The Chairperson explained to Members that the Speaker had instructed them to conclude the process of vacancies for the Board of the Land Bank and forward them to the Minister of Finance. Members asked for clarification on the process and discussed the procedure for nominations. They also discussed Legislation and proposed that the Land and Agricultural Development Bank Act, 2002 be reviewed.
The Minister of Forestry, Agriculture and Fisheries briefed Members about the intervention strategy that her Department was busy with in order to prevent about 200 emerging farmers from having their farms auctioned off because of debt to the Land Bank. The farms would belong to the state for three years. After three years, the farmer had to show the capacity to farm productively. During the three-year period her Department had to nurture the farmer to ensure that the farmer reached a position of productive farming. At the same time relationships and mentorships had to be built with agricultural organisations and other government departments, as well as access to markets. Also discussed was the Smart Pen and extension officers and the implementation of a database to assist with information and budgeting. The Committee was supportive of the need for structured on and off-farm settlement support.
Nominations for vacancies on the Board of the Land Bank
The Chairperson told members that they had received an instruction from the Speakers Office on the 21 August, to conclude the process of two nominations for vacancies on the Board of the Land Bank. Referring to the Land and Agricultural Development Bank Act of 2002, he pointed out to members that by law Parliament’s role was limited to receiving and tabling nominations, and likened the Committee role to that of a post office for receiving nominations and then having to hand them over. The nominations had to be forwarded to the Minister of Finance who by a Proclamation of July 2008 was now responsible for the Land and Agricultural Development Bank. The Ministry would short list candidates for interviews and then make the final appointments. He stressed that the parliamentary committee role had to be debated and that they would need a legal opinion from the State Law Advisor as well as Parliament, on the matter.
Dr D George (DA)asked for clarification on whether they would go through a process to finalise the list of nominations received or whether the list would merely be tabled, and then forwarded. What value were the Committees adding to the process?
The Chairperson replied that the Committee simply received the nominations and then passed them over to the Minister of Finance. Courtesy on the part of the Speaker and the Minister enabled the Committee to engage in the process.
Mr L Bosman (DA) asked if there was another process where people submitted their applications or nominations directly to the Department of Finance. He asked if they would have insight to the list. He requested the list and questioned whether they had a role to play. Would they be submitting an additional, separate list. He was concerned that Parliament’s role in the whole process was not significant, that the oversight role did not really exist in the matter. He asked the Committees if this was acceptable. He stressed that the Board would have a national role in financing the agricultural sector, and the implementation of the Board’s administrative actions would impact on the sector.
Mr G Mokgoro (ANC) was concerned about the situation because they had received many adverse reports about the Board, which had been problematic. The parliamentary system was changing, taking into consideration the Money Bill, and strong oversight was needed. He stressed that the limitations of Parliament on the issue were not in keeping with the processes taking place.
Mr P Pretorius (DA) shared the sentiments expressed by his two colleagues and agreed with what the Chairpersons said. He said they were very limited by the provisions and the prescripts of the law, which simply said the Committee had to submit nominations by representation to the Minister, who would finally make the appointment based on his own assessment. He stressed that the Minister was not prevented from listening to the views of the Committee, and before making the appointment the Minister could submit a list of people with full CVs, to the Committee for recommendations. The Committee should be given an insight into the best candidates, come up with four or five names which the Minister could interview and then make the appointment. In this way the Committee would have an oversight function, otherwise there was no need for the Committees to get together for this meeting. The Minister should not appoint people on his own and he had a moral obligation to take into consideration the views of the Committee members.
Mr B Mashile (ANC) said the views he heard questioned legislation pertaining to the Land Bank and how it was constituted. He asked if they could have more time to conclude the nomination of members so that all views could be understood.
Mr O De Beer said that the legislation was flawed and had to be reviewed since it only gave the Committees authority to process nominations for the Minister. He stressed that they needed a process to review that section of legislation. The current process was a compliance issue which ignored the oversight role of the Committee and did not guarantee that the Committees’ recommendations would be considered.
The Chairperson referred members to the section in the Land and Agricultural Development Bank Act on the Management of the Bank as well as to the Proclamation of July 2008, which took away the functions and administration of the Land Bank from the Department of Agriculture to the Finance Ministry. These two documents were what guided the Committee.
