Department of Agriculture, Forestry and Fisheries & Entities: 2011 Strategic Plans and budgets

Agriculture, Forestry and Fisheries

28 March 2011
Chairperson: Mr M. Johnson (ANC)
Share this page:

Meeting Summary

The Department of Agriculture, Forestry and Fisheries (DAFF or the Department), Onderstepoort Biological Products (OBP) and the Agricultural Research Council (ARC) presented their strategic plans and budgets for 2011. The Department also presented a short report on Ncera Farms.

The Department reported that farming production was in decline, and South Africa was now a net importer of food.  Farmers were being squeezed by higher input costs and low commodity prices.  The need for economies of scale were forcing out small-scale farmers. The Department’s targets for job creation had been criticised as unattainable. Farmers had decreased cash flow, and were being financed by debt, but there was little new investment in the sector. Part of the problem was that local farmers were forced to compete with international counterparts who were heavily subsidised, and DAFF suggested that more attention should be given by government to providing indirect subsidies for fuel, fertiliser and feedstock.  Small and emerging farmers required extra support because for many, their only asset was the land on which they lived, which made sense that they should be assisted in farming it properly. The development taragets were set out, noting that the key strategic goals were to increase the profitable production of food, fibre and timber products in all sectors, to create a transformed and united sector, and to generate an increased contribution to economic growth and development. The Department would be working closely with India, Russia and China to achieve some of these goals, and much of the marketing focused on improving trade and marketing skills, and the possible creation of free trade areas. DAFF aimed to provide comprehensive production support to 15 000 new farmers each year for the next four years, support packages for smallholder farmers and enabling the planting of 40 000 hectares of forestry over four years. It aimed to create 5 200 new job opportunities over the period. In the fisheries area, it aimed to increase the number of fish farms. The total budget was R4.719 billion.

Members noted that it was difficult to judge the appropriateness of intentions in the absence of a report on achievements in the previous two years, and said that little appeared to have been achieved to date. Members also commented that the high number of skilled vacancies hindered the Department in achieving its plans. They questioned proposals to establish new commodity groups, asked about compulsory community service for veterinarians, and discussed the recent Foot and Mouth outbreak and where responsibility for this lay. They believed that transformation would not be achieved without tackling the root cause, related to economy of scale, and price increases. Although projects to improve training opportunities were welcomed, Members criticized the agricultural colleges and their training standards. Members cautioned that the debt was rising ever-higher and that the strategies proposed probably did not address the problem. They were also concerned about food security, the mechanisation programme, the rationale for establishing new fish farms, what support could be offered to fish smallholders, and lack of provincial plans. Members agreed that a special session was needed to discuss fishing policy.

Members did allow the presentation of Onderstepoort Biological Products (OBP) to proceed, although it currently had no Board to approve the strategic plan. The Committee would take up the Board matter urgently with the Minister. The revenue for the current year was R158 million, of which R128 million was from local sales, and R30 million from export. This exceeded the budget, since OBP had managed to increase the doses produced and vaccinate significantly more animals. OBP noted the need to recapitalise the facility, as its infrastructure and equipment were old, although it took the advice of the Committee to be cautious not to risk contravening the Public Finance Management Act. It did, however, caution that South Africa had to have sufficient stocks of vaccine at all times, and to maintain its high international ranking and profile. The number of doses targeted was outlined, and OBP had entered into partnerships with provincial governments to assist rural farmers, and with distributors for supply and refrigeration of vaccines. 10% of its annual revenue was channeled into research and development. It outlined plans for training that would assist in job creation, and increased vaccination. Members were pleased with the results, urged that the permanent appointments must be made soon, asked about the choice of a service provider to assist with marketing, and commented that it would be preferable for OBP to try to use local, and preferably black economic empowerment companies for distribution. They asked about borrowing powers and funding of a GMP facility. Other departments must be urged to purchase from OBP rather than foreign suppliers. The DAFF was asked to provide a report on Board and staff appointments by 18 April.

