National Agriculture Marketing Council and Agricultural Research Council: Annual Reports 2008/ 09

Agriculture, Land Reform and Rural Development

09 November 2009
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

The Committee was briefed by the Agricultural Research Council (ARC) on its Annual Report 2008/09. The major problem that it faced lay in funding. The ARC only had a 4% increase in Parliamentary allocations, yet its staff salaries had increased by 6.8 %. The ARC had a deficit of R 16 million and its cash flow was not more than R40 000. The ARC had received a qualified audit, which was due to the poor state of the books, which were presently in the process of being sorted out. Seven people were fired for corruption in the previous year.

Members asked questions about the interaction with other government departments when conducting research, and pointed out the need for institutions to pool their resources and share their knowledge, so that research was not needlessly repeated. Members were interested in how climate change was affecting the industry, what had been done to assist farmers in dealing with the honeybee bacteria, whether the problems of obesity, particularly in the youth, were linked to genetically modified foods, and whether ARC had looked into whether it would be possible both to boost small farmer dairy production and alleviate health issues by promoting protein-rich milk products. Other questions related to whether ARC was able to assist the Department of Correctional Services in setting up farms in correctional service centres, what role the Council was playing in advancing and developing the poultry industry, and the effects of fertiliser leaching into rivers on the farmers downstream. Members questioned why the Chief Executive Officer’s salary increase was proportionately higher than other staff, asked how many scientists the country needed, and what ARC was doing to encourage the production of scientists. ARC admitted, in response to questions, that transformation was still a challenge, and that the issues around the audit report were being dealt with.

The National Agricultural Marketing Council (NAMC) presented its Annual Report, focusing on the mandate of the NAMC and its structure and noting that two female Africans, three male Africans and two white males were in senior management. The various divisions through which the work was done were listed and explained, and it was noted that the main purpose of the schemes run by NAMC was to uplift the black producers in the agricultural sector and to encourage their integration into the commercial mainstream. Members asked how information on marketing training was communicated, whether the programmes were run throughout the country, noted that food prices in the rural areas were very high, and that this could be improved through efficient rail transport. Members asked whether quarterly reports were submitted to the Minister, whether there had been visible benefits to the money spent on monitoring food prices, whether NAMC had contributed to the database of emerging farmers and had participated in other projects with EmpowerDex, a project in Grahamstown and other projects of the Department. Questions were also asked about the agriculture risk management systems paper, other research ongoing, whether the maize marketing scheme was finalised. Members raised the issue of the performance bonus of the CEO, but the Chairperson ruled that this would not be discussed, as the whole system was under review. Members expressed their concern that transformation in the agricultural sector was limited, and asked how NAMC was assisting farmers beyond primary production.

Meeting report

Agricultural Research Council (ARC) Annual Report 2008/09
Dr Shadrack Moephuli, Chief Executive Officer, Agriculture Marketing Council, told the Committee that the presentation was not different to what the Committee had seen in the annual report of the Agricultural Research Council (the Council or ARC). The funds that the ARC was receiving from the Parliamentary grant were not enough for the organisation to carry out its mandate, which was to conduct research in order to promote agriculture, and also to ensure reduction in rural poverty. The ARC only had a 4% increase in Parliamentary allocations, yet its staff salaries had increased by 6.8 %. The ARC thus had a deficit of R16 million and its cash flow was not more than R 40 000.

The ARC had received a qualified audit and Dr Moephuli said that this was due to the fact that ARC was in the process of cleaning up its books. Seven people were fired for corruption the previous year. During the period under review, the ARC had succeeded in publishing 225 Publications in peer-reviewed journals which exceeded the target of 215 publications. The ARC also produced 25 patents and plant breeders which assistedthe institution raise the much needed funds as people or institutions pay royalties for the use of the plant breeders rights.  This would be amongst the highest number of patents/plant breeders rights by a South African institution.

The Chairperson informed the Members that time was short, and asked that the numbers of questions be limited.

The Chairperson asked how the Agricultural Research Council (ARC) was working with other government departments in conducting its research and how they were also making use of the research. It seemed as if government departments and institutions worked in silos, without cross referencing to each other, and he was worried that similar research might well be done by other institutions. He asked how the institutions could thus pool their resources and share their knowledge.

Ms C Mabuza (ANC) asked what novel products the Council had developed in the past five years.

Ms Mabuza asked how the ARC aligned its activities to the issue of climate change.

Dr Shadrack Moephuli replied that any of the fruit quality and tree growth problems that beset the industry were directly related to climatic conditions such as insufficient winter chilling, high summer temperatures, late frosts, and other factors. Most of these problems were still unsolved, but the ramifications were becoming even more acute. ARC had a unit that directly dealt with conducting research on climate change and its effects.