He said that they should accept the reality that until such time that the law was amended there was nothing that they could do. He reiterated Mr Pretorius’ point which was to draw the attention of the Minister of Finance and let the Minister make it his responsibility to consult Parliament in the process. He said that a danger existed where officials of the Finance Ministry received the nominations, did the short listing and invited people for interviews. After that the Minister would receive the short listed candidates and make his decision on whom would be appointed. He stressed that Parliament had to engage with this limitation in the Act since they should not be negotiating and debating their role. Parliament had to be able to determine its role, which had to be very clear. It was currently very fuzzy.
Mr Bosman agreed with the Chairperson. He said the Committee could help in the process of getting and selecting the right people and that the Act did not exclude the role of the Committee. The Act allowed the Committee to collect and nominate in the process, did not prescribe the process and could be interpreted that the Committee could have a short list, intervene and recommend to the Minister. However, it was the Ministers prerogative to agree. The Committee could look at the applications and help the Minister in prioritising candidates in the list.
The Chairperson said that today was the final date to respond by way of nomination to the Minister of Finance since it had been postponed on 28 August to accommodate the processes in Parliament.
Mr S Abram (ANC) said that they could do very little in terms of the statute and that it was not the entire Board but two vacancies that had to be determined. Some nominations came to the Agriculture-related institutions at Parliament. He did not know how many nominations had been received and understood that the nominations had been sent to a deputy director general at the Ministry of Finance. He felt that the nominations, which they had before them at the meeting, should be submitted to the Ministry of Finance. He stressed that they should notify the Minister that short listing by the staff of the Treasury should be limited to merely checking whether the individuals qualified. The Committee should also request that the Minister give them an opportunity to peruse the CVs of the various candidates. The functions of the Land Bank were not purely financial but also to develop agriculture, and the final two nominees would have to be people who would carry out the national priorities of the government regarding agriculture and financing. He agreed with the chairperson that the Land Bank Act of 2002 needed to be amended and brought in line with the requirements of the present day, and what was expected of agricultural development in the future.
He did not think that Parliament’s role should be merely to forward the nominations and considering national priorities the Minister could seek advice and assistance from the Committees of Parliament in arriving at a final decision. The Committee could submit four names and the Minister could choose the final two candidates. Appointments to the Board were for a period of up to five years but he did not know when the entire Board’s term came to an end. He stressed that a new Board would have to be constituted and that legislation should urgently be amended to provide for parliamentary oversight and control and involvement in the appointment of the directors of the Board.
Ms Z Dlamini-Dubazana (ANC) pointed out that the Committee had to differentiate between the two concepts of the appointment and nomination process. The Minister conducted the appointment of the Board members and according to the Act, the Portfolio Committees were expected to execute the nomination process. The nomination process started by looking at the credentials of people according to the specifications laid down for the vacancies and after that had been done the suitable candidates were listed as well as how many people had responded to the advertisement. The two lists compiled by the Committee were sent to the Minister, and these were the two different processes of nominating and appointing. The appointment process by the Minister is the government’s work and should not be confused.
The Chairperson responded that the process talked about a role that Parliament was expected to play through its Committees. People were directly being nominated and had also nominated themselves to the National Treasury. The Speaker announced on 27 August that the Committees of Parliament should play a role in the nomination process while the Minister did the interviewing and appointment. The Minister had to take on board the Committees of Parliament but the final appointment would still reside with the Minister. He said the nominations that would be received would be included in a covering letter, which would include the recommendations of the Committees. Clarity was needed on the process of interviewing and on nominations that went to the National Treasury. The Committee wanted to engage in the process so that the Minister could be aware of the views of the Committees before finally appointing two people.
Dr Z Luyenge (ANC) agreed with the Chairperson and said that the Committee should collaborate with the Minister to ensure that the two vacancies were filled. He strongly recommended that the Portfolio Committees be part of the interviewing panel since the Minister might not be part of the panel, and could make an appointment from a process in which the Committees played no role. He felt that since the Committees were not part of the critical interviewing process, they would value being included in the nomination process.
