ALERT AGRICULTURE, AQUACULTURE & FISHING SECTOR

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ALERT AGRICULTURE, AQUACULTURE & FISHING SECTOR
21 APRIL 2021

   AGRICULTURE,
   AQUACULTURE &
   FISHING SECTOR
   ALERT

IN THIS
                    The agricultural sector’s lifeblood –
ISSUE               protecting and preserving South Africa’s
                    scarce water resources
                    South Africa’s reality as a water scarce country is a well-
                    known fact, with water scarcity being exacerbated by poor
                    water resource management and licensing, lacking water
                    infrastructure, insufficient maintenance and investment, and,
                    without question, climate change. Climate change and its
                    impact on water is linked not only to increasing and more
                    severe periods of drought, but also erratic and severe weather
                    patterns which have a knock-on effect on water availability.
                    Given the extensive water needs of produce farmers, the
                    agricultural sector is and will be one of the hardest hit by the
                    effects of climate change.

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ALERT AGRICULTURE, AQUACULTURE & FISHING SECTOR
AGRICULTURE,
 AQUACULTURE &
 FISHING SECTOR

                                               The agricultural sector’s lifeblood
                                               – protecting and preserving
                                               South Africa’s scarce water
                                               resources
                                               South Africa’s reality as a water scarce         The financial ramifications of water
                                               country is a well-known fact, with               scarcity for farmers, and of drought in
   The Paris Agreement                         water scarcity being exacerbated by              particular, have recently been impacted by
   has required countries                      poor water resource management and               the repeal of the declaration of drought
   like South Africa to                        licensing, lacking water infrastructure,         as a national disaster in July 2020. The
   commit to practical                         insufficient maintenance and                     move resulted in an outcry from prominent
                                               investment, and, without question,               agricultural organisations who questioned
   measures to combat                          climate change. Climate change                   its justification given the impact drought
   climate change and                          and its impact on water is linked not            has had on commercial agriculture and
   strategies to adapt to                      only to increasing and more severe               the persistence of droughts in parts of
                                               periods of drought, but also erratic and         the country. Following the repeal, farmers
   its effects.
                                               severe weather patterns which have a             must mitigate the effects of drought
                                               knock-on effect on water availability.           themselves without any financial support
                                               Given the extensive water needs of               from the disaster relief of R139 million that
                                               produce farmers, the agricultural sector         was previously provided by government
                                               is and will be one of the hardest hit by         which, even when it was available, was
                                               the effects of climate change.                   argued to be insufficient.

                                               To mitigate these detrimental impacts,           Since the “un-declaration”, water shortages
                                               South Africa has adopted a variety of            have remained a reoccurring theme
                                               measures that aim to cater for both the          in 2021, with water scarcity in the Nelson
                                               short and long term. There is, for instance,     Mandela Bay region of the Eastern Cape
                                               its commitment to nationally determined          considered by experts to be in “dire straits”.
                                               contributions under the Paris Agreement,         A total of eight dams in the region are less
                                               which set the goal of keeping global             than 10% full and the Kouga Dam, one of
                                               average temperature increases less than          the biggest facilities serving the region
                                               2°C above pre-industrial levels by 2050.         generally and particularly farmers, is only
                                               The Paris Agreement has required countries       5% full and close to running completely
                                               like South Africa to commit to practical         dry. In trying to endure the recent and
                                               measures to combat climate change and
                                               strategies to adapt to its effects.

                                                                        CDH’s Agriculture, Aquaculture
                                                                        & Fishing Sector Specialists
                                                                        provide practical and commercial advice to help our
                                                                        clients in this sector achieve their business objectives,
                                                                        protect existing interests and maximise opportunities.

                                                                        CLICK HERE TO READ OUR BROCHURE.

2 | AGRICULTURE, AQUACULTURE & FISHING SECTOR ALERT 21 April 2021
ALERT AGRICULTURE, AQUACULTURE & FISHING SECTOR
AGRICULTURE,
 AQUACULTURE &
 FISHING SECTOR

