products price index as well as at the cost-of-living index; he would then see that for the past 10 years the controlled agricultural prices have been lower than any other agricultural price.

Secondly, he would see that for the past 10 years the agricultural products price index has been lower than the cost-of-living index.

Where does that leave the farmer?

The point the hon member made was that the control boards were increasing the costs.

I want to tell him something else. If he has a look at last year’s statistics, he will see that the price of agricultural products increased by 11%. The increase in the price of food was 19%. If one accepts that 48% of the unit of food is in effect the agricultural product, and 52% is added through further processing, handling and marketing, one comes to the disturbing conclusion that the contribution of inflation owing to the processor and the marketer is 26%; in other words the inflation in the secondary sector was twice as high as that in agriculture. The hon member should therefore not look to us to find the fault. He should first have a look at the figures, and think before he discusses them.

I should also like to address a few words to the hon member for Lichtenburg. I was pleasantly surprised that the hon member adopted such a calm and peaceful attitude here today.

He knocked your feet out from under you!

Just to show how neatly the hon member knocked my feet out from under me, I should just like to refer to two matters he discussed.

Firstly, the hon member said that all they were asking was for the farmers’ profit margin to be moved back to where it was in 1981. If I may remind the hon member, we had to borrow R270 million to finance the loss we incurred by exporting that maize harvest. Therefore, the profit margin to which the hon member referred was subsidised to the tune of R67 per ton for the whole harvest. This was done by means of a loan. This was therefore not a genuine profit margin; we supplemented the profit margin with a loan. This is a very bad way to do business. [Interjections.] We therefore cannot refer to the profit margin achieved in that year as the real one.

Although I do agree with the hon member’s basic point of view in that we should be looking for ways to help the farmers, I want to tell him we have to be very careful what we say when discussing these matters.

This brings me to the problem concerning agricultural diesel. As hon members are aware, agriculture and other industries were in the past given certain rebates. For example, because farmers did not use the roads, they did not have to contribute to the road fund. They did not pay GST and so on, either.

When the old scheme was in operation, what happened was that the Treasury suffered enormous losses as a result of the manipulation of these rebates which were granted to certain industries. The other evening in this Committee the hon member for Witbank referred to these losses and said that they cost the Treasury almost R40 million per month.

I did not say that.

It would be a good idea for the hon member to read his own speeches in Hansard.

The total losses as a result of irregularities and the manipulation of these rebates came very close to between R120 million and R140 million.

For what?

For what? For the Treasury. Irregularities means cheating.

Per day, per month or per year?

Per year. [Interjections.]

It is far more!

Unlike the hon members on that side, the hon members on this side started working on the problem as soon as it arose.

The chairman of our farming group also made an announcement in connection with this matter. There had to be changes with regard to this matter in which irregularities were causing the Government to lose R140 million per year. Incidentally, the farming sector pays almost R80 million of that loss per year. It was therefore essential that the scheme be changed. The hon member for Witbank also said he accepted that it was not reasonable to expect the State to suffer such losses. We greatly appreciate that statement by the hon member for Witbank.

If the State had to compensate for these losses by introducing a price increase, it would have meant that we would have had to pay 9 cents a litre more for agricultural diesel. I do not want this to happen, and I am sure no one on that side wants it to happen, either. We on this side therefore say we accept that such a change will have to be effected. We therefore accept the change which means the onus is shifted from the State and is now placed on the user, because he is the one that derives the benefit from the rebate. He should therefore be responsible for proving he qualifies for the rebate. This is what happened here.

In the past, when the old scheme was in operation, a person, once he had made application for the rebate and had registered as a user, could be granted a rebate and paid only the net price. In terms of the new scheme one re-registers as a user and is entitled to a rebate, but one initially pays the higher price and later has to claim the rebate.

The hon member for Soutpansberg is an lawyer and will no doubt agree that when an undertaking of intent is given, it is not as legally binding as when confirmation is given of how the diesel was used. This change must take place so that the Government will be able to prosecute people guilty of irregularities.

However, the new scheme creates certain problems for the farmer. In the first place, there was a problem concerning the management and the structure of the scheme, and then there were also major problems regarding its administration. As the Margo Commission correctly pointed out, it is true that the less paperwork is involved, the more effective the taxation will be.

It is interesting that the hon member for Lichtenburg has just referred to the fact that it will be difficult for the co-operative to get its cheque from the farmer in this situation. I just want to draw the hon member’s attention to the fact that on 7 July a decision had already been made to rectify this matter. [Time expired.]

Mr Chairman, I think that since the Marketing Act of 1937, which was re-enacted in 1960, is 50 years old this year, it is fitting that we pay tribute to these organisations that have made, and are still making, such a major contribution.

The prolonged depressed conditions being experienced in agriculture places a considerable burden on the shoulders of the farmer. Economising measures that are constantly being practised by the responsible farmer, are being continued with circumspection, yet no satisfactory financial results are achieved. This suppresses zeal for work and enthusiasm, a state of affairs that is not beneficial to the farming industry, which has become a demanding and specialised occupation, particularly in respect of proper financial planning and efficient management.

The past few years have been characterised by a slower recovery of the South African economy than was generally expected, as well as—I emphasise this—the serious problem of a high inflation rate which has inter alia contributed to input costs remaining a serious problem in the agricultural field. South Africa’s inflation rate compares poorly with that of overseas countries. How can a farmer still become a shareholder in the prosperity of this country? We do not want to remain a member of the ragged trousers brigade. The farmer has his pride, after all. He wants to, and is capable of, producing, but he also wants to share in the prosperity of this country.

Agriculture cannot be dealt with or assessed independently from the rest of the country’s economic activities. The average growth rate of South Africa’s economy is lower than the population growth, and this points to increasing unemployment, with resultant lower purchasing power and poverty. Furthermore, it emphasises the inability to utilise the available resources in the economy productively enough. The chain reaction arising out of this, is one of the main contributors to the high inflation rate, which rushes on unchecked. South Africa’s ability to create prosperity, is hampered by low productivity. This in turn contributes largely to our unacceptably high inflation rate.

One solution to this dilemma is trained manpower. This applies at all levels, particularly in the field of agriculture. However, the net realisation on the farmers’ production is no longer sufficient to decrease their debt significantly, or even at all. The farmer’s share of the final price the final consumer pays is lower than 40%. In addition, it is assumed that the farmer’s profits on the product do not lie in its primary production, but in the refining of the product, that is, in its final processing, until it reaches the final consumer. The farmer, or his own affairs arm, must to his own financial advantage approach this matter in a serious light, since that is where the money lies—so much so, that nine of the food processing factories form part of the 100 top companies in the country, as reported by The Financial Mail.

The co-operative must therefore be afforded the opportunity to overcome or eliminate the two factors which are really detrimental to it, viz capital creation, or efforts to obtain new capital, and the statutory restriction on its activities. However, how can the co-operatives, as those responsible for the input costs, and who by implication keep forcing up inflation, amidst the privatisation process—we on this side of the Committee are not opposed to that—having also felt the pinch of the weakening economy, apply for protection, and get it? I am referring in particular to the news letter of the Department of Trade and Industry of July 1987 in respect of the adjustment of the price scale with regard to customs and excise allowances on agricultural tractors. I quote from the letter:

Dr McCrystal, chairman of the Board of Trade and Industries, recently made the following Press announcement:

This duty was fixed in October 1986 and was aimed at imports at uneconomical prices which applied at that time. From information obtained recently, the Board of Trade and Industries reached the conclusion that the tariff protection on urea should be adjusted. This finding is based on the fact that there is a worldwide over-production of this product, and that certain countries are prepared to sell urea at prices lower than production costs. In the light of this, and in order to prevent the negative effect of this on the local industry and the possible loss of job opportunities, the board deems it advisable to maintain sufficient protection against such unrealistically-priced imports.

The present price of urea is R518,59 per ton. Yet urea can be imported at less than R380 per ton in Durban, and perhaps at an even lower price.

As is mentioned in the report in respect of industries, agriculture is also concerned about the possible loss of job opportunities and would also like to prevent this, particularly since agriculture provides the biggest number of jobs, especially in the rural areas.

Scarcely 10 months after their application for tariff protection, the fertilizer industry maintains that increased over-production, that has occurred abroad in the interim, has caused dumping on the local market which could harm the South African manufacturers. They have consequently asked for an increase in the import levy on important fertilizers.

One understands the predicament of the fertilizer industry, and one does not deny it the right to protection if it should become necessary. However, one cannot expect agriculture, which has been brought to its knees by increased production costs, interest rates and inflation and consumer resistance, to help solve the fertilizer industry’s problems when it cannot even solve its own.

If we are seeking solutions to the ever deteriorating financial position of the farmer, and we know that products can be imported more cheaply, we must realise that agriculture as a whole can never be separated from the State. After all, agriculture provides the staple food—maize and wheat—of the country. Involvement by the State in farming is a worldwide practice, and the Economic Advisory Council even comes to the conclusion that agriculture fulfils a major role the South African economy as a result of its contribution in providing food and fibre, earning foreign exchange, providing employment, stabilising economic activity in the rural areas, as well as maintaining security. That means that agriculture can be regarded as one of the indispensable sectors of the economy. Agriculture must therefore be placed in a position to take up its rightful place in the country once again. That is why agriculture must be given its greater share from the State Budget again. In 1951 to 1960 it was 9,36%; in 1961 to 1970, 6,87%; in 1971 to 1980, 4,36%; and in 1981 to 1986, 3,25%. [Time expired.]

Mr Chairman, I take pleasure in participating again in the debate, particularly on agriculture, and I should like to make a few remarks in respect of my impressions thus far.

As regards the hon member for Lichtenburg, who made a contribution here, I found it interesting to note when listening to him and the other speakers, that whilst we are conducting a general debate dealing with agriculture in general, but mainly with marketing and dealing with agriculture in the broad sense, we always reach a point where the farmer’s problems as an individual—this is really an own affair—are dealt with. Therefore, although we should really be dealing with a certain subject in this debate, the discussion very often tends to move towards an own affair, which should really be addressed in another debate. It is not that we do not want to react to it, but here one is determining the broad basis of marketing, control and checks which agriculture as a whole deals with, not own affairs.

I listened attentively to the hon member for Lichtenburg, and what he spelt out there was true in respect of the problems that exist in agriculture. There are major problems, and he supported what he said with statistics. One must be careful of statistics, however. If one reduces statistics to a single figure to express a generalisation in the overall agricultural sector, it does not necessarily reflect what the position is in particular agricultural sectors, since there are industries that are not doing badly, that are in fact doing well. Others are doing very badly, however.

Therefore, when we apply generalisations to agriculture, we could harm the image of agriculture by indicating that it is merely a raggle-taggle kind of thing, which it is not. Agriculture has real problems, and the State is trying to address those problems insofar as it is within its financial capacity to do so. I think that aspect must also be taken into account.

If I therefore look at what the hon member for Lichtenburg said, I come to the important conclusion that we are not going to get the farmers out of difficulty with financial aid. What he is in fact pleading for is really in contrast with what is happening at the moment, viz a movement towards more economical forces which control circumstances in the sense that one must produce in a more market-oriented way, and that one must take away control to a certain extent and give a free economy an opportunity, with due regard for the dangers that may hold for agriculture. That is true.

What the hon member is advocating, however, is increasing control, more price control, intervention at all levels, to create artificial circumstances that are in conflict with the normal basic rules of a free economy. We shall have to reconcile the two standpoints in some way. Our economy is in fact too small to allow a completely free operation of economic forces.

On the other hand, we know that if one disturbs the economy in a certain way, it reacts. I want to give the hon member an example of what my problem is with State aid to agriculture. Let us look at the designated area where large-scale aid was given to farmers. Let us look at what really happened there.

Before aid of any kind was given, the premium above agricultural value was approximately 6% to 8%. That had to be paid before one could obtain the land. Since the State wanted to assist the farmers, it granted aid in the form of 100% loans on agricultural value. The price of that land rose to 126% above agricultural value, and I am being cautious in saying this. What happened there, therefore?

Is that not perhaps an own affair?

Yes, but I am now being compelled to refer to an own affair. I just want to point that out to the hon member, and I concede that I am dealing with an own affair now.

What happened there then? Before assistance was given, the farmer had to pay 8% extra to obtain the land. Now, after all the assistance that has been given to the farming sector, he has to pay 26% extra. If we subtract that 8%, it means that the farmer, with all this aid, is 18% worse off than he was before the State gave any aid. That is how the economy reacts. If one bumps it here, it bulges on the other side, and these bulges can sometimes be uncomfortable.

Therefore, when we look at State aid to agriculture, we must be careful that the aid we give in the short term, does not cause us to end up in such a dilemma in the long term. In fact, is one of the industries we are addressing in this way not perhaps in that dilemma precisely as a result of control because the market signals, the economic signals, did not come through in time so that farmers could quickly have exercised control in planting crops or changed over to other crops? This is another problem. It is a real problem that one industry influences the broader spectrum of agricultural industries.

Let us just look at the 6 million ha of land under agricultural crops, of which more or less 4 million ha is under maize. If there were to be a change-over to other industries, we would also determine to what extent these other industries could accommodate it; otherwise we are simply transferring the overproduction in one industry to another. However, I am grateful for the way in which the hon member approached the problem, and although I disagree with him in respect of price control, I think we could put our heads together in a sensible way to address this problem and to find a firmly-based solution for agriculture, one which could offer us a future.

The hon member for Fauresmith also adopted a very responsible standpoint in this regard. He spoke in a completely different vein by mentioning the abolition of control in a responsible way. Of course this accords with what we are trying to do today. The abolition of control must be dealt with cautiously. We must nevertheless also take note that when we take away control in agriculture and undertake certain privatisation actions, we do not plunge ourselves into a monopolistic situation, in which loss of control could cause chaos, particularly in regard to certain aspects.

Agricultural value and the reconstruction of agriculture are probably among the most important concepts we shall have to bring home to our farmers. In fact, this is another subject the hon member raised. In this way we shall have to resettle young farmers on farms that come into our possession due to the unfavourable financial circumstances which cause some owners sell their farms. Therefore, in a responsible way, we shall first have to afford these farmers an opportunity to lease these farm on a term basis, after which they will be permitted to purchase the farms in question; of course, only if they can prove themselves as full-fledged farmers by really making a success of farming, under the supervision of the department. We shall have to look into this. Of course, certain statutory amendments would unfortunately have to be effected before such a system could become fully operative.

I should also like to refer to the hon member for Bryanston.

†The hon member spoke about major errors and mismanagement in the field of agriculture. I am not going to join the choir in this out-of-tune song. The hon member, however, effectively demonstrated, I believe, that the fundamental problems underlying the present state of agriculture are in fact escaping him. As a result the melody lingers on. Even though the hon member does not like either the words or the tune, both still linger on.

*We must come back to the realities of agriculture. We must meet the realities of agriculture at this grass-roots level if we want to solve the problems in their entirety.

In my opinion the hon member for Caledon adopted a very interesting standpoint with regard to marketing and deregulation. He emphasised in particular that there should be no confusion. When we look at the way in which regulation and deregulation have been implemented in the wheat industry, we realise that we can learn many lessons from that. I am also grateful for the contributions the marketing boards are making to an increasing extent in this country—their responsible actions in facing the problem of marketing, which is a difficult problem. We in this country are going to find ourselves in a dilemma in the future as far as marketing is concerned. The demand for agricultural products is going to change as a larger part of the population moves to the cities. We shall have to provide more refined products. The market therefore changes in the demands made on agriculture. We must therefore be ready to exploit this, because when the population becomes urbanised and begins to maintain a higher standard of living, which will in fact happen, the inevitable participation of other population groups in the economy is going to create a larger market. And this in reality boils down to the distribution of wealth. This will in fact take place in the long run.

This does not mean that we will in fact have to give up something that is our own, but that we shall find a larger market for our own products in that greater economy, which will mean that it will be possible for the other population groups to have greater participation. We must therefore be ready to exploit this market, which is already developing, properly. This also forms part of the restructuring of agriculture.

†The hon member for Mooi River referred to the economic problems in agriculture, and also said the relief measures were inadequate. I agree with him in that regard. It is not possible to fund agriculture by applying only the means at our disposal today.

*It is not possible to solve agriculture’s financial problems by trying to pay off the total debt burden of the farmers out of a State budget of R47 million. The need is simply too great. This also emphasises this important aspect, viz that the solution to the problems of agriculture does not only lie in the hands of the State. It must take place on the strength of co-operation between agriculture and the State. A strategy must therefore be worked out with a view to enabling farmers to farm themselves out of their troubles again. The State will not be able to subsidise farmers out of their trouble. This is a truth we shall also have to realise at some stage.

The hon member for Heilbron addressed fine words of gratitude and earnestness to the Government concerning the aid that has been given. I do not want to make a political issue out of this, but I cannot help making this observation because what happened, upset me. When he thanked the Government for the aid it had given and for the earnestness with which the Government regards the problems in agriculture, there were a few “hear, hears” from this side, but the hon member for Lichtenburg and others laughed. It may be that the aid is not sufficient, nor is it, but let us at least acknowledge that if the Government had not given this aid to the agricultural sector and to the industries in the northern parts of the country, serious chaos would have prevailed there. Although the hon member perhaps cannot agree with all the forms of aid and its implementation, I do not think one could really laugh at what the Government has done in its earnestness and responsibility, not only for the agricultural sector, but also for other taxpayers in this country to whom it is accountable.