Mr Mashile pointed out that the current process was guided by legislation and would be difficult to change. He said that in the process of the Minister appointing Board members, the Committee could request to be informed about what was happening at the various stages of the final selection process. He felt that once nominations had been screened for compliance, and before the final selection, Parliament could comment on individuals on the list that qualified for an interview. He stressed that they needed to conclude the current process and then start examining legislation so that Committees could embark on amending the legislation within the next six to twelve months.
Mr T Mufamadi (ANC) agreed with the Chairpersons and Mr Mashile’s concerns. He pointed out that after 15 years of democracy, Parliament had not played a role in the appointment of the Land Bank Board but simply nominating like any institution or individual. He emphasized that it was something that needed to be corrected beyond the filling of the two vacancies because the role of Parliament could not be equated to that of any institution. He said that their oversight role could not only be reflected through the Auditor General’s report but at the inception of the Board. The Committees should view the matter as a project starting with the law itself, determine the role of Parliament, solicit the Executive and particularly the Minister but steer away from questioning their responsibilities enshrined in the current law.
The Chairperson said that the Committees had to play a more meaningful role in the process though the law indicated that the Committees’ role was to nominate. There had been big problems in the Land Bank, and a situation where Parliament had played a very, very limited role. After a whole year, the Land Bank would be coming to the Standing Committee on Finance on the 22 September. So much had happened since then and the situation had been that the Committee had had no influence over who sat on the Board and the challenge and responsibility was to change the law. This should be communicated in the covering letter with the nominations.
Mr Pretorius felt strongly that there should not be a covering letter but rather a Joint Committees’ report to the House because what was being said should be in the public domain and not part of a private letter to the Minister. He agreed with the content of the letter.
The Chairperson suggested they pass over all the nominations and while the Minister went through the process, the Committee should request all the nominations since the Committee had received only a few. They should inform the Ministry that Parliament had to be on board and in full confidence be part of the process and also put forward recommendations. He told members that six CVs had been received, that one nomination had come to his attention, and asked members what other nominations they had.
Mr Bosman recommended that all nominations be compiled on one nomination list, plus the nominations directed to the Department of Finance. Secondly, screening and compliance with the Act be done administratively and thirdly that the final list of CVs be referred to the Committee for perusal and for their recommendations to be made to the Minister
The Chairperson responded that the matter had to be concluded to comply with the Speaker and the Chairperson of the National Council of Provinces and a letter would be forwarded to the Minister.
Briefing by the Minister of Forestry Agriculture and Fisheries on the Land Bank
Minister Tina Joemat-Pettersson said one of her concerns was that South Africa did not have any tariffs on grain and the absence of tariffs on grain was detrimental to the farmers of this country. Grain South Africa met with Minister Rob Davies to negotiate tariffs and to impose tariffs on grain entering the country at a cheap rate so that it would not compromise the SA grain industry. Commercial farmers were struggling with commodities such as grain where their input costs were far higher than production costs, and far higher than the prices received for commodities. For emerging farmers this had meant limited access to all co-operations, financial assistance and any financial systems, reduced input costs for commodities as well as limited access to the market. When commercial farmers complained that they were not receiving their prices for goods on the commercial market, the situation was far worse for emerging farmers.
The Land Bank, the Chairperson and Board of the Land Bank did not report to the Department of Agriculture and currently reported to the Minister of Finance. The Department of Agriculture, Forestry and Fisheries had no mechanism to intervene in the Land Bank. The Department of Rural Development and Land Reform had very limited mechanisms to intervene in the Bank. The three Ministers directly affected by the Bank had developed a sound relationship in the affairs of the Bank. There was no co management of the Bank, and the management system reported to the Minister of Finance.
It was in the interest of land reform that the needs of a number of distressed farms owned by the Bank were discussed. It was also in the interest of land reform that the departments intervened and found that it would have been retrogressive and against the interests of land reform if farms in the hands of black farmers were allowed to be auctioned. An immediate intervention strategy had been needed since a number of farms had been already listed to be auctioned. The auction was stopped but repayments were not stopped. The departments have no mandate over the Bank and simply pleaded with the Bank to stop the auction and to reconsider the debt of those farmers.
A meeting was held with the Minister of Finance to discuss the transfer of R146 million from the Micro Agricultural Financial Institutions of South Africa (MAFISA) to the Bank. The money was set aside as a holding fund for the debt of those farmers, and used to offset the debt of farmers. The Department of Agriculture also agreed to assist with production loans and the Dept of Rural Development and Land Reform assisted with mortgage loans. The loans were then separated into production loans and mortgage loans. The challenge was that it was an acute intervention, not planned or researched, it had to happen overnight and the implementation strategy took place after the decision was taken to intervene.
