Shameful lack of government support
Fifty years from now, when historians talk about our way of life in SA, they will employ some of the expressions used by science-fiction writers to describe alien worlds. Terms such as "parallel universes", "time warps" and "duplicate worlds" will doubtless abound.
It started long before the police lost their battle against crime, abdicating the protection of its tax- paying citizens to private security companies. In fact, even under the ancien regime, people of means chose not to delegate their health care to the state. Instead, they paid twice for medical cover - once, via their taxes, to government institutions and then again with medical insurance. Well-to-do Brits do exactly the same, so this hardly appeared noteworthy.
The same could be true about private retirement products (as they are euphemistically called) and even - though this is less common outside the British Isles - private schooling. You pay your taxes for a service you'd rather not use, and then buy it again, in the parallel universe of modern South African life.
Lately the rate of duplication has grown exponentially. Outsurance sponsors more than 100 traffic officers to do point duty at busy intersections at rush hour or where traffic lights are on the blink. Suburban residents exasperated by the failure of the Johannesburg Roads Agency to fill potholes can now buy prepacked bags of tarmac and gravel.
Telkom 's failure to provide adequate - and adequately serviced - landlines now makes it essential for businesses to run additional cellphone connections. The frequent collapse of the ADSL links - even in long- established suburbs - means that organisations that are dependent on constant internet access now run duplicate wireless internet connectivity.
The wine industry is one of the biggest employers in the Western Cape (a distant colony so far off the radar screens of Darth Vader and the Sith Lords that its relevance to the financial wellbeing of the country has been completely ignored).
It makes a considerable contribution to tourism, to a number of downstream industries and (with export volumes exceeding domestic consumption), to the balance of payments. It is taxed at every possible opportunity: VAT, excise at R2,14 a litre, then levies for research, export promotion, empowerment and transformation, the Association for Responsible Alcohol, which add another 20c/l . In addition, every producer must pay an annual liquor licensing fee.
In accordance with the logic of the duplicate dimensions, however, it obtains nothing for all these investments. Instead, it is obliged to buy its statutory obligations on a user-pays basis. Every producer must pay the Wine & Spirit Board - a statutory body - R200 per variety for permission each year to press the grapes. It also pays to have the wine certified and it must pay a separate amount for export certificates.
It is worth reflecting on the industry's contribution to the national economy - as well as to employment and the gross domestic product (GDP) of the Western Cape.
Exports account for more than 50% of total wine production and about 30% by value of industry turnover (R6,2bn out of R19,2bn). In fact, R3,3bn of primary agricultural output enjoys a six-fold beneficiation as it goes from grapes to wine. In 2008, it contributed 2,2% to national GDP, 8,8% to national employment - all at a better than average labour to capital ratio. Add to this the value of wine- related tourism - currently estimated at R4,2bn - and you are forced to wonder at the deafening silence and shameful lack of support the industry receives from the government.
The occasional handouts from the Department of Trade and Industry are directed mainly at empowerment projects or to encourage trade with regions which, unconnected to commerce in wine (such as China and India), are important to the officials in that department. The problem now is that the prolonged weakness of the pound and the euro is beginning to leave SA's producers too debilitated to maintain these parallel payments.
How will our negligent state manage when yet another gold-producing goose collapses for want of a little attention?
From Business Day, 7 June 2010
- Michael Fridjhon's blog
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Re: Shameful lack of government support
Hi Dana
Great thing about the wine industry is the number of individuals claming to be experts and dissing facts.The funds in question were made available to the industry as a result of government intervention. This was administered by the SA Wine Council and SA Wine Industry Trust. Board representatives included Wosa, Vinpro, Distell, etc. Not able to get it their way, the latter got up and left the negotiations stifling any progress and leading to the situation that you now find so frustrating. Another hand-out from government will no doubt lead to the same stalemate due to the industry's petty politics, massive ego's and inability to co-operate.
Re: Shameful lack of government support
@Kalla, you should get your facts straight before you get on the soapbox. The funds you talk about was under control of a completely different industry body set up to drive transformation.
Good question where those funds ended up, but from what I know it ended up in a few individual pockets and did not benefit the poor at all. It did not end up at Distell, Wosa et al!
I did not advocate agri subsidies for the wine industry - just some realistic export marketing support for a key value added export industry. All of our competition gets that in a big way and we get zip. Without the funds to position the category, SA wine ends up playing the price card way too often.
The problem at government level is not a shortage of funds to uplift the poor - there has been lots of money, thanks to an efficient Dept of Finance & SARS. The problem is poor strategy plus how much of that gets wasted and stolen. Get real please!!
Re: Shameful lack of government support
One more aspect to ponder....Comrade Derek Hanekom stepped in to free over R300m finance from the KWV for use by the greater wine industry. Wosa, Distell, Vinpro, KWV had access to these funds to use for the promotion and greater good of the wine industry. They stuffed it up, and now you and Fridhon want more money from the industry? Greed knows no end.
Re: Shameful lack of government support
While the Stellenbosch and Franschhoek vino anoraks may differ, when it comes to agricultural subsidies there are more pressing sectors than the wine industry. Think staple foodstuffs. Think land reform. Then we are not even going to talk housing, health and education. If Wosa had used their resources to better effect and measured success on value and not volume, there would be more profit and a more stable environment for all concerned. There is such poor organisation in the wine industry that a government hand-out would do more harm than good. Those pleading for subsidies should look at the millions held in the coffers of industry organisations like Vinpro and ask why they do not step into the fold and address the concerns?
Re: Shameful lack of government support
THIS REPLY WAS SUBMITTED BY D BUYS, AND ACCIDENTALLY DELETED WHEN CLEARING AWAY MULTIPLE COPIES OF KALLA'S ORIGINAL COMMENT. SORRY DANA!
Kalla sounds like you work for the government? Michael makes a lot of very valid points. Lets be more constructive!
The global wine industry is very competitive and the SA industry has to compete against the huge subsidies paid in the EU, as well as against the strong government marketing support enjoyed in key growth markets, like the US and China, by Argentina, Chile, Australia and New Zeeland.
If you have to compare the tiny, industry-funded budgets that WOSA have to work with, you will see we are going to war armed with pea-shooters against very well armed opposition.
The World Cup has done a lot to help boost South Africa's image internationally and it will be crucial to follow up and capitalise on this once in a lifetime opportunity. Some help from government will be very useful and will help preserve and create much needed jobs!
Re: Shameful lack of government support
A typical anorak elitist comment. How is the wine industry going to contribute to food security, something that South Africa needs far more than the luxury that is wine? If government intervention and support are required, surely the grain and dairy industries are way more important. And if you want to know what happens to the excise and other duties the industry pays? Well Michael, alcohol for one causes over 50% of all road fatalities per annum, not to mention injury and maiming. State health services are responsible for mopping up the blood, and here the wine industry has to cough-up along with SAB and the other liquor companies - and rightly so. Unfortunately the majority of our wine consumer culture is far removed from WineX, bow ties and tutored tastings. The bulk of South African wine is sold to people seeking solace in the bottle and the bag-in-the box, and the result is an unfortunate array of social and health problems the stretched government services have to fund. Get off the elitist soapbox and have a look at the general state of the wine industry.