Perishable Products Export Control Board on Budget & Strategic Plan 2009/10 & Department of Environmental Affairs & Tourism on Marine Coastal Management, Fisheries & Mariculture

Meeting report

Briefing by Perishable Products Export Control Board (PPECB)
Ms Elaine Alexander (Chairperson, PPECB) introduced the delegates from PPECB.  The Board is the official certification agency for the export of perishable products from South Africa.  As a National Public Entity (in terms of Schedule 3A of the Public Finance Management Act), the PPECB delivers cold chain services in terms of the Perishable Products Export Control Act, No. 9 of 1983 and delivers inspection and food safety services mandated by the Department of Agriculture, Forestry and Fisheries (DAFF) in terms of the Agricultural Product Standards Act, No 119 of 1990.

Mr Luvuyo Mabombo (Chief Executive Officer, PPECB) briefed the Committee on the institutional background and perspective, the mandate and responsibilities and the mission statement of the PPECB (see attached document).

The products and services offered by the PPECB included cold chain management services, research and development, product certification and compliance with legislative and international food safety standards.  The perishable products export market generated approximately R12 billion per annum.  Value-added services included capacity building in the sector through agricultural development and training programmes and a Mycotoxin Analytical Program for the testing of harmful substances in food products.  The services offered by the Board extended to neighbouring countries such as Namibia, Tanzania, Kenya and Mozambique.  The PPECB employed 365 permanent personnel, deployed throughout South Africa.

The strategic plan for the period 2009 to 2013 was developed by the PPECB in accordance with the five key Government priorities for the next five years, i.e. the creation of decent work and sustainable livelihoods, education, health, rural development, food security and land reform and the fight against crime and corruption as well as the Sector Plan for Agriculture developed in 2001.  The five strategic objectives included enhancing the credibility of the South African Export Certificate, supporting the competitiveness of South African perishable products in the global market, strengthening the Board’s capacity as a source of strategic information in the sector, ensuring confidence in the quality assurance and food safety systems in the local perishable product market and ensuring compliance to quality and food safety standards for imported perishable products.

The presentation included an overview of the key performance indicators, targets and action plans for each strategic objective set, the business model for the PPECB and an analysis of the value chain.  The PPECB was funded by statutory levies and fees charged to the users of services and received no funding from Government.  The offices of the PPECB were situated in the main production regions of the country.  Details of the Board’s employment equity, transformation and skills development targets were provided.  The budget for the 2009/2010 financial year was R144.9 million, of which 59% was allocated to personnel and operational costs.

Discussion
Dr M Mogajane (Deputy Director-General, DAFF) requested a meeting with the Committee to discuss the concern of the Department over the fragmented nature of the legislation governing food safety.

Ms M Pilusa-Mosoane (ANC) requested clarity on the phytosanitary certificate mentioned in the presentation.  She asked what progress had been made in the review of the policy on food safety, product quality and the food chain.

Ms M Mabuza (ANC) asked how many persons were trained by the PPECB.  She asked if the PPECB’s offices were situated in all the provinces.

Mr S Abram (ANC) thanked the presenters for the presentation.  He asked what challenges were observed by the PPECB in Government’s objective to link rural development to land reform and what measures needed to be taken to address these challenges.  He was aware of several failed projects in Limpopo province and wanted to know what impact such failed projects had on the income of the PPECB and on the economy as a whole.  He noted that the personnel of the PPECB traveled a total of 3.5 million kilometers per annum (i.e. an average of 100000 km’s per person) and asked if the Governments of the neighbouring SADAC countries mentioned in the presentation contributed to the costs incurred by the PPECB in carrying out inspections in those countries.

Dr Mogajane explained that phytosanitary certificates were issued in terms of agreements reached between countries and certified that the plant exported to the country concerned conformed to the applicable plant health criteria.

Ms Alexander explained that the purpose of food safety and quality requirements ensured that products intended for human consumption contained no harmful substances.  Food safety criteria also took product handling methods and traceability into account.

Mr Dean Martin (Executive: Statutory Operations, PPECB) explained that the PPECB inspected products intended for export and issued an Export Certificate to confirm that the product concerned complied with South African export regulations.  The South African regulations conformed to the standards set by the United Nations (UN), European Union (EU) and the United Kingdom (UK).

