Agricultural Research Council Strategic Plan 2010/11 – 2014/15 & Perishable Products Export Control Board Budget and Strategic Plan 2010/11

Meeting report

Agricultural Research Council (ARC) Strategic Plan 2010/11-2014/15
Dr Shadrack Moephuli, Chief Executive Officer, Agricultural Research Council told the Committee that the Agricultural Research Council (ARC) had ensured that it always remained within the boundaries of its resource limits. The ARC had looked at the recommendations from the Science, Engineering Technology Institute (SETI) 2006/7 Review, which had highlighted a number of areas for improvement.  These areas included: the improvement of management processes; the strengthening of ARC linkages with external sources of knowledge; the improvement of the quality and relevance of research outputs; a focus on transformation and a reorientation of the research and development agenda for the developmental needs of the poor.  In response to the recommendations, the ARC had restructured its organisation and instituted new management processes; concluded and implemented collaborations with universities and others; diversified the workforce through active recruitments and secured partnerships with Provincial Departments of Agriculture (PDA), State-owned Enterprises (SOEs), and universities.

The ARC was in the process of integrating multi-disciplinary strategic objectives with a research strategy that encompassed approaches that focussed on competitive and comparative advantages (for example the ostrich industry); creating a critical mass on specific focus areas and diversifying capacity building initiatives. Dr Moephuli outlined the human resource and ICT strategic imperatives of the ARC.

With regard to the budget, the Parliamentary Grant had increased by 6% from 2009/10 to 2010/11. The external income that the ARC was likely to generate had only risen by 3% from contracts it had secured. There was a need to improve the internal organisational processes to avoid adverse audit findings. The areas of focus in 2010/11 were audit issues, projecting costing management, cash management, supply chain management, capacity and funding for sustainable growth.

Discussion
Ms M Mabuza (ANC) asked whether the Asset register had been submitted to the Committee.

Mr Craig Mathews, Company Secretary, ARC, said that the Asset Register had been submitted to the previous Chairperson of the Portfolio Committee last year. The Asset Register would be re-sent to the current Chairperson. 

The Chairperson asked Mr Mathews to send the Asset Register to the Committee Secretariat, so that administrative processes were not dependent on a particular person.

Ms Mabuza asked if the Professional Development Programme (PDP) was successful, and why there was talk about a research skills shortage, given that the PDP was started 13 years ago.

Dr Moephuli said that the PDP had contributed immensely towards the diversity in expertise of the staff at the ARC. However, when someone on the PDP qualified, they could remain at the ARC, or were at liberty to find work elsewhere. Not all of those who came out of the PDP were still with the ARC.

Dr Moephuli said that there were currently 223 vacancies throughout the entire ARC, out of a staff complement of 2 500. R78 million was required to fill these vacancies. When the Committee made a resolution in the middle of a financial year, the decision could not be changed because the funds were limited for that particular financial year. The ARC would have to wait for additional funds from the Parliamentary grant.

There was a general scarcity of science and technology skills in the country, and therefore that limited the ability of institutions to recruit the necessary experts. This also meant that recruitment took place from a limited pool. There were agreements with the Agricultural Research Service in the United States, Tokyo, and with the Chinese Academy of Agricultural Science, which facilitated payment of fees at these institutions.

Mr Mohammed Jeenah, Research and Development, ARC, said that the Department of Science and Technology, in its10 year Research and Development plan, was looking at producing 5 000 Doctoral candidates in 10 years time. At the moment South Africa was only producing 1 000 Doctoral candidates per annum and the challenge was to go from 1 000 to 5 000 candidates. The ARC had a target of 150 PhD and Masters students. In 2008/9 100 students had registered.

Mr Michael Netsianda, Human Resources and Support, ARC said that while there was an undertaking to expand the programme, there was also the challenge of retaining students. There were limited resources, but the intension was to continue to broaden the programme.

Ms Mabuza asked if the ARC could provide an explanation regarding the irregular expenditure amounting to R9.2 million, which was related to Supply-Chain management and tender processes.

Mr Gabriel Maluleka, Chief Financial Office, ARC, responded that the total figure of R9.2 million came about due to a lack of clear policy at a certain point in time. When the audit was done for the past financial year, the ARC had implemented a new Supply Chain policy. Auditors who were attending to the audit of transactions that extended to the earlier financial year used this supply-chain policy. The audit was thus not confined only to the year ending March 2009, but was extended to the year before. Most of the transactions that happened a year earlier were not in compliance with the new Supply Chain policy. In terms of the National Treasury regulations, out of R9.2 million, about R800 000 required further investigations.

Ms Mabuza asked the ARC to explain why the Sustainable Livelihoods Programme, which was responsible for identifying challenges, was discontinued, and what projects were planned for 2010/11 to facilitate increased participation by emerging farmers.

Dr Moephuli responded that deliverables and job descriptions were not clear, and provinces were not utilising them. Heads of Departments (HODs) did not need to house people in provincial offices. The ARC tried to incorporate this in new units called Technology Transfer units. It was found much more effective to work with provinces and have agreements with provinces around delivering on specific projects, because they had prioritised areas of focus. This was why the Sustainable Rural Livelihood Programme was discontinued.

Ms Mabuza asked, in the light of climate change and rising input costs, what percentage of the budget was allocated for research on local products and indigenous technology.

Mr L Bosman (DA) asked for clarity regarding the fragmentation of research, specifically with reference to partnerships with institutions. Most institutions were dysfunctional. He asked why the ARC could not take control of the process. He suggested that the ARC investigate this situation to allow for central control around research, as millions of rands were being wasted.

Dr Moephuli said that in regard to the co-ordination of research institutions, the ARC did not have the mandate and power to do that as the ARC. The power currently rested with the government. The ARC simply managed all the institutions inside the ARC, as the campuses of the ARC, and as it was mandated to do in terms of the ARC Act.

Ms N Twala (ANC) asked for clarity on the termination of contracts, noting that approximately 41 people were due to terminate their contracts in 2008/09. She asked ARC to provide the reasons given for the terminations. She asked further what measures the ARC had taken to offset the effect of the retirement of 31 personnel in 2008/09, and if the ARC had managed to replace those staff members.

Mr Netsianda said that almost 25 of the retired positions had been filled, and the ARC had hired people with doctoral degrees. ARC had also adopted a policy around forced retirement appointments. The intention of this was to give the ARC the opportunity to retain most of those people who had retired. Two researchers who had retired had been retained to offer mentoring and also to drive some of the research programmes.

Dr Moephuli said that the ARC did have a staff retention strategy that had been approved by the Board. The strategy encompassed incentives to retain people so that staff were not lost, tried to accommodate those at retirement age to find ways of keeping them at the ARC, and took career development into account, for instance by granting sabbaticals. ARC was attempting to answer the need to keep experienced staff, and in many instances the staff released were those who were retiring. The ARC had not really sacrificed people for the sake of transformation.

Mr Netsianda said, in regard to termination of contracts, that there were various aspects to this issue. Some people had felt that they did not want to renew contracts, and others were engaged in disciplinary processes where there had been misconduct.

Ms Twala said that it had been six years since the ARC programme was introduced into townships. She asked for details and progress on the Agricultural Research for Development Programme, how much revenue the ARC received from the rentals and leasing of its properties, and how was the income from such transactions utilised.

Dr Moephuli said that with regard to Agricultural Research for Development, the ARC had collaborated with the Netherlands and some other universities. The ARC had provided training to a number of scientists, and researchers together with universities. The ARC was funded for four years by the Dutch, but no longer had funds to continue.

The ARC received R250 000 per annum from rentals and leasing, which was used to fund back those facilities and sometimes the funding was used for research for the ARC.

Mr N Du Toit (DA) noted the 223 vacancies and the need for 5 000 doctoral candidates over the next 10 years. He asked if the mandate of the ARC would be influenced negatively if it did not fulfill this requirement. He asked what needed to be given back in terms of international investment agreements. 

Mr Moephuli explained that in relation to the 223 vacancies, the Parliamentary grant had only increased by 6%, and in that 6% the ARC had to accommodate inflation adjustments, as well as vacancies. The ARC tried to strike a balance, in terms of an agreement with organised labour, and the remainder of the amount of money could then be used to fill the vacancies. This should not be the case in an organisation where 60% of the Parliamentary Grant was used for salaries, and 40% was used for paying for operational costs. The ARC was seriously under funded. If the ARC had R300 million it would manage to properly fulfill its mandate. These were the limitations that the organisation faced, but it still managed to ensure that the books were balanced, that it paid suppliers and delivered in terms of what was contained in the Strategic Plan. Implementation of the Business Plan was limited by the amount of resources allocated to the organisation.

Mr Du Toit noted that if 5 000 doctoral candidates were needed over the next 10 years, then it was important to also know what these candidates would be doing. He wanted to see what the focus was in solving these problems.

Dr Jeenah said that there had been a misunderstanding. In 10 years time the country wanted to produce 5 000 PhD candidates per year, not to have graduated 5000 students in 10 years time.

Mr Du Toit asked for clarity regarding what constituted a subsistence farmer and a smaller farmer. He asked if the size of farms was involved as all these matters were linked together.

Dr Moephuli responded that definitions varied according to the size of the farm, and in other instances varied according to the resources available to farmers.

Dr Jeenah said that the definitions from the maize project for nitrogen considered drought-tolerance farmers growing maize on less than 3 hectares of land as being resource poor.

Mr S Abram (ANC) said that he had been with this Portfolio Committee since last year but had never seen an Asset Register, and had been asking for it every year. Having an Asset Register in itself was no longer sufficient, because the facilities of the ARC were deteriorating on a daily basis. He had heard that in the Mpumalanga highveld, part of the ARC’s land was going to mining, but this might be a rumour. There was a need to know the status of those assets.

Mr Abram said that there was a weed which was busy ravaging graze land. This was serious since about 43% of the total agricultural output was contributed to by the livestock industry, and 73% of the land was not suitable for intensive crop production. While he respected the challenges facing the ARC, there was a need for information on this matter. He asked for specific information on livestock illnesses. South Africa was facing the danger that if the livestock situation was not improved there would be major constraints.  Farmers were complaining about the livestock improvement scheme, as it would fall apart if not maintained.

Dr Moephuli acknowledged the importance of livestock, and stated that the ARC was doing research on Malignant Catarrhal fever. He noted that the ARC was still searching for the scientific name for the so-called “Bangkrot Bossie”. 

Mr Abram said that in 1995, certain facilities became part of the ARC, and during the negotiation period it was agreed that certain funds would be ring-fenced for the maintenance of the facilities. He asked what the ARC was doing to ensure that these facilities remained intact and could do the sort of work required. He said that the expertise and experience of ageing researchers should be retained. They should be replaced with skilled people.

Dr Moephuli said that ring-fencing was a serious challenge for the ARC and there was a need to look seriously at the way funding was structured for Foot-and-Mouth disease, the Animal Improvement Scheme and agricultural engineering, to make a proper assessment of the situation. About six or seven years ago, ring-fencing had disappeared, with no added income. The ARC had to manage with limited funding. The Animal Improvement scheme had cost R100 million to run, but the ARC was only getting R30 million over and above other costs. The ARC was trying to charge fees to farmers for participating in the scheme, to generate income. The ARC was also trying to have low fees, with limited and free services for black farmers. This issue had been raised with government several times.

Ms Mabuza said that she agreed with the concerns expressed on the Asset Register.

Ms Mabusa asked whether there was a plan to fill the 223 vacancies.

Ms Mabuza, whilst appreciating the limited capacity at the disposal of ARC, asked what research activities and how many projects the ARC had to ensure the prosperity of the agricultural sector, in terms of food security, indigenous and locally developed species, the development of drought tolerant genes, climate change mitigation and adaptation, appropriate technologies and their transfer to resources and water conservation.

Dr Moephuli used the presentation slides to  illustrate some of the projects in which the ARC was involved. This included the growing of African Leafy vegetables. The ARC was assisting the farmers with this vegetable and the gross annual income was in the region of R200 000. Fruit trees had been planted in a variety of villages in the OR Tambo district, and the fruit was being harvested and sold.  The ARC was working in co-operation with the Independent Development Trust (IDT) in training communities on how to use roof water for gardening. The ARC did a number of projects with the Provincial Department of Agriculture, public entities, universities, and Non Governmental Organisations.  The key issues for the ARC were still drought-management, water usage, and the improvement of the type of crops that it produced.

With regard to climate change, Dr Moephuli responded that the ARC had indicated in the presentation that it had established a number of multi-disciplinary teams to look at a number of different projects. These projects had been consolidated to address the issue of climate change from different angles and with different institutes. The ARC therefore had a theme on climate change and would be able to address the issue. The ARC was working on a number of projects to mitigate climate change.

Perishable Products Export Control Board (PPECB) Strategic Plan 2010-11
Ms Elaine Alexander, Chairperson, Perishable Products Export Control Board, explained the legislative framework in which the Perishable Products Export Control Board (PPECB) operated. The PPECB inspected products for export and then certified them. This gave the country’s products a really good advantage especially within the European Union (EU) because the products tended not to be held up at ports. The one aspect that clients valued was the fact that certification took place and the EU accepted the certification as being in line with its own certification. The PPECB was governed under the Public Finance Management Act (PFMA) and adhered to it in every way possible. In terms of the Perishable Products Export Control Board Act, temperature, cold treatment management, and equipment certification was all certified by the PPECB.

Ms Alexander explained the delivery model of the PPECB and the strategic objectives that governed the operations of the organisation. The most important objective for the PPECB was to support government in developing systems to ensure compliance with South African food safety and quality standards for imported products.

She then took Members through the remainder of the presentation, following the slides (see attached document for full details)

Discussion
Ms Mabuza noted that last year the PPECB had given the Committee a list of laws that it felt required amendment or had to be repealed, but nothing had been done about this. She felt that the Committee had failed the PPECB and that there was a need to put pressure on the Department to look into all the laws that required amendments or needed to be repealed. 

The Chairperson emphasised the role of Parliament in identifying laws that needed to be reviewed. These laws and their shortcomings should be submitted to the Parliamentary Legal Advisory team for review.

Mr Luvuyo Mabombo, Chief Executive Officer, PPECB noted the remarks made by the Chairperson and Ms Mabuza about the fact that the PPECB legislation was out of date. The PPECB Act had been identified for review with the Agricultural Product Standards Act.

Mr Bosman said that there were international standard setting bodies and local standard setting bodies in South Africa. He asked if the standards were in line and who was monitoring them, as there had to be co-ordination between international and local standards. There were more private standards coming into play, and Mr Bosman asked if the PPECB was compelled to monitor and implement those standards and if an extra cost was involved in this process for the PPECB.  He also questioned whether the PPECB thought that private standards had an influence on rising costs for the consumer.

Mr Mabombo said that the government had the authority to negotiate standards. After the government had negotiated standards, the PPECB would implement them in accordance with the responsibility assigned to it by government. The food safety and quality of products of plant origin did meet the requirements for international standards, but the PPECB could not say with confidence that products of plant origin that were traded in local markets met the minimum requirements for export.

Private standards did have an impact on the price of food. Private standards were owned by private standard owners. With regard to the costs for the consumer, the PPECB had set up a project to work on benchmarking standards, and the work on this issue was still in progress. South Africa’s food safety standards were owned by the Department of Agriculture.

Mr Bosman asked for clarity about the issue of opening up new markets internationally, and asked if the PPECB had a role to play in co-operating with the Department of Trade and Industry to minimise the red tape involved when exporting to international countries.

Mr Mabombo said that the PPEBC had associations with international forums. It was a member of the United States Produce Association (USPA). The reason for the membership of the USPA, was that it enabled PPEBC to lobby around the issue of South African citrus produce in the United States of America (US), and eventually try to do away with the cost to South African citrus growers of inspections by the US.

Ms Alexander said that the Department of Trade and Industry was the country’s lead trade negotiator when it came to bilateral trade agreements. The Department of Agriculture was the lead negotiator when it came to access around plants. The process was that after a negotiated agreement that allowed for trade was opened, the Department of Agriculture, dealing with matters like plants and pests, would step in and have to go through a process with the other country. Department of Trade and Industry, as distinct from the simpler process involving, for instance, manufactured goods, would find it difficult to deal with agricultural goods, because of the decisions that would have to be made on whether a market should be open or not.

Mr Du Toit expressed concerned about the 12% table grape fee, which was higher than others. He asked why this was so.

Mr Mabombo responded that the one reason for the high fee was the stagnation in the volumes of table grapes being exported, and the second reason was related to the nature of production of table grapes. With small volumes of grapes, about 60 to 70 people had to be bussed to the Orange River to carry out inspections, and this increased the cost of inspecting grapes

Mr Du Toit said that the PPECB had indicated that targets for employment were out reach at this time. He asked if it would not be easier to achieve these targets if they were put in line with the regions.

Mr Mabombo said that the PPECB used regional Employment Assistance Programme (EAP) figures for the region. For the national (head office) management structures, it used the national EAPs. Therefore it did engage in stratification. 

Ms Mabuza asked the PPECB to report on the projects that failed in Limpopo and Mpumalanga, and whether  these projects were going to be resuscitated. 

Mr Mabombo said that the PPECB was committed to do research on this matter, and had already received the outcome of an analysis from KwaZulu Natal. The PPECB was in partnership with other institutions and had a Memorandum of Understanding in place, which had, as one of the priorities, an analysis of failed land reform projects in 2010 and 2011. This project would be spearheaded by the Land Bank.

Mr Du Toit expressed concern about the quality of water in the country and asked for comment on this issue.

Ms Alexander said that the quality of water in the country was a very serious issue. The reasons for the poor quality of water had to do with rapid urbanisation; the unfortunate failure of the infrastructure in peri-urban areas to deal with sanitation; the ageing of water treatment plants; and industrialisation, which had brought new contaminants into the water. From a fruit perspective or a perishable produce perspective, the PPCEB had done a lot of research on whether this water would cause contamination. The greatest danger lay more with vegetables, because they seemed to take up or absorb contamination. The PPCEB had identified the use of dams as a means of reducing contamination.  The industry had made contributions to the upgrading of water treatment plants. This situation had to be carefully managed and many players had to be brought together to find solutions, because there were many different fragmented initiatives on this matter and no common solution.

The Chairperson asked if there was a global standard setting body.

Ms Alexander said that private standards were set by different bodies, and were not set by bodies that were recognised by the government. They would, for instance, be set by private or bodies of retailers, or by other bodies.

Mr Bosman said that the problem with private standards was that they were actually a brand, which was not scientifically based in all cases, and could take anything into account. They were not always related to the scientific standard of the product. A local South African brand should be promoted, with standards in compliance with international standards. 

Mr Abram asked about the situation of ring-fenced funds in 1995, as mentioned by Dr Moephule. He asked if the case had been recorded, what amounts were involved, and at what point did the current leadership discover that funds were no longer available.

Dr Moephule said that initially letters were sent which outlined the allocations for ring-fenced funds. These letters had subsequently changed. ARC was currently without ring-fenced fund allocations. This matter has been reported to the National Treasury. He hastened to assure Mr Abram that nothing untoward had happened to the money and perhaps it was related to budget-cuts.

Ms Mabuza asked what had happened to the National Research and Development model, and why had this model not been implemented.

Dr Moephule said that the National Research and Development model was implemented by the Department of Agriculture.

The following questions were raised but not directly answered

Ms N Phaliso (ANC) asked how information reached rural areas and what form of media communications were used.

Ms Phaliso said that very little was said about sustainable resource use and range of land.

Ms Phaliso asked if programmes of the ARC were linked to the Department of Water Affairs, who were doing an excellent job, and how different the programmes were, if they were not linked.

Mr Du Toit asked what the focus of the ARC was regarding the research, capacities and vacancies that needed to be filled, and if this was for the benefit of commercial farmers.

The meeting was adjourned.