16 October 2024

John Steenhuisen

The Minister of Agriculture Dear Minister Steenhuisen

BEE criteria for reduced-duty exports and imports, and the Department of Agriculture’s BEE plans

On 3, 4 and 7 October 2024, Mr Mooketsa Ramasodi, Director-General of the Department of Agriculture, published three regulations subjecting reduced-duty imports and exports of agricultural products to BEE criteria. This is harmful, unlawful, and in violation of South Africa’s international trade obligations.

We require that the BEE criteria for issuing permits, as well as the Department’s AgriBEE Plan and AgriBEE Enforcement Guidelines which inform the regulations, be withdrawn.

The regulations

The regulations concern the Department’s allocation of quotas for reduced-duty agricultural exports and imports under preferential market access schemes, also known as tariff rate quota schemes. In the published regulations, BEE is the first among five criteria to be applied by the Department in awarding:

1. Reduced-duty export quotas for a total of up to 200 000 tonnes of agricultural products and 190 million litres of wine to the United Kingdom and Northern Ireland as well as the European Union.

a. Government Gazette 51345; no. 5251: concerning the economic partnership agreement with the European Union.

b. Government Gazette 51351; no. 5253: concerning the economic partnership agreement with the United Kingdom and Northern Ireland.

2. Reduced-duty import quotas for a total of up to 500 000 tonnes of agricultural products and 9,5 million litres of wine to importers in South Africa importing from World Trade Organisation (WTO) member countries.

a. Government Gazette 51357; no. 5390: concerning the WTO: Marrakesh Agreement.

These trades constitute a minor yet meaningful portion of the total volume and value of South African agricultural exports and imports. The economic partnership agreements with the EU and the UK and Northern Ireland and the WTO: Marrakesh agreements provide for the removal of trade barriers between signatories, not for South Africa to abuse its administrative obligations as an opportunity to erect race-based import and export restrictions.

The regulations in context of the Department’s AgriBEE plans

The regulations are not your innovation and in fact amount to a renewal of those in place under your predecessor, Minister Thoko Didiza. We therefore believe it necessary to inform you of engagement by Sakeliga and our lawyers with the Department and your predecessor since November 2023.

In November last year, significant public alarm arose following media reports highlighting the regulations. The Department was quick to dismiss concerns and conveniently seized on some ambiguities in media reports to pretend that it had not made—and had no intention of making—BEE a condition for licences and permits in agriculture.

However, several of the denials and statements by the Department were inaccurate or false and failed to acknowledge the existence and contents of its official policies. In response to the Department’s denials, Sakeliga then released two official policies of the Department that were at that stage not publicly known, called the AgriBEE Plan and the AgriBEE Enforcement Guidelines. The Department had marked these documents “confidential” and did not publish them on its website, yet after we became aware of their existence we were ultimately able to obtain them through a PAIA request.

In its AgriBEE Plan and AgriBEE Enforcement Guidelines, the Department explicitly lays out its plans to make BEE compulsory. It seeks to:

- “enforce compliance of sector stakeholders to the transformation programme of the government” by making B-BBEE “a qualification and legal requirement for Government” when issuing licences and permits, water rights and other concessions, and disposing of state assets, etc.; and

- ensure that “before applicants or clients receive a service from the line function directorates (such as inspections, licences, permits, grants, subsidies and concessions), they must first be subjected to the predetermined compliance criteria aligned to the AgriBEE Sector Code.”

Our engagement with the Department concerns therefore not only the regulations now renewed, but also the Department’s standing AgriBEE Plan and AgriBEE Enforcement Guidelines.

Fortunately, the Plan and Enforcement Guidelines have not yet been successfully implemented everywhere and to their full extent. Agricultural economic activity in South Africa remains robust.

However, at this point it is evident that the Department has not heeded Sakeliga’s warnings, requests, and demands, opting instead to renew the regulations to which we had objected. This necessitates that we escalate our intervention, which is likely to include litigation as well as engagement with affected local and international parties.

As always we would prefer to resolve the matter without litigation. To this end we request a meeting with you to discuss an acceptable solution to the regulations, the AgriBEE Plan, and the AgriBEE Enforcement Guidelines.

Please find attached for your information:

1. 19 Nov 2023: Statement by Sakeliga setting out the problems with the regulations and the AgriBEE plans

https://sakeliga.co.za/en/sakeliga-releases-department-of-agricultures-confident ial-plans-for-unlawful-bee-enforcement/