SA farmers have mixed reactions about implications of VAT increase reversal

THE AGRICULTURAL industry in South Africa has given mixed reactions to the reversal of the proposed 0.5 percentage points increas in the Value-Added Tax (VAT) by Finance Minister Enoch Godongwana that the proposed on Thursday.

- YOGASHEN PILLAY

Francois Rossouw, CEO of Southern African Agri Initiative (Saai), on Friday said that the reversal of the proposed VAT increase was positive news for the agricultural sector and the consumers.

“A VAT increase would have put additional financial pressure on farmers, particularly smaller-scale and emerging producers who are often not VAT-registered and therefore unable to reclaim increased input costs. It would also have negatively impacted consumer affordability of essential agricultural products,” he said.

Rossouw added that while the VAT remaining at 15% would alleviate immediate cost pressures, the sector was still faing significant challenges, including rising input costs, infrastructure limitations, and logistical inefficiencies.

“We therefore urge the government to focus on improving infrastructure and logistics, and ensuring stable, supportive trade policies to foster sustainable growth and stability within agriculture,” Rossouw said.

Dawie Maree, head of information and marketing at FNB Business and Agriculture, said that a change in VAT will not have ahd a significant impact on commercial agriculture since commercial farmers were VAT registered, so there was a pass-through.