The Agricultural Research Council, the largest single agricultural research institution in Africa, described its strategic objectives as focusing on excellence in agricultural research and development, sustainable use of agricultural resources, the management and mitigation of agricultural risk, food safety and security, technology transfer and the generation of new knowledge. It was vital that South Africa reduce its annual import bill for wheat, of R4 billion. ARC could assist in finding solutions for this, and also in increasing food production in other categories and improving the quality of local production. The challenges that ARC faced included ageing infrastructure that would require significant funding to upgrade, the need to focus more on the smaller farmers and improve the extension system. Because ARC’s funds from contracts had decreased, it was unable to grow its human resources, and it could not achieve all its objectives. Members enquired what ARC was doing to address additives in chicken, questioned its method of funding and sought clarity on some items that seemed to recur several years without resolution, asked for a full motivation on the budget, asked if it could do research into fisheries and stressed the need for economic research. Members also felt that the fragmentation of research institutions was something that needed to be discussed as a matter of policy with the provinces.

The Department noted that Ncera Farms had faced many challenges, which were outlined, in relation to lack of governance and policy, delays in administrative requirements, irrelevant and skewed services and programmes, as well as external challenges caused by illegal settlements, poor farm infrastructure, lack of respect between stakeholders and ineffective enterprises. A forensic audit had been undertaken and was currently with the Minister. Although the Department then attempted to describe new plans for training, Members commented that this was inappropriate before the forensic matters had been finalised, They called on DAFF to produce the forensic report and updated financial information urgently, and said Ncera should continue running on a month-to-month basis in the meantime.


Meeting report

Department of Agriculture, Forestry and Fisheries (DAFF): 2011 Strategic Plans and budget briefing
Mr Langa Zita, Director-General, Department of Agricuture, Forestry and Fisheries, outlined the  main challenges facing the South African agriculture sector.  He said that the decreasing share of field crops in agricultural production was a factor in the country’s decline from a net exporter of foods to a net importer.  Farmers were being squeezed by higher input costs for fertiliser, fuel and feedstock on the one hand, and by low retail prices for food on the other.  The sector operated in an unregulated market environment, exposing it to fluctuations in world prices, while the growing dominance of retail chains was increasing the farmer/retail price differential.  A further challenge was the low production volumes and productivity levels of poorly skilled subsistence and emerging famers.

In the commercial farming sector, smaller and less efficient farmers were being forced out because they could not take advantage of increasing economies of scale.  Profits were growing only slowly for the large-scale farmers who had survived the depressed global market conditions.  Transformation remained a challenge in all three sectors of agriculture.  The increase in the production of horticultural crops had taken place in the face of the decline in field crops (a source of staple food), and this raised concerns around national food security.

Emerging farmers, and those operating on smallholdings, faced a wide range of challenges, such as inadequate support services, inadequate provision of on-farm infrastructure, including dams, windmills, and irrigation schemes, and weak implementation of the tractor mechanisation support programme. There was also lack of support for the establishment of commodity groups, inadequate access to agro-procession industries, insufficient infrastructure ensuring access to development finance, and unco-ordinated or untargeted training programmes.  Support in the form of equipment, finance and training, for established smallholders in the fishery industry and small growers in forestry, was described as non-existent.

Mr Zita set out the development targets for the Department of Agricuture, Forestry and Fisheries (DAFF or the Department). These included increasing the number of smallholder farmers to 250 000 by 2014/15, and reaping the benefit of continued success of commercial farming by increasing the number of employees from 780 000 to 800 000. It aimed to place 300 000 households in smallholder schemes and to create 145 000 jobs in agro-processing by 2020 and 5 520 jobs in the Community Works Programme by 2014/15. It also hoped to achieve the rehabilitation of 3,2 million hectares of argricultural land by 2014/15; and a 10% recovery of targeted fish stocks, such as abalone, hake and West Coast rock lobster, by 2014/15.  The key strategic goals were to increase the profitable production of food, fibre and timber products in all sectors, to create a transformed and united sector, and to generate an increased contribution to economic growth and development. The Department would be working closely with India, Russia and China to achieve some of these goals.