The Minister referred members to the report of the detailed analysis of the number of distressed farms on the books of the Land Bank. She said that two Deputy Director Generals (DDGs) were leading the process to verify what was happening on the ground and officials and extension officers were also visiting farms. A challenge was that the Bank did not have a strong relationship with the Dept of Agriculture and particularly on the production capacity of those farms. Moreover, the provincial Dept of Agriculture and the national Dept of Agriculture did not have a database of these farms and there was no relationship between the Bank, and the Dept of Agriculture regarding these farms. The Department had embarked on a fact-finding mission to establish relationships and to get the facts on these farms, and had started with Kwa Zulu Natal Mpumalanga, Limpopo and the Eastern Cape, as phase one. As from 29 September other farms would be covered.
Bedsides taking these farmers out of debt, a strategy was needed to get them operational again to have the capacity to once more repay the Land Bank. The Dept of Rural Development and Land Reform would take over the farms, and farms would be in the ownership of the State through the proactive land acquisition strategy, for the next three years and the Dept of Agriculture would assist in getting those farms profitable and working again. The Dept of Rural Development and Land Reform and the Dept of Agriculture currently expect the Land Bank to inform the Department earlier about distressed farms and not at the point of execution of sale. If the Bank did not inform the departments of a sale of a property they would not be able to assist a farmer. Rural Development and Land Reform would purchase land at a reserved price, and hold it as state land and make it available to the incumbent farmer under strict conditions where the farmer had proven the ability to farm or to run a profitable business. The Dept of Rural Development and Land Reform, and Dept of Agriculture Forestry and Fisheries have both articulated these conditions. On 16 September a meeting would be held with Land Bank to articulate the process in a document form, so that there was an agreement reached amongst all three departments.
As part of the rescue package for deserving farmers an intervention to assist the farmers to re-establish the productive base of the farm, seeds, fertilizers, herbicides, livestock and fencing would be provided. It would initially be provided to KwaZulu Natal, Mpumalanga, Limpopo and the Eastern Cape as the farms there had already been evaluated. The document that was given to members outlines the tender process for seed, fertilizer and herbicides. Strict time frames would have to be adhered to, to reestablish these farms so that they become productive, and the intervention was aimed at addressing the challenges faced by black farmers. The focus of the intervention was to ensure that black farmers in general developed and that African farmers in particular retained their farms and developed sustainable and viable farming practices. The first phase was the retention of the farm and the second phase would be to make the farm productive, to develop markets, to provide extension services and to work with commodity organizations for management support and for markets.
The Agri Business Chamber and a number of other institutions and organizations had come on board. Projects would be monitored on a regular basis and extension officers would be given information at meetings. The departments had requested that Land Bank officials who were operating in a specific area should work with the extension officers and commodity organisations. Strategic partnerships were being formed with Agri SA where necessary so that farmers could be connected and have access to markets or existing markets, which the commercial farmers have. The Minister stressed that an important factor was that there was no moratorium on repayment. Once the farms were productive, they had to repay their loans as money that should had gone to new farmers had been taken from MAFISA to save and rescue these farmers, and the money for MAFISA needed to be recouped. There was also now less money for MAFISA during the current financial year as a large chunk of the money that would have been spent on MAFISA was being spent on these Land Bank farms.
A team would go out and assess the remaining provinces: the Western Cape, Northern Cape, Free State, Gauteng and the North West and implementation in those provinces would be in December. The Minister was anxious that the planting season and the timeframes did not correlate and was concerned that the planting season would be missed. As this was an intervention strategy, she asked that members understand that the planning was happening as the implementation was taking place. It was a crisis, which required crisis management and the three departments had to ensure that such a crisis did not recur.
Mechanisms were being put in place by the three departments to ensure that a crisis did not recur in the future. The province, the district, the type of farm went into every detail as well as the cultivar and the seedlings that would be required. Capacity was going to be very stretched because there were 77 distressed farmers that were being attended to immediately, and the number was expected to rise to close to 200. Farms were placed in different categories, from those which could be resuscitated to those that were unable to be rescued. The farms that were unable to be rescued were the ones abandoned by farmers, and the Land Bank was advised to repossess those farms since the departments could not intervene in a farm that had been abandoned.