Dr Mogajane repeated the need to brief the Committee on all aspects of food safety at a separate briefing.  She said that food safety criteria applied to all products of a plant origin intended for human consumption.  In addition, countries specified requirements for acceptable quality of products, e.g. the size and grade of the product.  Products intended for export therefore needed to be inspected for compliance to the requirements and a certificate issued to confirm that the applicable requirements were met.  The DAFF worked closely with the Department of Health, which was responsible for food labeling and for meat products from the point where meat left the abattoir.  Co-operation between the various Departments was necessary to ensure the different legislative requirements were adhered to.  She said that the Department of Health had delegated certain functions to municipalities and as a result, some problems arose.  The DAFF was responsible for ensuring that all criteria for produce were met, from the farm to the plate (i.e. traceability).

The Chairperson remarked that food safety criteria should apply to products intended for the local market as well.

Ms Alexander agreed with the Chairperson’s comment and reported that recent testing of imported apples and pears revealed unacceptably high levels of chemical residues.  She said that between 16 and 20 different Acts included provisions for food safety and monitoring of products.  The Departments of Trade and Industry, Agriculture and Health had been reviewing the issue but the legislation was complicated and she expected the matter to take some time before it was resolved.  She said that the cold chain was governed by the PPEC Act, which was outdated and did not consider South African products in the global environment.  All products needed to be dealt with according to the same criteria, whether intended for export or for the local market.  The Board was mandated by the DAFF to review the PPEC Act and had submitted a document containing two possible scenarios to the previous Minister for consideration.  Certain functions mandated to the PPECB were no longer applicable, e.g. the organisation of shipping of products, which was found not to be economical.

Ms Alexander said that 30 students from all regions were trained by the PPECB each year.  She confirmed that PPECB offices were situated in all the provinces, ensuring a geographic and demographic spread of students.

On the issue of land reform and rural development, Ms Alexander said that many challenges existed.  The major problem in the rural areas was the lack of access for both inspectors to visit the project and for the project owners to information, knowledge and support services.  She said that there were failed projects in other provinces as well, for example in Mpumalanga.  The EU had provided funding to the PPECB to train emerging farmers in the application of chemicals and the handling of produce.  Emerging farmers faced many challenges and lacked knowledge of agricultural practices, product standards and the markets for products.  Emerging farmers often did not know how to pool resources and had poor access to knowledge of markets.  She said that a major challenge was bringing the producer and the market together and to educate the producer to understand the market for his products.  An understanding of the future trends of markets was essential for the timeous provision of capacity to take full advantage.

Mr Martin agreed that there was a need for the PPECB to quantify the effect of failed ventures.  The potential loss of volume had to be determined if ownership of the property changed or if the project should fail.  The PPECB needed to monitor the potential losses on a provincial basis.  He said that emerging farmers needed support to ensure their produce was successfully marketed to the local markets before they attempted the export market.

Dr Mogajane reported that the DAFF had established a food safety unit for the specific purpose to assist emerging farmers in the rural areas.  She said that the main problem was that farmers did not keep records of the agrichemicals used on their crops and animals.  She confirmed that emerging farmers needed more support, particularly in the rural communities.  The DAFF required assistance with the monitoring of agricultural products imported from other countries and used by farmers.

Ms Alexander reported that the loss of one hectare in the fruit industry resulted in the loss of three jobs.  One hectare of table grapes produced an average of 5000 cartons, valued at R35 per carton.  The loss of one hectare of table grapes therefore amounted to R175000 in income plus the cost of production and a capital cost of approximately R100000.  The impact on the economy was significant especially in the light of the large number of dependents of workers in the fruit industry.

Mr Mabombo explained that the exporters situated in the neighbouring countries paid the PPECB for services rendered.  The Board received no financial assistance from the Governments concerned.  The PPECB had requested the DAFF to host a programme for countries in the proposed SADAC trade zone to develop their own inspection boards.  The PPECB offered to assist with building the necessary capacity of the countries.  He said that the strategy of the PPECB to provide emerging farmers with ongoing support was to train the farmer with the extension officer.  The extension officer would continue support for the farmer after the PPECB training had been completed.  A memorandum of understanding had been signed between the PPECB and the National Agricultural Marketing Council to provide support to emerging farmers as well.

Ms N Phaliso (ANC) asked for a breakdown of the PPECB’s efforts to build the capacity of emerging farmers in the rural areas to comply with global standards.  She wanted to know what infrastructure existed in the rural areas and what assistance was provided by the DAFF.  She asked what methodologies were applied by the PPECB in the testing of genetically modified products.  She wanted to know what the relationship was between the export markets and emerging farmers.