Six programmes were presented, setting out the strategic interventions covering the main areas of the Department’s operations. In the area of administration, emphasis was placed on establishing commodity structures and associations, the creation of a “one-stop” development fund, and an improvement in intergovernmental stakeholder relations. Economic Development, Trade and Marketing focused on various programmes aimed at improving trade and marketing skills, including the facilitation of increased infra-Africa trade through the creation of a free trade area for Africa. Mr Zita hinted that an Afro-Asia pact was possible, following his recent meeting with his China counterparts, and suggested that senior people should be stationed in Russia, Brazil, India and China to support DAFF’s marketing strategy.

In the programme on Food Security and Agrarian Reform, the goal was to provide comprehensive production support to 15 000 new farmers each year for the next four years.  This would involve the training of extension officers and the transformation of existing agricultural colleges into training institutions, operating as “centres of excellence.” Support packages for smallholder farmers formed the core of the agriculture production, health and food safety component, while programmes for forestry and natural resources management dealt with the creation of an environment for planting 40 000 hectares over four years, the provision of support to 10 000 new small growers, and the creation of 5 200 new job opportunities over the period. 

The programme for Fisheries Management envisaged the number of fish farms increasing from 84 to 96 in four years, with processing facilities growing from 60 to 70, and fishing harbours from 12 to 19, over the same period.

The total budget would be R4.719 billion in 2011/12, growing to R5 312 billion and R5 503 billion in the next two years.

Discussion
Mr S Abram (ANC) said that while the strategic plan mapped out intentions, it was difficult to judge how appropriate these were in the absence of a report on what had been achieved in 2009 and 2010.  He described what had been set out as “a very tall order.”  He reminded Members that about three years ago, the Committee had been told that within two years, 10 000 new farmers would be established on five million hectares of land, but that very little had been shown. DAFF was now proposing to establish 50 000 new farmers, which would be a formidable challenge, particularly as it had a large number of vacancies in the highly qualified staff category, and this was unlikely, in the light of past experiences, to be achieved.

Mr Zita responded that the DAFF had set high targets, particularly for establishing 10 000 new farmers a year over the next five years.  However, he pointed out that DAFF’s programmes were intended to reach a large number of people. He noted that the DAFF was not opposed to working with existing commodity groups, but the focus had to be on the development of emerging farmers.

Mr Abram referred to the proposal to establish new commodity groups, and asked to what extent the Department had made use of existing expertise within organised agriculture, where commodity groups were functioning well with a good track record.

Mr Abram noted that DAFF had more than 700 vacancies, of which more than 60% were in the highly skilled supervisory and production roles.  He asked about the impact of this on the Department, and what it was doing to address this.

Mr Abram also asked for further details on compulsory community service for veterinarians, and what measures were being taken to deal with the current Foot and Mouth outbreak.

Mr Zita told Members that compulsory community service for veterinarians required students, after completing their final year, to carry out one year in the community before being registered by the Veterinary Council.  A survey had shown that between 80% and 90% of students left the country after graduating from Onderstepoort, and this measure was intended to ensure that no student could practise without completing the compulsory service.

Mr Zita also advised that routine surveillance in KwaZulu-Natal had identified dip tanks contaminated with the Foot and Mouth virus.  Onderstepoort had not yet been able to isolate the virus, but the infection had been contained within the infected area.  There was one instance of 93 animals being moved via Vryheid to Gauteng, but these had all been slaughtered.

Dr L Bosman (DA) said that contrary to DAFF’s contention that the agriculture sector’s profitability had increased, it had in fact decreased considerably over the past two seasons, and would drop further in the current year owing to the increase in input costs and decrease in prices.  The grape industry was in dire straits, with costs increasing by 120%, and prices up only 40%.  Farmers received a return of less than R2 a bottle, which was probably less than the tip a waiter would receive for serving the wine.!

