SOUTH AFRICA – Oxfam South Africa wants the government to consider a sin tax for goods that use lots of water in the production phase and for emergency grants to mitigate against drought conditions.

The charitable organisation on Tuesday released its drought report and called on the government to take proactive steps to minimise the damage caused by the recent drought.

Oxfam spokesperson Isaac Mangena said an introduction of a sin tax on some agricultural products would ensure the equitable and sustainable redistribution of water.

 “A ‘sin tax’ could be extended to certain middle-class consumption goods which use high amounts of water in production, for example goods like beef, coffee and chocolate could be taxed for this purpose,” Mangena said.

The Oxfam report made four key findings.

It found that the narrow definition of drought had limited the range of the necessary relief deployed. It also found that poor management of water resources had in key aspects created the crisis.

The report noted that drought combined with unregulated food markets had resulted in food inflation that pushed more people into acute hunger.

And the report said drought exacerbated existing structural dynamics in agriculture, making it necessary to urgently rethink the sector.

Mechanisms for stabilising the price of white maize also needed to be investigated, including delinking white maize from the market.

“An emergency universal grant, pegged at inflation on low-income household nutritional food baskets, should be provided. Alternatively, all social grants should be increased by food-inflation rates on low-income households,” Mangena said.

South Africa had experienced its most severe drought in more than 35 years, which hit crop production, fuelled inflation and stifled economic growth.

The drought has abated in recent months, but recent reports pointed to the recurring El Niño phenomenon returning.

The South African Weather Service said on Monday that the possibilities of an El Niño weather pattern taking form in the next few months had heightened significantly.

Agricultural Business Chamber’s economist Wandile Sihlobo said while the weather services had forecast dry and warm weather conditions later in the year, the situation must continue to be monitored.

“Although it would be premature to provide any certainty on this outlook, it is worth noting that the Australian Bureau of Meteorology concurs with our local Weather Services and has noted a 50 percent chance of El Niño development later in 2017,” Sihlobo said.

However, Mangena said it was simplistic to just blame the drought on El Niño.

March 29, 2017: Business Report