Mr L Bosman (DA) said that it was essential that the South African standards were acceptable to both the local and international markets.  He requested the assurance that the PPECB was satisfied that the application of standards was adequately monitored and included the monitoring of imported products.  He asked the PPECB to indicate which gaps and constraints existed in the system and where the Committee could assist to bring the issues to Government’s attention.  Government did not provide any funding for the PPECB but maintaining the country’s image in the global market was of the utmost importance.

Ms L Moss (ANC) said that agricultural farming was part of Government’s rural development objectives but emerging farmers were struggling.  She asked if the PPECB worked with the new Ministry for Rural Development to ensure that the development goals were met.  She asked what co-operation took place with other Government agencies in the retraining of retrenched workers.  She felt that the workforce profile of the PPECB did not reflect acceptable transformation in employment equity objectives.

Mr P Pretorius (DA) noted that the PPECB was self-funded and received no financial assistance from Government.  He asked if the Board made provision for building up a surplus to tide it over lean years as it was unable to approach Government for additional funding.  He said that although staff costs amounted to 59% of the budget, such a high proportion was average in the civil service.  However, he noted that staff levels had increased by 15% over the previous year and he asked what measures were in place to ensure that the additional costs would be met.

Mr L Gaehler (UDM) requested clarity on the accessibility of the PPECB by emerging farmers.  He cited the recent case of citrus farmers in the Fort Beaufort district who had lost millions of Rands due to a lack of guidance and support.  He asked if the PPECB had an awareness campaign for emerging farmers in place.

The Chairperson asked what the job creation targets of the PPECB and the DAFF were for the following six months.

Ms Alexander explained that the PPECB was mandated to develop strategy.  The Minister appointed the Board and officials from the PPECB worked closely with the DAFF.  She urged closer co-operation between the PPECB and the DAFF with regard to the alignment and development of strategy.

In response to Mr Pretorius’ question, she explained that the PPECB had a financial reserve that can be accessed if necessary.  The Board operated on a fee structure and costs were calculated on the basis of anticipated volume of work.

Ms Alexander suggested that the PPECB provided detailed written responses to the issues raised by Members.

In conclusion, Ms Alexander said that an important trend in the fresh produce market was the increase in non-tariff measures taken by countries to exclude other countries from markets as tariff barriers were removed.  For example, 22000 non-tariff measures were applied to Pakistan when that country entered the World Trade Organisation (WTO).  She said that the application of food safety standards by producers will become more important if the country was to become more competitive in the global market.

Due to time constraints, not all the questions asked by Members could be answered and the Chairperson requested that written responses from the PPECB were submitted to the Committee by the end of the following week.


Briefing by Department of Environmental Affairs and Tourism (DEAT)
Ms Nosipho Ngcaba (Director-General: Environmental Affairs, DEAT) introduced the delegates from the Department’s Marine and Coastal Management branch.  She explained that the DEAT was mandated to ensure the health and safety of the environment and had a close working relationship with the DAFF to ensure the health of humans and the food safety of products produced in the environment and intended for human consumption.

The DEAT was responsible for the management of the marine biodiversity sphere, comprising the ocean, coastline and marine reserves as well as the terrestrial biodiversity sphere, which included national and provincial parks and nature reserves.  Although most game farming in the country was done by the private sector, game farming was regulated by the DEAT.

Ms Ngcaba said that the presentation would focus on marine aquaculture, responsibility for which was being transferred to the DAFF.  The Chairperson requested that the presentation provided clarity on exactly which responsibilities would be transferred to the DAFF and which would be retained by the DEAT following the proclamation issued on 26 June 2009.  He understood that the DEAT remained responsible for everything under water but responsibility for what was produced from the ocean would be transferred to the DAFF.

Dr Monde Mayekiso (Deputy Director-General: Environmental Affairs, DEAT) briefed the Committee on Marine Aquaculture in South Africa (see attached document).

The presentation included a map indicating the population density of the country, which reflected the relatively high concentration of human settlement along the coast.  A schematic of the business process highlighted the importance of research functions carried out by the DEAT on marine aquaculture.  Although aquaculture contributed 50% of fish production worldwide, production in South Africa was relatively low.  Marine Aquaculture in South Africa concentrated on the production of abalone, oysters, mussels, prawns and finfish.  The major marine aquaculture product was abalone (1000 tons p.a., valued at R283 million) and a 10% growth in production was reported.  The major freshwater aquaculture product was trout (1300 tons p.a., valued at R33.4 million).  There were currently 60 aquaculture right holders.