Dr Bosman noted that the emphasis in the DAFF presentation was on transformation, but this could not be achieved without tackling the basic causes of the challenges, such as the need for economies of scale, which made it difficult for small farmers to survive.  More attention should be given to the reasons for cost increases and reduced prices.

Dr Bosman said that the various projects aimed at improving training opportunities for emerging farmers had some merit, yet he was concerned about the transformation of the agricultural colleges, which had been badly neglected for a number of years. A mere name-change would not solve the problem, and serious attention needed to be given to improving standards of training for future farmers.

Mr Zita said that DAFF had established norms and standards for the evaluation of the country’s 12 agricultural colleges. Seven were found to have been neglected, and their infrastructure had deteriorated. The findings had resulted in proposals being made to National Treasury, and the subsequent allocation of funds to “kick-start” an improvement in infrastructure.  The roles of the national and provincial authorities in administering the colleges was being clearly defined.  DAFF’s aim was to broaden the scope of the colleges and to focus on vocational training.

Mr N du Toit (DA) described the DAFF’s strategy as “a wish list of targets”, and did not know how they could be achieved given the existing manpower and financial resources.  He predicted looming disaster in the agricultural sector, as the cash flow of farmers was declining, and they were financing the shortfall with debt. Farmers’ debt increased by 16% last year, but this was not being used for investment. Agrarian reform was necessary, but would take time.  Farmers had to be kept on the land and remain profitable, so DAFF should rather adopt a strategy that focused on critical factors such as input costs, investment, debt and prices.  He did not want to be a prophet of doom, but warned that at some point the prices of food and production and profitability would meet, which would spark serious problems. He did not think that the strategies proposed by DAFF would solve the country’s problems.

The Chairperson commented that not only were high input costs and administered prices posing a major challenge to commercial farmers, but they were also having to compete against overseas farmers who enjoyed huge tariff protection.  The Government therefore needed to discuss indirect subsidies in areas such as fuel, fertiliser and renewable energy sources.

Ms M Pilusa-Mosoane (ANC) said the drop in agricultural production was worrying, from a food security point of view, and said that attention should be given to doubling current poultry meat production.  She also expressed concern at the neglect of agricultural colleges, as good quality training was essential for all who were interested in agriculture.

Ms N Phaliso (ANC) referred to the mechanisation support programme, and asked how many tractors were being provided, and in which provinces.  She wanted to know if the implementation of this programme was being monitored.

Mr R Cebekhulu (IFP) criticised the management of the tractor programme, saying the system did not provide a proper way of monitoring operators.

 Mr Zita said the Department no longer allocated funds to projects without following up on these to ensure that the funds were properly spent.  This applied also to the current tractor mechanisation programme, although he acknowledged that there had been challenges in Mpumalanga in the past.

Mr Zita agreed with the concerns of members about the profitability of the commercial agricultural sector, and their statements that farmers needed support.  However, he pointed out that there were millions of people in the former homelands whose only asset was the land on which they lived. Agriculture provided these people with the opportunity to find meaningful employment. The Department had appointed people to deal with specific sectors of commercial agriculture, and there was ongoing work to analyse the causes of higher input costs, including liaison with the Competition Commission. Although the structural causes needed to be addressed, rural development was also crucial.

Ms N Twala (ANC) said a recent oversight visit had revealed both under-funding and under-staffing in the Fisheries Division of the DAFF.  She asked what the rationale was for establishing three new fish farms per year, and what species would be farmed.

Mr Zita said the Department was fully aware of the concerns that had been raised regarding under-funding and under-staffing in the fisheries sector, and much work needed to be done to overcome this challenge.  Feasibility studies would be conducted on the viability of the proposed twelve additional fish farms to be established, but current indications were that these targets were achievable.

Ms N Twala (ANC) said a recent oversight visit had revealed both under-funding and under-staffing in the Fisheries Division of the DAFF.  She asked what the rationale was for establishing three new fish farms per year, and what species would be farmed.

 The Chairperson said the Committee was concerned that proper plans should be in place to ensure food security for the country.

