FERTILIZERS and FEEDS BILL

1. FERTILIZERS and FEEDS BILL SUBMISSION BY THE FERTILIZER SOCIETY OF SOUTH AFRICA 13 March 2013

2. Who am I? Adam Mostert Chief Executive Officer of the FSSA Agronomist/Soil Scientist Almost 30 years experience in the fertilizer industry Joined the FSSA on 1 September 2012 Fertilizers and Feeds Bill (B41 - 2012)

3. Who is the FSSA? • Non-profit company with members • The FSSA represents its members who are: • Fertilizer producers: Chemical, Organic and Liquid • Fertilizer distributors: Locally produced and imported • Agricultural lime producers • Agricultural lime and gypsum distributors • Micro-element producers and distributors • Coating and additive producers • Speciality fertilizers • 20 Ordinary and one Affiliate Members • >90% of fertilizer sales in RSA and Zimbabwe Fertilizers and Feeds Bill (B41 - 2012)

4. Members of the FSSA • Arcelor Mittal • Atlas Organic Fertilizers • Chemplex Corporation (Zim) • Clariant SA • Foskor (Pty) Limited • Grasland Ondernemings • H Pistorius Lime • Industrial Commodities Holdings • Kalkor (Pty) Limited • Lake Internat. Technologies • NWK Limited • Omnia Fertilizer • PBD Boeredienste • Profert (Pty) Limited • Sasol Nitro • Sidi Pirani (Pty) Limited • Triomf Fertilizer (Pty) Ltd • Vaalharts Bemestingsdienste • Zinchem • ZFC Limited (Zimbabwe) • Aquasol (pending) Fertilizers and Feeds Bill (B41 - 2012)

5. SA Fertilizer Market Fertilizer market of ± 2 million tons/annum Lime market of 0,5 to 1 million tons/annum Almost 50% of fertilizers are imported in SA Large number of blending facilities and distributors are supplied by primary producers and importers/traders “Garden & Home” market Small Scale Farming market Fertilizers and Feeds Bill (B41 - 2012)

6. FSSA Code of Conduct (abstract) Act in accordance with the letter and spirit of laws and regulations which have relevance on the fertilizer and agricultural lime industries. Support and promote manufacturing, production and application practices with due concern for human health and the environment. Fertilizers and Feeds Bill (B41 - 2012)

7. Code of Conduct (abstract)(Continue) Continuously take into account the requirements of the Competition Act Apply the highest ethics of business practice in dealings with customers, suppliers and competitors (Consumer Protection Act) Fertilizers and Feeds Bill (B41 - 2012)

8. Bill Review Process All members were asked for comments and inputs on the new Bill (Dec – Feb 2013) All comments received from members were included in the report submitted to Parliament At least three members obtained legal opinions which were included in the report Members were given the opportunity to comment on the report prior to submission Fertilizers and Feeds Bill (B41 - 2012)

9. The FSSA acknowledges: the need for regulation of the fertilizer industry as far as product quality is concerned; the important role that fertilizer plays in food production; the need for protection of consumers and users of fertilizer; the need to replace Act 36 of 1947, although not urgent. Fertilizers and Feeds Bill (B41 - 2012)

10. The FSSA’s Position We REJECT the Bill in its current format; We request separate Bills for Feeds and Fertilizers; We request a transparent consultation process to redesign the Fertilizer Bill; With sign-off from all parties before the Bill is published. Fertilizers and Feeds Bill (B41 - 2012)

11. FSSA’s Expectations • Strict control of fertilizer quality - governance • Efficient administration of the Act • A level playing field for: • Small versus large fertilizer suppliers • Local product versus imported product • To ensure the availability of sufficient quantities of good quality fertilizers (plant food) for sustainable food production in the short, medium and long term. Fertilizers and Feeds Bill (B41 - 2012)