As far as agricultural diesel is concerned, it is true that agriculture finds these new measures rather irksome …

When you were talking politics …

No, I do not want to talk politics; I merely addressed a request in this regard that we should deal with it in this way, otherwise we are going to bring politics into agriculture.

Then you must talk to your backbenchers.

The situation with regard to agricultural diesel is awkward and inconvenient in respect of quite a number of the measures that have been introduced. However, I am grateful that members of Parliament with rural constituencies have brought this problem to the attention of the Government, and have not only done that but have come forward with positive suggestions. In this way a liaison committee was established on which we can refine this system and see whether we can solve the problems. In my opinion, agriculture must decide once and for all—I think we have accepted this—that we shall have to contribute to a system to limit anomalies as long as it is not impossible for us to implement that system. I think that that is possible, and that working group in fact met this morning at 09h00 for the first time, and is discussing this problem.

I am looking at a report which appeared in the newspaper yesterday and which deals with this matter. I want to appeal to the Press not to reach conclusions based on conjecture, because they announce that a new permit system has already been introduced which has been established to the satisfaction of the farmers to deal with the diesel matter. It is devoid of all truth. That committee met for the first time this morning at 09h00, and only then was it constituted and did it receive submissions. If we do not obtain the cooperation of the media in this matter, we are creating chaos and dividing agriculture. Agriculture has enough other things troubling it; the Press must not exacerbate our problems by way of distorted reporting.

The hon member for Delmas spoke about the Marketing Act. He asked how a farmer could obtain his share of the country’s prosperity. I think all the farmers have a desire to get rid of this dilemma and to get out of this quagmire of debt, this amount of R14 billion which is threatening to drag them under.

If one looks carefully at this large amount of debt, one sees that approximately R6 billion was created by the Land Bank, Agricultural Credit and other institutions. Part of the problem is that the other portion of the financing which came from the private sector—a number of members referred to this aspect—was not necessarily advanced on an agricultural-economic basis, but on the basis of other considerations, such as market value. The production capacity of the farm, its ability to cover the loans, were not taken into account. That is where the main problem lies. That is also why the actions of the State are aimed at bringing this debt within the farmer’s ability to pay once again. But we must come up with reasonable solutions and suggestions.

How do we get out of this difficulty? There are farmers—I do not want to generalise—who are still making a profit even in the drought-stricken areas. There are farmers who, despite all the problems of inflation, interest and land purchases, are still not in trouble. If we would consider this phenomenon for a moment, we could perhaps find a recipe we could use.

One of the things these farmers have in common, is that they made the right decisions. They were able to make the right decisions because they all kept books and saw to it that they knew precisely what was going on factually and on a day-to-day basis. Many of them were young and employed modern techniques to keep abreast. I know that it is not easy to achieve this, but we see that the farmers who survived, did so, and were even able to make progress by using sound business principles based on bookkeeping and employing the necessary expertise that is freely available. In this way the farmer will farm himself out of trouble. The State cannot do so, but can at most be a partner. Every farmer will have to make the decisions himself and only in this way will we get rid of this tremendous problem in agriculture.

Mr Chairman, it is a great privilege for me to enter this debate on this strategically important Vote.

I want to say right at the outset that we on this side of the House have no doubt that the hon the Minister has the farmers’ interests very much at heart; nor do we have any doubt that the hon the Minister has always been well-disposed towards the farmers and we sincerely thank him for that.

Secondly, I should like to say that unfortunately there was just a hint here and there in the speech by the hon the Deputy Minister that that may not always have been his attitude. We want to tell the hon the Minister that we greatly appreciate his goodwill not only towards agriculture but also towards the individual farmer in his present traumatic circumstances. It is because we know the hon the Minister’s attitude towards the farmer that we have no doubt that he will regard the speech by the hon member for Lichtenburg in a very serious light and that he will institute a thorough investigation into the well-intentioned, practical proposals the hon member made.

I represent a constituency, the economy of which is based almost entirely on agriculture. Therefore any change in agriculture in my area will have a direct effect on the socioeconomic welfare of the people in my constituency. In my contribution to this debate I first of all want to give hon members a picture of agriculture in my area. After that I want to deal with the question that is being widely asked at present, namely what lies ahead for agriculture.

The average farm in my constituency is 600 ha, of which 400 ha are cultivated land and the rest extensive grazing land. On an average farm of this type 360 ha of maize, 20 ha of sunflowers and a little sorghum or groundnuts are cultivated. For the most part beef cattle are kept on the grazing land. The farming structure is in my opinion representative of the greater part of the summer-grain area. It is well developed and well established, and almost all of the bad farmers have been weeded out by now. In my opinion the average standard of farming is very high. In addition, the auxiliary services and socioeconomic infrastructure have already been developed to a proper level.

Seven years ago the farmers in my constituency made a reasonable profit, and employment in the general economy was going well. At present it is a completely different story. The farmers’ average debt ratio in my area is now 67%. Despite even more generous drought relief measures, an increasing number of farmers are being sequestrated. Businesses in the towns are doing badly and unemployment is increasing.

In 1984 the SA Agricultural Union carried out a comprehensive survey and found that the position of 52% of the farmers who were predominantly summer-grain producers, was already critical by the end of 1983 in respect of financial survival. It was expected that this figure would increase to 65% by the end of 1984. The SA Agricultural Union also found that producers with a debt ratio of more than 30% in 1983 already had problems in meeting their debt obligations. At the end of 1986 a work group composed of members of the SA Agricultural Union, Uniegraan and Nampo found that out of a normal maize harvest of approximately 9 million tons and at the present net producer prices, roughly 54% of the fanners in the summer-grain area would have to leave agriculture in the coming years. At the same time, the hon the State President’s Economic Advisory Council found that farmers in this area with a debt ratio of more than 16,7% could not survive financially. We should bear in mind that three years ago the SA Agricultural Union shall set the critical limit at 30%, whereas the average in my constituency is at present 67%.

It is against this background that the people in my constituency are still urgently asking where we are going and whether the Government indeed has a practical agricultural policy which could, in practice, offer positive answers. Thus far the Government has allocated millions of rands for drought relief measures. We in the rural areas are very grateful for this because it gave the farmers an opportunity to reschedule their debt. The Special Reconstruction Committee under the leadership of Dr Jacobs is also geared to offer sound support to farmers who go bankrupt. As worthwhile as this is, there is no point in concentrating on treating only the victims of the disease, those that have ended up in hospital. If we do not cure the disease itself, an increasing number of victims will end up in hospital.

The disease in agriculture consists of inadequate and weakening profit margins. The disease has already taken on epidemic proportions in the summer-grain area. What are we doing to bring the disease under control? These days it has become fashionable to say that the market forces should direct the economy and therefore also cure the farmers’ disease. The hon the Deputy Minister also referred to this. Will these people be just as quick to say that forces of nature should prevent natural disasters, or that biological problems should be solved by biological forces? If their hearts failed as a result of overeating and tension, would they be satisfied with a prescription for diet and relaxation? Or would they insist on having a heart bypass operation to overcome the problem?

If we want to give attention to the root of the problem, we have to analyse the factors that are the primary cause of the problem. According to the report on the reconstruction of agriculture published by the hon the State President’s Economic Advisory Council, the total farming debt increased by R7,319 billion between 1980 and the end of 1985. Of this increase only 22% was as a result of the drought, whereas interest rates contributed 32,7% and inflation 48,7% to that figure. This means that 81,4% of the increase in the farming debt from 1980 to 1985 was caused by interest rates and inflation.

We know that at present the interest rate is relatively low, and indeed in real terms is negative, because at the moment there is no heavy demand for money. However, what is going to happen to interest rates when the demand for money increases once again? Will it, as in 1984, increase in an almost panicky way to 25% and 30%? This is what investors are afraid of. We do not believe that the Government has not yet done very much to alleviate this fear. If interest rates were once again to increase significantly, it would simply destroy agriculture with its giant debt burden. The second and most important cause singled out by the Economic Advisory Council was inflation. Inflation is destroying the producers, not only in agriculture, but also in the overall economy. If it destroys the producers, it will destroy the country too. With our inflation rate of approximately 17%, as against Japan’s-1% and the 1% to 4% of our other important trading partners, our local industries simply cannot survive against the competition imported products represent.

In the same way the export-orientated industries, and specifically agriculture as well, cannot remain competitive in the international markets. In order to compensate for an inflation differential of 16% to 17% every year, the external value of the rand would accordingly have to decrease by 16% to 17% every year. Such policy is obviously unacceptable, firstly because by doing so we would be admitting that we were unable to manage the economy properly, and secondly, because we would be struggling to pay off our foreign debt.

Lastly, the problem in agriculture is basically a consequence of our high inflation rate. It will not be possible to solve the problem in the long term unless the inflation differential can be eradicated. In the medium term the problem should be obviated by encouraging farmers to utilise land on which cash crops are being cultivated for extensive grazing instead. This process should be supported with export subsidies. This is the so-called mini-solution which was spelt out very clearly by the Jacobs Committee as early as 1983. The Jacobs Committee also proposed specific and clear solutions which we believe should already have been instituted at that stage. However, this was not done and the financial position of the farmers as well as the inflation differential have deteriorated to such an extent that new solutions are now necessary.

We know that organised agriculture and officials from the Department of Agriculture are involved in in-depth discussions on this matter. [Time expired.]

Mr Chairman, I want to thank the hon member for Schweizer-Reneke for the recognition he gave the hon Minister for his attitude toward farmers but I find it a pity that he attempted to drive in a wedge by questioning the attitude of the hon the Deputy Minister in this connection. I want to assure hon members that our farmers in South Africa have the greatest appreciation for the hon the Minister and the hon the Deputy Minister for the dedicated attention they are paying to current problems in agriculture.

I also wish to express my thanks to the hon the State President for being present at this very important debate today. He has shown himself willing to become involved in the solution of the problems agriculture is experiencing at this difficult time. We in agriculture are trying to make a scientific analysis of the problems and to seek possible solutions.

The Government deserves appreciation for being burdened with a very difficult task because experts say the period of drought, out of which we hope we are moving now, has been the severest in 100 or 200 years. If we examine what the drought and depression of the thirties did to agriculture and the country, we owe the Government recognition for the countermeasures instituted under current conditions to decrease the effect which the recent drought would otherwise have had on the country and on farmers in particular. This is no easy problem which can be solved in a single day and I think we have to be confident that the Government and in particular the hon the Minister and the hon the Deputy Minister are playing an important role in finding a solution to the problems being experienced in agriculture.

I want to talk about the marketing of red meat today and I wish to thank the Meat Board in particular for the fact that its members have also been willing to effect renewal in the meat industry during this difficult period. I am thinking specifically of Mr Frans Pieterse who was involved in the meat industry and maintains an open channel of communication between the consumer, producer and butcher to enable us to see whether we cannot iron out the problems.

The importing of meat to South Africa from abroad has been criticised and specifically over the past ten months we have imported 12 000 tons of meat, at a cost of R20 million. We have to realise that as a result of seasonal marketing shortages and surpluses and the drought the Meat Board had considerable surpluses followed by the present considerable shortages, and it is therefore essential to import this meat to keep the manufacturing and canning industries in operation. A great deal was said about the mountain of meat which resulted. The Meat Board succeeded in whittling away that mountain in the period up to March 1987.

At the moment there is a great shortage of low-grade meat in South Africa. Owing to supply and demand, the price is difficult to control at the moment and high prices have to be paid for the product at times. Nevertheless there are indications of success in curbing price rises and there is some prospect that prices will not increase after the end of the year, or will even decrease.

There has been a decline in the consumption of meat in consequence of the rise in price. This problem also has to be taken into account.

We wish to thank the hon the Deputy Minister for permitting, subject to certain conditions, the import of meat slaughtered at abattoirs in non-controlled areas. I consider this a step in the right direction.

It is said that chickens will drive cattle out of the country if the producers of red meat do not concentrate more on producing what the consumer market demands. Meat producers are dependent upon the consumer, and the quality of the meat together with its price will determine whether the consumer will buy the product in the long run. Consequently it is of the utmost importance that producers monitor their product continuously. Because of its lower price and marketing methods, chicken is capturing an increasing portion of the consumer market.

Producers of red meat should look to the Black market in particular. The Black consumer is notably the greatest challenge as regards marketing possibilities within the red meat industry. Frozen meat is not the solution for the Black consumer market and people should be geared to the hours when Black consumers are able to make their purchases. The establishment of more Black butchers in areas where Whites are not permitted to trade is important. These Black butchers are experiencing problems with control and management because of a lack of training, but this can be solved by in-service training.

†Red meat has always been part of the staple diet of the Black people in this country. Good service, friendly advice and neatly packed meat which can be transported easily is part of the solution. We must also remember that refrigeration facilities are almost non-existent as far as these people are concerned. A satisfied customer is the only criterion and the ultimate safeguard for a future market.

*The industry has not yet succeeded in developing a recipe to put this market structure to its fullest use. The present meat-dealers do not have the infrastructure or the knowledge to exploit this market.

When the potential of the Black consumer of red meat has been established, every marketer will concede that its extent has not been properly realised.

The producers of red meat in South Africa will not find it easy to produce sufficient red meat to be able to feed the entire population in future if they do not take note of these matters. Black people’s share in the total private consumer spending is expected to increase from 19,9% in 1970 to 44% in the year 2000. Whites’ share is expected to decline from 70,3% to 40% over the same period. As long ago as 1975 Black people were already spending more of their domestic budget on beef and chicken than were Whites. The consumption of red meat dropped from 33,8 kg per person in 1970 to an estimated 24,7 kg last year. This therefore means that the availability of red meat has not kept pace with the total population growth in the long term. Consumption of beef has declined worldwide and in contrast the consumption of chicken, fish and pork has increased.

It is specifically the task of the Meat Board to face up to this problem. To do this, the possibility will first have to be examined of abolishing unnecessarily restrictive regulations which have an inhibiting effect on sales. Secondly, the Meat Board should make an in-depth study of all production and marketing costs. After that it should tackle the job of counteracting the allegation that there is the health risk attached to the consumption of red meat. In the fourth place, the producer will have to receive a larger part of the total income from meat.

Mr Chairman, I make no apologies whatsoever for participating in this debate today, although I do so very much as a layman. In fact, the closest I have ever got to farming is growing vegetables in my back garden at home in Durban North. I do want you to know, though, Mr Chairman, that I am very confident that the vegetables I grew were of a particularly high standard. [Interjections.]

I am very aware of the incredibly important role that farmers play in South Africa. I am aware of the fact that farming is the second largest industry in South Africa, mining being the largest industry. I am also aware of the fact that South Africa is economically heavily dependent on farming.

Unfortunately, though, I am also aware of the fact that most farming sectors are in a state of decline, for a variety of reasons. It has been pointed out today that farmers in their thousands are facing serious trouble, including insolvency. Yet we know and accept that millions of people are involved in agriculture and owe their livelihood to farming, and that scores of platteland towns and “dorpe” owe their existence to agriculture. Obviously a collapse of the agricultural sector will be disastrous for this country.

It is also unfortunate that a series of very adverse conditions, such as drought, inflation, sanctions and high interest rates, as well as the poor Government policy, as indicated by my colleague the hon member for Bryanston, have taken their toll of the farming industry.

GST also.

It is particularly disturbing to note, however, the very rapid decline of the farming industry’s contribution to the GDP over the years. In 1911 the farming industry contributed 21% to the GDP; in 1940, 13%; in 1970, 8%; in 1982, 6% and in 1985, only 5%. I also note that agriculture’s share of exports dropped from 48% in 1964 to 7,5% in 1984.

Consequently we do accept the need for a rescue operation of sorts for the farming community, and we understand the necessity for R400 million being set aside by the Government for assistance to the farmer. What is important, however, is the fact that this aid will be offered on a selective basis only; in other words, not all farmers will receive it, and those already bankrupt will not be helped.

Aid to farmers must only be granted on a merit and an individual basis. I want to say, too, that there is merit in the report released not long ago by the Economic Advisory Council of the hon the State President, entitled, “Report of an Investigation into the Restructuring of Agriculture” and I find it difficult to argue with the following statement that appears in this report:

This makes sense, Mr Chairman, but of concern is that this report is offering advice and assistance which in many cases might be too late. Such a report we believe should, in fact, have appeared some years ago.

I want to stress, though, that aid cannot be given to those farmers who have proved incompetent. I notice with interest that the number of farms in South Africa has dwindled from 116 000 to 58 000 over the years. It is obviously likely that this figure may be further reduced and, while this is unfortunate, nevertheless I believe it would be wrong for the Government to go out of its way to support those farmers who have already run themselves into a state of bankruptcy.