Mr Abram reiterated his view that establishing 10 000 new farmers a year was impossible to achieve, and called for realistic targets to be set. 

Mr Zita responded to criticism that the job creation targets were unrealistic, by conceding that they would be difficult to achieve, but the Department still felt it could attempt to do so.

Mr Abram asked whether DAFF had any communication with the Department of Correctional Services so that small farmers could be drawn into the supply of food for the 160 000 people under its care at any given time.  This was an example of how new markets could be created.

Mr Zita responded that part of DAFF’s Zero Hunger strategy was to ensure that small farmers benefited from the State’s role as a market, whether by way of food for schools, the SA National Defence Force, or Department of Correctional Services.

Mr Abrams said the New Growth Path (NGP) expected the commercial agricultural sector to provide new jobs.  This would not happen, as the sector had other challenges, such as the Extension of Security of Tenure Act, which would deter many farmers from taking on new employees.

Mr Du Toit commented that the strategic plan did not contain a policy for dealing with the different provinces.  The recent disasters, such as Rift Valley Fever and Foot and Mouth Disease (FMD), resulted from a lack of supervision and co-ordination within the provinces.  A broken fence which had contributed to the spread of FMD had been left unrepaired, with catastrophic results that would cost the country billions of rands.  He asked whether the responsibility for this lay with DAFF or the province.

Mr Zita responded that the core responsibility for the FMD outbreak rested with the provinces, but they received support and guidance at a national level.  The broken fence appeared to be an unintended consequence of supporting tourism, as the fence had been taken down as part of the creation of the Transfrontier Park.

 Ms Pilusa-Mosoane asked how the necessary support could be given to small-holders in the fishing industry.

Mr Zita responded that DAFF was currently engaging with stakeholders in all the provinces so that the various programmes could be launched, particularly in those areas where there had not been much activity to date. The allocation of long-term rights was part of this process, and DAFF was mindful of the need to synchronise all the processes involved to ensure that the small-scale fisheries policy could be implemented.  The new allocations would take into account the need for new entrants to benefit from the policy.

The Chairman commented that the Committee would need a special session to discuss fishing policy issues.

Dr Bosman asked for clarification on the proposed establishment of commodity associations, under which 12 new bodies, as well as co-operatives, would be created. However, there were already about 30 well-established commodity groups in the country, which were active in the fields of development and marketing, and many involved small-scale farmers, so he felt that creating new groups could be counter-productive.

Mr Zita responded that the Department could not wait for commercial farmers to provide assistance to poor small-holder farmers through existing commodity groups, as their support to date had been miniscule. This was why extra capacity had to be developed specifically to help the previously disadvantaged.

The Chairperson said the implementation of the small-scale fisheries policy was keenly awaited by the Committee. He questiond whether this would take place in this year, cautioning that it was important not to create expectations that could not be fulfilled.

Onderstepoort Biological Products (OBP) Strategic Plan 2011 presentation
Mr Ayanda Ntsho, Acting Chief Executive Officer, Onderstepoort Biological Products, introduced his delegation.

The Chairperson noted that Onderstepoort Biological Products (OBP) was a profit-making instutition, but currently did not have a Board. He wondered if it was legally competent for it to table a strategic plan that did not have the approval of the board.

Mr Ntsho said a short list of nominations to the board had been presented to the Minister, but he did not know where the matter stood at present.  The board had ceased to exist in October last year, but, from both a practical and ethical point of view, OBP could not stop operating at that time.

Ms Ntombizodwa Mobeng, Company Secretary and Legal Adviser, OBP, said she had been told three weeks ago that the names had been presented to the Cabinet and approved.  However, she was still waiting to receive the names so that the Board Members could be registered.  There was an assumption that a seven-member board existed.  OBP had continued to operate in the knowledge that it had to comply with the Companies Act, but this had been difficult without the presence of an oversight body. 

The Chairperson asked the Committee whether, in the circumstances, the presentation should continue. 