                                               The agricultural sector’s lifeblood
                                               – protecting and preserving
                                               South Africa’s scarce water
                                               resources...continued
                                               ongoing drought, farmers who are              ∞   Improved and effective policies
                                               dependent on the Kouga Dam for irrigation
   Historically and to date,                   have resorted to leasing additional land
                                                                                                 Historically and to date, the
   the implementation of                       to plant fresh produce where water is
                                                                                                 implementation of water security
                                                                                                 policies in South Africa has remained
   water security policies                     more abundant, or trucking in water to
                                                                                                 a serious challenge. What is needed
                                               their farms, with both options incurring
   in South Africa has                                                                           are policies that, in fact, improve
                                               expenditure for the foreseeable future.
   remained a serious                          The impact this will have on the price of
                                                                                                 management and maintenance of
                                                                                                 existing infrastructure and address
   challenge.                                  produce and the consequent burden on
                                                                                                 other water related issues faced by the
                                               consumers cannot be ignored.
                                                                                                 country broadly, and the agricultural
                                               In the context of these challenges, and           sector specifically.
                                               South Africa’s broader water scarcity
                                                                                                 The latest proposed solution takes the
                                               issues, the task of finding swift and
                                                                                                 form of the National Water Security
                                               effective solutions is essential. However,
                                                                                                 Framework, which aims to cover
                                               while it is important to continue
                                                                                                 what is required to holistically protect
                                               prioritising reaching our climate change
                                                                                                 South Africa’s scarce water resources,
                                               commitments such as those under the
                                                                                                 identifying the underlying challenges
                                               Paris Agreement, and encouraging water
                                                                                                 and highlighting recommendations for
                                               saving practices, these actions will not be
                                                                                                 their redress. The framework aims to
                                               sufficient unless accompanied by effective
                                                                                                 guide all water-related policies across
                                               measures to address challenges relating to
                                                                                                 the governance system; strengthen
                                               unsuccessful water policies; lacking water
                                                                                                 implementation and encourage
                                               infrastructure; cumbersome licensing
                                                                                                 holistic oversight by government; and
                                               processes; and financing gaps.
                                                                                                 provide cross-sectoral water security
                                                                                                 through comprehensive stakeholder
                                                                                                 engagement and collaboration.

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3 | AGRICULTURE, AQUACULTURE & FISHING SECTOR ALERT 21 April 2021
ALERT AGRICULTURE, AQUACULTURE & FISHING SECTOR
AGRICULTURE,
 AQUACULTURE &
 FISHING SECTOR

                                               The agricultural sector’s lifeblood
                                               – protecting and preserving
                                               South Africa’s scarce water
                                               resources...continued
                                               ∞   Infrastructure development which             water for irrigation and other water
                                                   seek to address the shortcomings             requirements. In his 2021 State
   Through Operation                               and gaps in South Africa’s existing          of the Nation Address, President
   Vulindlela, the                                 framework                                    Ramaphosa highlighted the potential
   government aims to                              Given the high costs associated with
                                                                                                of Operation Vulindlela to reform
                                                                                                South Africa’s water sector. Through
   ensure that water use                           maintaining and upgrading South
                                                                                                Operation Vulindlela, the government
   license applications                            Africa’s water infrastructure and
                                                                                                aims to ensure that water use license
                                                   developing new infrastructure, the
   are finalised within a                                                                       applications are finalised within a
                                                   lack of sufficient financial resources
   revised timeframe of                            presents a major hurdle. There appears
                                                                                                revised timeframe of 90 days, which
                                                                                                should dramatically improve the
   90 days.                                        to be, however, a determined effort
                                                                                                current waiting period and redress the
                                                   from government to redress such
                                                                                                backlog of applications.
                                                   financing gaps in the form of the
                                                   Investment Fund. The fund aims to         From the above it is evident that the
                                                   invest R100 billion in infrastructure     approach to redressing South Africa’s
                                                   over the next decade, which financing     infrastructure deficiencies needs to be
                                                   will be directed towards projects that    multifaceted to cater for existing issues
                                                   have a positive social impact including   and to facilitate new development. This will
                                                   improving access to water.                require an all-inclusive and collaborative
                                               ∞   Improved legislative timeframes and       approach of all stakeholders, such as
                                                   licensing administration                  farmers and catchment management
                                                                                             agencies tasked with managing
                                                   The delay to processing and issuing       water catchment areas, to holistically
                                                   water authorisations has presented        protect South Africa’s scarce water
                                                   a key challenge, especially to            resources which are the lifeblood of the
                                                   farmers who require authorisation         agricultural sector.
                                                   to abstract ground, dam or river
                                                                                             Laura Wilson and Margo-Ann Werner

4 | AGRICULTURE, AQUACULTURE & FISHING SECTOR ALERT 21 April 2021
ALERT AGRICULTURE, AQUACULTURE & FISHING SECTOR
OUR TEAM
For more information about our Agriculture, Aquaculture & Fishing Sector sector and services in South Africa and Kenya,
please contact:

                André de Lange                                     Andries Le Grange                                   Verushca Pillay
                Sector Head                                        Director                                            Director
                Director                                           Competition                                         Corporate & Commercial
                Corporate & Commercial                             T +27 (0)11 562 1092                                T +27 (0)11 562 1800
                T +27 (0)21 405 6165                               E andries.legrange@cdhlegal.com                     E verushca.pillay@cdhlegal.com
                E andre.delange@cdhlegal.com

                Emil Brincker                                      Gillian Lumb                                        Lucinde Rhoodie
                National Practice Head                             Director                                            Director
                Director                                           Employment                                          Dispute Resolution
                Tax & Exchange Control                             T +27 (0)21 481 6315                                T +27 (0)21 405 6080
                T +27 (0)11 562 1063                               E gillian.lumb@cdhlegal.com                         E lucinde.rhoodie@cdhlegal.com
                E emil.brincker@cdhlegal.com

                Roy Barendse                                       Richard Marcus                                      Belinda Scriba
                Executive Consultant                               Director                                            Director
                Dispute Resolution                                 Dispute Resolution                                  Dispute Resolution
                T +27 (0)21 405 6177                               T +27 (0)21 481 6396                                T +27 (0)21 405 6139
                E roy.barendse@cdhlegal.com                        E richard.marcus@cdhlegal.com                       E belinda.scriba@cdhlegal.com

                Daniël Fÿfer                                       Burton Meyer                                        Roux van der Merwe
                Director                                           Director                                            Director
                Real Estate                                        Dispute Resolution                                  Corporate & Commercial
                T +27 (0)21 405 6084                               T +27 (0)11 562 1056                                T +27 (0)11 562 1199
                E daniel.fyfer@cdhlegal.com                        E burton.meyer@cdhlegal.com                         E roux.vandermerwe@cdhlegal.com

                Tobie Jordaan                                      Susan Meyer                                         Clarice Wambua
                Sector Head                                        Director                                            Partner | Kenya
                Director                                           Competition                                         T +254 731 086 649
                Business Rescue, Restructuring                     T +27 (0)21 481 6469                                   +254 204 409 918
                & Insolvency                                       E susan.meyer@cdhlegal.com                             +254 710 560 114
                T +27 (0)11 562 1356                                                                                   E clarice.wambua@cdhlegal.com
                E tobie.jordaan@cdhlegal.com
                                                                   Hugo Pienaar                                        Charl Williams
                Johan Latsky                                       Director                                            Director
                Executive Consultant                               Employment                                          Corporate & Commercial
                Corporate & Commercial                             T +27 (0)11 562 1350                                T +27 (0)21 405 6037
                T +27 (0)11 562 1149                               E hugo.pienaar@cdhlegal.com                         E charl.williams@cdhlegal.com
                E johan.latsky@cdhlegal.com

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PLEASE NOTE
This information is published for general information purposes and is not intended to constitute legal advice. Specialist legal advice should always be sought
in relation to any particular situation. Cliffe Dekker Hofmeyr will accept no responsibility for any actions taken or not taken on the basis of this publication.

JOHANNESBURG
1 Protea Place, Sandton, Johannesburg, 2196. Private Bag X40, Benmore, 2010, South Africa. Dx 154 Randburg and Dx 42 Johannesburg.
T +27 (0)11 562 1000 F +27 (0)11 562 1111 E jhb@cdhlegal.com

CAPE TOWN
11 Buitengracht Street, Cape Town, 8001. PO Box 695, Cape Town, 8000, South Africa. Dx 5 Cape Town.
T +27 (0)21 481 6300 F +27 (0)21 481 6388 E ctn@cdhlegal.com

NAIROBI
CVS Plaza, Lenana Road, Nairobi, Kenya. PO Box 22602-00505, Nairobi, Kenya.
T +254 731 086 649 | +254 204 409 918 | +254 710 560 114 E cdhkenya@cdhlegal.com

STELLENBOSCH
14 Louw Street, Stellenbosch Central, Stellenbosch, 7600.
T +27 (0)21 481 6400 E cdhstellenbosch@cdhlegal.com

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ALERT AGRICULTURE, AQUACULTURE & FISHING SECTOR
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