Department of Agriculture, Forestry and Fisheries Annual Report 2008/09

Meeting report

Department of Agriculture 2008/09
Dr M Mogajane, Acting Director-General, Department of Agriculture, in her opening address said during the year under review, agriculture was faced with unprecedented food security issues caused by continued changing weather conditions, global food demands, and outbreaks of diseases. Towards the end of 2007, the UN Food and Agriculture Organisation (FAO) reported basic food inflation of between 10 and 18%. The effects of the economic crisis on agriculture had been minimal compared to other sectors of the economy, and the quantity of exports also increased by more than 900 000 tons. Because of the crisis, agriculture saw a decline in growth rate by 17.1% during the second quarter of the year. More than 26 000 jobs were lost during the first quarter of 2009, and consumer preferences moved away from beef and mutton to poultry and other low cost products.

Programme: Administration
This programme provided strategic leadership including overall Departmental strategy development, monitors the implementation of strategies, and looked at the overall organisational administration and governance. Approved policies and strategies were managed and implemented through the efficient utilisation of financial and human resources. Financial and other support services were rendered satisfactorily in terms of predetermined service standards. The vacancy rate was standing at 14% – of the 791 posts that were available, 677 have been filled.

Programme: Livelihoods, Economics and Business Development
This programme developed and facilitated the implementation of appropriate policies and targeted programmes aimed at promoting equitable access to the agricultural sector. It promoted BEE in the agricultural sector, and monitored the economic performance of the sector. The economic performance of the agricultural sector was monitored on a quarterly basis and overviews of economic changes and their impact on the sector were produced. Crop forecasts for both summer grains and winter cereal crops were within the prescribed 5% of actual harvest during the period under review. Support was given to 79 866 households and emerging farmer groups by means of agricultural starter packs as part of the HFPP. Agricultural Marketing information was disseminated through a Web-based system and cellphones. It reported that 49 farmers gained access to financial assistance and 100 farmers were trained at two pilot sites in Limpopo and Free State. Of the 308 farmers that have been trained, 305 were trained in agricultural marketing and three in leather tanning in Ethiopia. The AgriBEE Charter Council had been appointed. The Grain Strategy was developed and was in the process of implementation in partnership with the industry.

Programme: Bio-Security and Disaster Management
This programme managed risks associated with animal diseases and plant pests, and developed the agricultural risk and disaster management plans to reduce risks associated with natural disasters. Contingency planning measures were put in place including a national steering committee in respect of the invader following information of its southwards spread within the SADC. Training manuals were developed in terms of the Fertilizers, Farm Feeds, Agricultural Remedies and Stock Remedies Act of 1947. The regulations on the grading, packing and packaging of fresh vegetables intended for sale in South Africa was gazzetted on 13 February 2009 under the principal Act – the Agricultural Product Standards Act of 1990. The draft Primary Animal Health Care Programme report was available and would be prioritised in the next financial year. The Agricultural Climate Change Sector Plan would be finalised end of the first quarter of 2009/10.

Programme: Production and Resource Management
This programme developed strategies in order to optimise agricultural productivity and profitability within the agricultural sector through sustainable use and protection of land and water resources. Many countries in the SADC were found not to have plant variety protection frameworks in place to protect the intellectual property rights of plant breeders. Consequently, a three-day capacity building and training workshop was hosted in SA to support SADC countries towards finalisation and implementation of the relevant legislation. A household food production model was developed. It was aimed at increasing production of food crops at household level. Over 500 breeding animals were distributed to emerging farmers in the Eastern Cape, Free State, North West, and Limpopo. These included 145 bulls, 50 pregnant cows, and 311 heifers. Three schemes on sorghum, maize and groundnuts were established. Each scheme is made up of an average of three projects and is currently piloted in Limpopo and Mpumalanga, and these schemes are done in partnership with the Agricultural Research Council (ARC), South African National Seed Organization (SANSOR) and provincial Departments of agriculture (PDAs).

Programme: Sector Services and Partnerships
This programme manages and coordinates inter-governmental, stake-holder and international relations, agricultural education and training, extension and advisory services as well as research and technology development. The National Agricultural Research Agenda was completed and inputs from stakeholders were incorporated. An agreement was signed with FAO on sustainable food production and nutritional education in schools in support of the national school nutrition programme. Through bilateral agreements with a number of African countries, the DoA was actively involved in the implementation of African Agricultural Development Programme (AADP), and within the SADC, the DoA promoted food security and agricultural production as well as the African Green Revolution to minimise the negative impact of high food prices on the poor in sub-Saharan Africa. Norms and standards for Agricultural Training Institutes had been discussed with selected representatives of the provinces and adopted by the Agriculture and Sustainable Rural Development Committee (ASRDC) / STC. A budget of R50 million had been approved for implementation in the 2011/12 financial years. In addition a budget option was submitted to Treasury.