Dr Bosman said he was dismayed at the situation, and serious questions needed to be asked about the delay in the process of putting a board in place.  Nevertheless, he proposed that the presentation should be allowed.

The Chairperson also voiced his concern, describing the OBP as a very important organisation whose work involved securing the lives of all South Africans. 

The Committee agreed to the OBP presentation proceeding.

Mr Ntsho said OBP’s revenue for the current year was R158 million, of which R128 million was from local sales, and R30 million from export, and that this was R64 million above budget.  This had been achieved on the back of a large increase in doses produced, resulting in more animals being vaccinated.  Operating profit at the end of February 2011 stood at R30 million, compared to a R4,1 million loss the previous year.  OBP had therefore managed to turn around.

He noted that there was, however, a need to recapitalise the facility, as its infrastructure and equipment were old.  OBP had the funds to procure new equipment, but was hamstrung by the requirements of the Public Finance Management Act (PFMA).  Management now had to decide whether to proceed with the purchase of urgently needed equipment, which would in fact exceed their delegated authority. However, if management did not take action now, the available funds would not be spent in the correct financial year, and South Africa would experience a shortage of vaccines.  The replacement of critical equipment to ensure security of vaccine supply would cost R48,3 million in 2011/12, and a further R71,8 million over the following two years.  If necessary, external funding would be sought.

He added that the recapitalisation programme was important to ensure OBP’s facilities met Good Manufacturing Principles (GMP) requirements.  This was needed for exports into Europe. He hastened to add that OBP products were highly regarded overseas, and countries such as Ireland secured special permits from the EU to import its vaccines.  The outlook for exports therefore looked good.

Mr Ntsho reported that the strategic objectives were designed to ensure the sustainable delivery of OBP’s mandate, and covered areas such as increased profitability and market share, the recapitalisation programme and the development of new products.  The new board would be committed to these objectives.

New and improved vaccines were being introduced each year, with the number of doses produced per year increasing from 84,6 million in 2010/11 to 107 million in 2013/14. OBP had entered into strategic partnerships with a number of provincial governments in order to ensure that it was able to reach and assist rural farmers, and it used distributors in remote areas to supply vaccines and refrigerators for storing them. He stressed that OBP had to have vaccines available when needed, because it was of prime importance to maintain the health of the country’s livestock. It therefore planned to improve its manufacturing to avoid the shortages of the past, and had set a target of actually achieving a minimum of 85% of the planned sales, and this would be done producing “risk stock” over and above planned levels.

OBP was a recognised market leader in tropical disease vaccines, so 10% of annual revenue was being channeled into research and development (R&D) funding, so that six new or improved products could be introduced over the next three years.

OBP also planned to play an increasing role in rural economic development, through training programmes and establishing rural distribution points.  This would help in job creation, and result in more animals being vaccinated.
 
Discussion
Dr Bosman complimented OBP on its presentation, and on the excellent results that had been achieved.  However, he was disappointed that the process of appointing new management had not been finalised, which placed stress on those in “acting” positions. The lack of a Board meant that management was not mandated to make investments or replace equipment.  He suggested that the Committee should urgently discuss this with the Minister, and advise that the situation was unacceptable.

Mr Abram also complimented OBP for its performance under difficult circumstances, but cautioned the acting management rather to err on the side of caution and to ensure the new Board was in place before making any binding commitments.  He agreed that it was urgent to appoint the required leadership as there were concerns about the inability to get things done timeously.

Mr Ntsho said OBP would follow the Committee’s advice, and err on the side of caution.

Dr Bosman sought clarification on OBP’s contract with a service provider to assist with its marketing activities.

Dr Jacob Modumo, Business Development Officer, OBP, said a strategic choice had been made on  an international company as a distributor in the rural areas.  The market was extremely competitive, and OBP had lost market share in recent years.  In order to defend its market share at the point of sale, particularly at co-operatives, where race proved a barrier, it had made use of distributors to promote its brand.  These partnerships also supplemented the complete range of products required by farmers.  Some distributors were black-owned Black Economic Empowerment (BEE) companies.  This defensive strategy had proved successful, and good progress was now being made at co-operative level.