Ms Mabuza asked what the ARC had done to assist farmers in dealing with the honeybee bacteria.

Dr Moephuli replied that it was the ARC that helped to discover the bacteria, and it had been assisting the farmers with solutions to prevent the honeybee bacteria from infecting their plantations, as well as assisting them with the necessary pesticides.

Ms Mabuza said that she thought there was a considerable problem in an overweight youth population, with many young people displaying fat on their stomachs, as well as the middle aged men developing “love handles” around their expanding waists. She believed that this might be linked directly to genetically modified foods and wondered what ARC was doing to investigate the cause of obesity amongst the youth.

Dr Moephuli replied that overweight amongst the youth, both for young women and men, was not a direct result of genetically modified foods. It was probably caused by the lifestyle that many young people were living, with the wrong type of diet, and failure to exercise. He believed that the best way to control weight was to go to the gym.

Mr S Abram ( ANC) referred the Committee and the team from ARC to page 22 of the Annual Report. He said that the average size of herd of cattle on communal farms was based on 19 head of cows per operator or emerging farmer, and there were about 413 per commercial farmer. He asked whether the ARC, during its studies, had looked into how protein rich resources like milk could contribute to the better health of South Africans, and could also be a means of cash income by promoting small milk producers.

Mr Abram asked if the ARC had formed partnerships with the Department of Correctional Services to try and assist the Department to grow its own crops, so that the latter could spend less on food. This Department was spending R1 billion on food a year for inmates, and that amount could be hugely reduced if correctional service centres had their own farms.

Dr Moephuli told the Committee that the ARC could not provide things like vegetables to Department of Correctional Services, but that it would be able to enter into an agreement to supply Department of Correctional Services with milk, as it had supplies of milk on a farm on which it was doing its research.

Mr Abram said that there was very little said in the report about the poultry industry. He questioned what role the Council was playing in advancing and developing the poultry industry.

Mr P Pretorius (DA) asked why the salary increase for the Chief Executive Officer had been so high. He noted that this percentage increase was far above the comparative percentage increases for other ARC staff.

Ms Jean Davidson, Council Chair, Agricultural Research Council, replied that the CEO’s salary had to be in line with what was happening in the market. There were not many people who possessed his skills and thus the salary had to be attractive, whilst also reflecting his competencies.

Mr R Cebekhulu (IFP) asked what the effect of fertiliser was on running water was. He also asked if the ARC had been conducting any tests in this field. He had noted that the livestock of many people who lived downstream from farms often would seem not to be well, and he questioned whether this had to do with the water they were drinking.

Mr L Bosman (DA) asked how many scientists the country still needed in order in order to meet the demands.

Dr Moephuli replied that ARC was still faced with the challenges detailed in the report. There was a shortage of scientists in the country, especially people with PHDs. The institution had been encouraging students to study science and had been giving bursaries for PHD studies and Masters degrees.

A Member of the Committee asked what changes had been made within ARC since 1994, as the Council was celebrating a 100 years of establishment in 2008. An enquiry was also made as to what specific role ARC had played in rural development and in improving the lives of the poor.

Dr Moephuli replied that he would state honestly that turning ARC around was a difficult task. It was very difficult to transform ARC, due to the fact that many of those both in the institution itself and in the related fields were predominately white.

The Member also asked if there was a Standing Committee on Public Accounts (SCOPA) resolution in respect of the audit report of ARC and, if so, whether that SCOPA resolution had yet been implemented.

Dr Moephuli replied that there was no SCOPA resolution. He had only fairly recently joined ARC. Many of the financial problems had been discovered by ARC itself, not the auditors, in the course of going through the books and cleaning up the operations. 

National Agricultural Marketing Council (NAMC) Annual Report 2008/09
The National Agricultural Marketing Council (NAMC) was represented by Ms Ntombi Msimang, Chairperson, and Mr Ronald Ramabulana, Chief Executive Officer. The NAMC was established in terms of an Act of Parliament in 1996, to advise the Minister and other directly affected groups on agricultural marketing policy.

The NAMC had two female Africans in senior management, two white males and three male Africans. The NAMC did its work through he following Divisions: Agribusiness Development; Statutory Measures Agricultural Trusts; Markets and Economic Research Centre.

The main purpose of the schemes run by NAMC was to uplift the black producers in the agricultural sector and to encourage their integration into the commercial mainstream.

The NAMC had a course that aimed to prepare emerging farmers that are export ready for the challenges that they have to face when entering an export market. Emerging producers that were export ready participated on exposure AgriMatch trips to a European country. The objective of the trip was to afford the emerging producers to experience the challenges when exporting through engagement with importers. This had thus resulted in many farmers progressing in their businesses as they developed links with markets. The NAMC was guided by the transformation charter when sending the farmers to the European market.

(The remainder of the presentation was delivered in accordance with the attached document.)

Ms N Phaliso (ANC) asked how information on marketing training for agriculture was communicated to the farmers on the ground, and whether the programme was run throughout the country or if it was limited only to Stellenbosch University.

Mr Ronald Ramabulana, CEO, National Agriculture Marketing Council, replied that the Council worked through industry partners and through that process had been able to identify farmers who were producing for the market. The industry partners assisted the Council to identify participants for the training programmes. Organisations like the Rural Women’s Network and Nozala recommended participants for the programmes.

Ms Mabuza said that food prices in the rural areas were very high, and in Limpopo food was more expensive than in rural areas. Something needed to be done to ease the burden on rural people, who were finding that they were no longer able to afford to buy milk and sugar for their tea. She wondered if it was not possible to go back to transporting food by rail, as this seemed more cost-effective.

Mr Ramabulana replied that he agreed that the food prices were high because of the mode of transportation that was used to transport food. The rail network that the country had was presently inefficient and diesel prices for rail trucking were very high. If the rail network was more efficient, then food prices would not have been as expensive as they currently were.

Ms Mabuza asked the Council to explain to the Committee why it was no longer submitting quarterly reports to the Minister. The last report that was submitted by the Council to the Minister was submitted in January.

Mr Ramabulana replied that now the quarterly reports were being written differently. They had been changed to accommodate the requirements of the Minister and the Auditor General. The Minister had received all four quarterly reports.

Mr Abram said that NAMC were spending large amounts of money on monitoring food prices. He therefore asked if NAMC could give the Committee an indication of how much was spent on monitoring food prices during the past year, and if there were visible benefits to the monitoring.

Mr Ramabulana replied that NAMC spent just over R1.1 million on monitoring food prices a year, looking at both urban and rural food prices. It was most important thing to look at how the country corrected the problems that it had. Policies had to be implemented, and recommendations were made by NAMC on how to deal with the matter. The country had a window of opportunity to deal with the problem and should be using it.

Mr Abram noted that there had been millions of rands spent in creating a database of emerging farmers (AgriBEE). He now noted that NAMC had also done something similar to that, and he wanted to know if NAMC had been consulted.

Mr Ramabulana replied that NAMC knew about the project, but was not a participant in the project. NAMC had its own database of farmers.

Mr Abram said that there was a base study that was done to a firm called EmpowerDex, and that a substantial amount of money was spent on this. There was also a report of a project that was run in Grahamstown, which cost R 3.3 million. There were also other projects in the report and millions were spent on them. He asked if the NAMC had been aware of the existence of these entities.

Mr Ramabulana said that he did not know about the Empowerdex project, but he knew about the project in the Eastern Cape. Once again, NAMC had not been part of this project.

Mr L Bosman (DA) said that the Council had produced an agriculture risk management systems paper. He asked if the Council had worked together with other research institutions and Committees that worked on the programme, and when the Committee was going to see the results.

Mr Ramabulana replied that the programme was implemented in partnership with SANLAM. The project covered marketing risk and input cost insurance. However, NAMC decided to run the project in the Agriculture Business Chamber.

Mr Bosman asked if there was any other research done by NAMC, and how far this had gone.

Mr Bosman asked if the maize marketing scheme had been finalised.

Mr Ramabulana replied that the maize scheme would lapse at the end of 2009. There was one case that was outstanding in terms of this maize scheme, but it had been finally resolved.

Mr P Pretorius (DA) asked if the performance bonus figures were not excessive. The senior manager received more than R1 million in performance bonuses. He felt that the figures were too high, and that, in principle, people should be paid for doing their jobs only.

The Chairperson interjected, saying that the Committee needed to engage SCOPA on the issue of bonuses and not ask the CEO to answer for his bonus. The needed to be standards set up to establish consistency. The lack of consistency was a major problem. This issue came out very often, and the schemes were not going to be renewed.

Ms Ntombi Msimang, Chairperson, NAMC added that the performance bonuses were discussed extensively. There were contracts in place and the Council had hired a Human Resource specialists to advise on the matter. A formula was used to determine how much an individual received. The one person who did not get a bonus was not performing well, and there was proper reasoning behind this.

The Chairperson said that the transformation in the agriculture sector was limited and the value chain was ignored. The relationship between the black and the white farmers only went as far as the primary production level. Beyond primary production, where money was really made, the black farmers were nowhere to be found. He knew a case of which such a relationship existed.

Mr Ramabulana replied that the Chairperson was right and it was a concern that the NAMC shared. NAMC was trying to expose farmers to packaging and logistics, and exporting. It was working hard to expose farmers to the export market. There were other people and institutions with whom the Council worked to try to promote black farmers.

The meeting was adjourned.



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