National Agricultural Marketing Council & Perishable Products Export Control Board Annual Reports 2009/10

Agriculture, Forestry and Fisheries

13 October 2010
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

The Committee was briefed by the National Agricultural Marketing Council (NAMC) and the Perishable Products Exports Control Board (PPECB) on their 2009/10 annual reports.

NAMC indicated that its objective was to increase market access to all participants, and promote the efficiency in the marketing of agricultural products, to optimise export earnings from agricultural products and to enhance the viability of the agricultural sector. Its Markets and Economic Research Centre concentrated on information knowledge management. Its major challenge concerned high food prices, and it was important to address this issue now. He indicated how NAMC would link farmers to markets, and said that it collaborated with the Department of Trade and Industry and mapped value chains. The Statutory Measures division achievements were highlighted, and the challenge was to ensure that the market share of black role-players in the production of agricultural products could increase continuously. NAMC supported 110 emerging producers on various training programmes. Vineyard Development Schemes had been completed in two provinces. The NAMC had spent 99.3% of its total allocation, and had achieved an unqualified audit report, with no matters of emphasis. The budgetary allocations were not adequate, and it was requesting additional funding.

Members congratulated the NAMC on its results, asked about monitoring and mentoring of trained farmers, and the training of women. They also enquired about the role of the NAMC in protecting local industries, and commented that the promotions increased competitiveness of their products. Members queried the large support offered to the Agricultural Research Council ARC, and the Tugela River Project.

The PPECB presented an overview of the strategic objectives, performance highlights and sustainability report. It noted that the PPECB Laboratory broadened its scope of analysis and certifications, whilst the Board had approved a five-year research and development Strategy for Cold Chain Research and Development. Nine small scale farmers had been certified to globally recognised good agricultural practices, while another eight received pre-audits to determine their state of readiness to be certified. It defined sustainability as holistically managing economic, social and environmental risks and opportunities to deliver on PPECB’s short and long term strategies. Internal challenges were identified as lack of support, capacity and communication, external challenges related to resistance from stakeholders and outdated legislation, and cost challenges hindered the PPECB from developing as it would ideally like to do. The PPECB had suffered fraud in the last year, with the loss of R20 000, but the matter had been dealt with internally and the staff member concerned was dismissed. Most of PPECB’s costs were related to employees.

Members were generally happy with the report, but asked for explanations around the impact and extent of fruit, and table grapes, as well as explanations on the financial statements in relation to the building, motor vehicles and furniture. They also queried the impact of a strong rand. Members noted that the disability employment targets were not being met, and urged that specific plans with targets be drawn to address this, as also a report on portfolios and numbers of women employees. Members were concerned, however, with the delay in reviewing policies, noting that this might hamper PPECB.

Meeting report

National Agricultural Marketing Council (NAMC) Annual Report 2009/10
Ms Ntombi Msimang, Chairperson, National Agricultural Marketing Council, presented the report of the Council (NAMC). She noted that the objective of the NAMC was to increase market access to all participants, and promote the efficiency in the marketing of agricultural products. It also optimised export earnings from agricultural products and enhanced the viability of the agricultural sector.

Mr Ronald Ramabulana, Chief Executive Officer, NAMC, said one main focus area of the Markets and Economic Research Centre (MERC)was on Information Knowledge Management. One of the challenges NAMC encountered was high food prices. He said that the time was right to address this challenge. While the prices continued to increase, it was important to have a discussion on this topic. It was important for MERC to link farmers to markets. The Tugela Ferry Vegetable Project and the Eastern Cape red meat project were typical examples. Two other focus areas related to trade, in collaboration with Department of Trade and Industry (dti) and the mapping and understanding of value chains.

Mr Ramabulana highlighted the highlights and challenges of the Statutory Measures Division. These included that more industries applied for statutory measures. There was a challenge around ensuring that the market share of black role-players in the production of agricultural products could increase on a continuous basis. The NAMC supported 110 emerging producers on various training programmes during the 2009/2010 financial year. The NAMC and role players within the wine industry completed the design of the vineyard development scheme in the Northern Cape and Free State.