When the Agriculture Credit Board was closed, black farmers had no access to funding for production or funding for a mortgage at a reasonable rate. The Land Bank as a commercial bank lent money at commercial prices and the interest charged by the Land Bank was higher than the interest charged by commercial banks. If black farmers and African farmers in particular were going to be dependent on the Land Bank, they would be trapped in a spiral of debt which would make it impossible for them to get out of the debt trap. The difference between the Land Bank and commercial banks were that commercial banks lent money on the basis of land, which could be used as collateral while the Land Bank lent money on the basis of the crop that you were going to harvest. If your crop was a failure or non-existent, you would be unable to repay your loan to the Land Bank. Commercial farmers needed the Land Bank, as it was the only bank that lends money on the basis of a future crop whereas commercial banks do not lend farmers money on the basis of a future crop. Neither commercial banks nor the Land Bank catered for a fundamental developmental objective for black farmers. A developmental mechanism or alternative tool was needed to intervene in the agricultural sector. Therefore the Land Bank had to be completely reviewed.
The Land Bank borrowed money on the commercial market and had to repay those loans to the commercial market, as they did not receive grants from the government. The government needed a funding mechanism to intervene in agriculture, that would not compel borrowing from the commercial market. Government had been developing strategies for regular communication and monitoring to reach people quicker and an industry database had also been established that gave the status of farms in the country. Regulations as outlined in various Acts were also being considered for review and shortly the Portfolio Committee on Agriculture, Forestry and Fisheries would be inundated with a list of Acts that needed to be reviewed.
The first round of the tender process would be for seed fertilizer and herbicides and another tender would later go out for livestock and fencing. Fencing was particularly important not only for the historical Bantustans but also for the provinces which had borders as boundaries with countries like Namibia, Lesotho, Swaziland and Botswana. In particular, Free State farmers had had serious problems with fencing, and fencing would be one of the programmes that would be intensified. The Minister asked members in their constituencies and constituency offices to monitor the situation as they developed on the ground and to give assistance in identifying weaknesses that existed in the system.
A Smart Pen [a combination of a standardised report form, a digital pen and a Bluetooth- GPS equipped cellphone] had been launched in George. The extension officer used the Smart Pen to complete a form on the farm which was immediately transferred to the central database. Should the extension officer complete the form in the office or at home it would immediately be picked up that the officer was not on the farm. The Smart Pen was being piloted and once the project was evaluated, members would be invited to assess its success and whether it should be used on farms. The Smart Pen was an administrative tool, which assisted with monitoring extension officers and it also created a database of the activities on each and every farm.
The Chairperson said to the Minister that the Committee understood that a Proclamation signed in July 2008, moved the administrative functions of the Land Bank to the Finance Ministry. He said the Land Bank would be asked to present themselves to the Committee, as its functions were what interested the Committee. The Committee had engaged in a process for the nomination of two vacancies at the Land Bank and held strong views about the nomination process.
Mr Bosman said that it was unfortunate that the systems that were needed for the development of new farmers were never really taken seriously. The issues raised by the Minister were very relevant and South Africa would not succeed without the transformation of the sector. He emphasized that in the past they did not take notice of many issues that played a role in maintaining long-term sustainability of the sector, especially those concerning emerging farmers who faced much more intense and severe problems than possibly commercial farmers. However the commercial farmers were under the same stress since disasters and other problems hit them harder because their investment was much greater on the input side. In the end if there was no crop available to meet their debts, they experienced the same problems, and the problems being faced had to be addressed irrespective of race.
Since 2001 the main objective of the sector plan was threefold. Firstly, to create a profitable sustainable agricultural sector, secondly, to put transformation strategies in place and run them properly and lastly, sustainability and access to everything that was needed to become sustainable. In the current situation it was impossible to run an emerging sector or developing sector without the proper instruments to do so. The Minister had mainly engaged with the financial side of agriculture and the Land Bank was unable to play the role of a developmental supporter, as envisaged. He said that they had to look at the functions of the Agricultural Credit Board and felt that something similar was needed to solve the problems since the Land Bank was a commercial institution funded by the open market.
The Land Bank had a record of bad debt and paid a higher cost for money than commercial banks, and when the Bank lent money to users and producers they then paid more for money, compared to what was offered by the commercial banks. The result was that the Land Bank book for the commercial sector had diminished from about 48% to 13% of the sector within the past six years. Many of their best clients had been lost to the commercial sector because they could not get better loans from the Land Bank. Therefore, the role of the Land Bank had to be examined if they were to be a developmental bank and government would have to support them. The Land Bank had to be removed from the commercial sector. The Land Bank had to be in a position where they could subsidise interest rates to new farmers until such time that they could compete on the open market with the rest of the commercial sector. Loan repayment time frames had to be extended for longer periods for people entering the sector because it would take a longer period for them to get established.
An issue that was neglected terribly was the support that had to be given to emerging farmers. The extension services had not fulfilled its role for a long time and currently the system was rotten. This had to be corrected and there was support and knowledge that could play a positive role. He stressed that disasters struck anybody and they had pleaded for a disaster risk management system that existed previously, to be implemented again. If that were in place, the emerging farmers would have been rescued under that system. When drought and other disasters struck, they would have received immediate assistance. Under the current system monetary assistance for disaster relief throughout the country was available after approximately two years. In the meantime farmers could not continue without cash flow systems. This would have to be rectified to enable a disaster risk management system to be put in place.
He referred to public private partnerships and the incorporation of the Agricultural Business Chamber that was in a position to monitor loans. The Land Bank was previously only a bulk supplier of money and they were still providing the service to the former co-operatives. The co-operatives then employed extension officers to make sure that when they lent money to a producer there was somebody that monitored that production process. However, it was no longer in operation and there was no real support for those farmers. In making decisions they had to consider incorporating and including the agricultural businesses since they had become experts over a long period of time. The agricultural businesses had created markets and could support people to access the market place and could provide assistance with finance. The agricultural businesses could also buy in up front and sell a crop, so that the system of uncertainty was eliminated.
He was concerned about taking money away from the Dept of Land Affairs and MAFISA since the Dept of Land Affairs did not have a budget or money available to pay for land, which they had already bought. There were people who were waiting for approximately five years to be paid under the restitution programme, and had not received payment because of a lack of funds. Funding was problematic.
Dr George referred to the proposal by the Minister to impose tariffs on imported grain and asked whether it was absolutely necessary, and what the problem really was. Was the problem that was grain was being dumped into our markets or with competitiveness in the SA market as a result of possible structural problems that needed to be addressed. He enquired about the moratorium on payments and asked how realistic the model was. There was probably an ongoing analysis taking place and asked how rigorous the process was because if an entity was not viable, there would be no income.
Mr Abram referred to the Minister’s programme of rural development and land reform, and the taking over of farms as a proactive strategy to get them working again. The land would also be purchased at a reserve price, which was the figure owed to the Land Bank by the defaulter. He emphasized that he had sympathy for the defaulter because he had defaulted as a result of a number of circumstances. Some of those circumstances were that the department had failed them in the past and that they did not get the necessary post settlement support. They did not get the necessary technical support from people who were supposed to have rendered that, and they were left to their own devices. How could they ever succeed? His concern was that those people had put in some of their sweat equity into the farm and the Dept of Land Affairs would merely take it over for whatever was owed to the Land Bank.
He felt the Department needed to assess the commercial value of the farms at the time that the Department was going to settle the loan, and that payment should be made to the particular individual. This needed to be done or else hundreds of these farmers would be joining the ranks of those that stood in line for social grants, and those that swelled the informal settlements in the country. At least if the person had something, they could go back and rebuild their lives, even in some other field, and stressed that members had to have a sense of responsibility towards those farmers.
With regard to the farms that had been left abandoned and that the Land Bank must repossess, he suggested that there were reasons why people may have abandoned them. Firstly, they did not get any support or assistance, nobody came to their rescue and on the ground many of them were helpless yet nobody assisted. The Land Bank should not repossess those farms immediately and the people should be traced and asked whether to put their farms on the market or sell them and recoup a little bit after settling their Land Bank loan. This was the humanitarian view so as not to create more beggars standing on street corners. Recently in Lichtenburg, a farmer whose farm was going to be repossessed and auctioned because the Land Bank was owed R800 000 sold the farm privately two days before the auction for R2.3 million. The person then had some money to reinvest. The human element should be considered.
