Agriculture Sector Transformation & Agri BEE Charter progress: Public Hearings

Agriculture, Forestry and Fisheries

16 September 2010
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

Several representative bodies made submissions around transformation in the agricultural sector, and outlined the progress made so far on the AgriBEE Charter. The Department of Agriculture, Forestry and Fisheries (DAFF) highlighted what was being done by the AgriBEE Charter Council and made the point that the statistics and information in this sector were difficult to correlate at present, but that work was ongoing on a new information technology portal. AgriSA said that the main challenges were that government and organised agricultural bodies were working in silos, with no co-operation and little trust. This had tended to polarise agriculture rather than achieve restructuring. Corruption and maladministration were rife, and there were high expectations, but little delivery. It recommended that needs-driven scientific, research-based programmes should be carried out, that contained databases for land reform and Black Economic Empowerment (BEE), inclusive of local forums.

Potatoes SA focused on the challenges and possible solutions for the problems of skills development, socio-economic contribution, and enterprise development. It highlighted that agriculture was not the career of choice for black students, partially attributable to the failure of transformation in this sector. Challenges included poor databases, dearth of specific expertise, shortage of farmers, getting access to irrigated land, problems of security and ownership, access to finance, markets and development opportunities. It identified the need for integrated centres of excellence between industry bodies. The
South African Transvaal Agricultural Union said that the failure of previous projects resulted in people falling into worse poverty. Loss of expertise in other sectors was leading to contamination of water, with consequences for crops, livestock and health. Uncertainty was caused by many farmers leaving South Africa, and this impacted on production and lack of investment. It urged that dedicated and functional research was needed, that practical experience was vital, that mentors should be specifically contracted, security in rural areas must be attended to, and rising food costs and food security must be addressed together, when planning for transformation.

Ms Pletts, an independent consultant, said the past selection criteria for land reform beneficiaries failed to take skills into account. Those teaching agriculture tended to focus on the theoretical since they did not have practical skills themselves. Everyone should be properly skilled and post-settlement support must include mechanisation. Households and communities must also grow their own produce and should be supported and trained to ensure food security. Agricultural Business Chamber identified the major sectoral problems as financing, research and development. It also cited problems with Landbank, lack of strong leadership at the Department, incorrect implementation of legislation and lack of coherence in policy implementation between the DAFF and Department of Trade and Industry. It recommended that government policy, although largely correct, should also focus on the competitiveness of the individual value-chains. Implementation was not being supported, and there were stumbling blocks in trade tariffs and agro-processing. The Chamber also highlighted the need for dedicated research.

The South Agricultural Processors Association submitted that the free market system must be fully supported as it would ensure sufficient food for all South Africans. It urged serious investment in rail infrastructure, to transport grains, and deeper draft in ports to enable import and export by sea. It cited electricity supply and research as vital to the industry. It complained that the trade and tariff policy regime was not being implemented, although it was a powerful tool to ensure food security. No food crops should be used for manufacture of biofuels. The National Agricultural Marketing Council noted the difficulties experienced by emerging producers in integrating into the formal supply chains and entering the export markets, and outlined its programmes. Training was essential, and various trusts were running bursary programmes. The Department of Trade and Industry outlined its role in supporting the agriculture industry, describing a number of incentive schemes. Various export councils were also receiving support.

The Centre for Producer Development outlined the steps it was taking in milk production, and outlined the ventures in the upper, middle and lower tiers, ranging from share milking partnerships to community ownership projects to small scale dairy farming mentorship. The Developing South African Poultry Farmers Association noted that many smaller farmers could not keep up with demands in the frozen poultry product sector, and live sales were not as financially sustainable. About half of all egg sales were done informally, and smaller players struggled to get access to resources, ready markets, technical skills and finance, although land was not a major issue. The Association recommended that the State
could procure services from small farmers to supply caterers at State institutions. The Agricultural Research Council noted that its challenges included lack of funding to scale up pilot projects, lack of partnerships to enhance extension officers’ roles and the status of women and youth. It had an ageing research infrastructure and scientific capacity, with a shortage of scientists, engineers, and researchers. It was focusing on meeting customer and industry needs for competitiveness and sustainable growth, which required pest and disease limitation, quarantine services and climate change research.

Grain SA submitted that the grain industry needed
one united voice, and should focus on empowering individuals to become independent farmers. The production of grain at current prices was not profitable, and small farmers lacked knowledge, access to finance and good machinery. The National Wool Growers’ Association of South Africa noted that it comprised of both commercial and communal farmers, but the wool was combined and sold as one “South African Wool” product. 67% of its budget was spent on communal farming, in order to develop infrastructure, provide training and mentorship, marketing support, resource management, and genetic improvement. Predation was one of the biggest challenges, and although the DAFF had been asked to assist, it had done little, while the Department of Environmental Affairs service delivery needed to be improved.

The Food and Allied Workers’ Union urged the Charter Council to ensure that the final Code must be fully coordinated, and said that ownership equity was a major challenge on which agreement must be found. It suggested that the 50/50 ownership model should be a prerequisite, unless there were compelling reasons to depart from it.  AgriBEE should supplement, but not replace, land reform initiatives. The South African Wine Industry Trust said it was developing a
Wine Charter, which set higher standards than the AgriBEE Charter. Working conditions on farms had not changed much, with short-term labour contracts being preferred, and land reform legislation had not achieved substantial transformation. Black wine farmers were finding it difficult to break into a long-established sector, so there was a need to stimulate partnerships and provide direction to the industry, with shared goals and setting of targets.
The emerging producers in South Africa found it difficult to integrate into the formal supply chain and were finding it difficult to enter the export market.

Members commented that the presentation of the ARC contained nothing new and wanted to know what it was planning to do around the identified problems. SAWIT was asked to comment on the allegations of fraud. The dti was asked to explain why food production was low in rural areas, and Members commented that energies and strategies should be expended on unproductive land. They also stressed that DAFF needed visionary leadership – from the Minister to the lower levels.


Meeting report

Agriculture Sector Transformation & Agri BEE Charter progress: Public Hearings
Department of Agriculture, Forestry and Fisheries (DAFF) submission
Mr Langa Zitha, Director-General, Department of Agriculture, Forestry and Fisheries, noted that an Agri BEE Charter Council (the Council) had been established, which would attend to promoting black economic empowerment in the agricultural sector (AgriBEE). This Council had drafted a detailed work-plan, and had already met six times to discuss and agree on the workplan activities. The Council agreed to migrate the principles in Section 12 into nine Sector Codes for the agricultural sector.

The Council had established three Working Groups which would be
responsible for the alignment of the Section 12 Charter with the final Department of Trade and Industry (dti) Codes. These groups would also check the seven elements of the Generic Scorecard and their allocation of points with the indicative AgriBEE scorecards and would be drawing up a budget for the activities of the Council and investigating and developing a cost-effective monitoring and reporting system on AgriBEE implementation. The Council agreed to commission a study to review thresholds for Exempted Micro Enterprises (EMEs) and Qualifying Small Enterprises (QSEs). The Council further made a commitment to complete a Draft Sector Code by the next Council Meeting and agreed to gazette it parallel to the study. The Council also completed the alignment of the AgriBEE Scorecard, and the development of an AgriBEE Information Technology (IT) portal was in progress.

Mr Zitha said that
reporting on the transformation of the sector was a difficult task under the current Section 12 Charter. It was unable to give statistics on scorecard targets and indicators, other than on the basic information contained in the BEE Portal of the dti. Statistics and information on AgriBEE were not available and coordinated. However, as a way-forward, the Council resolved that it would facilitate the gazetting of AgriBEE Sector Codes, and facilitate the signing off of the Section 9 Code by the key agricultural stakeholders and reporting by all agricultural stakeholders who fell under the scope of the AgriBEE Charter It would also draft a Comprehensive Report to the Minister and the Advisory Council.

AgriSA submission

Mr Theo de Jager, Deputy President, AgriSA, stated that this body followed two approaches in regard to transformation. The formal process was State-led and funded while an informal process was also followed, comprising private initiatives. The formal process had a 90% failure rate. Community farming was not working properly. There was no involvement of Farmers’ Associations, even on recapitalisation. Initiatives taken by the informal process included a Farmer Development Conference in Somerset West held in February 2010. This had resolved to contribute R200 million over a five-year period to establish equity schemes in Western Cape, Northern Cape, and Eastern Cape, and to create 73 commodity driven projects. Local farmers and training institutions would be involved in Agri-Business initiatives that would be undertaken.

The main challenges noted were that the government and organised agricultural bodies were working in silos, no co-operation existed between these entities, and they did not trust each other. The tendency was not to restructure agriculture, but to polarise it. Corruption and maladministration were rife, and there were high expectations, but little delivery.

AgriSA recommended that there should be scientific, research-based programmes that were needs driven and that should contain databases for land reform and Black Economic Empowerment (BEE). Reform should be localised and should be inclusive of local forums.

Potatoes South Africa (PSA) submission
Mr Mark du Plessis, Chief Executive Officer, Potatoes SA, focused his presentation on three areas, being the challenges and solutions on skills development, socio-economic contribution, and enterprise development. In regard to skills development, he noted a lack of passion for agriculture in black students, saying that for this category, agriculture was not a career of choice. Failures in transformation also mitigated against this industry not being more attractive. Potatoes SA had designed a two-pronged approach to develop young and current talent. Sixteen learners were funded in undergraduate programmes, fifteen were in internships and workplace experience, and ten were placed in postgraduate programmes. Career paths were matched with learning paths.

Challenges were identified as the poor database on subsistence farmers and communal gardens, food security and poverty in rural areas, and dearth of potato-specific technical expertise. Potatoes SA had established a base for practical skills development and technology transfer in rural areas, and for small commercial farmers. It had developed a potato-training course for extension officers and had partnered with the Department of Agriculture in KwaZulu-Natal for dedicated extension officers for projects.

Further challenges pertaining specifically to enterprise development related to availability of human capital, access to irrigated land, problems around security and ownership, access to finance for infrastructure and production, market access and development, and availability of technical support and mentorship. To address these challenges, the Potatoes SA Board had made a commitment to establish at least six sustainable small commercial black potato growers per year, to subsidise potato seed for these projects, and to create access to finance for the new growers. It would also be involved in the mechanisation of small projects and would focus hugely on technical support footprint to mitigate production risk. However, in order to achieve this, it needed access to a broader range of more accurate data about available resources, access to land, water and finance, farmer and market development, partnerships, and an integrated centre of excellence between industry bodies for generic transformation objectives.

South African Transvaal Agricultural Union (SA TAU) submission
Mr Bennie van Zyl, General Manager, South African Transvaal Agricultural Union, emphasised that the creation of job opportunities, development of rural communities for food security, sustaining natural resources, and development of the infrastructure were all typical objectives which could not be achieved by farmers alone. He argued that other transformational issues had detrimentally affected the industry. The Department of Agriculture Forestry and Fisheries (DAFF or the Department) had admitted that 90% of its projects on land transferred under the provisions for restitution had become unproductive. The net result of this was that people, through no fault of their own, were increasingly becoming the victims of poverty traps.

He noted that loss of expertise in other sectors was also resulting in the increasing contamination of water resources, and crops and livestock were now being exposed to water polluted by chemicals, heavy metals and sewerage. This would inevitably affect the safety of food, resulting in associated health related problems with extremely detrimental effects on the populace, as well as the ability of the State to provide health services. The apparent eagerness to export South African farmers to other countries on the Continent was causing uncertainties, which not only impacted on production and productivity, but which increased the reluctance to invest in agriculture. There was a crucial need for dedicated and functional research in the agricultural sector.

He also said that safety and security situation in rural areas had deteriorated to such an extent that the relationship between farmers and the South African Police Service was at an all time low. One argument stated that agriculture was subjected to the very same economic forces applicable to the rest of the national economy. However, this did not take into account that the raising of crops and livestock was totally dependent on unpredictable natural elements determined by weather patterns and the quality of soil. The ability to ensure economic sustainability under such circumstances was developed over time, and could not be mastered by theoretical knowledge alone.

South African Transvaal Agricultural Union suggested that transformation should be approached taking into account all critical factors, to ensure general well-being. Those who could and were willing to act as mentors should be contracted specifically. This was to be considered as a stand-alone function. Rising food costs required a reassessment of policy to enable South Africa to become self-sufficient in feeding its own populace, whilst also maintaining its influence in the region and competing effectively with other countries.

Susan Pletts submission
Susan Pletts, an independent consultant in agriculture, stated that farming must be seen as a business. Land allocation policy had focused on resettling and settling of previously disadvantaged and displaced people. No needs-analysis had been conducted, and the selection criteria for these beneficiaries failed to take into account their business skills, which resulted in the failure of most of these beneficiary projects. In order to guarantee transformation within the agricultural and land sector, the person who was to be given access to land must be equipped to be successful at farming.

The challenges in training emergent farmers, from subsistence level to large land project owners, were consistent. Literacy levels were a major challenge as course participants ranged from being totally illiterate to semi-literate, with a very small minority being reasonably literate. New farmers could never triumph whilst they operated within the current constraints. Education required constant reinforcement, not only through processing of information in theory, but also constant practice. The main problem was that technicians and agricultural college graduates were teaching agriculture, but had never been in that business themselves.

Ms Pletts suggested that food security must be achieved through households and communities growing their own produce. Every person involved in agriculture needed to be skilled. If there was going to be no distinction in household access to land, these beneficiaries should also be vibrantly supported and trained.

She recommended that agricultural land should be given to screened applicants who demonstrated the required skills and passion for working the land as a business. This would engineer transformation within the sector. To secure food production, post settlement support should include mechanisation. The AgriBEE Charter and the pending Agriculture and Land Green Paper would do nothing towards improving the situation unless appropriate screening was done and skills were transferred.

Agricultural Business Chamber (ABC) Presentation
Mr John Purchase, Chief Executive Officer, Agricultural Business Chamber, highlighted that South Africa had a highly diversified agro-food industry, ranging through all the major grains, sugar, citrus, wine, and most vegetables. It must be emphasised that South Africa generally had amongst the most affordable, safe and nutritious food in the whole world, which was a major positive asset. However, it was recognised that South Africa was suffering from underdevelopment and poverty in many marginalised rural areas, and that a lack of household food security was a problem due to insufficient disposable income and lack of skills, finance and market access to participate competitively in the mainstream agro-food industry.

South Africa’s strong rural and developing agriculture focus was in some sense in contradiction to the economic trend. The ABC believed that, in general, the current government policy on agriculture was correct, but that there was lack of effective government support for agriculture and implementation of agricultural policy. The incoherence of policy implementation between the Department of Trade and Industry (dti) and DAFF on the issues of agro-processing and trade tariffs remained a stumbling block. The policy approach was also too narrow, being mainly production oriented, and insufficiently focused on ensuring the competitiveness of the individual value chains.

ABC said that two critical issues in the broader agro-food industry were financing, and research and development. The principal supporting institutions were the Landbank and the Agricultural Research Council (ARC). Landbank, the principal developing finance institution in agriculture, had been dogged by major governance problems that had diminished its role in agriculture. Financing, especially development finance, for the agro-food industry was a critical issue. The private sector, and in particular the multinationals such as Monsanto, PHI, and Syngenta, have now surpassed the ARC as the principal providers of new research technology to industry. The ARC had lost human resources capacity over the past ten years, and its funding by government had also come under severe pressure. The Department had also suffered from leadership problems over the past few years, with many changes of administrative heads and incessant restructuring.  There were also problems with the implementation of certain legislation. However, there was some progress which could be built upon.

South African Agricultural Processors Association (SAAPA) Presentation
Mr Jannie de Villiers, Executive Director, South African Agricultural Processors Association, submitted that in order to maintain food security in South Africa, the free market mechanism system must be supported, as it was the most credible system to ensure enough food for all South Africans.

The Association (SAAPA) also recommended that serious investment was needed in rail infrastructure, pointing out that in the 1980s, 85% of all grains were transported by rail and the processing sector had been developed for rail intake. Most new bulk carrier ships were being built larger, which then necessitated a deeper draft in the ports of South Africa to ensure that it could participate in imports and exports of soft and hard commodities.

Government spending on research in agriculture had decreased in the past ten years, and, especially given the impact of climate change, this must again increase to maintain the current levels of production. The continuous supply of electricity to the processing plants of the country remained essential for food security.

An analysis of the white maize crop estimates over the last fourteen seasons had shown underestimates for thirteen crops, leading to higher maize prices to consumers. SAAPA recommended that the producer independent crop estimate system be maintained, and that only scientific inputs be used for estimates.

SAAPA noted that although DAFF had approved a new trade and tariff policy regime, it was not being implemented because the major implementation body reported to the dti. The trade and tariff policy was a very powerful policy tool to enhance food security.

SAAPA further recommended that no food crops should be used for the manufacturing of biofuels. The speculation on the Johannesburg Securities Exchange should be limited, where it affected food. South Africa should strive to become the preferred food aid supplier to the World Food Programme especially in the African region.

SAAPA called on government to continue its fight against collusion and to increase competition to drive prices down, in support of a healthy free market.

National Agricultural Marketing Council (NAMC) submission
Ms Ntombi Msimang, Chairperson, National Agricultural Marketing Council, explained that emerging producers in South Africa were finding it difficult to integrate into the formal supply chains and to enter the export markets. This was mainly due to a lack of marketing infrastructure, lack of market knowledge, lack of volumes, and limited understanding of the highly sophisticated export environment. NAMC had thus developed programmes that supported these emerging producers in their endeavours to supply markets.

She outlined the initiatives, all of which encouraged beneficial participation of emerging and developing farmers in formal and informal markets and encouraging their integration into the commercial mainstream. The Red Meat Development Scheme, the Grain Development Scheme and the Grape Development Scheme were described, and their location of each was indicated. There were business partners in each.

Training was identified as one of the factors that contributed to lack of access to markets by the emerging sector. NAMC facilitated a number of training programmes in order to capacitate black producers to operate their businesses successfully. NAMC also engaged with the Trusts leadership to discuss issues around statutory measures, with specific focus on agricultural transformation. All the Trusts were running a bursary programme that supported a large number of black post-graduate students. The Meat Trust was currently funding 12 PhD students, while the citrus trust was funding 54 students. Other trusts were assisting students to find internship and workplace experience placements.

Department of Trade and Industry (dti) submission
Mr Stephen Hanival, Chief Director: AgroProcessing, dti, outlined the role of the dti in supporting the development of a strong and vibrant agriculture industry, and described a number of incentive schemes. The Enterprise Investment Programme was accessible to local and foreign owned entities investing in South Africa. Its objective was to stimulate investment in manufacturing. It focused primarily on production, processing and preservation of meat, fish, fruit, vegetables, oils, and fats, but also gave attention to manufacturing of grain mill and dairy products. The Cooperative Incentive Scheme promoted cooperatives, by providing a matching grant, and assisted cooperatives to acquire what they needed for start-up, and increased their viability and competitiveness by lowering the cost of doing business. The priority sectors were manufacturing, retail, service, and agriculture. The Export Marketing and Investment Assistance partially compensated exporters for costs incurred in developing export markets and recruiting new foreign direct investment (FDI) into South Africa, as well as matching grants for primary export marketing research to develop new export markets. The Sector Specific Assistance Scheme was a cost-sharing grant scheme to non-profit business organisations, for collective sectoral development. It targeted Agro-processing, chemical allied Industries, electronic industries, textile and clothing, metals and allied industries, creative industries, and motor industry components, amongst others.

Mr Hanival set out the various Export Councils that were getting support from dti, which included the
Farmed Abalone Export Council (FAEC), South African Flower Export Council (ASSO Flowers), South African Ostrich Business Chamber (SAOBC), Wines of South Africa (WOSA), Fresh Produce Exporters’ Forum/Fruit SA, South African Fruit & Vegetable Canners’ Export Council, Meat Exporters of South Africa and the South African Dairy Foundation

Centre for Producer Development (Cendel) submission
Mr Nico Schutte, Chief Executive Officer, Centre for Producer Development Milk Producers Organisation (Cendel), told the Committee that transformation in the milk producers’ sector was taking place at three tiers. In the upper tier, various joint ventures in the Eastern Cape were operating very successfully. The landowners were previously disadvantaged individuals, and their cows and initial management were provided by commercial farmers on a 50/50 equity basis. He outlined the joint ventures that were in operation. Funding had been sourced. Amadlelo Agri (Pty) Ltd involved a number of commercial dairy farmers in KwaZulu-Natal and the Eastern Cape, who had invested funds into an investment company that also included Landbank. The Grassland Development Trust and Grassland Agriculture were operating a unique share milking partnership.

In the middle tier, some emerging farmers had advanced to milking more than 100 cows, and had become independent after they were mentored. Jackalskraal Trust, near Plettenberg Bay, was a project owned by the coloured community of Kranskop, which was successfully milking 230 cows. It had also benefited from mentorship, and was part of the local study group and a going concern. At Elim, Western Cape, a dairy had been established through grants from the Provincial Department of Agriculture, which should become profitable when a greater number of cows were in production off pasture.

In the lower tier, there was demand for mentorship in the small-scale dairy-farming sector. The Milk Producers’ Organisation (MPO) and its affiliate, Cendel, had coordinated a mentorship relationship between established and previously disadvantaged dairy farmers. From 2007 to 2009, Cendel participated in DAFF’s Pilot Master Mentors Programme, and 198 individuals benefited from mentorship in 13 dairy projects. This Master Mentors Programme was aligned to the provinces, but had been slow and some activities were abandoned through lack of funding, whilst for other the Agricultural Sector Education and Training Authority provided funding. Cendel had a dedicated team of dairy experts to provide mentorship and in-service training to previously disadvantaged farmers, and would provide a range of services from feed cost analyses, through animal health, and financial planning. There was a need to continue engaging new entrepreneurs in dairy farming in all three tiers of milk production.

Developing Poultry Farmers Association (SAPA) submission
Mr Moses Modise, Chief Executive Officer, South African Poultry Farmers Association, noted that the chicken business was retail driven, and provided food to South African urban areas (about two-thirds of the country. The Living Standard Measure (LSM) had calculated that those in lower income categories spent about 70% of their income on food. Frozen products were dominating the poultry industry, with about 52 to 104 deliveries per week being demanded. This effectively excluded the smaller farmers. The live sales were not as financially sustainable as frozen sales. In regard to egg sales, more than half of all egg sales were done informally, and because there were no complex cold-chain requirements, this was better suited to the developmental State dynamics. However, the growth of this sector was limited by consumer habits.

In this sector, the
small scale players were still struggling to get access to resources, ready markets and technical skills, as well as to obtain finance, largely because of the poor financial performance, historically, of small businesses. Land was not usually a limiting factor in this sector. However, small producers needed long term support. South Africa was not an agrarian society, although so many people had been dispossessed. In the short term, poverty alleviation could be boosted by poultry and other agricultural interventions. He stressed that poverty alleviation was not agriculture, but agriculture was one business tool that could fight poverty. He recommended that the State could procure services from small farmers to supply caterers at State institutions like hospitals, the army, police and correctional service sectors, as well as small quantities to central warehouses.

Agricultural Research Council (ARC) Presentation

Ms Anathi Canca, Executive Director, Agricultural Research Council, said that the Council (ARC) was experiencing many challenges that impacted on its mandate to carry out its duties. These challenges centred around the non-availability of funds to scale up pilot projects, lack of appropriate partnerships to improve the role played by extension officers, and the status of women and youth. In addition, ARC had an ageing research infrastructure and scientific capacity, with a shortage of scientists, engineers, and researchers.

ARC had managed to make interventions in a number of areas, including distressed land reform farms, the Comprehensive Rural Development Programme (CRDP), and capacity building and entrepreneurship.

Its research and development focused on meeting customer and industry needs for competitiveness and sustainable growth through knowledge generation. This would involve mitigating risks from pests and diseases. There was also a need to improve on quarantine services and climate change research. Technical support would be given to small producers for market access. Agricultural production would focus on new technologies and agricultural practices, and agronomy, including training on entomology, soil health and horticulture. Training in harvest technologies would focus on harvesting, packaging, transport and storage. Development and training in skills had to focus on scientific, technical and agricultural skills. Bursaries were provided from undergraduate up to post-doctoral level.

Grain SA submission
Dr Kobus Laubscher, Chief Executive Officer, Grain SA, elaborated that the grain industry needed
one common and united voice. Agriculture remained the cornerstone of many economies, particularly the developing economies, and rural prosperity was reducing the pressure on urban resources. If 30% of the land was to be in the hands of black farmers, then black farmers should produce 30% of the agricultural produce.

He set out the various o
rganisations involved in farmer development (see attached presentation). He noted that the budget for grain production had grown from R2 million to R16 million per year over the past five years, with a total of R66 million spent in the industry. There had been a growth in personnel from five to thirty two people over that time. Development was about people, and therefore the focus was on empowering individuals to become independent farmers, building on their existing foundations, and this message must be sent at many levels.

Challenges experienced by farmers included the low profitability of grain production, lack of knowledge, skills and experience, lack of production finance, and poor condition of tractors, implements and infrastructure. He pointed out that there were 156 farmers were capable of planting 23 575 hectares of summer crops now, but the production of grain at the current prices was not profitable, which meant that many would not plant at all.

National Wool Growers’ Association of South Africa (NWGA) submission
Mr Petrus De Wet, President, National Wool Growers’ Association of South Africa, said that this organisation (NWGA) comprised 10 000 members, of whom 5 500 were commercial farmers and 4 500 were communal farmers. It was bringing R2 billion into the Gross Domestic Product (GDP) of Agriculture through wool exports. R20 million of the budget was allocated towards transformation. The organisation was fully demographically integrated, with commercial and communal farmers from South Africa and Lesotho selling their products as “South African wool” through one sale.

67% of the NWGA budget was spent on communal farming, in order to develop i
nfrastructure, provide training and mentorship, marketing support, resource management, and genetic improvement. One of its projects was done in partnership with the Eastern Cape Provincial Department of Agriculture, breeding and distributing rams across the Eastern Cape.

NWGA tabled the results of some independent studies on the effect of sheep farming from 2004 to 2009, showing around 20% improvement in the financial status and living conditions of those farmers. Predation was the biggest challenge, which was threatening food and fibre security. There had been calls on the DAFF to intervene without success, and the Department of Environmental Affairs had passed legislation, but it was not being properly implemented, nor was service delivery up to par.

Food and Allied Workers’ Union (FAWU) submission
Mr Abraham Daniels, Provincial Educator and Organiser, Food and Allied Workers’ Union, submitted that the Charter Council should ensure that the ultimate Section 9 Sector Code must be fully coordinated, with an adequate reflection of all pillars and scorecard aspects. The most contentious issues were always substantive rather than procedural in nature. There seemed still to be some seriously contentious issues during the engagement on the Code.

Ownership equity was a challenge, and the Union (FAWU) said there was a need to find agreement. The current debate concerned whether to draw a threshold line to exempt some farms from being bound by the Sector Code. FAWU suggested that the 50/50 ownership model should be a prerequisite, as a way of advancing farm worker equity ownership interest, unless some compelling reasons were making this proposition untenable.

FAWU said that AgriBEE should be seen as supplementing, but not replacing, the Land Reform initiatives. One aspect of land reform had to do with ensuring security of tenure for farm dwellers, including human rights issues such as access to graves or burial sites, and access to grazing land. These obligations should be enforced over and above the AgriBEE-inspired transformation component.

FAWU concluded that the Section 9 engagement process and Code were an imperative expected by society from the agricultural sector.

South African Wine Industry Trust (SAWIT) submission
Ms Sharron Marco-Thyse, Chairperson, South African Wine Industry Trust, told the Committee that this organisation (SAWIT) had facilitated a major broad based BEE deal with KWV. SAWIT was also in the process of developing a Wine Charter, which set higher standards than the AgriBEE Charter, and was committed to and would implement the AgriBEE Charter objectives.

She outlined what SAWIT had done between 2003 and 2009, including support to
BEE wineries, grants to numerous community initiatives and organisations, providing education and training for black leadership and technical skills, and assisting with marketing and export promotion of black wineries.

Working conditions on farms had not changed much, with job shedding and short-term contract labour being prevalent. The land reform legislation had not achieved the changes expected, with less than 8% of the 2014 targets having been reached to date. At present, both the business and land ownership of the wine-industry was mostly white controlled. There were very few successful commercial black wine farmers. The global recession had also had an effect on transformation. It was very difficult for emerging wine farmers to break into a wine-making legacy of 350-plus years, and many white farmers were not willing to open their doors to black entrepreneurs. The growing rural population was poor, low-skilled, and under-resourced.

SAWIT was planning to design a monitoring tool for implementation of and compliance with the Wine Charter guidelines and called for the establishment of the Wine Charter Council. It advocated an increase in resource flow from urban to rural areas. The major c
hallenges to the transformation of the wine industry lay in monitoring of key priorities, stimulating partnerships to facilitate change and transformation, and reflecting the impacts and challenges. SAWIT would look into providing strategic direction to the industry and assisting it to identify the actions necessary to facilitate its transformation agenda. It would also create shared goals, supported by the setting of clear targets for the industry.

Discussion
DAFF and dti submissions
Mr N du Toit (DA) commented that the agriculture fraternity should be putting its thinking and strategies into areas that were less developed. That meant concentrating on unproductive land in order to develop it. He also noted that the agricultural sector policies needed to be rethought. They were too liberalised. The agricultural sector needed visionary leadership from the Minister right down to those at the lower levels.

Ms M Mabuza (ANC) remarked that millions of people were vulnerable to food security, and suggested that the government should use the mealies that were in abundance to feed the 14 million people who were starving.

Mr S Abram (ANC) stated that the dti input pointed out economic opportunities that existed in agriculture, and those opportunities should be being exploited. However, he thought that South Africa was doing many things in an incorrect way.  He wanted to know what the DAFF was doing to support and grow the agricultural sector. He pointed out that South Africa was importing beef, despite having its own cattle. He also suggested that the agricultural producers should tell the Committee of what interventions they would like the Committee to make, in order to help them do their work better.

A senior DAFF official stated that a tariff policy was in place. It simply needed to be implemented. Section 12 of the AgriBEE Charter was going to be gazetted, following the suggestions of the Charter Council. It would be finalised in December when the Council next met. He suggested that DAFF could report on progress early in 2011.

Ms M Pilusa-Mosoane remarked that she had heard many excuses from DAFF, and reminded it that the Committee had the right to call the Department in to report on progress at any time, and should not have to wait until next year.

The Chairperson told DAFF it would be called in to report to the Committee in November, not next year, as it still had enough time to prepare for the finalisation of Section 12.

Mr L Gaehler (UDM) asked the dti why food production in rural areas was very low, saying that it seemed that no support was given or research was done in those areas. He also asked why organic produce was being imported, and why there were more imports than exports.

Mr Hanival replied that in the past biofuels were imported from the former homelands. Dti had a task team, working with South African Revenue Services to monitor imports of all sensitive products. New standards would be passed on low value products entering the country. The development of organic standards was pending, since dti saw value in this aspect.

ARC and SAWIT Presentation
Ms Pilusa-Mosoane remarked that the input from the ARC was not new. She wanted to know if the ARC had partnerships with other government departments for funding.

Ms Anathi Canca replied that the ARC had partnerships with other government departments. The ARC had received R2 million from the Department of Science and Technology for the creation of about 160 job projects. Furthermore the ARC was working on a draft Memorandum of Understanding (MOU) with the Department of Correctional Services, so that the correctional service centres could, wherever possible, produce their own food, and also train offenders in the process.

Ms D Carter (COPE) commented that some organisations were not making farming worthwhile. The Committee was aware of many of the points that ARC presented.  It was time to implement, not still to present plans.

Ms M Mabuza said that she did not think that the ARC was completely open with the Committee. The Committee had discovered that the ARC research station was collapsing, but if the ARC did not present its problems upfront, the Committee could not support further funding for it.

Mr Gaehler remarked that ARC had not proferred any solutions. He noted that many problems were identified, and many agriculture graduates were unemployed, and asked what the plans of ARC were.

Ms Canca elaborated that since 1996 the ARC had absorbed 161 previously disadvantaged students, of whom 20 were PhD students, 83 were Masters students, and the rest were Honours and undergraduate students. The ARC had further received accreditation from AgriSETA as the training institution for the agricultural sector. 12 courses were accredited already.

Mr Abram wanted clarity on allegations of fraud within SAWIT.

Ms Marco-Thyse explained that a loan of R126 million was committed to, with the Industrial Development Corporation, to conclude a deal that was completed in 2004. Mr Charles Erasmus was appointed immediately, as the President of SAWIT, in order to fast-track the repayment of that loan. However, this was a long term loan.

She also noted that partnerships had been concluded with the Universities of Cape Town and Western Cape to train students in scarce skills.

The meeting was adjourned.


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