12. Objections and Reasons for Rejection The Bill does not meet its objective of ensuring safe food production and food security; The need for an Advisory Council is questioned and the proposed composition thereof is unacceptable; Registration of production facilities instead of final product is unacceptable. Fertilizers and Feeds Bill (B41 - 2012)

13. Food Production and Food Security • The Bill must state clearly how it will support: • food production; • food safety; and • food security. • Bill must be clear on what the fertilizer industry and other stake holders must do to support the above. Fertilizers and Feeds Bill (B41 - 2012)

14. Technical Standards Advisory Council Powers should be detailed and limited Industry stakeholders must be consulted FSSA should be represented on the Council FSSA should be consulted in appointment of advisors Specialist consultative committees will do the work – why duplicate and add cost to the taxpayer? Fertilizers and Feeds Bill (B41 - 2012)

15. Disqualification and Dissolution of Council Section 6(2)(b) refers to a hearing No hearing process and procedures Discretion of the Registrar disempowering the industry No consultation required Fertilizers and Feeds Bill (B41 - 2012)

16. Product Registration Procedure Product registration should continue because it will be difficult to control unregistered product Streamline the registration process – FSSA is prepared to assist with the registrations Long turnaround time of registrations and renewals put the industry at risk Bill has to make provision for specific time frames and be clear on what has to be registered Consumer Protection Act? Fertilizers and Feeds Bill (B41 - 2012)

17. Imported Product • Three types of imported products • Raw materials for chemical fertilizer production, e.g. ammonia and potassium chloride; • Intermediate products for bulk blending, e.g. di-ammonium phosphate (DAP); • Final product for direct application. • Potential for poor quality product containing harmful elements is huge in the latter two • Strict control at ports is non-negotiable Fertilizers and Feeds Bill (B41 - 2012)

18. Exported Product Specifications are negotiated between buyer and seller or specified by the buyer; Regulations of the importing country apply; No registration or control is required in SA Fertilizers and Feeds Bill (B41 - 2012)

19. Licensing of Facilities FSSA objects to the licensing of premises in principle FSSA objects to tonnage based licensing Control over declared tonnage will be difficult to enforce and administrate Discrimination against larger producers Fees = tax double taxation Fertilizers and Feeds Bill (B41 - 2012)

20. Licensing of Facilities Not the mandate of DAFF to regulate factories; Other departments do audits on occupation, safety, health and the environment in terms of the applicable acts; Voluntary implementation of quality management systems, e.g. ISO 7000, 14000 and 18 000 by the factories; Ideal case for self-regulation by the industry Fertilizers and Feeds Bill (B41 - 2012)

21. Tonnage Fees Payable Fee structure is unknown Massive financial implications for industry? Large volume of small product range producers will pay unfair high fees – fees not related to actual costs incurred by DAFF Fees should cover actual costs of either auditing plants or registration of product Slow product registration - facilities? Fertilizers and Feeds Bill (B41 - 2012)

22. Rules of Commerce It is not practical to provide an invoice for each load of product Invoices are not issued by the despatch department to prevent fraud and achieve segregation of duties Bulk invoices cannot be generated in advance Delivery note should be sufficient Fertilizers and Feeds Bill (B41 - 2012)

23. Natural Scientists • Section 28: recommendations to farmers must be done by a registered scientist (Act) • FSSA proposes: • Recommendation by unregistered personnel • Overseen by internal registered natural scientist Fertilizers and Feeds Bill (B41 - 2012)

24. Advertisements FSSA objects to approval of all advertisements by the Registrar Duplication of regulations by ASA Registrar may have the power to call for withdrawal of advertisements under certain conditions, e.g. unregistered product or misleading claims Fertilizers and Feeds Bill (B41 - 2012)

25. Conclusion FSSA rejects the Bill as presented FSSA requests the withdrawal of the Bill FSSA requests a separate Fertilizer Bill FSSA requests an open and transparent consultation process to redesign the Bill FSSA pledge their full support for this process Fertilizers and Feeds Bill (B41 - 2012)

26. Fertilizers and Feeds Bill (B41 - 2012)