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chapter 5
Grain SA and Agri SA became involved with the authorities with a view to de-
veloping a logbook that was practical and would comply with the SARS re-
quirements. The discussions were furthermore aimed at finding an acceptable
method for assisting producers who were held liable for non-compliance after
SARS audits. Representations were addressed to SARS and the audit teams
involved to accept alternative information like industry branch budgets and fi-
nancial analyses by, for example, agribusinesses as sufficient substitute infor-
mation for logbooks.
SARS was requested to permit producers during the 2012/2013 tax year to get
the relevant administrative practices in place to support audits more effectively
in future. SARS was also requested to consider workshops in this regard with
the assistance of Agri SA and its affiliates. In order to assist its members with
problems and uncertainties regarding the diesel rebate, Grain SA established a
support desk with a firm of attorneys in 2011/2012 to answer producers’ enquiries
in this regard.
The biggest problem centred around the keeping of logbooks and the application
of the 80:20 requirement in practice. As no guidelines existed, Grain SA submitted
proposals for possible solutions to SARS. These included proposals on the content
and composition of a logbook.
Eventually, SARS published guidelines for logbooks that did not accommodate
Grain SA’s recommendations. In the opinion of Grain SA these were unpractical,
and led to unnecessary administration. Grain SA continues to liaise with SARS in
this regard.
Competition in agriculture
Fertiliser industry
Grain SA keeps a record of, processes and interprets national as well as interna-
tional prices of inputs like seed, fertiliser, chemicals and agricultural machinery on
a daily, weekly and monthly basis. This is used to build data on the price, quality
and availability of inputs.
The organisation’s extensive database on international and domestic price move-
ments makes it possible to compare the prices of production inputs. The information
on fertiliser prices that was collected and analysed in the course of time indicated
that competition in the fertiliser market was suspicious.
Grain SA consequently approached the Competition Commission on several oc-
casions to investigate the matter and provided the commission with information
indicating that local prices did not necessarily reflect international price levels.
Historically, fertiliser constituted about 30% - 35% of a grain and oil producer’s
running production costs and therefore had a major effect on the profitability of
grain production. During 2008 sharp increases in fertiliser prices increased the
figure to about 45%. As this increase in costs mainly had to be absorbed by the
producers, it was important for Grain SA that the information on uncompetitive
practices in the fertiliser market be reported to the Competition Commission.
In 2007 the Competition Commission started investigating various violations of the
Competition Act in the fertiliser industry. Grain SA played a role in this by, among
other things, providing information and statistics to the competition authorities.
The investigations revealed several violations of the Competition Act, including
price fixing, market division and collusive tenders in the provision of a wide range
of fertiliser products. Several fertiliser companies were involved in this. Ultimately
it led to Sasol concluding a settlement with the competition authorities in terms of
which Sasol paid a fine of more than R250 million.
The Chairperson of the Competition Tribunal encouraged affected groups to in-
stitute claims for damages against Sasol, given Sasol’s admission of uncompet-
itive conduct. However, producers had a very difficult burden of proof with re-
spect to the extent of the damage. Consequently, Grain SA negotiated with Sasol
that a trust, the Sasol Nitro Research Trust, be founded, to which Sasol donated