He emphasized that interventions were problematic. He said that the number of things listed and the information provided by the Minister, indicated very little, was limited and did not give the information that was needed. He warned of a ‘one size fits all’ approach, and in believing that people wanted what was proposed to them. Cases had to be examined carefully to see whether people were able to do something or else the R146 million would go down a ‘bottomless pit’.
Minister Joemat-Pettersson responded that it was precisely because the Department was looking at each case individually that she had instructed officials to visit each and every farm. The 77 farms that were reported on to her had been reported on a detailed basis. Decisions taken on behalf of the Department were not based on what it wanted but on what the Department was doing in conjunction with the farmer. The unintended consequences of visiting each and every farm resulted in the delay factor.
The Department was in no position to instruct the Land Bank on what they should be paying for these farms and wanted to ensure that no one lost farms. That was the premise on which they worked but the ownership of the property still rested with the Land Bank. The only reason why the Land Bank did not have the auctions was because of the intervention strategy by the Government. That intervention strategy had to be accompanied by a budget or else the Land Bank would have had to be auctioned. The payment that would be made after assessing the commercial value of the farm rested entirely with the Land Bank.
The proactive land acquisition strategy was a strategy of rural development and land reform in which the farm belonged to the state for three years. After three years, the farmer had to show the capacity to farm productively. During the three-year period the Dept of Agriculture had to nurture the farmer to ensure that the farmer reached a position of productive farming. At the same time relationships and mentorships had to be built, as well as access to funding and markets. The Department of Agriculture had three years in which to build capacity, although three years were not enough. Joint ventures needed at least five years in which to transfer skills and another five years in which to transfer markets. It would take at least ten years to develop a successful commercial farmer if not more. Farming information was passed on over generations and SA had a 15-year backlog to catch up with.
The Department understood that the defaulter did not get post settlement support and there was sympathy with the defaulter. Previously there was no relationship between the Land Bank and the Department of Agriculture. No information was shared between the two and there was no database. When those applications were made to the Land Bank, the Bank gave funds without the proper due diligence, without a proper business plan and without the proper understanding whether it was going to be a successful or a viable farming business. One could not blame the Dept of Finance now. When those farms were handed over the Land Bank was part of the Dept of Agriculture, but it had no relationship with the Dept of Agriculture when farms were allocated. Before the farm was allocated there had to be a joint planning process in which these departments worked together. The Land Bank had to give the information at the planning stage, at the point of execution or even at the point of application, and not at post settlement. The Dept of Agriculture could not intervene when the farm had already been auctioned.
Contractual arrangements would be put in place so that everyone was aware of what role they would play. The figure that the Department was intervening in was the figure for productive loans. The figure for purchasing land at a reserve price was still being debated between Land Reform and the Land Bank. Rural Development and Land Reform had their own views on the process and how it had to be managed, and were debating the figure for mortgage loans and the price that was paid for the actual land. They had a meeting on Monday 14 September and another Wednesday 16 September to reach an agreement on how the departments would deal with these farms.
The Department was in total agreement with Public Private Partnerships because agriculture was a business and the Department was aware that Agri Business had markets to give support. Funds were not being taken away from the Dept of Land Affairs, the funds that were being used came from the Agriculture Credit Board. Investigations were still underway regarding what happened to the R1 billion. The disaster management report would be tabled in the near future. A thorough analysis of grain and all commodities was underway as well as an analysis of commodity prices, for the Competition Commission and the report would also be tabled to the Committee on completion. During the three-year period the farm would be owned by the state and there would be an opportunity during this time, to develop a running concern. Repayments would start after three years and once there was a running concern, repayment was expected.
The Department realised that the extension officers needed more development, skills and training and there was an intensive programme to do that. The Smart Pen was one process to monitor their whereabouts and also to build up a database. The extension officer was now expected to fill in an extensive form and capture the data, which the Department did not have. The Department was in agreement that there had to be a funding mechanism for farmers, and proposals would be presented to Members regarding mechanisms that would be put in place. The Department was in its sixth month and was still developing and putting systems into place and hoped to have a database up and running before the financial year end. The database was crucial in preparing budgets and allocating funds. The intervention for disaster management pertaining to all farmers would also be reported to the Committee. The current intervention strategy took too long and by the time the Department intervened it was already far too late, just ridiculously too late. The Department was developing a disaster management strategy, which was more efficient, more accurate and which could receive information quicker.
Ms Vangele Titi (Deputy Director General: Planning, Monitoring and Evaluation – DAFF) said that the Minister had already indicated that DAFF want to link extensions to commodity organizations because we thought that was the best way to do it and to ensure that the Land Bank was at the centre of operations. DAFF would ensure that someone who represented the commodity organization whether in citrus or horticulture would be there to assist the farmers.
Mr Pretorius referred to the rescue package for 77 farms and asked whether the total monetary value was over R250 million. He enquired whether 200 farms would eventually be at stake, asked what amount was being looked at, from where the funds would come, and whether MAFISA was able to provide additional funding.
Mr E Mthethwa (ANC) stressed that synchronization between departments created many problems but was of great assistance, and had to happen. He emphasized that the Dept of Transport was crucial to the intervention strategy because without roads there was no access to those farms and farmers could also not reach their marketplace destinations.
Minister Joemat-Pettersson responded that the Department had made R146 million available immediately to cover production loans. The current production loan figure from the Land Bank was R24 million and the funds would be used to develop programmes on those farms because it made no sense to keep the farms without having any money to develop them again. To kick-start the farms, the Department would provide seed, fertilizer, herbicides, livestock and fencing so that farmers could be assisted to get onto their feet again. As an intervention strategy for integration, the Infrastructure cluster had met to develop on/off farm settlement support. The Dept of Rural Development and Land Reform had been the frontrunner of off-farm settlement support that looked at infrastructure around the farm.
The Chairperson said that in the Patensie - Hankey citrus area there was a budget for a provincial road because trucks constantly capsized there. There was also a proposal to have a rail link with that road but two years ago the budget item disappeared from the budget of the provincial government. He emphasised that these kinds of challenges were examples of the need for infrastructure for farms. Some officials in the Land Bank did not even know what MAFISA stood for which also pointed out a problem that had to be dealt with. He felt that they should consider incorporating the Land Bank within the agricultural area because its functions and programmes were about agriculture. Disaster support was critical and should receive urgent attention. A case in point was somebody that was referred to the Land Bank for bailout because 500 dairy farming cows were burnt in a veld fire and the person had no recourse. The person had no insurance.
Minister Joemat-Pettersson stressed that the Department was engaging with the Dept of Transport around agro-logistics and they needed seriously to look at creating the capacity for agro-logistics particularly as it was required for transporting products to market points. For agriculture to be efficient, it was particularly being emphasized that the Department consider moving from road to rail. The movement from road to rail was also part of reviving ailing railway towns, which closed when Transnet re-routed freight away from certain towns. As part of the intervention in rural towns and to revive rural towns they were looking at the role of the railways and agriculture, and how the closure of the railways had actually led to the compromising of certain railway towns. There were certain towns, which were completely dependent on the railway and to intervene in those towns, they were looking at the possibility of getting agricultural freight back onto rail.
The Minister said that the Department intended to honour further engagements as they were required. She pleaded with Members to understand that in certain instances, matters were long overdue and if the Department was acting faster than reporting to the Committee, they humbly asked to be forgiven. She also apologised if members read about something in the press before it was reported to the Members but they were dealing with a sector which required immediate intervention. The Department was being encouraged to work more efficiently, to work more accurately and to work against time.
The Chairperson said that the Committees present had agreed that they needed to engage with the Minister of Finance in order for Parliament to play a role. They wanted the Finance Minister to take them on board during the process of the appointments to the Board of the Land Bank, so that officials in the National Treasury were not the only ones doing the interviews and the short listing. Moreover, the Act did not provide a role for Parliament to play except for forwarding nominations to the Minister who then decided what happened.
A resolution was taken by the Committee to urgently examine the Land Bank Act, especially where roles were concerned. The reason for mentioning this was that the Committee wanted to fast track the process and lobby Minister Joemat-Pettersson because she would have the opportunity to meet her colleague, the Minister of Finance, and mention to him what was transpiring.
The meeting ended.
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