Constraints to the aquaculture industry included a high energy coastline with limited sheltered bays, non-availability and high cost of property on the coast, limited access to finance and development capital, the lack of infrastructure, limited human resource capacity, skills and expertise and the lack of a comprehensive national policy on aquaculture.  Aquaculture models in Australia, Chile, China, Ireland, Norway and Vietnam were studied and analysed.

Current interventions in South Africa to stimulate growth in the aquaculture industry included the approval of Government policy in September 2007, the finalisation of strategic objectives by the DEAT in November 2008, the establishment of a Marine Aquaculture Advisory Forum in 2008 and the finalisation of an implementation plan in January 2009.  Four steering committees were appointed to drive research and development, animal health and welfare, business support and trade and product safety and quality.  Government entities, research institutions and industry were represented on the steering committees.  Six potential aquaculture development zones were identified in the KwaZulu Natal, Eastern Cape, Western Cape and Northern Cape provinces.  Interventions to develop capacity included three students studying aquatic medicine and biology in Norway and two students studying biology in South Africa.  Two strategic partnerships were signed in East London and Umgababa.  There was currently no veterinarian in the country who specialised in fish health and only two who showed an interest in the subject.

Ms Ngcaba said that the marine aquaculture section was recently established and had received no allocation from National Treasury.  The DEAT funded the branch by re-prioritising the existing budget and relied on donor funding from Norway.  To date, the section had concentrated efforts in establishing policy and assessing the capacity that will be required to develop the industry.  She said that the allocation of fishing rights remained the responsibility of the DEAT but refrained from commenting on recent comments made by the Ministers of Water Affairs and Agriculture.  She said that any review of fishing rights needed to be done within the legal framework as the rights allocated were of a long term nature.  The DEAT took cognisance of the issues raised by fishing communities concerning the allocation of fishing rights.  The allocation or re-allocation of future rights needed to take the legal issues into consideration as well as the diminishing supply of fish resources.

Discussion
Mr R Cebekhulu (IFP) requested comment on recent media reports on foreign vessels fishing in South African waters.

Mr Abram asked if the transfer of responsibilities to other Departments included the transfer of officials as well.  He noted that responsibility for marine resources remained with the DEAT but became the responsibility of the DAFF once harvested.  He requested clarity on how the two departments involved would function.  He noted that there were 60 aquaculture right holders in 2008 and wanted to know the type of entities that held the rights, when the rights were granted and the expiry date of the rights.  He was of the opinion that the rights were granted to the larger players in the industry, to the detriment of the smaller producers and the communities reliant on fishing.  He asked if the DEAT had investigated possible amendments to legislation to address the issue.  He requested a copy of the policy document on aquaculture gazetted in 2007.  He asked if the DEAT had engaged with financing entities, such as the Land Bank on the issue of providing financing for aquaculture ventures.  He asked if the DEAT had done any research or made any proposals to gain access to land for aquaculture purposes.

Ms Phaliso expressed concern over the lack of consultation by the Department with the Committee.  She noted that consultation took place with the Ministry but the Committee was not consulted.  She asked what role was played by the South African Policy Service (SAPS) in enforcing the laws against pollution in harbours.  She said that small-scale fishermen had limited access to harbours and lacked the larger vessels necessary to fish in deeper, less polluted waters.

Ms Phaliso stated that the briefing made no mention of the plans for the development of poor, rural fishing communities.  No mention was made of the insight and direction provided by the Committee.  No mention was made of any plans to empower rural fishing communities.  She asked what progress had been made in providing the infrastructure and electricity supply to communities for the development of aqua cultural projects.  She said that the use made of consultants was detrimental to capacity building in poor rural areas and requested that the Committee was more thoroughly briefed in future on the Department’s plans for rural development.

Mr Pretorius referred to the six development zones mentioned in the presentation and asked how many potential entrepreneur sites had been identified for each zone.  He remarked that fish farming had good growth potential and could make a significant contribution to providing food security in the country.  The six development zones identified seemed to be inadequate.  Although the presentation listed the constraints faced by the Department, no mention was made of the constraints faced by individuals.  He asked what barriers to entry to the industry applied to individuals and small enterprises.

Mr Gaehler observed that no development zones were identified for the Wild Coast area of the Eastern Cape.  He asked if the development zones would benefit the local people or only the bigger companies.  He wanted to know how the Department would ensure that more jobs would be created and that the small scale fishermen and poor communities would be involved in the development zone projects.  He asked if the figure of R39.9 million reflected on page 27 of the presentation was incorrect as the total of research maintenance costs, operational costs and management costs amounted to R9.9 million.

Ms Moss cautioned against releasing information to the media that created false hope in poor communities.  She felt that the presentation did not reflect the actual situation observed in the fishing communities, which had been hard-hit.  She was disturbed by the deterioration in the ability of fishermen to sustain a livelihood from fishing and proposed that alternative sources of income were developed for the affected communities.  She referred to a report in the business section of the Sunday Times in January 2008 when the Department announced that R1 billion was available for the development of aquaculture projects at locations in the Northern and Eastern Cape.  She wanted to know what progress had been made with the projects concerned.

Ms Moss stated that there were challenges in the fishing industry under the previous Minister.  She wanted to see the involvement of the fishing community in addressing the challenges in the industry, not just the interests of the large companies.  She requested a copy of the policy document approved in 2007 as well as a list of the representatives on the Marine Aquaculture Advisory Forum established in 2008.  She wanted to determine if the fishing communities were represented on the Advisory Forum.  She asked when projects in the six development zones will commence.  She was perturbed that issue resulting in the proclamation gazetted on 26 June 2009 was not discussed with the Committee and suggested that the two Ministers concerned were invited to brief the Committee on the matter.

The Chairperson asked what the average annual production was for aquaculture products in South Africa.  (The production data was provided on page 8 of the presentation document).  He agreed with Ms Moss that the presentation by the DEAT reflected the decisions taken by the Executive.  He noted that the House of Traditional Leaders were consulted in the establishment of the Marine Aquaculture Advisory Forum but wanted to know why the small-scale fishermen were marginalized even though the fishermen were an organised group.  He remarked that none of the responsible Ministers had mentioned the fishing industry in their budget speeches to Parliament.  In view of the changes in the responsibilities of Government Departments, the Committee’s oversight responsibilities and the potential for the fishing industry to play an important role in the country’s economy, the apparent lack of attention given by Government to the fishing industry created an anomaly.

Ms Mabuza wanted to know what action was taken by the Department to address the issue of a lack of interest in the fishing industry.

Mr Pretorius requested clarity on the responsibilities transferred to the DAFF.  He understood that the DAFF will become responsible for marine aquaculture and the issue of permits to cultivate fish but the DEAT will retain responsibility for permits to harvest wild fish.  He noted that 38 personnel will be transferred from DEAT to DAFF.

Mr E Sulliman (ANC) noted that one of the aspects of successful aquaculture projects in other countries was that Government support was in place.  He said that small-scale fishermen required more support from Government and suggested that the issue was brought to the attention of the Minister.

Ms Ngcaba explained that the DEAT was informed of the meeting with the Committee only two days before and did not anticipate all the questions asked by Members.  The DEAT was in a position to reply to certain questions and she suggested that the Department submitted written responses to the questions to the Committee.  She explained that until recently, the Department’s focus was on conservation of dwindling fish resources and the involvement in marine aquaculture was a relatively recent development.  A process of consultation took place during the development of the responsibility for aquaculture and the DEAT soon realized that the industry was highly technical in nature and that the Department had inadequate resources to implement the programme with immediate effect.

In response to Ms Moss’s questions, Ms Ngcaba advised that the amount available for the development of aquaculture sites announced in 2008 was R100 million.  Although the funds were made available, the programme was still in its early stages and does not yet reflect any growth in community participation.  She advised that most of the fishing rights were held by players in the private sector and said that it was important that applicants for fishing rights understood their markets before making the significant financial investment required.  The DEAT was working closely with the Department of Trade and Industry to develop the best strategy, determine where additional support was required, to develop funding models, etc.  She agreed that the matter required urgent attention but more time was necessary before progress could be shown.  She said that the changes to the responsibilities of the DEAT necessitated a review of operations and would also require a review of the applicable legislation.

The Chairperson suggested that the DEAT’s Parliamentary Liaison Officer was taken to task over the failure to adequately inform the Department of the purpose of the meeting.  He said that the lines between the responsibilities of DEAT and DAFF were blurred and suggested that both Departments appeared before a joint sitting of the Portfolio Committees on Environmental Affairs and on Agriculture, Fisheries and Forestry for further discussion.  Issues such as the interim responsibility for ensuring the health of fish produced needed to be clarified.

Due to time constraints, the Department was unable to respond to Members’ questions and agreed to provide written responses by the end of the following week.

The meeting was adjourned.