Ms Sarah Muvhulawa, Chief Financial Officer, NAMC, indicated that the NAMC received a total budget R31,5 million, including funds from sponsors. It had spent 99.3% (R28,1 million) of the allocated amounts. It had also achieved an unqualified audit report, with no matters of emphasis. The main challenge in regard to the budget was that the allocation was not adequate. NAMC therefore requested that it be granted additional funding.

Discussion
Mr N Cebekhulu (IFP) asked why the trained farmers were not monitored and mentored.

Mr D DuToit (DA) complimented the management of the NAMC for running the organisation well. He asked how the three day course with the 32 women had been enabled.

Ms R Nyalungu(ANC) asked where the 32 trained women came from.

Ms M Pilusa-Masoane(ANC) was pleased with the report and said it was very clear. She asked what other requests, other than a budgetary increase, the NAMC might have.

Ms Msimang replied that the 32 trained women were part of the NAMC’s continuous training programme, which was run in conjunction with Stellenbosch University. This training was more about acquiring and sharpening skills. Most farmers know how to farm, but the NAMC helped them to acquire greater skills and knowledge in farming for markets.  Farmers needed the proper infrastructure and resources to deliver for markets. An institution was needed to oversee this work. NAMC itself did not have the capacity to do this, and it would like the marketing review to be finalised.

Ms Nyalungu asked about the impact of climate change.

Mr Ramabulana responded that climate change would continue to have an impact on production and the markets.

Dr L Bosman (DA) agreed with other Members that NAMC should be congratulated on its good financial statements.

Dr Bosman asked for the role of the NAMC on protecting local industries.

The Chairperson said that NAMC appeared, on the face of it, to be doing a great job. He noted that it was undertaking a lot of promotion and thereby improved the competitiveness of its products. His concern related to the huge amount of support for the Agricultural Research Council (ARC).

Mr Ramabulana said that the NAMC had to support the ARC, because the ARC played a vital role in the effectiveness of the NAMC.

Mr Nkosi asked if the project at the Tugela River was for emerging farmers only, and how these emerging farmers could understand that they could produce more.

Mr Ramabulana responded that NAMC was currently looking at both local and international markets. Mr Nkosi was correct about the issues he raised. The NAMC was working with the people in the Tugela region to make them understand they could produce more. The NAMC was also working with Stellenbosch University in setting up a centre for mentorship. Most of the budget of the NAMC was currently spent on training and mentorship. It tried to revive farms and make them work. The role of the NAMC was to protect local industries, but there was very little it could do to protect the market.

Perishable Products Export Control Board (PPECB) Annual Report 2009/10
Mr Louis Vorster, Chairperson, Perishable Products Export Control Board, presented the Committee with an overview of the strategic objectives and the value chain analysis of the Board (PPECB). Its main strategic objective was to enhance the credibility of the South African Export Certificate and support the export competitiveness of the South African Perishable Products industries. By doing so it was possible to strengthen the PPECB’s capacity as a credible source of strategic information for serving industries and stakeholders. The Board also supported Government in ensuring confidence in the quality assurance and food safety systems for local perishable products. It further provided support to Government in building systems to ensure compliance to South African quality and food safety standards for imported perishable products.

Mr Luvuyo Mabombo, Chief Executive Officer, PPECB, presented on the performance highlights, sustainable report, and challenges. He briefly listed that some of the highlights included the hosting of the inaugural international harmonisation workshop, the building of a strategic partnership with the Johannesburg market, and the fact that 261 food safety audits and 116 surveillance audits were conducted. PPECB also noted that these performance highlights related to value added services. The PPECB Laboratory broadened its scope of analysis and certifications. The Board approved a 5 year Research and Development Strategy for Cold Chain Research and Development. Under the heading of training, he noted that nine small scale farmers had been certified to globally recognised Good Agricultural Practices (GAP). A further eight small scale farmers received GAP pre-audits to determine their state of readiness to be certified.

Mr Mabombo defined sustainability as holistically managing economic, social and environmental risks and opportunities, to deliver on PPECB’s short and long term strategies. Sustainability needed visibility, and this was done by communicating and tracking PPECB’s key performance indicators. He noted that it was necessary that operations must be monitored and risks identified. Action must be taken through effective leadership, by executing and managing the proper implementation of the Business Strategic Objectives.

Mr Mabombo then listed some of the challenges. These were internal and external and related to costs. Internally, there was a lack of support, capacity and communication. Externally, PPECB encountered resistance from stakeholders and were faced with the challenge of trying to operate under outdated legislation. Its workforce profile consisted of 39.6% Africans, 31.3% Whites, 24% Coloureds, and 4.8% Indians.

Mr Johan Schwiebus, Chief Financial Officer, PPECB presented the financial report. He informed the Committee about the incident of fraud, noting that it involved R20 000. The issue had already been dealt with internally and the person involved was dismissed. He noted that the major expenditure of PPECB was on employment costs (at 70%) while the rest was related to other activities.

Discussion
Ms C Mabuza (ANC) was very happy with the report. She asked for an explanation on the impact and extent of exports of citrus and other fruit, and table grapes.

The Chairperson asked for the progress on the ban on Thailand on citrus fruit.

Mr Vorster said that in regard to citrus, it was not so much a consideration of the crop results, which could be either up or down, but was more to do with mitigation.

Ms Mabuza said that the issue of container inspection on page 48 of the Annual Report also needed explanation.

Mr Vorster said that PPECB was doing very well on container inspections and it yielded positive effects.

Mr Du Toit congratulated PPECB for doing a great job, saying that he was satisfied with the financial statement. However, he did ask for an explanation on the nature of the building, motor vehicles and furniture.

Mr Schwiebus told the Committee that PPECB owned one motor vehicle, while the rest were on reimbursement trade. He proposed that there was also a need for the IT equipment to be replaced. The laboratory was very expensive, and that was the reason for additional charges. In terms of risk, PPECB also recognised that it would like to have information coming more quickly into its system.

Mr Du Toit asked also what should be done in relation to the strong position of the rand.

Mr Vorster noted that the strong rand made exports difficult, but it was important to ensure that South African farmers could still compete, even though the Rand was strong.

Ms Mabuza asked if PPECB was satisfied with the percentage of people with disabilities in its Employment Equity profile.

Mr Mabombo said that in regard to employment equity, it was still a challenge to get enough employees with disabilities was still a challenge. The working environment and conditions at PPECB were not ideal for disabled people, but this was not an excuse. He understood that companies were expected to have 2% of disabled employees, but noted that PPECB still had a challenge in attaining this target.

Mr Mabombo said PPECB was currently reviewing buildings and offices to accommodate disabled people. He noted that the organisation had started late in trying to meet employment equity targets, but it was making good strides and would eventually reach the 2% target.

The Chairperson said that the Committee was always receiving very broad answers about employment of the disabled. He stressed that PPECB needed a plan to address the issue, setting out goals and targets.

Mr Mabombo said he would set this out in the next presentation.

Ms Mabuza asked for the statistics, and positions, of all women working in PPECB.

The Chairperson was struggling to understand the statutory report and asked for more clarity on harmonisation.

Mr Mabombo said that the statutory report was only one part of the business.

Mr Du Toit asked PPECB how much money it wanted and how it would still spend it.

Mr Mabombo said that the reason for the risk assessment, as set out on Page 57 of the presentation, being stated as 28% was that it was a pure management risk exercise.

Mr Vorster indicated that the two major challenges encountered by farmers were financing and equipment availability.

Ms Mabuza was concerned about NAMC’s delay in reviewing policies, saying that this might hamper the organisation.

Mr  Ramabulana said there was already a review being done internally of the draft internally. This draft would be brought before the Portfolio Committee, but he could not give a date. In response to a further question from Mr S Abram as to when the review had started, it confirmed it had commenced four years ago.

The meeting was adjourned.

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