Mr Abram commented that OBP was an internationally known and State-owned institution. However, there were still some State departments who were purchasing from outside bodies, and he felt that the  Committee neded to send out a clear message that OBP should be supported by these departments.

Mr Abram reminded Members that the creation of a GMP facility at OBP had been on the table for discussion ever since 2000, and asked if DAFF was making a serious attempt to evaluate the GMP requirements.

Ms Emily Mogajane, Deputy Director-General: Production and Resources Management, DAFF, said a proposal on the GMP had been put to Treasury, as well as another proposal related to the  establishment of a vaccine bank.  She would follow up on this. She also indicated that she would follow up on the final appointment of a Chief Executive Officer, and report back.

The Chairperson asked for these reports by 18 April.

The Chairperson asked whether ODP, having become profitable, had any borrowing powers. 

Mr Ntsho said that OBP did have borrowing powers, and had a plan specifically for the funding of the GMP facility.  If funds were not forthcoming from National Treasury, it would approach DAFF for support, or engage with the Industrial Development Corporation (IDC).

The Chairperson noted that the distributor in the rural areas was Bayer, a foreign company, and asked why a local, and preferably also a BEE company, was not being used.

Agricultural Research Council (ARC) 2011 Strategic Plan briefing
Dr Shadrack Moephuli, Chief Executive Officer, Agricultural Research Council, described the Agricultural Research Council (the Council or ARC) as the largest single agricultural research institution in Africa. It interacted with a wide range of partners.  Its strategic objectives focussed on excellence in agricultural research and development, and covered the sustainable use of agricultural resources, the management and mitigation of agricultural risk, food safety and security, technology transfer and the generation of new knowledge. 

In the area of food safety and security, he pointed out that South Africa had a R4 billion annual import bill on wheat alone, and this must be reduced. ARC could make a contribution by finding new solutions, enabling local farmers to produce wheat that was resistant to diseases and met nutritional requirements, at higher yield levels. With the right infrastructure, which would include laboratories, information systems, human resources and training, ARC hoped to make South Africa a net exporter and increase the number of farmers producing wheat.

He noted that there was also a need to increase food production in a wide range of other food categories, such as vegetables, fruit and teas, and to improve the quality of local production.  This objective would lead to job creation and poverty alleviation.  Rural farmers with limited incomes should focus on high value crops such as fruit trees and essential oils.

South Africa was also a net importer of meat, and ARC supported animal improvement schemes that enabled farmers to keep records and thereby improve their breeding programmes and marketing expertise.

Dr Moephuli set out the challenges that faced ARC. The first related to its resources, as most of its laboratories and equipment were old, and would require significant funding to effect upgrades. ARC needed to focus more attention on small farmers and Small, Micro and Medium Enterprise (SMME) development, as the country’s extension system was weak.

Mr Gabriel Maluleke, Chief Financial Officer, ARC, said that although ARC was under-funded for the type of work that it carried out, it had been able to cope up to this point, but warned that the decrease in funds obtained from contracts placed greater strain on the ARC resources.  ARC could no longer grow its capacity, and although there were over 600 unfunded vacancies that needed to be filled, it only had the financial resources to replace those who left, and not to make new appointments.

 Mr Moephuli summarised that ARC was nevertheless a well motivated organisation, and was trying to achieve its objectives within its budget constraints.

Discussion
Mr R Cebekhulu (ANC) was concerned about additives being injected into chickens, and asked if ARC was able to provide any protection against possible harmful effects to the consumers.

Mr Moephuli said research was currently being carried out at ARC into the injection of brine into meat, and he would forward details of the findings to the Committee.

Mr Abram said there needed to be a drastic change in the funding of ARC.

Dr Moephuli said that the challenges outlined in regard to funding had the result that ARC had to prioritise its activities so that it only spent what was allocated, and ensured that it could honour all its contracts.

