Exporting agricultural products to the European Union (EU) – AgriBEE

Reference documents:
Government Gazette 43910 dated 18 November 2020
B-BBEE Amendment Act No. 46 of 2013

This article highlights the fact that exporting of agricultural products is not as simple as one would think; B-BBEE transformation is a direct and immediate compliance requirement too.

Do you export (or plan to) agricultural products to the EU in 2021? If so, the requirements for a permit application have been published in Government Gazette 43910 dated 18 November 2020.

The criteria for issuing such permits is linked to B-BBEE. The B-BBEE criteria for issuing permits in this application is in terms of Section 6(1) of the B-BBEE Amendment Act, 46 of 2013.

The validity of the B-BEE certificates measured against Amended AgriBEE Sector Code issued by Accredited Verification Agencies (accredited by SANAS) is 12 months from the date of issue. The list of accredited Verification Agencies is available on the SANAS website (https://www.sanas.co.za).

Permits issued for products in terms of the SADC-EU EPA between the EU and the RSA are subject to the Agricultural Black Economic Empowerment (AgriBEE) Sector Code published 8th of December 2017 under section 9(1) of the Broad-Based Black Empowerment Act No 53 of 2003 (as amended to BBBEE Amendment Act No. 46 of 2013). The AgriBEE Sector Code was published in Notice no. 1065 of Government Gazette No. 36035 of 28 December 2012.

The AgriBEE Sector Code is also available on the Departmental website https://www.dalrrd.gov.za; publications – Government Gazette 36035

Background info: An Economic Partnership Agreement (EPA) exists between the Southern African Development Community (SADC) and European Union (EU) and was signed by both parties on 10 June 2016. The agreement came into effect on 01 October 2016. The SADC-EU EPA package contains agricultural products to be exported by SA into the EU market under the Tariff Rate Quota (TRQ) regime. The SADC-EU EPA TRQ package offers SA enhanced market access for agricultural products.

Scope of application

The scope of the AgriBEE Sector Code includes any enterprise which derives more than 50% of its turnover from the following:

The primary production of agricultural products;
The provision of inputs and services to enterprises engaged in the production of agricultural products;
The beneficiation of agricultural products whether of a primary or semi-beneficiation form; and
The storage, distribution, and/or trading and allied activities related to non-beneficiated agricultural products.

Conditions for the issuing of export permits (a detailed list is provided in the gazette)

Permits for the products specified in the Table, will be allocated on the basis of the Preferential Market Access Permit Allocation System which takes into account the following variables:
(a) The B-BBEE status of applicants- obtainable from a valid B-BBEE certificate measured against Amended AgriBEE Sector Code issued by a SANAS accredited verification agency;
(b) The market share of applicants- derived from historical export data for the past three years (2017, 2018, 2019);
(c) Quota applied for by applicants;
(d) Number of applicants; and
(e) The total quota available for the specific product.

NOTE: Companies which have common Directors or Owners will be disqualified.

A “Tax Compliance Status Pin” is compulsory to all applicants/clients applying for preferential market access permits. A Tax Compliance Status Pin has to confirm that the company is in good standing with SARS. A company not in good standing with SARS will be disqualified.

The quotas allocated to exporters will be provisional.

Despite any provisions in other laws, applicants registered as joint ventures, mergers, consortiums, holding companies or other similar business arrangements are not allowed to apply separately from their subsidiaries, minority shareholders or divisions for the same product, as this will create an unfair advantage towards other applicants.

A fee of R1 210.00 per permit will be payable for annual permits, as well as lost permits and replacement permits issued until 31 March 2021.

General

Applicants must return all expired permits within thirty (30) days after the date of expiry thereof. Applicants who do not return their expired permits timeously will not be considered for the granting of permits.

Exemptions

According to the AgriBEE Sector Code, enterprises with an annual turnover of less than R10 million qualify as Exempted Micro Enterprises (EME). EME’s will enjoy a deemed BEE recognition level of either level 3 or level 4 (as defined in the Amended AgriBEE Sector Code), and sufficient evidence of qualification as an Exempted Micro Enterprise is a Sworn Affidavit, an auditor’s letter or similar letter issued by an accounting officer or verification agency, and must accompany the application form submitted to the DAFF.

A Qualifying Small Enterprise (QSE) is an enterprise with an annual turnover between R10 million and R50 million and it qualifies for BEE compliance measurement in terms of the AgriBEE QSE Scorecard. A QSE must comply with five of the elements of the AgriBEE Sector Code for the purpose of measurement, and this certificate must accompany the application form.

Large enterprise is enterprise with an annual turnover exceeding R50 million.

The application form is provided in Annexure A of the gazette. Table 1 in the gazette must be consulted too.

BEE transformation is entrenched in South Africa’s economy and vital to the personal growth of citizens and companies alike.

Author Craig Tonkin

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