Sorghum is a nutritious, gluten-free grain with significant health benefits, including high dietary fiber, suitability for individuals with celiac disease and diabetes, and a sustainable energy source. Its resilience to climate change makes it an excellent alternative to maize, particularly in drought-prone South Africa.

However, the 15% VAT imposed on sorghum products makes them less competitive compared to maize products, reducing consumer choice and limiting food diversity, especially for low-income households.

Problem Statement

While South Africa is food secure at a national level, household affordability remains a challenge. Sorghum is a highly nutritious staple, yet its affordability is hindered by VAT, making it less accessible to lower-income consumers. The taxation places sorghum at a disadvantage against maize, discouraging consumption and production. As a result, the industry is in decline, with lower demand affecting farmers, processors, and retailers. If the current trend continues, sorghum production in South Africa may cease altogether, leading to job losses and economic setbacks.

Economic and Strategic Considerations

The National Development Plan (NDP) aims to expand agriculture and create one million jobs by 2030. Removing VAT on sorghum aligns with this goal by:

  • Supporting small-scale farmers and commercial producers.
  • Enhancing food security through a diversified staple diet.
  • Encouraging market growth and investment in sorghum value chains.
  • Reducing financial strain on consumers, particularly in lower-income groups.
  • Promoting entrepreneurship and rural economic development.

Competitive Disadvantage

Maize meal is zero-rated for VAT, while sorghum meal is taxed, making it less competitive. This pricing disparity directs price-sensitive consumers towards maize, suppressing sorghum demand. Additionally, VAT impacts processors’ cash flow, adding financial burdens that ripple through the supply chain. Removing VAT would enable fair competition, increase consumption, and support economic sustainability in the sorghum industry.

Conclusion & Appeal

Sorghum is an indigenous African crop, primarily consumed by lower-income households. Removing VAT would directly benefit these consumers while revitalizing a struggling industry. The estimated R238 million in VAT collected annually on sorghum could instead be redirected to strengthening the sector, preserving jobs, and ensuring long-term sustainability.

The sorghum industry urges the National Treasury to reconsider its decision and grant VAT zero-rating to sorghum and sorghum products. This measure, coupled with other ongoing industry efforts, will help prevent the decline of a vital agricultural sector, support local economic development, and improve food security for South Africans.

Source: Grain SA