Mr Abram queried several of the budget projections, and said a lot of money seemed to be spent on travel and accommodation, and that many of the matters seemed to remain on the table for several years in succession, without ever being finalised.  He believed that ARC should send further justification for the budget to the Committee.

Dr Moephuli responded that he would engage further with Mr Abram on the issues he had raised. He  pointed out that costs were incurred at ten campuses employing over 2 000 people, and that researchers travelled the length of the country to monitor 1 000 experimental sites.

Mr Abram noted that no mention had been made of research into fisheries. 

Dr Moephuli responded that research into fisheries had not been part of ARC’s mandate up to now, and it would be up to DAFF to provide guidance on its future role.

Ms Pilusa-Mosoane supported her colleague’s request for research to be carried out in the fish sector, because of its importance as a food source.

Mr Du Toit asked whether the effects of fracking methods used for gas exploration, particularly in respect of the water tables, fell within the area of responsibility of ARC, and whether ARC could give an objective assessment of the benefits and disadvantages.

Dr Moephuli replied that since geology was also not within the ambit of ARC’s activities, it would not be able to make any assessment on fracking.

Mr Du Toit suggested that the areas of mitigating and managing risk in the agricultural sector required a dedicated task team within ARC, who could focus on economic research, and could produce blueprint economic models to assist farmers needing advice.

Dr Moephuli agreed that there was a need for a dedicated economic research group, but said that at this stage, the funding was simply not available.

Dr Bosman referred to the fragmentation of research institutes in the country.  There were provincial institutions costing million of rands to operate, but he did not know what benefit they offered, and he asserted that many of them were dysfunctional.  He recommended that the Government be asked to bring all provincial institutions under the umbrella of the ARC.

Dr Moephuli said that the fragmentation of research institutions was a national policy issue, and needed to be referred to DAFF for resolution.

The Chairperson commented that there appeared to be a need to engage with the provinces to achieve co-ordination of research institution activities.  He commended the work done by ARC, and suggested that more could be done in collaboration with DAFF and OBP.

Ncera Farms (Pty) Ltd: DAFF Report
Mr Mkhululi Mankazana, Deputy Director-General: Food Security and Agrarian Reform, DAFF, said Ncera Farms was a very small entity within DAFF, but faced many challenges, including a forensic audit which was currently in the hands of the Minister.

He presented a long list of challenges. These included the absence of a permanent CEO, the absence of a board, and the lack of a well defined governance and policy framework. There had been delays in the finalisation of lease agreements, unaccredited and irrelevant training programmes, skewed and undefined technical and advisory services and lack of programmes directed at supporting local and regional economic growth. Ncera had further been hindered by the development of informal settlements, poor farm infrastructure, a lack of mutual respect between stakeholders, the fact that some of the enterprises were not cost effective to run, and a shortage of water. He indicated that the first set of problems, related to governance, were expected to be dealt with by 30 June 2011.

Mr Mankazana then put forward what he described as a “one-stop shop” for the training of emerging farmers, by way of a Training and Development Academy. There would be three programmes offered.  The “Starter-Finisher” course would incorporate cadet, apprenticeship and vocational training programmes.  The “Farmer Support” programme would focus on technical and advisory services, mentorship, the mobilisation of input suppliers and buyers, and assistance with business plans, while the “Franchise Development” programme would promote high value commodities, facilitate partnerships and design agri-village models.

Discussion
The Chairperson commented that the plan just outlined by Mr Mankazana was completely new, and was presented at a time when the outcome of the forensic investigation into Ncera Farms was still unknown. He said that he was totally confused by this, and wondered why it had been mentioned.

Other Members of the Committee agreed, saying that further engagement on the matter would be an exercise in futility.

The Chairperson said that DAFF needed to provide the Committee with the forensic report and updated financial information on the 2010/11 budget year, as a matter of urgency.

Mr Zita said DAFF would work on a revised financial narrative, and would ask the Minister for the forensic report.

The Chairperson said that in the meantime, Ncera Farms should continue its operations on a month-to-month basis.

The meeting was adjourned.


Share this page: