Grain South Africa , Specialised Oil Extraction and Umvithi Youth Development Consultants briefings on their initiatives

Rural Development and Land Reform

25 January 2011
Chairperson: Mr P Sizani (ANC)
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Meeting Summary

The Committee was briefed by Grain South Africa (GSA) on their Farmer Development Programme (FDP) which sought to capacitate emerging farmers and turn them into commercial farmers. GSA did this by providing technical, educational and financial support. GSA was committed to assisting emerging farmers in any way they could, but was limited by funding. It therefore looked forward to unlocking more funds from the Department of Rural Development and Land Reform (DRDLR). It outlined its work and the fact that it would encourage assistance to cooperatives but that it was not convinced that making machinery available on a shared basis was necessarily the best solution. It stressed throughout the presentation its willingness to assist by any means that it could.

Members raised questions concerning the role of the Land Bank, and how its interest arrangements worked, and also asked how GSA identified farmers for training, how many study groups had been formed and how those needing assistance were targeted. Members questioned whether funding was likely to be given mostly to farmers who adjoined commercial farms, but GSA stressed that it tried to target those who were commercially inclined for further business, but would assist anyone. Members also asked how GSA identified farmers for training. Members noted that GSA worked with other commodity organisations where it could, and asked about the cooperation with other departments, and took note of the plea by GSA for more assistance from the Department of Rural Development and Land Reform in order to offer a more comprehensive service in conjunction with the other commodity organisations. Questions were raised around the provision of tractor to communities versus individuals, and whether GSA agreed with the Department’s approach to providing tractors to communities. Further questions related to stock-piled grain and the Committee stressed the responsibility of government to ensure food security. Two of the farmers in the areas assisted by GSA briefly outlined their concerns.

Specialised Oil Extraction (SOE) briefed the Committee on a business plan that this entity had developed to take advantage of naturally growing fruit trees in the Vhembe District of Limpopo. It had identified large numbers of avocado trees in communities that were bearing the type of fruit that was not commercially viable, although the trees could be used to graft commercially desirable cultivars. SOE had trained communities in doing this. Its pilot project had met with overwhelming success. This venture would focus on community co-operatives, who would utilise these untapped resources in order to gain an additional income of approximately R1 700. The project would eventually need factories and pack-house to deal with the level of produce. The project would create jobs for the community and turn the region into a fruit product hub. The project would need government funding for four years, after which it would be able to turn a profit. SOE had met with government in Limpopo and was warmly received, and now awaited an official response. Members were very excited about the project and asked how many jobs this was likely to create, and noted that whilst the initial jobs would be concentrated on the actual grafting, there were spin-off industries that would result. Members asked about whether government had agreed to get involved and SOE replied that it was confident that this would happen. Members also asked how many factories were likely to be developed in Limpopo, asked about the funding, and the possibility of including marula trees in the projects.

Umvithi Youth Development Consultants (UYDC) briefed the Committee on their work developing initiatives for rural youth development and stated that the name change from the Department of Land Affairs to the Department of Rural Development and Land Reform provided an avenue for focusing on rural development and had presented many opportunities for development. It outlined its contribution towards comment on the Rural Development and Land Reform General Amendment Bill and stressed its support for and studies into development of the rural youth. Although Members had no time for questions, they appreciated the input and would take the issues forward to the necessary government structures in order to further UYDC goals of rural development.
The minutes of 17 August 2010, 03 November 2010 and 19 January 2011 were adopted without any amendments. The Draft Study Tour to Malawi Report would be considered at the next meeting.

Meeting report

Farmer Development Programme (FDP): Grain South Africa (GSA) briefing
Dr Kobus Laubscher, Chief Executive Officer, Grain South Africa, said that the aim of the Farmer Development Programme (FDP) was to develop and capacitate black commercial farmers. Grain South Africa (GSA) was willing to assist government in ensuring that more black commercial farmers became successful. GSA had a comprehensive plan to assist these farmers, having identified shortfalls within government structures that were supposed to assist these farmers. There was a need to fast track delivery as agriculture did not wait for government structures.