It is clear that the agricultural industry is going to take time, perhaps 10 to 15 years, to restructure itself, and the Government must do all it can to assist in this regard, and should already have done all it could to have avoided this in the first place. While I concede that the farmer needs protection and assistance, there is no doubt that the consumer needs help and protection as well. There is a widening gap between what the consumer pays for goods and what the farmer receives for them. One can pick up any newspaper any day and read about how the consumer is being affected by spiralling food costs. While the general inflation rate runs at about 17% the inflation rate on foodstuffs is running at approximately 25%. We note that a basket of foodstuffs of 95 items, which cost R190 in April last year, cost R236 in May this year. This did not include items such as bread, meat, eggs, milk and other essential items. Unfortunately, if these items had been included the cost would have been appreciably higher.

However, of some comfort to the consumer is the fact that we note that the South African Agricultural Union and the SA Co-ordinating Consumer Council are meeting on a fairly regular basis now to discuss matters of common interest and to promote mutual understanding. These two bodies have agreed that the Government must step in to address the matter of inflation, because both parties, the farmers and the consumers, are being affected by it. Both groups require the Government’s protection, and it is essential that the Government attend to this matter with a definite policy. What would appear absolutely essential is that the Government call representatives of commerce, industry and the agriculture movement to a conference to negotiate ways and means of overcoming the problem.

On a totally different tack, I must say that I find it particularly difficult to understand how the Government can differentiate between own affairs agriculture and general affairs agriculture. I can only assume that this means that the Government has now established the mechanism by which it is able to hide the fact that it is protecting and helping the White farmer far more than the Black farmer. Agriculture is agriculture, and the lives of millions of people depend on the farmer, whether he is Black, White, Coloured or Indian. All farmers are affected by the same adverse conditions—drought, inflation, sanctions etc.

I noticed with interest a report that appeared in Die Burger on 3 July 1987, in which the chairman of the South African Institute for Agricultural Engineering stated that 15% of the Black community in South Africa and the independent states can make a very real contribution as commercial farmers, but they need the necessary financial aid and the necessary technical assistance.

Mr Johan Murray referred to Black farmers as thirsty for greater technical knowledge and as people who had produced successful results out of the most meagre opportunities. The institute believes that most farms in the Black areas are too small and that consideration should be given to the Land Bank and commercial banks offering Black farmers financial assistance on the same conditions as offered to White farmers.

I find this most interesting and most encouraging. I want to ask the hon the Minister today what new considerations have been given to help with the general upliftment of the Black farmer with regard to such matters as the size of farms he can own, financial assistance, offering of technical assistance, training of farmers etc. We must accept that the Black farmer does play a vital role in this country and needs protection and assistance in all respects. The Government must address itself to this problem more readily in the future.

Mr Chairman, I am afraid I do not have the time to reply to all the points made by the hon member for Durban North. He made a very interesting speech and if I have time available I will reply to some of his remarks.

*At the outset I wish to express a few personal thoughts. This is the last time Dr Immelman, our Director-General and our friend—I can say “our friend” because he is also the farmer’s friend in South Africa—will be attending a debate on agriculture in his capacity as Director-General. Dr Immelman has decided that it is time for him to retire. I do not know whether his time of retirement suits me all that well because Dr Immelman has rendered exceptionally good service to my Ministry and to me personally. I should like it placed on record that I appreciate this very highly. On behalf of all of us present I wish to thank him sincerely for the service he rendered in the many years he was involved in agriculture. I believe Dr Immelman had only one calling and that was to practise agriculture in various spheres within the department. Our grateful thanks to Dr Immelman.

Hear, hear!

I also find it a particular pleasure to congratulate our new Director-General sincerely on his appointment. He is Mr Harry Hattingh, who at the moment is still our Deputy Director-General. He will take over the post from 1 November. Mr Harry Hattingh is known to us all. He is the author of various articles on agricultural economics which have made him quite well known in agricultural economics circles. In view specifically of the current state of agriculture, we believe that Mr Hattingh, too, will leave his mark on South African agriculture. We want to tell him he is very welcome at these debates in the House of Assembly.

Hear, hear!

I want to make one final observation of a personal nature. I can do no other but have it placed on record that one of our great friends, by virtue of his contribution to organised agriculture in South Africa, Mr Org du Plessis, was buried on his farm yesterday. This friend to agriculture and particularly to marketing made an exceptionally great contribution from the time of the release of the report on the inquiry into agricultural marketing legislation. At the request of the then Minister, he relinquished his seat—Heilbron—to serve on the National Marketing Council for the specific purpose of applying certain aspects of amended marketing legislation. Mr Du Plessis dedicated himself to the grain industry in great measure and over many years. He left his mark indelibly in this sphere and I wish to pay tribute to him on this occasion.

The hon member for Mooi River tendered his apologies for his absence this afternoon.

†I would like to react to some of the remarks that he made in his speech. I agree with the hon member that we have short-term as well as medium and long-term problems in South African agriculture. [Time expired.]

Proceedings suspended at 12h45 and resumed at 14h15.

Afternoon Sitting

Mr Chairman, I was replying to the hon member for Mooi River on a certain aspect he mentioned in his speech and I should like to revert to it very briefly. He commented that it had become necessary to evaluate the relief measures we had instituted to see whether they were effective enough. It is true that we have instituted a variety of relief measures in agriculture over the past few years; one could almost write a book about this. I agree with the hon member that it is essential to take a look at the effectiveness of these various relief measures and I shall conduct discussions with the Jacobs Committee along these lines.

I should like to continue the pattern of a positive debate and make a very important announcement which is related to a certain industry. At the moment the wool industry is doing very well internationally. This is one of the commodities we shall have to use in very great measure to effect structural changes in agriculture. I shall return to this in a while when I reply to the hon member for Lichtenburg. In March 1987 we granted the wool industry an advance payment of 720 cents per kg. As a result of a very positive rise in the international wool market we have decided to increase this advance by 11 % to 800 cents per kg.

Hear, hear!

Last year’s closing price for wool was 1 047 cents per kg so this is altogether a safe advance. I do not wish to anticipate matters but I think we shall quite probably be able to make yet another deferred payment—in spite of this increased advance of 11%—if the growth of the wool market continues its present trend.

Various comments were made on the Marketing Act, which is 50 years old this year. We realised recently that this was one agricultural Act in South Africa which was perpetually subject to change, especially in respect of the various schemes falling under it in the times in which we are living. We had a wool scheme, which was in operation for the past 15 years. Hon members will recall that there was considerable tension in the wool industry at the time; I almost want to say there was the same tension in the wool industry as appeared later in the maize industry. Some wool farmers felt it was time to examine this scheme de novo. The National Wool Growers’ Association decided we should examine the scheme and I requested the National Marketing Council to consider this. The terms of reference have already been approved and I shall now make an announcement in this regard.

Firstly, an inquiry will be instituted, a report issued and recommendations made in this regard with a possible proposal of an alternative marketing system for wool. Depending on the committee’s findings in this connection, there must also be a specific report and recommendations on the following aspects with a view to greater effectiveness, cost-cutting and the elimination of possible duplication of services. In the first place the possibility must be investigated of transferring the entire physical handling, storage, evaluation, management of pools, presentation of auctions as well as all other attendant matters and administrative actions to the agent. Hon members know we have only one agent and that is the FBC. The question whether pools should be closed annually or over shorter periods is a very sensitive matter which will be thoroughly investigated. There is also the further question whether the objective gauging of wool should not be done by the agent or another private organisation. Furthermore the question is whether it does not remain desirable, from a cost-effectiveness point of view, to locate the head office of the Wool Board in Pretoria. In addition there is reference to any other matter in the above-mentioned context on which it is found expedient to report and make recommendations.

We shall obviously appoint producers from the respective wool growers’ associations to the committee of inquiry—it will not be a commission but a committee—people with exceptional knowledge as well as those who dislike the scheme. I should like to emphasise this because we shall include them in that committee of inquiry too. It will also consist of wool buyers, representatives of the FBC and members of the National Marketing Council. The secretariat will be handled by my department. We hope to receive this report shortly and that we shall most probably be entering a new dispensation as far as the wool industry is concerned.

I find it particularly pleasant to react to aspects raised here today by the hon member for Lichtenburg. While I was listening to the hon member—I have known him for years—he appeared to me to have had good liaison with organised agriculture himself to have come here armed with such positive ideas. We are in continuous contact with organised agriculture, with Nampo and the various trade organisations, to see whether we cannot extricate farmers from this incredibly difficult situation. Irrespective of relief measures one institutes in the short term, they will not help if the profit position of South African agriculture does not improve. We are in no doubt about this, so we are examining this situation very seriously.

The hon member again referred to the various problems which had arisen in agriculture. He alluded to one most important aspect in particular, which is that agricultural inputs had risen much faster than agricultural prices. When one views this figure over the past few years, it is truly a terrifying one. He referred to inflation, which is a serious problem in this regard. Nowadays people make statements and allocate percentages to aspects which cause problems in agriculture. Drought is quite a long way down the list and inflation is right at the top.

As a result I asked my department to investigate the effect of inflation on problems in the agricultural sector. With the object of making a proper comparison, we took a look at the exchange ratio in agriculture in the USA and the EEC. When inflation is the issue, one should remember it not only influences one’s inputs but also one’s output. In other countries too, such as the USA, it is a fact that the prices of agricultural requirements have increased more rapidly than agricultural prices. Consequently we also find a deterioration in what we call the exchange ratio in agriculture. We reached certain conclusions and came upon the following very interesting statistics. From 1978 to 1986 the exchange ratio declined by 15% in the USA, by 30% in England, by 19% in Germany and by 15% in South Africa. We appear not to be too badly off. I agree this presents a problem but it is not confined to South Africa; it is a worldwide problem.

There is an explanation for this. If one makes use of certain effective inputs in agriculture which increase one’s yield per unit, this necessarily means that one’s prices have to decline in the process because one has a greater supply as a result of effective action. Consequently this is a factor to be taken into account. I do not wish to make light of or ignore the problem; on the contrary, I think inflation remains one of the greatest problems in the economy. We cannot brand the problem of inflation as the only or the greatest we are facing in South African agriculture. Unfortunately agriculture has its unique characteristics in the economy. One does not always understand these matters; I do not always understand them either. [Interjections.]

After identifying the problems here, the hon member made certain recommendations to which I should very much like to react. Firstly, the hon member requested that we retain the carry-over debt schemes of six and ten years at agricultural co-operatives. I can tell him there is no question of our being able to discontinue those schemes at this stage. When we instituted the scheme in 1984 with a guarantee of R800 million, we had a six-year scheme because we hoped it would rain. If it had rained from 1984 and matters had gone well, we would probably have reached a stage now in which we could have phased out this scheme. It did not happen like this; on the contrary, we had to increase and improve this scheme, so we converted to a ten-year one. I speak to many co-operatives and examine quite a number of their balance sheets—I look at the debiting of their members—and as far as I can see we shall not be able to phase out this scheme within the next decade. It has already become a permanent financing institution at a certain co-operative. So what has happened? Agricultural co-operatives have become agents as it were in the implementation of a drought relief scheme. This complicates the matter enormously for the Government and the Ministry. This means—I am mentioning this cautiously but it is very important—that we shall have to intervene to an increasing extent in the autonomy of a co-operative, and I do not like that.

Hon members will recall that we made additional funds available as early as the beginning of this year to subsidise even those interest rates down to 6%. The State therefore has a direct interest in the matter.

It is my desire and my goal for us to be able to phase out this scheme ultimately so that our co-operatives may become autonomous bodies again.

The hon member alleged that the R400 million granted had not been applied successfully. I am being honest with the hon member. One anticipates that a very large number of farmers have serious problems, and I should like to prevent sequestration. That was the initial aim.

In negotiations we conducted with banks, co-operatives and creditors, we requested banks in particular to wait a while. Banks and many creditors then decided to see which way the cat would jump and not take action immediately. It is also true, however, that many of our farmers stood stock still to see what would happen. We also encountered the situation that in applications which were actually received the extent of security offered was so meagre that we could not accommodate those farmers. It has now been decided to use the R400 million which we wanted to apply for that purpose to extend relief by inter alia—as the hon member proposed—creating the possibility that Agricultural Credit could purchase land again. This is not only intended to assist younger farmers but also to avoid aggravating capital formation problems in agriculture—as the hon member put it. I am referring in particular to land prices—land is a farmer’s most important capital—because we want to prevent a further decline. We are working on this but it is a point we shall touch upon in a future debate.

The hon member mentioned the matter of a deferred payment on maize. I do not know whether there will be such a payment. I do not know whether he has information but we shall have to be very careful in the way we apply that deferred payment if we receive it.

It is very difficult to budget for a deficit in the Stabilisation Fund. One does not know what will happen in the international grain market; one moment prices are rising and the next they are plunging. Hon members will recall that we are specifically going to apply a support amount of R134 million this year to prevent the maize price declining by approximately 20%. In consequence of export volumes we did not expect to realise, the Stabilisation Fund is over R500 million in the red at present. We shall therefore have to consider this matter very carefully.

The hon member requested that interest be frozen by means of the Agricultural Credit Act. This is a matter we are investigating. My view is that, if we in any way wish a financing system to function effectively in terms of the Agricultural Credit Act, it will have to have a far greater share in total agricultural financing than is the case at present. It is currently below 7%. I think one possible solution would be to create greater mobility regarding interest rates instead of applying a rigid rate of interest, as provided by the Act. We are examining this.

The hon member also made certain observations on a matter which is situated more in the sphere of structural change in the longer term—a matter about which so much is being written and said in agriculture. I agree that the financing system and relief measures will not get agriculture out of trouble. One will have to introduce a change in production structure, and we are working on it this year. The two-market system was one of the plans we considered, but I want to say today I am very grateful we did not apply this system. If that two-market system had applied today, the single-channel marketing system would have been completely destroyed. The reason for this is that the gap between the consumer and producer price is so great that the board would not receive any maize. What would happen, as the hon member for Bryanston said, would be that the poultry people would buy their own maize farms. That is the type of situation one would find. The entire control system would therefore be destroyed in the process.

Instead of this we attempted to modify the scheme, and here I am not referring only to the maize scheme. We have included certain mechanisms in the marketing boards, the Oil Seeds Control Board among others, to encourage people to come forward with price estimates, or the so-called scenarios. It is an interesting fact that a year or two ago this country was still importing about a hundred million rands’ worth of oilseed cake and vegetable oil as a result of a shortage of proteins in this country. According to the latest price scenarios published by the Oil Seeds Control Board, we can increase the land we can earmark for the planting of sunflower from 300 000 to 400 000 to 600 000 to 700 000 ha; then we shall at least have our own oilseed cake and vegetable oil and would not need to import any. This will saddle us with a different problem, however; we would be left with vegetable oil for which we would have to look for a market overseas. This is presenting a slight problem but we are encouraging farmers to convert from maize to sunflower on a small scale.

However, there is another very interesting trend in agriculture, a consequence of a proposal we made to the industry in general. In certain regions of our country—here I am thinking of the Northern Transvaal and the Springbok Flats which are most effective grain-producing areas but also very risky because of the humidity—many of these producers could convert to dry-land cotton. Last year the price of cotton was 280 cents per kg on the international market at present; it is more than 400 cents per kg on that market. It is by no means impossible to produce 800 to 1 000 kg of seed cotton per ha on dry land if one’s climate is only marginally favourable. The dry-land cotton industry could develop into a very profitable one, especially in certain areas of South Africa. I am not saying that one could plant it in the Western Transvaal, although I know of farmers who have already produced dry-land cotton there.

What we are therefore trying to do is to see whether we cannot use marketing strategies to steer production systems in South Africa in a more marketing-orientated direction. Nevertheless it is true that the normal producer, as we know him—I am the same way inclined—together with his labour, is inclined to apply a specific production system on his farm. It is not easy to change something like this. It always seems difficult to me to alter things in politics; well, by the same token it is not always easy to make changes in agriculture. [Interjections.] That is the very problem, Sir.

As a result of this, discussions were held among organised agriculture, Nampo and the grain industry to establish the possibility of creating other methods by which we could make progress in the direction of market-orientation in the first place. One is incapable of market-orientated production, however, when there is a total price collapse. We therefore have to develop a system by which the conversion to greater market orientation can be supported to some degree. We believe the only method by which we can accomplish it at this stage is by means of a system of land conversion under which cropping areas are incorporated into more permanent grazing regions.

At the same time one must obviously consider the cash-flow position of the farmer who becomes involved in this process. It is a fact that, when one introduces merino sheep for instance, it takes four years before one sees a cash flow; it takes from seven to nine years in the case of cattle. What does one do with such a man in the interim, especially if he is burdened with debt at the co-operative and the bank and in addition lacks a cash flow? [Interjections.] Consequently we have to try to apply a system which will result in our being able to carry out an effective conversion while at the same time creating a degree of cash flow for the farmer. We are currently investigating this entire scheme. We hope to make an announcement on this subject soon—even before the coming planting season—if it is in any way possible to accommodate the farmers in this respect.

The hon member also put forward what I consider to be a very revolutionary proposal, ie that the food subsidy system should be built in at the starting point. The hon member has caught me unawares. This is a matter which requires some thought. I do not wish to reject the idea summarily at this point and the hon member did ask me not merely to shoot it down in flames. The hon member is right in one respect of course. We subsidised fertilizer for many years for instance. As the hon member said, however, by the time the food reached the consumer’s table, a number of people had in the meanwhile pocketed all the advantages. A situation then arises in which the gap between the farm gate price and the consumer price develops negatively. We then reach the same situation existing in North and South America where the producer’s share of the consumer price of food is even lower than ours because of the terrible subsidy systems. I shall furnish hon members with the relevant figures in a moment.

In reality this means that when something like this happens, one will have to make a more determined move in the direction of distribution and retail price control—as we have already had in the case of milk. I am subject to very great pressure, inter alia from the Housewives League of South Africa, which wants me to reimpose control on the retail price of milk. Unfortunately it was necessary at a certain stage to introduce restrictions on the registration of distributors for the simple reason that we wanted to effect higher capacity utilisation. This higher utilisation of capacity, however, later developed into a situation in which there were only four, five or six large distributors. When one then wants to lift restrictive registration suddenly and change the system into one of formal registration, smaller distributors cannot enter the system; that is when a difficult position really arises.

At the moment the situation exists in the milk industry that we think we have captured almost 10% of the larger entrepreneurs’ capacity. I am speaking about the Transvaal here and specifically the PWV area. They are starting to fix their prices now so one has to pay for it when one summarily wishes to reduce control in the process. This is no easy matter either.

The hon member also spoke about input costs as one of the existing problems. He also referred to the role agricultural co-operatives played in this regard. We decided during discussions I held at the beginning of this year with the Co-operative Board, especially in the light of the report on the inquiry instituted by the Board of Trade and Industries which we received last year, that it had also become necessary for co-operatives to control one another. After all, the cooperative is the body which has to sell the product—the input—to the farmer. To a great extent this determines the effectiveness of the co-operative movement.

They conducted an inquiry and, do you know, Sir, we found differences of 100% for the same product among co-operatives! No matter how fond the farmers may be of agricultural co-operatives, they are not entirely blameless in this process. [Interjections.] The co-operatives themselves are conducting their own investigation into this situation. The hon member requested us not to sweep this matter under the carpet. I agree with him—we shall not do so.

I also have a request, however, that I wish to address to the Official Opposition. We are all politicians; I am one too; one who knows what it is to lose—let me tell hon members this straight. Nevertheless we have to be careful not to move in a direction of party-politicising our agriculture in this country. This is not a good thing and I am not making this appeal on behalf of any political party. If I were to appeal on behalf of a party, hon members know which one it would be.

It would be in vain.

This is unhealthy for the effectiveness of agriculture and I am prepared to enter into personal discussion with the hon member who is the chief spokesman on Agriculture in this House if necessary.

Splendid!

The hon member for Fauresmith also mentioned the fiftieth anniversary of the Marketing Act and I thank him for doing so. The hon member made a very interesting statement here concerning the yardstick we normally use in gauging the effectiveness of the system controlling agriculture. It is that the difference between the price received by the farmer and that paid by the consumer has to be as small as possible. I have figures here for the USA and the RSA which show that the producer share of the food-Rand was 40 cents in 1975 in the USA whereas it was 56 cents in the RSA. Our farmers therefore receive a larger share of the food-Rand than the Americans. In 1985 the American farmer’s share of the food-Rand was 31 cents however, while the South African’s was 48 cents. The situation is therefore deteriorating but I still consider that our system in South Africa—as reflected in these figures—remains effective. As regards the Marketing Act, I want in all seriousness to recommend a biblical text to hon members which I came across in one of the balance sheets of one of our larger co-operatives. To me it represents a classic description of the objective of the Marketing Act in South Africa.

I regard that verse taken from the Bible as a beautiful reference to the Marketing Act.

†My friend, the hon member for Bryanston…

Is he your friend?

Well, yes, sometimes he is my friend. I have known the hon member for many years. [Interjections.]

The hon member made some very interesting statements. It is quite obvious that he is definitely not in touch as far as maize production in South Africa is concerned. [Interjections.] Let me tell him that it is impossible to produce maize at between R100 and R120 a ton. If he can show me an area in South Africa where that can be done, I would be very grateful.

*If it were possible to produce maize at such a low price, there would be vast surpluses so that one will be able to export and provide the consumer with cheap maize. Only a short while would elapse, however, before conditions would develop which would land one in the same position in which we are at present.

It is interesting to see what subsidies and relief measures in agriculture have done in other countries in particular. Saudi-Arabia—hon members will wonder why I am mentioning this country—was an importer of agricultural products for many years but is today an exporter. Why? Because of enormously high subsidisation.

†The Saudi government bought wheat self-sufficiency with a 50% subsidy on machinery and irrigation equipment, free water and a guaranteed price of $1 000 a ton. In 1985-86 production was up to 2 million tons with domestic consumption at only 700 000 tons.

The Japanese government also puts a high price on self-sufficiency—this concept of self-sufficiency where a country only produces enough to meet its own needs does not work in agriculture—and pays its farmers three times the world price for rice while feeding it to pigs at less than half the world price. Meanwhile the Little Red Riding Hood of all the developed countries—that is the consumer—pays 8 to 10 times the world price.

*I am mentioning these figures merely to show hon members that one has to be very cautious when one makes statements on subsidies and simply says that one should produce cheaply.

The hon member for Caledon spoke about the free market and open competition and said we should not move too rapidly toward deregulation of our various control measures in agriculture. He referred to bread in particular. When one makes an assessment of bread in South Africa—as one has to assess each commodity on its own merits—one has to realise one is dealing with an historical course of events which cannot simply be changed. We appointed the Davin Commission to inquire into the bread subsidy and the recommendation of this commission was—as hon members know—that we should phase out the subsidy. An infrastructure with a restrictive registration was also built up in the baking and milling industries, however, very specifically for the purpose of maximum utilisation of baking capacity because such capacity is enormously capital intensive. If one permits anybody to open a bakery, one is going to end up with an increase in the price of bread. That is why we retained such limited margins and restrictive registration in the baking and milling industries over the years. I agree with the hon member that, if they were lifted and more free competition created in consequence, new concentrations of power could arise in the industry. This would mean that the bread price at certain places would be double that at others whereas a man in Messina pays the same price for a loaf of bread today as does a man in Cape Town. This is a highly sensitive matter and the hon member is quite right that one has to be politically cautious in how one deals with it.

The hon member for Heilbron dealt with the case of diesel very competently and therefore I am not going to say anything further about that.

The hon member for Delmas made a very interesting remark, ie that agricultural cooperatives should be more active in the primary and final processing of primary agricultural produce. I agree with him; that is one of the solutions. In this way the farmer would be able to receive part of the added value of the primary produce.

The hon member made a further most interesting comment to which I should very much like to react—the matter of the budget. How does one gauge an agricultural budget in South Africa? Is it gauged merely by simply watching how the figures increase every year? I want to tell the hon member one cannot gauge the effectiveness of an agricultural budget in that way. The distinctiveness of agriculture is such that if there is a flood for instance, additional funds are required to assist farmers. Or there is a drought, as is the case this year. Hon members themselves know that the total agricultural budget rose to R1 700 million this year. This is an abnormal increase in comparison with that of previous years, so it depends on the conditions agriculture has to cope with.

Another form of taxation has also developed to the benefit of agriculture. This is a direct consequence of the sophistication our marketing boards are developing. I want to give one or two examples in this regard. Are hon members aware that we imposed levies of about R50 million on the consumer of dairy produce last year? For what purpose? For the cross-subsidisation of various products. Hon members know what conditions in the dairy industry are like; one moment there is a surplus of butter, the next a surplus of milk powder and at the moment we have a shortage of milk powder. A levy then has to be imposed on one product in order to eliminate the surplus on the other. Butter and milk powder are the balancing products, so this is a most complex matter.

The consumer paid that levy; he paid it in terms of an Act of this Parliament which empowers a control board to impose a levy. It is as good as a tax. Who does not use dairy produce? We have to take this into consideration. If we look at maize, we will note a built-in levy of approximately R68 per ton.

Mr Chairman, may I put a question to the hon the Minister?

Order! Is the hon the Minister prepared to reply to a question?

The hon the Minister furnished the figures in respect of the allocation to agriculture in the budget, in reply to a question from the hon member for Brits. On that basis I reproduced them here.

Order! What is the question the hon member wishes to put?

The question I wish to put to the hon the Minister is whether those figures he furnished were not correct.

The figures are quite correct. I want to tell the hon member that it is a rule of this Parliament that one replies to what is stated in the question. One does not try to evade the question. Those figures are correct but I am trying to give an analysis in addition to the figures which I supplied to the hon member.

I conclude by telling the hon member that it is a complicated matter to gauge the effectiveness of an agriculture budget with precision. It is a very complex matter. There will probably be years in which the agriculture budget can be criticised effectively. That is why I am here to provide an explanation as I am now trying to do.

I want to tell the hon member for Schweizer-Reneke I am grateful for the thanks and appreciation he expressed. In fulfilling the duties attached to my post in the difficult times in which we find ourselves, no Minister of Agriculture could do his work if he did not liaise most intensively and sympathetically with organised agriculture. I thank the hon member for this. I believe the hon member took note that I gave a reply in regard to the two-market system. I believe he noted that we were unable to apply this system and that we were not able to apply it in the past either. It is a system which cannot be administered and I am pleased we did not introduce it regardless of the enormous pressure exerted on us in this regard.

The hon member for Vryheid spoke about red meat. He was concerned about restrictive measures in the red meat industry. Two years ago we decided to appoint a committee of inquiry—the Van Rensburg Committee—to see whether we could find a method by means of which we would obtain a freer flow of meat from outside areas to the controlled area. Hon members know that meat may flow from the controlled area to the uncontrolled. An inquiry was conducted and the recommendations of the investigation were positive, namely that under specific conditions and on the issue of a permit one could permit surrounding abattoirs in urban areas to distribute meat in the controlled area.

To my mind these conditions are perhaps a little too strict but we decided to put them to the test for a number of months to see how they worked. If there is no movement and a freer flow of meat, we shall have to relax the restrictions imposed on this even further. If one does not lay down any conditions, one can disturb the slaughtering capacity within the controlled area and that is why the slaughtering capacity which is closely allied to marketing and prices requires proper control.

I agree with the hon member, however, that we should lift restrictive regulations on meat to a very great extent. It is also the standpoint adopted by the Meat Board to grant applications from butchers far more freely. Once again one has to be careful because if one has a butchery on every street corner, the cost of meat per kg ultimately has to rise. That is the reason for a scheme such as we have today. In the past it was almost a case of there being as many butcheries as there were cattle in South Africa. We cannot go as far as this; we have to apply some degree of control but I agree with the hon member that we have to get a freer flow of meat.

†I want to tell the hon member for Durban North that we made a very thorough investigation of the contribution Black agriculture makes to job creation and economic development, especially in the national states and the TBVC countries. That is very important. The agricultural growth in these areas is 7%, which is the highest in the whole of Africa. This is owing to the constant flow of technical and economic advice from my two departments.

It is also important to note that most of these states are also connected with the South African marketing schemes in order to facilitate their marketing requirements. I hope that this will be an indication to the hon member that we are also looking into Black agriculture in South Africa.

Mr Chairman, the fact that I must follow the hon the Minister of Agriculture, who was a bench-fellow of my late father in this House, evokes many memories. I hope that the hon the Minister will excuse me if I refer at once to a few other matters in the very limited time at my disposal.

In the first place I do not want to let the opportunity pass to pay tribute to the team of farmers, leaders of co-operatives and academics in the Northern Transvaal, under the leadership of Mr Dries Bruwer, for the pioneering work they have done, specifically as regards the self-help programme for the farmers in that area.

Seventy per cent of the farmers in the summer rainfall region are technically bankrupt. The assistance schemes of the State can only save some farmers, and there is doubt about its adequacy. Today, against the background of the fact that the farmers who are still on their farms and are trying to produce are good farmers who could to a certain extent withstand the consequences of the drought, the unbearably high interest rates and inflation, I am lodging an appeal for the 1 500 good farmers who, it is estimated, could be forced out of agriculture this year. The saving of these estimated 1 500 farmers is essential for the continuation of a stable agricultural sector.

Today I am also lodging an appeal for those farmers who are already so weak financially that the State can no longer help them to help themselves. If such farmers themselves realise that they cannot survive any longer, and they are prepared to put all their cards on the table as regards their creditors, and they offer all their assets, without exception, to be divided among the creditors and the creditors satisfy themselves that the farmer can no longer be helped economically, and that all the farmer’s assets have indeed been disclosed and can be divided among the creditors, total excussion of the farm should indeed take place by agreement, and the creditors reach an agreement among themselves and with the farmer on precisely how the assets should be divided, and just for safety sake a further provision is inserted in the agreement that if it is discovered later on that the farmer did not disclose or offer all his assets, the arrangement will lapse, I maintain, Mr Chairman, that it is the duty of the State to take such steps as may be necessary to see to it that the State is not the cause of the farmer being sequestrated anyway. If all these requirements are met, and the State, for example, refuses to recognise this as total excussion whereas the creditors are satisfied that it is total excussion, and refuses to honour its guarantee to a co-operative creditor for payment of left-over production debts, I maintain, Mr Chairman, that I will find this a totally incomprehensible and unacceptable state of affairs.

I can find no stumbling-block in the legislation which prevents the State from recognising and respecting such an agreement, but if the hon the Minister is of a different opinion, we should like to hear about this.

The fact is that it is in the interests of the creditor, of whom the State will probably be one, to save the considerable costs of sequestration for the sake of a larger payment to the creditors. It is in the interests of the creditors and the general economic climate in the community to avoid the loss of time, the possible procedural short circuits and red tape, probable lower sales prices and the trauma of sequestration, and it is in the interests of the farmer, his next-of-kin and the community that he should be spared the spiritual suffering of sequestration and be able to start earning a new income with dignity.

I should also like to lodge a plea for the livestock farmers. In my constituency, Potgietersrus, virtually every farmer is essentially or at least potentially a livestock farmer. The hon the Minister is aware that probably the most disastrous drought in living memory in our country, in the summer rainfall area, together with other factors, has given rise to a tremendous decrease in the breeding stock. Livestock farmers have been compelled to sell breeding stock to consolidate their financial position and survive from year to year as it were. Our farming community has always adopted the wonderfully realistic attitude of considering their livestock as reserves. Those reserves have now largely been depleted. The existing possibilities to acquire finance for the purchase of livestock through the Land Bank are simply too inaccessible and the procedures too cumbersome for most farmers who are already in a perilous position. I should like to make a serious appeal to the hon the Minister for an interest-free financing scheme, which can be implemented in practice, for livestock farmers through the Land Bank and via the co-operatives, similar to production loans from co-operatives, linked of course to the carrying capacity of the farmer’s land and over a period of say five years, so that our livestock farmers can build up their breeding stock again.

I am tempted to refer to the matter of the diesel price, and specifically to what the hon the Deputy Minister of Economic Affairs and Technology said on 12 August. I am quoting:

The hon the Deputy Minister made a further statement:

It would seem that the hon the Deputy Minister would like to follow in the footsteps of a former Minister, Dr Lapa Munnik, and we sympathise with the hon the Minister of Agriculture, because with friends and colleagues like that he and the farmers of our country do not need any enemies.

Mr Chairman, the hon member who has just resumed his seat should really have refrained from passing that last derogatory remark. It is typical that they are becoming personal again and I dissociate myself entirely from that type of statement. [Interjections.]

I should like at the outset to associate myself with the hon the Minister’s tribute to Dr Immelman, who is retiring. On behalf of hon members on this side I wish to express our grateful thanks to him for what he has done for agriculture. May his retirement hold many more productive years and peaceful days.

I want to tell Mr Harry Hattingh that I was a member of the Maize Board for years and the one thing I always held against him was that he would never permit those of us in the maize industry to be compensated for the risks we run. He would never budge on those risk aspects, but for the rest we always moved him in the direction we wanted him to take, to such an extent that we could benefit the maize industry until certain years when drought began to make itself felt and inflation began to get out of hand. Since that time the maize industry has not been able to keep afloat. I hope Mr Hattingh, with his experience, will be of great value to us in this respect too and will help the maize farmer to survive.

South Africa is a country of drought and even in years of surplus harvests there are areas which, owing to drought, produce too little to enable the producer to recover his costs. We have always had that problem in South African agriculture and especially in cropping areas. To compensate for this presents a problem because basically one cannot do this. Since inflation began to get out of hand, this tendency has resulted in production costs reaching such a high in maize-producing areas today that it demands up to 40% of the agricultural value of that land to produce there. If a certain area experiences drought in two consecutive years and those people lose their input costs, they no longer have any credit standing.

The hon member for Bryanston would do well to move about a little among those farmers and see what they meant to the economy of the country. Trade and industry are still flourishing today on the burden of debt which exists in the maize producing areas in particular.

I am not attacking the farmers; I am attacking you!

Yes, but the hon member did express criticism here in this respect. He said we could produce maize at R100 to R120 per ton, but take a look at the investment costs and what capital has to be employed to be able to produce maize today.

The problem is the interest rates …

All right, we have this problem now and scoring debating points off one another will not help.

Production costs keep rising in South Africa. I have a survey here conducted among more than 20 different organisations. This survey is based on the period between 31 March 1986 and 31 March 1987. It was found according to this survey that the price of 22 production aids had dropped during that time. The average percentage cost decrease was 7%. Against this, the price of 88 articles had increased by 14,9% on average, so we should not think that inflation is no longer taking its toll in this country.

It is interesting to note that Dr Karel Weiers, the German agricultural attaché in South Africa, wrote an article in which he specifically pointed out that such situations had also arisen in European countries in the past, so much so that some of those governments had had to intervene and consolidate farmers’ debts and in many cases some farmers had had to be assisted to remain on their farms by means of a system in which the state bore the burden of debt until the farmers could begin producing again to survive.

We shall have begin examining such a system very soon in South Africa. In view of our present inflation rate, it will not help us to try to enable people merely to keep going because they have to generate capital; they have to be able to reduce their debt. While a burden of interest and an inflation rate remain, these people are unable to generate any capital for survival.

There is also talk about restructuring agriculture. I attended a seminar at the University of the Orange Free State on the possibility of introducing sheep for the production of wool but in most maize-producing areas in our country such sheep cannot be introduced because those regions are so sandy that the sheep eventually carry more kilogrammes of sand on their backs than wool.

I foresee that we shall have to consider other produce, such as soya beans and groundnuts, and that we shall have to increase the production of such crops. In the past we possibly omitted in the past to do enough research in respect of good groundnut cultivars. I recall that Dr Schelshop of the Potchefstroom Agricultural College carried out research on groundnut cultivars on my farm for years. Not enough research was done, however, to find satisfactory cultivars by means of which a higher production yield could be obtained.

This is why we shall have to take another look at this type of diversification of production, otherwise we shall not survive in this country. In speaking of the restructuring of agriculture, we cannot devote attention to certain produce only but we have to examine a wider variety of products for future cultivation.

Soya beans are one of the commodities which are not being produced in sufficient quantities in this country. They have a greater potential in world markets than any other produce but at the moment we are not exporting any soya beans. We have to remember one point and that is that the overproduction of feed grain, which is occurring in South Africa and elsewhere in the world at present, will inevitably result in a worldwide shortage of this product and this includes South Africa. As the economy recovers and industrialists and the ordinary consumer are able to spend more, they will have more purchasing power and shortages will arise in the country. We also have to provide for a degree of stabilisation so that a person may survive without leaving the industry entirely.

I want to mention a further aspect related to green mealies. [Time expired.]

Mr Chairman, on behalf of this side of the House I too just want to extend my sincere congratulations to the Director General, Dr Immelman, who is now retiring, for his years of service to us. It has always been a great pleasure to read his speeches in Die Landbouweekblad, and in him we have discerned a man of stature who has a love for agriculture. We thank him. May he have restful years ahead of him.

On this side of the House we can very definitely also draw a fine distinction between the hon the Minister and the hon the Deputy Minister. We can sense how passionately the hon the Minister speaks about farming, because his heart and soul is in it, but we cannot say the same about the hon the Deputy Minister. The hon the Deputy Minister does not know the Transvaal farmers and their problems. [Interjections.] The hon member for Heilbron also reminds me very strongly of the person who said he merely wanted to quote two texts from the Bible. The one text he wanted to quote was: “And Judas went and hanged himself’ and the second was: “Go, and do thou likewise”. [Interjections.] The hon member did the same with my speech. I quote from that speech of 12 August:

We obtained this information from the Department of Finance; we are not the ones who said that. I went on to state:

The CP also asked the hon the Deputy Minister to examine the following aspect, and I quote:

We asked him to create a simplified scheme for the farmers. In our farsightedness we issued a warning, and we are now doing so again. I also said:

That is so. It costs us approximately R13 per hectare of maize merely to obtain this bridging capital, and approximately 4 million hectares of maize are planted, and also 2 million hectares of wheat and other crops. I mentioned an amount of R40 million in my speech, but it costs us R60 million to R80 million in bridging capital.

I should like to say a few words about inflation. There is a stealthy murderer loose in South Africa. He is invisible, but he has already committed many economic crimes, and there are many corpses strewn about. It is almost like the Great Flu Epidemic of 1918, killing off people in the flower of their youth. I am now speaking about the young men who start farming and are then broken. I want to mention a few comparative figures that have a tremendous effect on the farming community. I want to quote from the Statistical Economic Review of 1987-88. I quote from page 21 of the report:

How the deuce can one simply go on and on? Eventually one has to go under. We are told that it is the drought that has caused the hardship. However, we need only look at the nearest farms. I think they were allocated as far back as Jan van Riebeeck’s time and their names are “Keert de Koe” and “Houd den Bul”. After 300 years they are no longer planting wheat, not because no rain has fallen, but because the inflation rate has destroyed them. In 1954 it cost approximately 70 tons of maize to purchase one good tractor, but in 1987 it costs approximately 210 tons of maize to purchase a tractor of the same quality. Within 14 years the prices of farming requisites have increased by 14,9%, as against an increase of only 12% in producer prices. Ultimately no one will be able to farm any longer. Even if there were only one person left who was farming on a large scale in South Africa, he would also go under if the inflationary trend continues. In 1970—I set the index at 100—producer prices were 100. In October 1986 they were 357,8, whilst during that period the prices of farming requisites increased to 478,5. It is so often said that inflation cannot be curbed. It reminds me of the parishioners who kept saying, for many years, that they could not build a church because the minister was too lazy to make his parish calls. They then replaced the minister with another minister, and within two years they had a beautiful church and everything was fine. I think that is what South Africa needs too. [Interjections.]

I also want to speak about inflation and labour costs. From 1979 to 1986 the productivity of people in our country remained static, but the cost of labour increased by a factor of 2,2. The graph indicates that labour production is at the same level, whilst the cost involved in that labour has increased by a factor of 2,2. Remuneration paid to workers constitutes 54% of the value of South Africa’s products. So hon members know why inflation has such a fierce sting. It is because we are perhaps paying labourers more than they are worth to us in terms of productivity. That is the end result of inflation. We shall have to re-examine what we are paying people.

In the few minutes still left to me I want to speak about trade unions in agriculture. Apparently there is some talk of a minimum wage in agriculture. This is apparently aimed at protecting the workers. Let me tell hon members this afternoon that there is a fine relationship between Blacks and Whites in agriculture. The happiest people in South Africa at the moment are the workers on the farms. The prevalent disposition is one of happiness, peace and love. [Interjections.] I want to ask hon members this afternoon, however, to see to it that trade unions are kept out of the agricultural sector. I would rather pay 10 workers R200 per month and give them free housing, water or fuel, than pay four workers R500 per month each. I would then have to tell the other six to leave, that there was no longer any room for them on my farm. I am asking that we keep this bugbear out of agriculture.

Mr Chairman, I want to take this opportunity to thank Dr Immelman for all the years he has been a friend to the farmer and the co-operative industry. I wish him and his family a pleasant retirement. A very warm welcome to Mr Harry Hattingh and may I wish him well. We know him to be an objective person and we hope he will be objective and sympathetic in future.

Quite a number of problems in agriculture were touched upon here today. Let us summarise them quickly. In the first place I want to elaborate a little later on the deteriorating exchange ratio situation. Secondly, it is not so easy to effect structural changes in agriculture under the present oppressive economic conditions. This could have been done far more easily if the farming industry had not been burdened with debt. Our burden of debt, but also our ruined credit standing is a great problem and a millstone around our necks as far as future reconstruction is concerned. Prevailing pessimism, especially in summer crop-farming areas, is a further problem.

I should like to associate myself with our hon Minister by saying that the entire exchange ratio situation is one of the most important aspects in the restructuring of agriculture. We cannot get away from this. If we do not restore the situation, we shall not arrive at a solution to these other problems I have tried to mention. If one examines the exchange ratio, it represents the difference which exists between the price obtained for the product internally and externally as against the costs of producing it.

“Price” is a relative concept in our country today in the sense that most of our agricultural produce is sold on a basis of supply and demand by means of a floor-price or pool system. Consequently the farmer does not have much control over that facet of his farming. He does have a certain degree of control over inflation in that he is able to bargain through his cooperative or make a certain contribution by means of good planning.

That is why I want to say the co-operative movement is pre-eminently the movement in South Africa which has made a real contribution to curbing inflation in agriculture—that matter we all talk about but to which we find no solutions. In view of the fact that the hon the Minister said here that the difference in exchange ratio had declined least in South Africa, I merely want to ask today whether this is not in consequence of the entry to and involvement of co-operatives in this field. [Interjections.] I want to suggest today that we do nothing which will weaken the co-operative movement in South Africa. [Interjections.]

There are four main divisions in which the co-operative movement is especially active. First there is its commercial division; this division of the co-operative is an effective bargaining mechanism on behalf of the farmer. The hon the Minister mentioned prices they had come across which had differed by as much as 100%. We instituted an intensive investigation into the entire question of bargaining in the Free State circle of co-operatives. The farmer has to realise that the final result of bargaining does not only lie in the price of that produce; one has to consider a series of items such as continuity of supply and quality.

The co-operative I am acquainted with, Sentraal-Wes, disposes of 65% or two thirds of its commercial turnover at a profit margin of 5,3%. Where would find a business in South Africa selling two thirds of its commercial turnover at a profit of 5,3%? This is the contribution the co-operative makes. Added to this, at the end of the year we pay a bonus to our members on the purchases they have made; this helps to keep costs even lower.

The industrial divisions of our co-operative process our fanners’ produce. They take it and work it up into a more refined state, as the hon the Minister said today. What is important is that we use the profit made in this sphere—frequently non-members are also involved in this—to subsidise operations in the commercial division in order to bring those costs down even further.

The agricultural development divisions of co-operatives carry out active research today on more cost-effective methods of production. They inform our farmers about a variety of items so they are actively engaged in keeping input costs down and contributing to rebuilding agriculture.

I come now to the division of co-operatives which causes me some concern and about which I want to say a few words. I am referring to our produce divisions. They exist chiefly to receive, store, handle and then reconsign our members’ grain. Of course, they have other functions as well. Over the years produce divisions have been the stable, strong factor in our co-operatives. Over the years 14,8 million tons of silo capacity has been created by grain co-operatives in this country. Here I am referring to southern and northern co-operatives.

Co-operatives had to obtain a permit from the Grain Silo Committee for the erection of these silos. Representatives of both the Government and marketing boards have representation on the committee which grants these permits. The issue of a permit is subject to certain specific provisos. There must be a need for it, for example, and the possible expansion of grain deliveries also has to be taken into account. Consequently definite requirements were set. Silos were not erected haphazardly; on the contrary, they were erected in the national interests for the sake of storing strategic food supplies. For years the Government provided the grain cooperatives with money in its estimates to enable them to erect those silos.

What I want to say, therefore, is that those silos were erected in accordance with a certain set of rules. One of the rules is that co-operatives will be compensated for the costs incurred in the erection of silos, the storage of grain and unutilised silo capacity. Grain co-operatives then use this unutilised capacity compensation to pay their instalments on loans granted by the Land Bank. I am now referring to the loan raised by grain co-operatives to erect these silos.

It is also important to know that there were cases in which co-operatives did not wish to erect silos, although a need existed in this connection. They even received requests from the Grain Silo Committee; I could almost say the necessary cheque was sent to them with the instruction to erect the silos precisely because a need for them existed. It is also important to know that, although these silos were the property of co-operatives, they did not have a real say in how those silos were used. This was done in accordance with producer deliveries, and the respective control boards subsequently paid this compensation in terms of mutual agreements they had concluded. This was also done in the case of unutilised capacity in those silos, if this actually existed.

It is also foreseen that a variety of factors will contribute to an increase in the unutilised capacity in future. We had dry years which took their toll; we could not fill our silos. In addition the Maize Board also adopted a new marketing strategy, which I am of course not criticising. It remains a fact, however, that this strategy will lead to a decrease in deliveries, even to possible structural changes intentionally supported by the Government and toward which we of Uniegraan are not negative either. Consequently we are concerned about the possibility that an appreciable part of that silo capacity is going to remain unutilised in future.

In negotiations with the Maize Board we were able to succeed in obtaining payment for that unutilised silo capacity this year. Nevertheless we are concerned about what is going to happen in this respect in future. This is why we ask—I am saying this by way of summary —in the view of the important part played by co-operatives in the country in curbing input costs and furnishing a variety of services, that the hon the Minister pay very serious attention to this problem. We request him to ensure that co-operatives are not weakened in the process. We appeal to him to assist us in finding a solution to this matter of compensation for unutilised capacity at grain silos. We are also aware the Government is not unsympathetic in the matter; on the contrary, the hon the Minister himself said on the occasion of the announcement of this R400 million aid programme that it involved inter alia the “preservation of the rural areas”. Co-operatives, as part of rural areas and as the institution furnishing this invaluable service, are so important that we are obliged to request today that the hon the Minister approach this matter sympathetically and assist us to find a solution which is mutually acceptable to grain co-operatives, control boards and the Government. After all, these are the three partners which have stood together here over the years. We know a committee has been appointed but the time factor remains a great problem and we should very much like to find a solution in this regard as soon as possible. [Time expired.]

Mr Chairman, the hon member for Winburg seems to have a fair amount of confidence in the hon the Minister’s efforts to reduce the maize-producing capacity of South Africa. He expressed his concern at the surplus silo capacity with which agricultural co-operatives in the maize-producing regions of South Africa have to contend.

I want to take issue with the hon the Minister on this whole question of the production of maize. About two months ago I spoke with a particular farmer in Natal, who told me that he was perfectly able, provided he did not have to pay interest costs—which are built into the price structure, as the hon the Minister knows—and that all else was equal, to produce maize for R100 a ton. I must say that I said to him I should like to produce his evidence for the hon the Minister, upon which he said to me: “Not on your life. If I let the Minister know that I can produce maize at this cost he is certainly going to cut the maize price!” [Interjections.]

Nevertheless, I believe that any farmer who is prepared to admit that this man was right in this respect would need his head read because he knows that if he does indicate that maize can be produced for that much less, something will be done about the price. [Interjections.] I must say to the hon the Minister that I believe he began to understand what I was getting at when he began to talk about the measures that were being taken to cut the production of maize.

I find quite exciting, Sir, the whole idea of, for example, growing dry-land cotton on the Springbok Flats. This is a positive and intelligent move and it shows some imagination. I had not had any previous knowledge of this. I hope there are many more ideas in the offing. Having sunflowers instead of mealies is a very good idea, making us independent as far as oilcake is concerned.

I believe these marketing strategies, which the hon the Minister discussed, indicate the direction in which we should be moving. I believe we have to look at what so many other countries have looked at and that is the possibility—if we are going to overproduce—of actually paying farmers not to produce. If we are going to start paying R100 a ton for exporting maize it may well be cheaper to make sure that those farmers do not produce any maize at all. If we are going to use subsidy money of any kind, the bridging finance the hon the Minister discussed, when transition from, for example, maize to cotton or pastoral land takes place, perhaps the money should be used as bridging finance rather than to keep a sinking maize farmer in production.

I was also interested in the hon the Minister’s request that politics be kept out of the agricultural industry, and in the great “toenadering” that was taking place between him and the hon member for Lichtenburg. When I think back to only yesterday, to the debate on the Water Amendment Bill, I remember that hon member saying that there was no way one could trust this Government under any circumstances. He also used words to the effect that “hulle was ’n klomp boereverneukers”. Although I praise the hon the Minister for his approach I think he has very little chance of keeping politics out of agriculture when it comes to the hon members on our right.

I have very little time at my disposal. I want to raise two other matters very quickly indeed. One has to do with dairy production. I should like the hon the Minister to comment on an idea that has been a bee in my bonnet for a number of years and this is the question of long-life milk. I know that to set up production is very expensive indeed. However, on the other hand, for the vast Black market which does not have refrigerators at all, I believe long-life milk is the answer. If one is spending money to assist agriculture, rather than pouring it into farmers' pockets through subsidies, perhaps it would be a good idea to provide the machinery necessary to produce long-life milk.

I have only a minute left to speak and the final point I want to raise is the question of wine. Perhaps the hon the Deputy Minister has some opinions on this subject—on wine and brandy. I believe that we in this country are going a little overboard as regards the selling price of our wine. I urge the industry not to cut its own throat. We have now reached the stage at which a South African brandy of reasonable quality, which is produced in this country, costs more than a bottle of imported whisky. This simply does not seem right to me. I recently had to pay more than R11 for a bottle of my usual brand of brandy, whereas I paid R10,49 for a bottle of whisky.

When I look at the prices of many of the wines that are being produced here—and we really are producing some excellent wines now—I believe many of them are overpriced. We should be taking advantage of the fact that these wines are locally produced and be keeping our prices down. [Interjections.]

Mr Chairman, I do appreciate the positive note in the hon member for Bryanston’s speech, and also his appreciation of the way this side of the House has dealt with agriculture. I think he was quite positive in that regard and I thank him.

As a member of the Union Co-op at Dalton, highly successful processors of wattle bark and sugar cane, I am naturally very interested in the co-operative movement. Members of our co-op will be forever grateful to this Government for the foresight it showed in granting us a licence to test the new diffusion process in sugar-milling 23 years ago. This success story has been recorded in book form and I should like to make use of this opportunity to present to the parliamentary library a story of triumph over adversity which I feel will be useful to agricultural study groups.

I am convinced that the co-ops, if attuned to their future role, will form the cornerstone of a healthy farming sector. Their role is the refinement of raw commodities for the consumer. Those co-ops that are not will have to get onto the consumer chain.

Last year our farmers earned R9,3 billion in our domestic market. These same products fetched R27,24 billion at retail outlets. This means that there is scope for at least doubling the producer’s share of this cake. This will call for a change of emphasis by the co-ops from simply providing a good service to their members to one of making money for their members.

*There is no impediment because of the Co-operatives Act as far as the processing and marketing of agricultural products by co-operatives is concerned. Section 21 (1) (a) of the Co-operatives Act, Act 91 of 1981, determines that a co-operative can undertake the marketing of an agricultural product of its members or of any thing which is derived from an agricultural product, and can for such purposes acquire, or acquire control over, any agricultural product or any such thing and dispose thereof or process it or manufacture any article therefrom, and can dispose of the product or thing into which it was so converted or the article which was so manufactured.

Many agricultural products are in fact already being processed and marketed by co-operatives. The best examples of this are Sasko in respect of wheat products, the KWV and a number of wine co-operatives in respect of wine, Vleissentraal in respect of meat, two co-operatives in respect of sugar, a number of co-operatives that process mealies, flour and feeds, Langeberg in respect of canned fruit, the Small Karoo Agricultural Co-operative in respect of ostrich products, the Central Timber Co-operative in respect of woodchips and the NCD in respect of dairy products, to give only a few examples.

The most important reason for encouraging the co-operatives to process their members’ products is that it is the only way of increasing the primary producer’s realisation price of his products by channelling the profits made in marketing processed products back to the producers. Here I should like to agree with the plea made by the hon member for Delmas.

According to the official statistics, the producers’ share in the consumer spending on agricultural products is as follows: Grain, 32%; meat, 48%; fats and oils, 30%; and dairy products and eggs, 65%. This gives one an average of 47%. It is clear, therefore, that there are extensive opportunities for the producer to increase his share in the consumer’s rand by marketing his products in a processed form through his co-operatives.

We do not have reliable statistics to indicate the scope of the co-operatives’ processing activities as percentages of all processed products, but we know that this still compares very poorly with that of large food groups on the Stock Exchange, with the exception of Sasko, the Small Karoo and the Langeberg co-operatives, for example.

†Whilst there are strong and extremely successful co-ops—as mentioned—it would, however, seem that a final co-ordination of the movement is lacking. This can perhaps be ascribed to the essential weakness and problems associated with co-operatives. The basis of the weakness and problems of co-ops can be ascribed to a few overriding factors such as capital formation. The formation of capital suffers from a lack of permanency and a lack of growth. This stems from the fact that shares retain their par value, are repayable on application and are of restricted issue. All other capital is by way of loans or retained profit. This obviously places restrictions on the speed of growth of a co-op compared to companies which can trade shares openly and regularly go to the market for recapitalisation.

I pose the question of how much longer the South African farmer can afford not to go to the Stock Exchange with his enterprise.

With the advent of the taxation of cooperatives like any other public company, we must accept that the co-operative movement has to restructure itself, and I would not be surprised if some of them go to the Stock Exchange, even to a limited extent. I believe that the agricultural sector can well compete with the exchange which provides dividend yields of 1,9% and a lot of our agricultural enterprises will beat the market hands down on that basis.

Another problem is individuality. The South African farmer is renowned for his individuality and love of independence, and this supports the development of a plethora of local co-ops, each with a structure and operating enterprise. This plurality of development obviously restricts total development and gives rise to competition and a lack of cohesive and centralised action. This in turn affects purchasing and marketing.

Another weakness is management. Co-ops have a history of poor management, stemming from poor appointment principles and from restrictions on remuneration. Professional management historically shied off co-ops because of their reputation and limitations on remuneration. For example, the co-op system rules out equity participation for management.

*The other very big problem is marketing, because the most important distribution channels, for example the giant chain groups, are not freely available for our co-operatives’ products. They are involved in conglomerates with own interests and processing groups. The co-operatives are loath to have their products processed by central co-operatives and prefer to do their own processing.

This is probably the biggest problem because the opposition groups are centralised in big, strong companies, and for a co-operative to tackle them on its own would be to fight a losing battle. We must give recognition to the Co-operative Board of the SA Agricultural Union, which is doing everything in its power to get the grain co-operatives, for example, not to process their own mealies, but rather, like Sasko, to have their processing done by one central co-operative.

In the timber industry we have a very good example in CTC, where three small cooperatives joined forces in the seventies and established a central organisation to export wood-chips to Japan. In my opinion this is an excellent example of what is possible.

One fact must be acknowledged, and that is that the producers cannot pin their hopes on constant increases in the prices of their products. The consumers simply cannot afford this, especially in our country with its masses of consumers with limited incomes.

The export market north of our country, as well as the market in our own country, can be developed extensively, but if every co-operative wants to do this on its own, two things will happen. On the one hand the co-operatives will compete with one another, and this will result in price-cutting, to the disadvantage of their producers. The duplication of marketing costs will not be to the advantage of their producers either.

Only if our co-operatives form their own joint power-bloc and, like the other companies, can offer the market a comprehensive food hamper, can this processing activity come into its own.

†Mr Chairman, I think that if we look to the future, the advantage of co-ops to the local communities is obvious. [Time expired.]

Mr Chairman, I shall come back briefly to the matter the hon member broached in regard to co-operatives, and to what the hon member for Winburg said. Also permit me to convey our sincere congratulations to Mr Harry Hattingh. I have known him personally for quite a few years now. Mr Hattingh is an agricultural economist of some stature and I think he has the necessary qualifications and experience to carry out the important ask that now awaits him.

Also permit me to associate myself with what the hon the Minister said and, on behalf of this side, pay tribute to our deceased excolleague, Mr Org du Plessis. He made his mark in the agricultural industry, not only here in the House of Assembly while he was a member, but also in public life up to the time of his death.

In the past few years there has been increasing criticism of our Marketing Act and the functioning of our marketing boards. We find that criticism coming, for the most part, from bodies wanting to promote their personal financial interests or from people who are not conversant with the marketing problems in agriculture. Those people forget that there are only two branches of agriculture having the same marketing problems and the same solution for those problems. After all, one cannot tackle the marketing of wool on the same basis as that of ripe tomatoes.

Although I believe unswervingly that the Marketing Act, and our marketing boards controlled by that Act, are an indispensable prerequisite for the orderly and stable marketing of agricultural products in South Africa, it is also necessary for the marketing boards to continue to examine their own activities and actions with a critical eye.

This afternoon the hon the Minister announced that a committee of inquiry would examine the marketing scheme of the Wool Board. I think it is a good thing for the hon the Minister to have taken that decision, because there has recently been a degree of uneasiness discernible amongst wool producers. This is not the first time this has happened. About 15 years ago, when we initiated the present marketing scheme, conditions were such that wool-farmers asked us to do everything possible to facilitate the sale of their wool. There was a time when we could virtually not give it away. When we approached the then Minister of Agriculture with the single-channel marketing system, he told us that it was a wonderful scheme, but added: Heaven help you if the wool price increases. We subsequently introduced a system, and as luck would have it, the wool price virtually doubled within a single season. I still remember very well how the woolfarmers in my area, the South-eastern Transvaal, the North-eastern Free State and Northern Natal, held an enormous rally at Amersfoort where I, as a young man, had the honour of addressing the crowd of woolfarmers that afternoon. I also remember hearing very clearly that afternoon that I was not a communist, but a Bolshevic.

A Woolshevic?

I am glad to be able to say that the person who accused me of that did have the magnanimity, a few years later, to apologise for having done so.

At the time there was also talk, amongst the wool-buyers and wool-brokers, that we as wool-farmers were attempting to interfere in the normal market forces and the normal economic processes. The Wool Board’s marketing scheme, however, brought stability to the wool industry. It brought price stability, it poured oil on troubled waters as far as the farmers were concerned, because there was security.

As far as I am concerned, it is quite in order for the hon the Minister to appoint a committee of inquiry to examine the marketing scheme since there is some uneasiness amongst our wool-farmers. I actually know what the main reason for that uneasiness is, but let us rather leave it at that for the moment. A review of the scheme could only prove beneficial. I only hope that we shall not lightly do away with the stability we have achieved in the wool-industry by way of the present scheme. I have been a wool-farmer all my life, and if we have to return to the so-called free-market system that existed in the wool-industry when I was a young farmer, would the hon the Minister please warn me long in advance so that I can get rid of my sheep in time. That uncertainty that we experienced for many years we can never afford to have again.

As far as the co-operative movement is concerned, I should like to associate myself with what was said by the hon member for Winburg and the hon member who has just spoken. We cannot underestimate the importance of the co-operative movement in the farming industry in South Africa. It is also necessary for the co-operative movement to take a close look, on a day-to-day basis, at whether it is still achieving the goals for which it was established. In the co-operative movement we must guard against having the various co-operatives building themselves individual little empires. I think that is necessary, and I am not saying it in a derogatory sense. I am saying this in the interests of our farmers as a whole.

The Whip has informed me that my time has virtually expired, but permit me just one further remark. Over the past few years I have repeatedly called upon the hon the Minister of Finance to re-examine the effect of general sales tax on the agricultural industry, specifically in relation to the purchasing of machinery and capital goods. My request has repeatedly been refused. I am now happy to note that the Margo Commission is apparently of the opinion that that request was not all that absurd. The hon the Minister of Finance announced—I understand his reasons—that the findings of the Margo Commission are quietly being considered and that they would probably take considerable time to implement. For the sake of the agricultural industry of South Africa I want to call upon the hon the Minister of Agriculture to twist the hon the Minister of Finance’s arm in an effort to persuade him to implement that recommendation of the Margo Commission as quickly as possible.

Mr Chairman, it is probably difficult to say something new at the end of a debate. It is a pleasure for me to be able to agree wholeheartedly with the hon member for Barberton about the idea of the pool scheme, which he merely did not want to call by that name.

Permit me, at the outset, to thank Dr Dirk Immelman for his many years of service to the industry. I think that his successes bear some relationship to the area in which he grew up. That area is on the very fringes of my constituency, in the Karoo.

I also want to congratulate Mr Harry Hattingh very sincerely. I think that a very profitable time lies ahead for him. I think that he knows the farmers and that the farmers already know him.

I understand that in this House we are not allowed to speak about animals, about monkeys and so on. I nevertheless feel inclined to say this afternoon that the hon the Minister of Agriculture is a whale of a guy. Let me tell the hon member for Potgietersrus to keep his eye on this young fellow sitting here at the back. He must watch him carefully, because he is going to develop into the greatest Minister of Agriculture this House has ever seen.

We’ll get him right!

Although red meat producers have recently, for the first time in many years, had relatively easy access to the market and have obtained good prices for their products, the one major problem plaguing them is the uncontrollable increases in the input costs involved in meat production. In addition they are also faced with the enormous increase in marketing costs when their product reaches the point at which it has to be converted into cash.

There are few people who realise in what difficult circumstances the meat producer, representing by far the greatest agricultural industry in our country, has had to persevere in an effort to provide the consumers of this country with red meat. Apart from the prolonged drought, meat producers have also had to absorb the effect of cost increases with which producer prices could not keep pace. To illustrate this, let me dwell for a moment on the cost of farming requisites. I want to point out that between 1975 and 1986 the average cost of all farming requisites increased by 465%. During this period the cost of cattle fodder increased by 364%. The price of yellow maize increased by 433% and the cost of pig-meal by 354%. The increases in the price of machinery, implements, irrigation equipment and material for fixed improvements are likewise frightening. With these tremendous increases, it really does sound like a bonus to hear that the Land Bank interest rate on mortgage loans increased by only 125% over this period, while it increased by only 80% in regard to section 34 loans.

One must concede, of course, that the producer prices of meat also increased considerably over this period. The increases in producer prices, however, were not nearly the same as that of input costs. The greatest increase was that in the producer prices of mutton, ie 286%, whilst that of beef increased by 272% and that of pork by 209%. Over the same period, however, consumer prices generally increased by 404%. I should like the consumers of red meat to realise that during the past 11 years the red meat producers produced meat in conditions that were such that their returns did not nearly keep pace with their costs.

When the meat producers’ laborious toil, concern and risks eventually bring them to the point where a marketable carcass can be made available to the consumer, another shock awaits them. Since 1975 the cost of marketing red meat has also increased by leaps and bounds. The marketing cost of beef increased by 444% in the controlled areas. One of the most important components of the marketing cost of beef at present is that of the Meat Board levy which has increased by more than 90%. The explanation for this formidable increase is, of course, that the year 1975, taken as the basis, was part of a period when there was a relatively balanced supply of beef and there was no need for stabilising measures justifying an increased levy. The stabilisation fund, which is considerably depleted as a result of the drought, must now be augmented; hence the additional levies. The stabilising measures in terms of the meat scheme have proved their value.

Abattoir tariffs increased by more than 500% over this period, and to a great extent this reflects the cost of the new abattoirs which have had to replace the old and obsolete abattoirs in some controlled areas. Over the same period railage increased by 424%. Once again the question will be asked whether the gross returns on slaughtering stock have not also increased in value, in order to compensate for the increased marketing costs. The gross returns on cattle in the controlled areas did increase by 327% over the period under discussion, it is true, but the marketing costs increased by 444%.

As far as the increase in the input costs of the agricultural sector is concerned, an interdepartmental committee was instructed by the Minister of Commerce and Industry to investigate the matter and found last year that the most important factors that played a role in this were: The decrease in the exchange rate value of the rand, the effect of the relatively high inflation rate, the sharp increase in interest rate levels, the levying of a surcharge on certain items and customs tariff protection.

As far as the meat industry is concerned, the first three factors are probably of greatest significance, and we did, in fact, experience the effect of the exchange rate value of the rand with the importation of fish-meal to supplement local shortages. A change in the exchange rate value of the rand caused a 62% increase in the price of fish-meal. The price of stock remedies was also adversely affected.

As far as interest rates are concerned, there was some relief, in fact, owing to the decrease in the short-term interest rate since 1985, but interest rates are still an important factor in the farmer’s cost structure owing to the prevailing debt burden situation largely caused by the prolonged droughts.

I cannot neglect to express my appreciation for the work which has consistently been done by organised agriculture, specifically the SA Agricultural Union, to lighten the farmer’s burden. Cattle farmers, of course, also benefit from this.

I also want to convey the sincere thanks of the meat producers to the Government for the manifold steps that have been taken to grant assistance, steps which will have to continue indefinitely. I should nevertheless point out that inflation, one of the major enemies of the farmers and also the Government, still has to be overcome. The stranglehold on the agricultural sector will increase in severity if the problem of inflation is not quickly eliminated or reduced to a tolerable level.

Agriculture is making its contribution to increased productivity which is a fundamental requirement in the combating of inflation. What is required, however, is an overall economic strategy aimed at speedily and effectively correcting the structural deficiencies in the South African economy which are the contributing causes of inflation. Increased productivity remains the watchword. It is the task of the Government in conjunction with the SA Agricultural Union to implement such a strategy.

Mr Chairman, I thank you for the opportunity to participate in this debate this afternoon. If I perhaps say a few things here this afternoon that would seem to indicate that I do not have any sympathy or fellow-feeling for the farmers, hon members must please forgive me. I shall be doing so with the utmost compassion because, as a fellow-farmer, I think I have walked this road with many other farmers, and I am aware of what the agricultural industry in this country is going through.

Firstly I want to associate myself with the hon member for Beaufort West who referred to marketing costs and the problems in the meat industry. I want to agree wholeheartedly with the statements made here today not only by him, but also by numerous other speakers who preceded him.

I am concerned about the fact that agriculture is beginning to get the image—or that perceptions in that regard are beginning to take hold—of an industry which is looking for handouts from the State on the one hand and is exploiting the consumer on the other. I think that today we also accuse the middleman and the processor of taking a larger chunk of the consumer’s rand than the agriculturist can take for himself. The consumer is probably also right in claiming that the farmer exploits him and makes an unfair profit.

Against this background I have thought fit to advocate this afternoon that in this country we should rather form a partnership and not attack one another. We are here in this country to produce food and raw materials which others must process and use. In many cases the farmer himself is the consumer. That is why it is so important for me to react to one or two remarks made here this morning, particularly about fixed prices. Some of the hon members in this Committee are people who take a very firm stand on fixed prices. This is one of the things in this country that has resulted in producers losing their sense of responsibility. I myself was a maize producer. I myself produced maize, and my attitude at the time was that it was the board’s problem to do the marketing; my problem was to produce. The moment one has a fixed-price system, that is the producer’s attitude. I am very sorry to have to say this here this afternoon, but that is why I said that we would have to try to move carefully through this minefield.