Finances
The Office of the Auditor-General had given the  the DoA received an unqualified audit report. Emphasis of matter focused on irregular expenditure. Other matters of concern were risk assessment and performance information. The DoA had a surplus of R89.877m. Graphs and tables detailing actual spending per programme and economic classification were shown.

Status on AgriBEE FUND
The Land Bank was appointed to manage and administer the equity funds. Equity fund allocations for year 2008/09 from the Department of Agriculture, Forestry and Fisheries were R50 000 000 00. As of 31 March 2009 the balance of AgriBEE Equity Fund was R60 528 512.00 accrued from 2007/08 and 2008/09 financial years. A sum of R20m was allocated yearly for skills development, and R30m was always allocated for developmental initiatives that enhance transformation and empowerment. R16m had been allocated to the National Programme for the Creation of Small Enterprises and Jobs in the Second Economy. R14m was paid to the SA SMME Excellence Model to stimulate entrepreneurship among previously disadvantaged individuals (PDIs).

Discussion
Mr D Worth (DA) asked the Department to comment on the status of its internal audit system, vacancy rate of 17%, and to explain what its stance was on GMO products and how the R60m given to Development Bank SA was spent.

Dr Mogajane explained that internal audit challenges had been with the Department for sometime. The audit committee had only two members at present, and more were needed to help with assessments and to warn them of problems. The intention was to set up an investigation unit for anti-corruption. Regarding the GMO products, she said there was a system that registered GMO and the Department of Environmental Affairs handled it and Department of Health verified everything and checked the GMO applications.

On the issue of vacancy rates, Mr Isaac Miti, Chief Director: Corporate Services, said the reason that the number was standing at 17% was because they have to check members before appointing them and this process took a lot of time as the National Investigation Agency has to check their criminal record and citizenship. The NIA takes 30 days to do that. The NIA has agreed to have a dedicated team that would look into Agriculture to reduce the days from 30 to 15. A moratorium on filling of non-critical posts would be lifted once the NIA had managed to reduce its investigation time to 15 days.

About whether the R60m in DBSA was spent appropriately or not, Mr Venter, CFO: DoA, explained the Department got an unqualified report from the Auditor-General. The R60m was transferred to the DBSA in order to manage the Lobatsi Project. The DBSA was to manage the funds and an agreement was signed. They also offered more expertise than being fund managers only. The R60m was spread to other projects in different provinces.

Mr G Mokgoro (ANC) wanted to know if there was a relationship between the Department of Rural Development and DoA, and asked the Department to explain the decline in agriculture growth and how BEE was promoted in the agriculture sector.

With regard to the relationship between the Department of Rural Development and DoA, Dr Mogajane replied the two Departments were being reconciled. A memorandum of understanding had been signed to ensure the two Departments were on par. However, it was noted the two Departments were different. Agriculture contributed to rural development. There were areas not suitable for agriculture especially those that were hot and dry, and did not have water. First, they had to invest in infrastructure before agriculture could play a role, and look at agricultural processing strategies so that agriculture could function normally.

Concerning the decline in agriculture, Mr Adams, a DoA official, said agriculture was a seasonal sector and that it needed to be compared quarter to quarter than year to year as that would give a realistic picture of performance. The decline in growth also reflected the value of agricultural contribution to other factors.

On the question of BEE, Ms Vangile Titi, DDG: Sector Services and Partnerships, DAFF, explained that a fund was started in 2005. Between 2006 and 2009, funds allocated came to R67m and were transferred to the Land Bank which then paid it to enterprises. For 2008/09 no transfers had taken place because of problems. Businesses to be funded were going to be identified.

Dr Mogajane and Mr Andile Hawes, DDG: Production and Resource Management, DAFF, stated that access to loans was going to be made available but the problem within the agriculture sector was that most farmers did not qualify in terms of long term strategies. An accreditation system was used, and assessments would be done to ease the process of allocating funds. The DoA was planning to have a funding mechanism that would deal with loans and grants.

Ms N Magoala (ANC) requested the Department to brief the committee on the Land Bank status.

Dr Mogajane elaborated that the government did not invest in the Land Bank. The Land Bank had to source its own finances and it borrowed from the private sector. That is why it was in crisis. Most AgriBEE funds were stored or frozen in the Land Bank even though they were not spent.

Mr O De Beer (COPE) asked if funds were allocated for Disaster Management, and why compliance was a big problem for the Department as there was under-expenditure in certain areas.

Mr Venter replied that the National Treasury did not allow for the Department to budget for disasters. They waited for provinces to submit reports for funds. However the DoA was fast-tracking the system of disaster allocation in order to reduce the turnaround time so that it got submitted within two weeks.

The compliance issue was a technical incident that had happened. It has been corrected. Payments had been made to affected institutions or parties.

On the matter of under-expenditure, Dr Mogajane said the use of SMMEs in structural development posed a challenge. Some still required incubation in some sectors. Provinces were lacking in technical skills especially in areas like engineering and aquaculture. Engineering was heavily outsourced. All these retarded the implementation of programmes. At micro level, there were gaps between the DoA and Department of Land Affairs.

The meeting was adjour