Mrs Jane McPherson, Manager: Farming Development, GSA, added that the FDP was also funded by the Grain Trusts. There was need for a common and united voice in agriculture in order to have food security. Agriculture was the cornerstone of many developing economies and was an important rural employer. The FDP was specifically funded by the Maize Trust, Oil and Protein Seeds development Trust, Sorghum Trust, Winter Cereals Trust Wheat, Winter Cereals Trust Barley and South African Breweries Maltings (Taung). The budget had grown from R2 million to R16 million over the past five years. Personnel had also grown from five to 32 over the same period. Development was about people and the focus of the FDP was on empowering individuals to become independent farmers. GSA started by finding people at local level, and building on existing foundations, The FDP incorporated study groups, demonstration trials, farmer days, the Farmer of the Year Competition, advanced farmer support, training courses and radio broadcasts. The crux of the FDP’s approach was that its development strategy looked at what farmers had already and tried to take them forward from that point.

Problems facing emerging farmers included the low profitability of grain, lack of skills and expertise, production finance, poor condition of equipment and infrastructure. GSA was seeking a partnership with the Department of Rural Development and Land Reform (DRDLR), which involved grants for Land Reform Beneficiaries and financial guarantees for private and communal farmers. GSA was currently awaiting the Memorandum of Understanding (MOU) with the Department. If it could unlock funding from the Department it could help emerging farmers more.

The Chairperson felt that several issues needed to be clarified. GSA had indicated a new programme by the Land Bank, and he asked for more elaboration on. He added that GSA had mentioned that there were no grain silos in the Eastern Cape but that in his experience they were in several places, specifically in East London Harbour and near Cradock. He also said that in the context of the MOU, GSA had raised the issue of abolishing the post-settlement 25% grant.

Ms McPherson replied that the Land Bank made bulk loans to the industry. It gave loans to co-operatives at 0% interest, which the co-operatives could then give to farmers. The Land Bank and the co-operative each carried 50% if the risk, which meant that agribusinesses now had no excuse not to lend. She said that in commercial areas in the Eastern Cape there were grain silos every 25 kilometres, but that in deep rural areas such as Bizana and Lusikisiki silos were far from farms. There was also a problem for deep rural areas around grain dryers. With regards to the post-settlement grant, she clarified that this was based on 25% of the value of the land, and in some cases this was way too much and in other it was too little. It was now not being calculated using 25% of purchase price.

Ms L Mazibuko (DA) asked how GSA identified farmers for training under the FDP. She asked whether other commodity organisations also had development programmes in place and whether there was synergy amongst these organisations.

Ms McPherson replied that GSA worked on a voluntary basis to identify farmers. It had seven offices spread across all provinces except Limpopo. GSA went to communities and the Department and offered help. It formed study groups in many communities and currently had 120. No-one was too big or small for assistance. Out of these people GSA then targeted those that were commercially inclined for further assistance. The FDP was limited by its funding. In Limpopo the funders had said that they wanted to see a focus on funding the commercialisation of farming. GSA worked with other commodity organisations where it could, but it was limited to grain. It hoped that with the Department’s help it could offer a more comprehensive service in conjunction with the other commodity organisations.

Ms P Ngwenya-Mabila (ANC) said it was clear what GSA was doing, but asked whether the Farmer of the Year competition that it had mentioned was the same as the one the Department ran or if they were separate. She said there was Department programme to encourage people to till and asked how GSA would integrate that into instances where people lacked the equipment to do so.

Ms McPherson replied that the GSA competition was separate and the winner was selected from that programme. GSA was working with 3000 farmers, 150 of whom were eligible for production loans.

Ms A Steyn (DA) said that she had visited one the FDP farms specifically to look at GSA’s programme and that what it was doing was really pleasing. She stated that GSA had been involved in training Department of Agriculture Forestry and Fisheries (DAFF) extension workers and that at the time of her visit this had ceased. She asked what was going on with this initiative. She asked for clarity on the production loan of 65%. She said that GSA mentioned helping 175 farmers and asked how it had identified these farmers. She also asked whether, if GSA were to obtain more funding, it would be able to help more farmers and, if so, how many.

Dr Laubscher replied that GSA funders had stopped GSA from training DAFF extension workers as the funders did not believe that this was GSA’s core business.

Ms McPherson said that when referring to the “production loan” she was referring to input insurance and that if a farmer insured his farm yield valued at R5 000 the input insurance would guarantee 65% of it. There would be a shortfall of 35%, which was a problem. GSA was trying to find a way around this. If GSA had more money it could definitely do more.  Money was the limiting factor for the organisation.

Mr R Cebekhulu (IFP) asked whether GSA actively went out to find people or if it was focusing on subsistence farmers adjacent to larger farms. With regard to the exploitation of the surplus of grain, he asked if there was any focus on the issue of Genetically Modified (GM) grain.

Ms McPherson said that given the option of going hungry or using GM food, people would inevitably choose GM. However she knew that people were concerned about the issue, and GSA did keep a record of whether grain was GM or not. People could get either type. South African Breweries only used non-GM grain to make beer. She added that GSA would not concentrate on only those adjacent to larger farms as it helped everyone and that no-one was too small to receive assistance. GSA’s funders preferred it to focus on commercialisation, but it still helped everyone.

Ms P Xaba (ANC) said that it was a good presentation but asked about people with no land.

Ms H Matlanyane (ANC) said that most Members were from rural areas where individual families were trying to farm for subsistence. When it came to growing maize these people had to take their produce to grain co-operatives for it to be refined. She asked what GSA’s role was in these instances. She asked whether there was anything GSA could do to provide communities with tractors in cases where the community consisted mostly of subsistence farmers. She asked how GSA assisted government to ensure that Presidential Nodal Points were assisted.

Ms McPherson replied that in theory shared equipment was a good and cost-effective idea but that was very difficult to manage in practice. GSA tried to motivate that individuals be given tractors, and it ran a training course that sought to make people aware of the potential pitfalls and difficulties that they would face when sharing equipment, which included difficulties that people may need to use equipment at the same time, arguments about who got to use what equipment, and at what times, and who would pay for maintenance. Although shared equipment was not a favoured approach GSA at least tried to make people aware of the challenges and still helped them. It was useless saying an approach was problematic and would not work; instead GSA would try to work with everyone and tried to help wherever possible, and in every possible way.

The Chairperson asked Dr Laubscher about the agreement signed between AgriSA and government with farming companies to buy stock-piled grain.

Dr Laubscher replied that the Committee was aware that South Africa had a huge maize surplus, due to three very good harvest years. There was a real challenge in terms of the low prices, which made maize farming uneconomical. This agreement was still under negotiation and Mr Langa Zita, Director General of the Department of Agriculture, was looking at exporting this surplus to India and Saudi Arabia. GSA was looking at ensuring that it was possible to get rid of the entire surplus, but, worldwide, there was an oversupply of maize. The question was whether to export this surplus in a processed form or not.

Ms Xaba asked Ms McPherson to explain how a community could have access to a tractor if it was only given to an individual. Experience showed that in cases like this the tractor was only used by close-friends and family members, not the whole community.

Ms McPherson replied that she did not have an answer to that problem. It was very difficult to know what to do and this area remained a challenge. On the one hand there was the problem of not everyone having access to a tractor if given to an individual, or in-fighting as to who was to use a shared one, as well a lack of responsibility about paying for repairs for a communally owned tractor by community members, resulting in neglect of the tractor.

Ms Mazibuko said that it was clear there was a disagreement between GSA and DRDLR about handing out tractors, as the Department was very proud of the tractors it had provided to communities. She asked whether GSA had any relationship with DRDLR when it came to policy consultation and if it had a relationship with the Department of Higher Education and Training (DHET) or training colleges.

Dr Laubscher replied that GSA’s involvement in making tractors available was a side-job and that its focus was on looking at what people had and how they could work with that. Invariably the community asked GSA about how to access tractors and GSA tried to help them. In some communities tractor sharing worked, but in most it did not. GSA preferred to empower the individual farmer to use the resources that he or she had, in a better way. With tractor sharing there was the issue of concurrent needs to use the tractor, as harvesting had to occur in at the same time for all farmers.

Ms McPherson said that it was true that tractors and equipment were not the job of GSA, but it inadvertently wound up getting involved because when farmers became bigger they needed equipment. GSA did reach out to DAFF and in some cases it had worked well. There was a sub-division in the DAFF with whom GSA was working with on policy.

The Chairperson said that unfortunately they were running out of time and asked that the farmers who had accompanied the GSA delegation be given an opportunity to say something.

Mr Joseph Maleme said that he had started farming in 2008 near Ladybrand and that the GSA had come to him and asked him what he needed. He had told GSA that he wanted training, which GSA provided. In 2009, GSA provided him with assistance under one of its programmes for 64 hectares. He had had a yield of 1.9 tons per hectare. The DRDLR had given him R30 000 with which he bought a second-hand tractor, which had subsequently broken down. GSA had also been unable to help him with growing sunflowers, as this was not a grain. He added that farmers were facing many problems. He did not want to be forced to sell his 22 head of cattle to pay for the R14 000 repairs needed for his tractor. He entreated government to assist farmers.

Mr Jan Botha said that he had a mixed farm with a dairy in the eastern Free State and that he had heard about GSA three years ago. There were 12 people in his study group. He was also helped by the State to get farming implements. The problem was that there was no money for maintenance of the equipment. He planted maize at his farm, but the rains destroyed his crop. It was difficult to work in a group using shared implements. He reiterated GSA’s position that sharing implements did not work in practice and lead to fighting amongst users.

Dr Laubscher said that GSA was working with the Department for a new dispensation to assist farmers using an agreed upon business plan. He told the Committee that they should not despair as GSA would strive to make things work. Agriculture was too important to accept that it could be allowed to fail.

The Chairperson said that in China there were 1.3 billion people and the government had taken steps to ensure that every mouth was fed every day. He added that this was a huge responsibility and that in South Africa it should not be GSA’s responsibility, for it was the responsibility of government to ensure food security. Rural development was not just about one department. The Committee would follow up on the GSA presentation, by engaging with other departments and committees so that it could collectively work out a programme making use of GSA’s assistance.

Specialised Oil Extraction (SOE) Business Plan for Vhembe District: Avocado and Mango Value chain
Mr Dennis Gilbert, Chief Executive Officer, Specialised Oil Extraction, that that Specialised Oil Extraction (SOE) had a project in the Vhembe District of Limpopo to promote rural agriculture for Vhembe District by creating a continuous sustainable number of jobs while benefiting the poorest of the poor. SOE had identified that top grafting of the existing fruit trees that were growing at homes in the rural areas, where the soil is excellent and well suited for commercializing the trees, could create sustainable 131 job opportunities and create wealth for hundreds of the people in those rural areas.

Top grafting of existing avocado and mango trees could turn home grown and commercially unproductive varieties into commercially productive varieties. This would enable creation sustainable jobs from the start of the project. The project would start off, initially, as a purely agricultural job creation initiative, which would entail cutting down and top-grafting the commercially non-productive trees and creating a self-sustainable agricultural project.

The objectives of the project included using homestead trees to create an income for the poor families through the identification of avocado and mango varieties for the export markets and commercial oil production. The project could create employment and use the multiplier effect through the value chain. By turning unproductive trees into a source of income for the rural poor SOE would be able to uplift the community and turn the region into large fruit producer.

The project would also enable skills transfer for a sustainable commercial venture. SOE had already started the programme and received enormous commitment from the community. The project would need Government assistance for the first three years, after which the project would become self-sustainable. The funding needed from Government was for the first 3 years operational and implementation costs, as well as the capital expenditure and training. SOE therefore requested that government fund the project to the benefit of the people. The project had the potential to create many jobs and harness unproductive naturally growing trees as a source of commercial fruit, juice and oil production.

Mr Chrisjan van der Berg, Representative of SOE, added that it was clear that there were vast areas with unproductive avocado trees, which were currently not producing fruit of a commercially viable variety.  He stressed that SOE had the idea to graft favoured varieties of fruit onto the existing strong rootstock of these trees and make them productive. The intention was to form co-operatives amongst the villages with a main co-operative overseeing the process. If there were co-operatives and a factory this would allow the community to have certainty of the ability to sell the fruit they harvested from their trees.

The financial model would take funding from government for four years, after which it would start breaking even. At that stage each homestead would be receiving R1 700 additional income, which was quite substantial. The project would better the lives of the people of Vhembe and would be financially viable.

The Chairperson asked Mr Gilbert to tell the Committee more about the arrangement SOE was trying to setup with government.

Mr Gilbert replied that SOE had discussed its ideas with the DRDLR in Polokwane and received the blessing of the MEC and Premier. He had thought it proper to advise Parliament of the initiative, both in order to give information and to show that SOE was serious.

The Chairperson asked how many jobs 100 000 tress would yield.

Mr Gilbert replied that initially they would create 131 jobs, but that more jobs would be created by the second phase, which would see the introduction of pack-houses, factories, juice factories and oil extraction factories.

The Chairperson asked for an indication of how many jobs this would create.

Mr Gilbert replied that the project would be so large after five years that it was likely that there would be a need for pack-houses, which would employ an average of 200 people, as well as a few hundred additional fruit pickers for the villages, about 100 factory workers, a drying factory that would also employ 100 and a marketing facility that would need about 25 people. He added that very quickly the multiplier effect would mean a job yield of a few thousand. All this would be possible with very little money.

Ms Ngwenya-Mabila asked whether the intention was to graft all the trees in a community or only selected ones, and whether there was a charge for the grafting. She asked who was funding SOE currently and how much grafters were getting paid.

Mr Gilbert replied that SOE intended to graft all the trees but currently did 50% at a time in order to maintain at least a 50% level of greenery in the area. The cost of grafting had been borne by SOE as a pilot project in order to see if it worked, which it had. He added that he would appreciate it if Members could speak to people in the project to see their enthusiasm. SOE was paying for all expenses, but did not pay the villagers to graft. The villagers had also not requested payment. He said that bigger the tree grew, the more shoots it would be possible to get and every shoot could be cut and sold to neighbours. Thus the villagers had two sources of income, by selling graft wood and fruit.

Ms Steyn said that it was good to see so much passion and that both presentations had focused on using what people had. This was an approach that was missing. With regard to the meeting with the Premier and MEC, she asked with which department SOE had held meetings, and also asked whether SOE had given a presentation to the national department about the recapitalisation programme.

Mr Gilbert replied that in Polokwane SOE made presentations to a huge delegation, which was very impressed. SOE was now awaiting a response. He added that it had talked to the DRDLR and believed they would come to the party, as the discussions seemed fruitful and encouraging. 

Ms Matlanyane asked how many factories SOE planned to establish in Limpopo. She wanted to understand the role of traditional leaders in the project and asked for a breakdown of the co-operatives. 

Mr Gilbert replied that SOE would prefer to use factories that were able to produce about 500 tons of juice and would require about three of these. SOE would also need at least two oil factories. Several factories could go up in Bushbuckridge.

The Chairperson asked whether the research showed which areas were suitable for growing avocados, litchis and bananas, because the possibility of 500 jobs in one programme would mean that it was possible to create even more projects of a similar nature across the country.

Mr Gilbert replied that avocados grew in the eastern tropical and sub-tropical districts of the country and that mangos grew everywhere. He added that there was a large demand for mangos and that trees numbered in the millions and grew everywhere. 

Ms Matlanyane said that in Mopane and Capricorn there were a lot of marula trees, and asked whether there were any initiatives there.

Mr Gilbert replied that his knowledge of marula trees was extensive, and that there was also a huge potential for them, but that that would be another presentation in itself.

The Chairperson told Mr Gilbert that the Committee would be willing to meet with SOE again and wished to engage continuously on the project. He added that there were time constraints. The Committee would pursue this discussion with the relevant provincial and national departments, and would revert to SOE.

Umvithi Youth Development Consultants (UYDC)
Mr Mthobise Mkhize, Chief Executive Officer, Umvithi Youth Development Consultants said that Umvithi (UYDC) ha
d a long history of offering support to community projects through its vision and programmes to better the lives of young people. It tried to enable those from rural and disadvantaged communities to gain access into the worlds of Beauty and Fashion, Arts, Sports, Tourism, Education and Skills, Agriculture and Business Development, and to relate all of this to career opportunities.

UYDC had decided to focus on five development initiatives that served as the main pillars of the most desirable needs for youth wanting development. These included the Umgungundlovu Youth Carnival 2009, Youth Development Conference 2010, celebrations with the District Mayor of uMgungundlovu to mark the 150 Years of arrival of Indians in SA, Boundless Southern Africa Summit and Sports and Recreation Conference 2010.

With regard to the Rural Development and Land Reform General Amendment Bill [B33-2010], Mr Mkhize said that UYDC’s contribution was more focused on
the name change and development and support to the Bill. The document served as a good sign of sustainable and   balanced growth, by power sharing or delegation of power by the Minister downwards through to ordinary members of staff, through the various tiers, so that it represented combined and integrated action of a person, individual and team. It allowed for information sharing to the ordinary members of society, sustainable development of rural communities and more especially, of youth and economy.

UYDC looked forward to a public policy for rural youth that sought to identify the objectives, implementation, strategies, results and impacts for opportunities directed at rural populations. The Bill became a strategic actor in rural youth development by revising and analysing the attention focused at rural development. It served as a strategic development initiative that utilised the advantage of a good link and partnership between the government and ordinary citizens. It had resulted in the establishment of many rural development programmes. Mr Mkhize made the point that “Land affairs” had a very limited meaning to many individuals. The change in name for the Department, from “Land Affairs” to “Rural Development” had potential to maximise funding opportunities for rural based organisations. It also provided for the elite branding of rural communities, attracting donors for potential sponsorships, improved market and promotional strategies, minimising risk of exploitation of rural businesses, and classifying the unfortunate as part of the country’s growth.

He said that, in conclusion, the goals of UYDC relating to Bill reflected developing strategies to benefit the rural economy, reflecting the findings of a study looking at rural youth and thus rural communities who were missing out on development opportunities that were more readily available to urban youth and looking at what could be done to turn the situation around. Improving access to basic needs and vocational training was critically needed. UYDC broadly supported the name change as it served as an anchor for all these aims.

The Chairperson thanked UYDC for its submission, and said that the Committee had the responsibility of assisting UYDC, by raising some of the issues in other committees, since many of the issues were cross-cutting. UYDC had shown itself serious about rural development. The challenge was translating theory into actions and end products. This material could usefully be used by Members in their debates in Parliament. It was unfortunate that there was insufficient time for questions, but asked Members to submit any questions that they had for UYDC in writing. 

Adoption of minutes
The Chairperson asked Members if they were willing to adopt the draft Report on the Study Tour to Malawi.

Ms Matlanyane said that she had gone through the Study Tour Report, but did not want to rush it.

The Chairperson agreed that it would be useful to allow for a discussion on the Study Tour report, particularly the three main items that emerged.

The Chairperson tabled the minutes of 17 August 2010, 03 November 2010 and 19 January 2011 up for adoption.

The minutes were adopted.

The meeting was adjourned.


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