At the opening of Parliament, President Cyril Ramaphosa announced the Government’s intention to expand the list of food items exempt from Value Added Tax (VAT) to provide greater protection and support to the most vulnerable in society.
But if that is the goal, the means to achieve it must be reconsidered. What is needed is a deeper discount, not a wider one, to significantly reduce the higher price A limited basket of high protein Staple foods, with few exceptions, are already exempt from VAT.
Consistent with this conclusion National Treasury Report 2018 Apart from a few additional food items, it is better to direct more money to low-income families through cost-side interventions than through further VAT exemptions, the finance minister was told.
One of the food items it proposed for the new exemption was individually frozen chicken pieces, the main source of meat protein for low-income households. We add peanut butter to the list because of its high protein content, which makes a lot of sense from a nutritional standpoint.
Beyond those items, the National Treasury would better direct the revenue foregone to steep price reductions on a subset of highly nutritious staple foods.
read more: The Ramaphosa government is calling for protein-rich foods such as peanut butter and chicken to be added to the VAT-free basket.
Children need energy, protein and vitamins and minerals to grow. Carbohydrates are the body’s main source of energy, while proteins can also be converted into energy.
Conversely, excess carbohydrates can be converted into some amino acids – the building blocks of proteins – but cannot be converted into essential amino acids, which can only be obtained from the food we eat.
Vitamins and minerals (also known as micronutrients) are found in a wide range of foods, especially unprocessed ones. The clinical picture of malnutrition is determined by the relative lack of energy, protein and micronutrients.
Malnutrition in children is manifested in three ways.
The first is acute, where children are underweight or, in more serious cases, dangerously ill from severe acute malnutrition. Every year in South Africa, about 15,000 children are hospitalized with severe acute malnutrition. 1000 die from that. Generally, these children fail to get enough of all types of food – carbohydrates, oils, proteins and micronutrients.
The latter is the opposite side of the spectrum, where children are overweight and obese, sometimes because they are genetically predisposed, but often because they eat too much. Children from poor families may become overweight due to insufficient protein intake but high intake of starch and sugar. the latest National Food and Nutrition Security Survey More than a fifth (22.6%) of young children were found to be overweight.
A third form of malnutrition is chronic, manifesting as stunting (short for age). This means that even though children get enough energy, they do not get enough protein to develop their bodies and brains. Studies Show that children with stunted growth have lower circulating levels of essential amino acids.
This is our biggest household food security problem—families can’t afford enough protein-rich foods. If we had to reduce our nation’s nutritional status to just one diagnosis, this is it: South Africa has a protein security problem.
Food insecurity
approx 17.5% of households Report severe food insecurity – going to bed hungry or without food before the end of the month. However, 7.7% of under-five children are underweight and 5.3% (underweight-for-height) are wasted.
On the other hand, 28.8% of children are stunted. Simply put, more than a quarter of our children have a deep and chronic protein deficiency, which cripples their potential and is a ball-and-chain around the ankles of economic productivity and long-term growth.
Some may argue that reducing household food security to problems of protein deficiency is an oversimplification. But addressing protein deficiencies with affordable foods like eggs, speckled beans, and whole-cream milk also improves micronutrient intake.
The other major cause of stunting is chronic inflammation of the intestines, which requires clean water and sanitation and improved food hygiene. But we must not be paralyzed by the complexity of nutrition by doing nothing to improve our intake of nutritious foods.
The pressing question addressed here is whether further VAT exemption is the best fiscal tool to protect families from rising food prices. The answer is no. Instead, we need to make high protein staples more available and affordable.
Severe acute malnutrition
To do this, the milk supplementation program for children under two who are failing to thrive must be revived to restore their growth and prevent progression to severe acute malnutrition.
Government and industry should work together to double discount a basket of 10 protein-rich staples sold in supermarkets and spas. A proposal was made By the DG Murray Trust and the zero-stunting campaign Grow Great.
A retail subsidy matched by the food industry’s agreement to forego profits on house brands of these products could reduce prices by 20-25% and beyond, over the 15% saved through VAT exemption. Although there will be some spillover to affluent consumers – especially when house brand eggs are double discounted – most of the selected foods in the proposed basket are mainly consumed by low-income households.
To ensure that the subsidy is passed on to the consumer and that retailers fulfill their promise of selling the subsidized product at the price, it is necessary to constantly compare prices with other non-subsidised brands. The scheme requires public advertising to promote subsidized products and assist in redesigning food choices.
When fully implemented, the annual cost to the national exchequer would be between Rb3-billion and R5-billion, not equal to the loss of revenue to the fiscus that would have to be factored in if the VAT tax exemption were extended. The difference is that manufacturers and retailers come to the table, give up profits on select items, and double the government’s contribution.
read more: Five opportunities for early childhood development in SA’s social compact
Business Unity South Africa has written to the National Economic Development and Labor Council that its members are under such financial strain that they do not wish to even entertain the idea of ​​the proposal. That’s a questionable excuse. As President Cyril Ramaphosa said at the opening of Parliament, many companies are making huge profits as prices continue to rise.
Anyway, that’s not really the problem. We need to see through the ups and downs of corporate profits towards a sustainable path to economic growth and development and that cannot happen without household food security.
Instead of trying to shut down critical discussions, Business Unity South Africa should lead the way in eliminating nutritional vulnerability. Fortunately, some of its members are more forward-looking, and one has shown a willingness to be the first when the government puts money on the table.
The ball is now in the government’s court. If the political moment convinces the National Treasury to allocate funds to increase food affordability, it should leverage the commitment of the private sector and double its money.
It should focus its funding on solutions that have the greatest impact on child nutrition today and economic growth in the future. DM
David Harrison is Chief Executive Officer of the DG Murray Trust (DGMT).
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