On the other hand we cannot simply speak of a free-market system in this country. That is equally dangerous. The countries in which there is a so-called free-market system, are countries in which producers have to be subsidised most heavily by their governments at this stage in order to keep them on their feet. I am referring to a remark made by Dr Karel Weiers, the agricultural attaché who returned to Germany earlier this year and who said that the addition of subsidies to the agricultural industry in the EEC amounted to 60% of the value of the agricultural industry in that country. Let us examine South Africa, and hon members will see that subsidies have contributed a meagre 3% to the added value of agriculture. Then hon members can see that the Government deserves to be complimented on the way in which it deals with the marketing system in South Africa. The same applies to the way in which the farmers shoulder their responsibilities, and to the present employment of production methods and the marketing of their products.

If we look at the remarks made earlier this year by the hon member for Yeoville, we find that on 26 June he said that agriculture’s contribution to the increase in the consumer price index for May was 25,8%. It has been indicated here today, time and again, that the agricultural producer’s price for his product increased by a mere 11% during 1985. Surely that is an obvious indication that there is a difference between the point of production and the point of consumption. I think that is something we shall have to rectify.

Amid cries of “scandalous”, the hon member for Wellington said that a bottle wine cost between R12 and R15 in a restaurant, while the farmer’s share of the price of that bottle was 44 cents.

We are dealing here with an industry that should work hand in glove with the processor and the consumer. At the same time I want to point out to hon members the importance of the agricultural industry in South Africa. In 1986 the gross agricultural production totalled R9,3 million. When those products ended up on the consumer’s table or in his wardrobe, the value of that overall agricultural production was R27,2 million. So an amount of R17,9 million was added to the producer price. This indicates to one the scope of the job creation, not only on the farms, but also in the process of manufacturing and processing.

To come back to the hon member for Beaufort West’s speech, I want to emphasise that when one looks at what has happened in the meat market—that is the most important component of the consumer’s food basket, comprising 38% of it—we find that from 1974 to the present day, the meat producer’s share in the consumer’s rand decreased by 13,6 cents. As a percentage this is approximately 30%.

I think reference has also been made here to the fact that during 1986 the contribution of food to the CPI was 20,8%. That is something I want to correct, but let me first come back to the 11% which the farmer obtained for his product.

We do not want to advocate the imposition of control in this country. Nor do we want to advocate the establishment of a free-market system. We are asking for a moderate degree of regulation.

Fairness!

We are asking for fair regulation; I agree with that hon member. If the farmer’s profit therefore lies in the added value and in the refinement of his product, we must clear the way for him to do some creative thinking, thus enabling him to refine his product, process it and also market it. There must be a relaxation of the regulations so that that creative thinking can emerge. I do not want to attack the decentralisation policy, but I do want to point out that at this stage it provides that incentives will only be given to those industries in areas in which there are growth points. When raw materials are processed in the production area, however, those industries orientated towards raw materials do not come into consideration for these incentives. I strongly want to advocate that fibres be processed at the point of production, and that assistance be granted to the co-operative movement to which hon members on this side of the House have referred today.

If we were merely more creative in our thinking, we would be in a better position to utilise our tourist potential, and we as farmers should exploit that potential. This afternoon I want to call upon the hon the Minister of Agriculture to have agriculture co-operate with the Tourism Board, the Department of Commerce and Industry and the MECs who have an interest in conservation activities with a view to promoting tourism in this country so that the farmer can ultimately obtain a greater share of the consumer’s rand.

Mr Chairman, I want to react at once to certain remarks made by the hon member for Cradock. I want to tell him that I welcome the fact that he has also jointed the ranks of the parliamentary agricultural group. We know that he played a very prominent role in agriculture in the Eastern Cape, and I am sure he will make a good contribution to the agricultural debate.

The hon member also spoke about creative thinking this afternoon. I think he touched upon a very important facet when he referred to the farm price and the consumer price and said that both the farmer, with his organisation, and the agricultural industry as a whole should move into this sector so that both the consumer and the farmer could benefit. I think that is a very important standpoint that the hon member adopted in this regard, and we shall still have to give this considerable thought.

I want to react to another remark made by the hon member. He said that agriculture, with its various marketing schemes, could not afford any rigidity, particularly in regard to one certain scheme, ie the single-channel fixed-price system, in which production plus additional costs must, in fact, be taken into consideration. I am sympathetic to the hon member’s standpoint. There was a period however—this has a long history spanning many years—when such a system was necessary in specific industries, a system whereby one could at least guarantee the producer a price. The hon member said he was also a maize farmer. Well, I grew up as a maize farmer, and a wheat farmer too. I want to say, however, that in the ’thirties there were seasons in which the farmer simply had to take his products back to the farm, because he could not get a proper price for them. There is a stage in one’s life, however, in which one has to adjust as far as marketing is concerned. I agree with the hon member; one cannot find oneself in such a protected position when it comes to production that one merely takes production plus additional costs into consideration when determining a price. Then the consumer is too heavily burdened. We are systematically moving away from that system, except in the case of the wheat industry.

Since I am referring to the wheat industry, let me say that the moment we produce more than 2 million tons of wheat in South Africa, we have difficulties with this scheme. Let us have no doubts about that. We would have problems in determining the price of wheat. The wheat farmers have a very responsible attitude as far as this is concerned and take many conditions into consideration, but there is still a very strong emphasis on production costs alone. I am not saying that the emphasis should not be placed on production costs, but one should also take the marketing situation into consideration.

I shall probably not be able to reply to all the speeches, but I am going to get a move on. The hon member for Potgietersrus grew up before my very eyes, as it were, but perhaps he has been away from me for too long. [Interjections.] I am saying this in a positive spirit. The hon member is concerned about the cattle farmers in his area and has asked for an interest-free loan to re-establish the cattle farmers there. I have to tell the hon member that that is a matter on which I really cannot give him a reply. No one in this country wants to lend money on an interest-free basis, and if one were to give the farmers interest-free loans, someone would have to pay that interest to the financiers from whom the money was obtained. That would have to be either the Land Bank or some other body, whoever that may be.

I know of certain agricultural co-operatives which are intensively engaged in a form of restructuring within their own areas by way of granting financing facilities to their members on a relatively cheap basis, with low interest rates aimed at a gradual change-over.

The hon member for Parys spoke about the restructuring of agriculture. He spoke of the possibility of introducing soya beans as a product which could be more easily sold overseas. He made the important statement that structural changes were not that simple, involving as they did a very complex operation which we shall have to tackle soon. An interdepartmental committee has been instituted to investigate the technical aspects of structural changes in agriculture.

“Structural changes in agriculture” has become a popular term. If one analyses what structural changes in agriculture actually consist of, one sees what an absolutely complex study is involved, a study covering a very wide field. We shall have to deal with this matter very carefully. I therefore agree with the hon member.

The hon member for Witbank spoke about the labour situation in agriculture. I am not responsible for this sphere of activity; it is actually my colleague, the hon the Minister of Manpower, who has to examine that aspect. As an agriculturist let me tell the hon member, however, that whether we like it or not, we shall at some stage or other have to look at some form of labour legislation in agriculture. I do not want to say that the legislation relating to agricultural labour should be precisely the same as existing labour legislation. I personally think that it is possible to include a separate chapter in our labour legislation in South Africa specifically adapted to the particular circumstances applicable in agriculture. As in all spheres, agriculture is unique. On farms it is not merely a question of labour, but of a whole social structure. For example, at their own cost, farmers in South Africa provide approximately 500 000 children with primary education. That is a completely different situation that one would have to evaluate, and one would have to examine a completely new form of legislation.

These days it is difficult to export South African agricultural products. I do not want to say much about that at all, because it is an extremely difficult situation. We shall, however, have to see what the international attitude to labour relations in this country is. I agree with the hon member that at present the relations are excellent. I do think, however, that at some time or other we should have this established by way of legislation.

I also know the hon member for Winburg very well. He is a director of one of our major agricultural co-operatives in South Africa, ie Sentraal-Wes. He is also chairman of Uniegraan which plays a very important part in the bulk handling of grain.

The hon member mentioned a very sensitive matter, ie the question of the protection of the grain-silo industry. During a certain period in South Africa, in the days when grain bags were used, we decided, as State policy, to convert to a form of bulk handling.

If one travels through the summer-grain areas of South Africa today, the towering grain silos are a common sight. They cost the grain industry in South Africa millions of rands. As the hon member said, there are bulk facilities available for 14,8 million tons. They were erected at great cost and utilisation capacity guarantees were provided. We shall, of course, have to look into the matter.

I am glad the hon member mentioned that we shall have to investigate this whole matter, because it is again a question of specific schemes, particularly the single-channel fixed-price scheme. This has also resulted in the necessity for a specific handling structure for a specific industry.

I want to tell hon members that if we were to change those schemes in certain of our grain industries—I am referring to the wheat industry, the maize industry and other grain industries too—in the process we could adversely affect the utilisation capacity of the grain-silo industry. What this actually amounts to is that producers could then bypass the agents and market their products without making use of grain silos. I nevertheless believe that the problems we have in this regard will also be solved, even though they are complex.

†The hon member for Bryanston has taken the opportunity to tackle me on the point of production costs of R100 or R120 per hectare.

*Probably this could be done, and let me concede that point to the hon member. I must tell him, however, that to be able to produce at that price one probably needs a yield of approximately 10 tons, 12 tons or even 14 tons. This chiefly depends on irrigation and also on what one has to pay for water. However, such a small area would be involved that if we only had to concentrate on land with a high-yield potential, we would not be able to produce enough grain in South Africa. Prices would then rocket in any event. The moment prices increased, the marginal land would come back into circulation. Many of those who had converted to cultivated pastures, would plough these up again. It is therefore not as simple a question as the hon member makes out.

The hon member then made a remark for which I have the utmost sympathy. We must treat our brandy with circumspection. This is actually a surplus elimination product in the wine industry as a whole, an aspect dealt with by the KWV; I am referring here to the distilling wines from which brandy and other products are made. We must support this industry. The hon member for Wellington, who is an authority in this field and a director of the KWV, tells me that the whisky which is imported and which is “cheaper” than our brandys, is of a very low quality. When next the hon member for Bryanston samples that product, he should take note of the quality. [Interjections.]

There is nothing wrong with Bells. [Interjections.]

The hon member Mr Redinger made a very interesting speech about the co-operative movement, a speech on which I should like to give him a fairly detailed reply. It concerned the role that co-operatives have played in South Africa in the provision of farming requisites. Looking at the recent figures, from which it appears that the co-operative movement has played a major role in the provision of farming requisites over the years, one cannot imagine how agriculture in South Africa could exist without this function performed by the cooperative movement. [Interjections.] I see that the turnover in farming requisites totalled an amount of R3 479 million in 1986. Services furnished during the same year amounted to R566 million.

The hon member mentioned the importance of the marketing function of the co-operative movement. The role played by the cooperative movement in the decentralisation of economic activities and in maintaining the social infrastructure is also very important. If one travels through the rural towns in South Africa today, one sees the main and branch offices of agricultural co-operatives. One thinks of the people they employ and the role that officials of the co-operatives play in our social activities in rural areas. They are certainly indispensable, and we must take note of that.

The hon member spoke of the exchanges. Perhaps I did not follow his argument very well, but it appears to me that he meant that co-operatives should make use of exchanges in an effort to mobilise their processing activities. That is a problem that needs to be addressed very seriously. Exchanges have been established in several spheres, but some of the larger co-operatives do more business than the exchanges. This matter has been debated at congresses on several occasions, for example the question of the overlapping of the functions of co-operatives.

There was a time when we in the cooperatives adopted the decision that one co-operative should not do business with a member belonging to another co-operative. This matter was investigated on a scientific basis and the reaction was extremely interesting. The general managers said they wished to adhere to the rule of overlapping. Directors were less cautious about that aspect. It is interesting, however, that the farmers, the members of co-operatives said that it was a good thing for co-operatives also to compete with one another. I, too, think that is a healthy state of affairs.

The hon member for Barberton also spoke about the wool industry. I am only too aware of the erstwhile struggle between Wolpi and the existing scheme. I know that the hon member was a member of the SA Wool Board at the time. In my view, however, the investigation deals basically with marketing costs. In many respects this system has also become too expensive. On the one hand there is the one agent, the FBC, and on the other the SA Wool Board, which has grown up with the specific scheme over a period of 15 years and refined its activities. That was perhaps a good thing. I really think—I am saying this in all honesty, and I have very good friends in the SA Wool Board—that many of the services offered by the SA Wool Board could just as well be offered by the FBC. I know I am venturing on dangerous ground, because it is a matter which is being investigated. It is time for us to examine this, however, and the matter will be thoroughly investigated.

I agree with the hon member that one should be very careful not simply to write off the single-channel pool system. In my view we could then also experience difficulties. It seems to me as if the major problem of a large percentage of the wool farmers is the question of the pools. So many pools have been created—I think there are 2 000 or 3 000 pools—into which the classes and grades of wool, for example the micro-grade, are sorted. It is therefore not true that higher-grade wool subsidises the poorer quality wool. There is virtually a pool for every type of wool in South Africa. It is a question, however, of when one closes the pool. Those are all facets that will have to be investigated.

In conclusion I want to extend my very sincere thanks to hon members on both sides of the House for a very fruitful debate. Agriculture is a very dynamic industry, and I think that if we can conduct a debate in this field as we have done today, we are helping to make the industry a dynamic one.

I also want to say something about the past. I have been in this House for many years now. We have always told one another, prior to agricultural debates, that it is strange that whenever we begin to debate agriculture, the Press galleries are empty. The Press galleries are empty, because the journalists say it is just one Lamentation of Jeremiah from beginning to end. Today we have really had a few positive contributions here, and I see that there are a few more people in the Press gallery.

It is only Freek who is on the job.

If we tackle the problems of this old industry, I foresee it raining again within the next few years. Not only will it rain again, the prices of agricultural products will also improve. We are now beginning to see signs abroad, in the international world, indicating that agricultural prices will not remain at this level for ever. Because South Africa has one of the best farming communities in the world—which makes it one of the six best export countries for agricultural products in the world, notwithstanding the difficult climatic conditions—prosperous times are in sight in which the farmers of South Africa will again get a better deal in this country.

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 should not like to disturb the peaceful atmosphere in the House, especially after the splendid agriculture debate we held this afternoon. However, to prevent some of our hon members who are not farmers perhaps thinking that we farmers cannot speak harshly with one another I think it is necessary that we exchange a few frank words with each other, especially after the speech which the hon member for Lichtenburg made yesterday. [Interjections.]

I want to start by conveying my sincere thanks to the hon members of the PFP, as well as the hon member of the NRP, who supported this amending Bill on the standing committee. I even want to thank the hon members for Lichtenburg and Delmas for their worthwhile contribution to the discussions of the legislation on the standing committee.

How did the discussions proceed? On that standing committee penetrating questions were put to the members of the department who were present. In my opinion the questions were answered most satisfactorily.

Moreover, I want to say in all fairness that at that stage the hon members for Lichtenburg and Delmas did not wholeheartedly support all the clauses in that Bill. They preferred to abstain from voting. In general these hon members and their party were generally satisfied with the amending Bill.

Yesterday, however, the hon member for Lichtenburg produced a political feat of strength here. To achieve what? He might have notched up a political point or two, but in the process he shot down a Bill which he agrees is essentially a good Bill. Now the question is: On what grounds did he shoot it down? In order to give the reply to this I shall quote him:

Consequently he was not opposed to the Bill in principle but he shot it down because this Bill was introduced by the Government. Surely that is a nonsensical standpoint. For the first time in this House I have experienced a Bill being shot down simply because the Government party introduced the Bill. It is the first time in the history of this House, I think that this nonsensical standpoint has been adopted.

It is the indecision that bothers you isn’t it?

Had I been the hon member for Overvaal I would rather have kept perfectly quiet. I shall come to him as well in a moment.

That is the itinerant member.

At an earlier stage I think that hon member could have given the hon member for Lichtenburg very good guidance in this regard. I believe the hon member for Lichtenburg’s standpoint would then have been different. But I shall come to that hon member in a moment.

Just keep to your speech!

Order! The hon member for Overvaal is making too many interjections.

I want to accept that the hon member for Lichtenburg, who participated in this discussion immediately prior to me, probably studied this Bill thoroughly. That is how I have come to know him, because I think he is a thorough man. Then the hon member continued, however, to make the following remarks:

If one reads what he said in its full context one sees that he is speaking of existing rights. He said that he could deduce that from the Bill, but what is stated in this Bill is exactly the opposite. Why does the hon member then make this statement? I shall quote to the hon member the relevant portion in section 17 of the Bill, the portion in section 17 which replaces section 30 of the Principal Act:

The hon the Minister has no discretion in this regard. Why does that hon member cast suspicion on this legislation by making a totally erroneous statement in this regard? I really cannot understand it.

I want to refer to a further standpoint adopted by that hon member—something which I have never experienced before. As incomprehensible as it is to me that he cannot support a Bill on the grounds that the governing party introduced it, it is equally incomprehensible to me that during a single speech he could change his policy. I now know that he forms part of his party, a party which is inclined to jump from one policy to the other when it suits them, but I have never experienced policy changes within the course of one speech before.

You are really referring to yourself now!

Let me show the hon member what I mean by that. He said the following in his speech:

That is what the hon member said. The CP is therefore not in favour of it. When did they change policy with regard to this standpoint? Can they not remember that the hon member for Barberton participated in a debate on this same matter a relatively short while ago, on 5 September 1986? At the time he concluded his speech as follows:

That was legislation which dealt directly with making the Lesotho Highlands Scheme possible.

On 5 September 1986 the CP gladly supported similar legislation. Yesterday, less than a year later, however, they forget what their policy standpoints with regard to this scheme were. [Interjections.] Yesterday the CP did not support this legislation in connection with the Lesotho Highlands Scheme. They do not support it on the ground that insufficient regard has ostensibly been had to other areas such as the Eastern Cape, the Northern Cape and the Eastern Free State in the establishment of the Lesotho Highlands Scheme.

I now want to know from the hon member where he and his party colleagues were when the planning of the Lesotho Highlands Scheme was in progress. I want to point out to him that hon members on this side of the House—myself as well—on many occasions conducted interviews with the department and with the hon the Minister in order to ensure that these areas could be affected by such a scheme were not detrimentally affected. At that juncture there was simply no sign of the hon member or of his party colleagues. They were nowhere to be seen when they had to act in the interests of these areas on behalf of which they ostensibly want to act now.

The hon member asked, furthermore, that we should have thorough regard to the proposals of the SA Agricultural Union. Allow me, Sir, to inform the hon member that in this regard hon members on this side of the House have acted in a responsible way by discussing the proposals of the South African Agricultural Union in detail with the officials as well as with the hon the Minister responsible for this legislation. We satisfied ourselves that all objections on the part of the SAAU with regard to the legislation under discussion were receiving attention. When one reads the legislation in its entirety the objections are not of material importance. On that basis alone we can confidently support the Bill.

My time has nearly expired and I want to conclude by telling the hon the Deputy Minister that this is a Bill which we initially treated with a quite a measure of criticism. We examined it critically but it is a Bill that amends the Water Act—something which is extremely necessary at this stage. Therefore we on this side of the House support the passage of this Bill.

Mr Chairman, I find myself in the situation of supporting much of what has been said by the hon member for Fauresmith. We in this party are certainly consistent in our attitudes, as expressed at the standing committee meetings, and I much regret the stance taken by the hon member for Lichtenburg in his speech yesterday. I, too, find it absolutely extraordinary that anybody can say that he accepts a piece of legislation in principle because it is necessary—he believes in that sort of legislation because it is necessary—and then say that he does not trust the Government because they are a bunch of “boereverneukers” and he wants to have nothing to do with them, and that his party are not, therefore, going to support this piece of legislation. All he is doing is to make a political football of the whole matter of water affairs, and of the farmers themselves, and I do not think that what he is doing is in the best interests of the country. I really feel that he did a grave disservice to the whole Department of Water Affairs. [Interjection.] The hon member on my right suggests that this is a new pattern, that I am supporting…

New patriots.

New patriots? Well, Sir, I wish he would speak up and express himself a little better! [Interjections.]

We in these benches believe this is an important piece of legislation. The whole question of subterranean water has been on many people’s minds for a long time. I believe it is vitally necessary that we control this resource. The principle of that water falling under State control in certain areas is an important one.

Some disquiet was expressed about the fact that water should be considered on the same basis as mineral rights on a particular piece of land. I do not think this holds water … [Interjections.] … and this matter was discussed in the standing committee. Mineral rights are a static thing; they will always be there on that piece of land. Subterranean water, however, can extend over an enormous area and if one extracts water from one section one can seriously affect the rights of others on adjoining properties. It actually happened to me. I saw the water-table dropping considerably over a period because of over-use by neighbours. So serious was this that trees on my property died because of the falling water-table. It is an important new concept that subterranean water now becomes public water rather than private water.

The other important provisions of the Bill deal with drainage control areas and the building of a water-work on private land. The water that will be brought into a particular dam or work that could well be used elsewhere or would influence water in a public stream now becomes public water in a drainage control area. I think it is important to understand the difference between public water and private water.

In South African law we have distinguished between public and private water for a long period. To a certain extent the new principles embodied in this Bill change that. In certain instances which specifically deal with subterranean water and water in a drainage-control area, it becomes public water instead of private water.

Water is too precious a resource to waste, or to allow individuals to use to the … [Interjections.] The hon member on my right suggests that I sit down. The hon member for Overvaal obviously does not like what I am saying, because I have pointed out that his party has taken an extremely expedient line in this matter for which they ought to be thoroughly ashamed.

Jan, you are quite right. These people have moved so far right, look where they are standing!

Well, we certainly have not moved right towards the hon member’s party. I want to say to the hon member Comdt Derby-Lewis there is no way at all that we want anything to do with his party.

Those hon members are more right than the Nats already.

We believe this is an important measure which deserves support and we in these benches are certainly going to support it.

Mr Chairman, the hon member for Fauresmith said that we on this side of the House might not have studied this Bill thoroughly. Water is vitally important and therefore it has a very high value as well. It plays a major role in the purchase of land for agricultural purposes or for industrial development. When it comes to the thorough examination of this matter and seen against this background we cannot support this amending Bill. [Interjections.] I thank the hon member for calling me “oom”; I appreciate it. I want to tell the little boy who is calling me “oom” that he must find out what the United Municipal Executive of South Africa says about this Bill.

It is an hon “oom” (uncle).

Pardon me, Mr Chairman, it is an hon little boy. The United Municipal Executive of South Africa says:

It is a drastic amendment, particularly of the law, and particularly, too, when it is not accompanied by compensation.

Today we received a memorandum from the office of the town clerk of the association which reads as follows:

[Interjections.]

I think it comes from the constituency of the hon leader of the National Party in the Transvaal. [Interjections.] Then the hon member says that we have not made a thorough study of this matter. We did make a thorough study of this matter and we take heed of what the South African Agricultural Union has to say. This union stated in its memorandum that:

Furthermore they said:

Furthermore the union says that when that area has been declared a Government water control area it could happen that there may be a conflict of interests. The undertone of all these objections indicates that not everyone is happy with this Bill, and therefore we cannot support it.

Mr Chairman, may I ask the hon member a question?

Order! Is the hon member prepared to answer a question at this stage?

No, Sir. The hon member farms in Bryanston, and I don’t understand that.

Mr Chairman, the hon members for Potchefstroom, Fauresmith and Bryanston …

Mr Chairman, may I ask the hon member whether or not he and, for example, the hon members for Brakpan, Roodepoort, Overvaal and Nigel agree with the hon member for Lichtenburg that the water from the Highlands Scheme should not be used for the PWV area at all, but for the Eastern Free State and everywhere else? [Interjections.]

Mr Chairman, I shall deal with that matter in the course of what I have to say in any case, so the hon member must just wait for his answer. [Interjections.]

*My colleague the hon member for Lichtenburg did not say that we were opposed to the legislation. He spelled out very clearly and unequivocally why we could not support this legislation. The first reason why we cannot support it is that the hon the Minister and the State are now being given the right to expropriate my and every other farmer’s subterranean water without compensating us for it. They can therefore take my water and go and do something with it. At this stage this can only happen in small delineated areas, but we know how matters progress once something like this is on the Statute Book. We know how the powers work which we vest in the hon the Minister through this Parliament. We are not only concerned about this hon Minister but about future Ministers too. Once a person has that power he has it and he uses it as he wishes. [Interjections.]

What about Connie Mulder?

What did Connie Mulder do wrong?

Oh yes, and many of the Ministers sitting here too! In any case, as regards the hon member for Turffontein, I must say that when one looks at him one remembers what he said about the present State President. [Interjections.]

André, do you trust the State President now? [Interjections.]

That is not what is at issue now. In any case I am discussing serious matters. [Interjections.]

Order! The hon member for Soutpansberg must be afforded an opportunity to continue with his speech.

I want to tell that hon gentleman that as regards the matter of subterranean water I do not know whether, with the knowledge we now have on that subject, we should go so far as to place this kind of legislation on the Statute Book. [Interjections.] I know the department has done research and I want to say at once that I do not have the technical knowledge which the department has. However, let me tell hon members that there is a discussion under way regarding the building of a dam in the Sand River near Louis Trichardt. The department advised the town council of Louis Trichardt to sink boreholes and get their water from them. They followed that advice and the water table is now dropping there, and the department has now advised the town council of Louis Trichardt to abstract less water from those boreholes than it has done so far.

Quite right! [Interjections.]

If, during a drought, the water table is dropping in areas where water is being extracted, no matter how strong the subterranean water is—hon members can go and talk to people in that area—and good rains then fall, the water table never rises to its original height; in any case not in my part of the world.

You are talking nonsense!

I do not know what that hon member knows about these matters, but that is my experience. [Interjections.]

I want to get back to my original point. The hon the Minister is taking this subterranean water without compensating the people for it. Whether or not it is water that would flow it forms an intrinsic part of the market value of that land. I want to tell the hon member that one can drill for water at one point. In my constituency, near where I myself am farming, there are two faults, namely Palala and Auf der Haar. The flow of water in those faults is strong or weak, depending on the rainfall. It is the seepage water from those faults which provides the adjoining farms or the farms in the specific area with more or less water for livestock. If one abstracts water from a fault at a specific point, one will eventually cause the weaker boreholes or the boreholes from which the seepage water is obtained, to dry up. There is no doubt about that.

As far as I am concerned the argument is as follows: Whether or not there is subterranean water and whether it is strong—so strong that the hon the Minister wants to lay claim to it—and whether or not the present owner of the land is utilising it, it forms an integral part of that land’s value and if someone else is going to start utilising it this is going to affect the value of that land in future. That is what the argument is about.

There is another reason why we do not support this Bill. My colleague the hon member for Lichtenburg stated this unequivocally. He did not express an opinion on the Highlands Water Scheme—the hon member for Fauresmith said that he was opposed to it—but on the fact that the water was all being taken away to the PWV area. His standpoint was—and we find no fault with this—that the water should be used nearer to the source, which would promote decentralisation. The industries and the labour in the Witwatersrand and PWV areas need not be centralised further—the water can all be used there. It need not all go to the PWV area.

[Inaudible.]

It need not all go to the PWV area.

Order! The hon member for Wellington is making too many interjections. The hon member may proceed.

Thank you, Mr Chairman. I do not hear him in any case, but thank you any way.

I think this is something that the hon member for Wellington can leave alone and leave the people of the Transvaal to decide about. [Interjections.] A further point on this aspect to which my colleague objected, and which is also a valid objection, is the fact that people are already starting to pay for the water from that scheme which they are not using or enjoying. My colleague said that we had no objection to certain aspects of this legislation, but when we weigh up these aspects against those we do object to we are compelled to oppose this legislation.

Mr Chairman, I want to thank hon members who participated in this discussion most sincerely. I also want to thank the hon member for Lichtenburg most sincerely for his good wishes. He did not wish me everything of the best politically, and I do not need those good wishes in any case, because we are faring well.

The hon member quite rightly said that they did not object to the principle. The hon member then told us in a roundabout way what they did object to. He said for example that it was because of our diesel problems which the Government was not handling correctly. Even if we were to solve the diesel problems, this would not have any effect on the water position in the country. One can manufacture fuel in all manner of ways, but one cannot manufacture water. [Interjections.] The hon member is laughing now, but we are still getting to the point he objected to. The hon member’s objection was that the Government could not exercise control.

Today in this House I want to invite the hon members of the CP to Atlantis, where we monitor this subterranean water properly. They can take a look at this. The Department of Water Affairs has a commendable history as regards the provision and control of water in this country. What did we do about the big drought and emergency conditions in the PWV area, about which those hon members talk so glibly? Forty percent of our economic activities take place in the PWV area, and how can we allow that area to be without water for a single moment. We invite these hon members to visit Atlantis, where we monitor the control over subterannean water so that they can see how this department can control water.

The hon member spoke about the matter of ownership, the purchase of farms and the value allocated to these farms. When one purchases a farm with good subterranean water, it is true that the farm is very valuable to you. That hon member is quite correct, but what does this amendment say? It does not say all that water is going to be taken away from that person. In the first place it only says that the existing rights which that owner had on the farm are recognised. In the second place it is also decided in advance that water is going to be provided to him for domestic use, as drinking water for livestock and for a number of other things. Water is a national asset and when a person has purchased a farm he definitely did not buy that farm to peddle water.

You are making it a national asset. It was not one before.

That is the point we want to make. We say in that amendment that we want to place subterranean water in the same category—in some areas where it is essential and possible—as surface water. We also want to treat it in the same way.

I also want to give hon members the assurance that we will proclaim such subterranean control areas very selectively, as was the case in the past, when we applied the present Act. We will not declare water scarce areas as subterranean water sources with the specific purpose of taking the water elsewhere. We have specific areas in mind where there are large subterranean sources, where we can abstract water and utilise it elsewhere.

I also want to say that the idea is not to use the water as a primary source of water in the PWV area. The idea is to use it as supplementary water, for example when we experience large-scale droughts as we are at present, because it takes a very long time before subterranean water is supplemented. It can be abstracted more quickly than it is supplemented. For that reason we will not abstract that water constantly. It will be monitored. We will not exhaust the sources; we will only use them as a supplementary source.

I now come to the matter of the advance payment of tariffs. Clauses 29 and 30 deal with this. It has been said that those persons who pay now will not be able to utilise it later. Sir, we are used to paying retrospectively. We have become used to this, and if we are expected in any way to make a small investment in the future, we do not want to do so. There are people who want to live in this country after us. We are prepared to cultivate land and develop farms for our children, but are we not prepared to invest a little in the future of water in this country too? Sir, I think you may be quite right when you say that the water may not be utilised at the moment. However, the benefits which will accrue from this are far greater than the disadvantage of paying in advance for a while.

When the Lesotho Highlands Scheme comes into operation, we will find that there will be high water tariffs in the areas to which it will be supplied. For this specific reason we would like the tariffs to be determined in good time, so that the people are not suddenly faced with the shock of higher tariffs.

To a great extent the hon member for Fauresmith actually brought the hon member for Lichtenburg to book. I want to thank him very much not only for his support today but also for the good work he did on the standing committee.

He is very indecisive, however.

He is the chairman of the standing committee, and as he rightly pointed out, in the course of last year he argued with us a great deal about the development of the Lesotho Highlands Project. However, the hon member for Fauresmith took the trouble to acquaint himself with the facts in connection with the water supply in other areas in this country. As a result he has been convinced, and that is why he was able to rise to his feet here today and say that he supported this legislation and the Lesotho Highlands Project.

†I should like to thank the hon member for Bryanston for his support. According to the other hon members on the standing committee that hon member made a very positive contribution during the discussion of this legislation. He referred to the detrimental effect of the uncontrolled extraction of subterranean water on neighbours. I should like to thank the hon member for his contribution.

*The hon member for Delmas only read out a whole series of objections. The legislation is being published so that objections can be raised; that is quite right. When a person objects it does not, however, necessarily mean that one must simply throw the legislation into the wastepaper basket. When there are objections they must be considered thoroughly. This is what the standing committee and all the other people are doing. If these objections are valid and cannot be resolved by the proposed legislation, one gives attention to them, otherwise such objections cannot be valid.

The hon member for Soutpansberg said that water was simply being taken and then something was being done with it. I already explained this matter when I referred to the hon member for Lichtenburg. Water is not simply being taken away from people. This is surplus water which exists in certain areas. [Interjections.] I want to tell the hon member that he does not understand the value of the department also becoming the guardian of the subterranean water in this country. This will prevent—as the hon member for Bryanston also said—the water simply being extracted left and right. It also does not only concern the person who is being prejudiced, the person from whom the water is being taken. As the hon member said—it concerns neighbours and organisations that will be prejudiced by this. Water is therefore not simply being taken; there is control over the abstraction of this subterranean water.

The hon member also spoke about the drop in the water table. I have already told him that this will be monitored. Water will not simply be extracted.

Mr Chairman, may I ask the hon the Deputy Minister a question?

Yes, Sir.

Mr Chairman, what kind of water does the hon the Deputy Minister foresee will be taken, in what amounts, and is the landowner whose water is taken going to be compensated for it?

No, Mr Chairman. I have already told the hon member that we are going to determine what the existing rights are which that owner exercises, and what the rights are which he does not exercise for his basic purposes. The objective of this legislation is, however, to make provision for surplus subterranean water. We cannot allow people to peddle surplus water, which is a national asset, whether or not the hon member agrees with this. In this regard surplus water belongs to all the inhabitants of this country. For that reason we cannot allow this water to be sold to people. The surplus water is abstracted and utilised elsewhere.

In conclusion I want to thank all hon members who supported this Bill.

Question agreed to (Official Opposition dissenting).

Bill read a second time.