AgriSETA, Forest Sector Charter Council, and the National Agricultural Marketing Council

Agriculture, Forestry and Fisheries

29 March 2011
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

Three entities in the agricultural sector appeared before the Portfolio Committee on Agriculture, Forestry and Fisheries to present their strategic plans and budgets for the period of 2011/12. The National Agricultural Marketing Council focused on key realities in the sector, job creation, information exchange, trade, training, and budget allocation. The Forest Sector Charter Council, after lengthy argument on whether, in the absence of financial statements, it should present or not, briefed the Committee on the Council’s formation, its main objective, and its role. The Agricultural Sector Education and Training Authority briefed the Committee on its overarching aims and priorities for 2011/12, how it allotted its R106 million discretionary allocation for 2011/12, learning programmes to be supported, research activities, and challenges.

Members asked how the National Agricultural Marketing Council was going to fund the successful red meat project in the Eastern Cape, and if there were programmes in place to make sure local exporters were able to meet the required high export standards; they enquired if the Forest Sector Charter Council had intentions of being a profit-making organization, and if there were communities who already had benefited from the sector-claims; and how the Agricultural Sector Education Training Authority was  trying to fight off the perception that the sector education and training authorities were useless, and if it had plans of recruiting people who were passionate of agriculture but uneducated to join in the sector.

Meeting report

National Agricultural Marketing Council (NAMC) Presentation
Mrs Ntombi Msimang, Chairperson, National Agricultural Marketing Council (NAMC), in highlighting the key realities in the agricultural sector, stated that the current market structure was shaped largely to cater for existing mainstream market participants. The market structure at the processing and retail level was highly concentrated. The reason for this was because it was inherited from the previous regulated marketing regime and Government support incentives, and because it was providing a breeding ground for a non-optimal competitive environment and high entry barriers for smallholder farmers.

Key actions that were needed included, firstly, a paradigm shift. Industries that could benefit from this shift were the grain industry, meat industry, cotton industry, fish processing and forestry. The size of the cake needed to be increased. To achieve this, the bio-fuel policy needed to be reviewed; there was need for the realignment of export promotion policy and tools, and for buying local products. Secondly, the potential of quick wins needed to be leveraged. It was important to develop new and expand existing development incentive schemes, and to leverage the potential of institutional markets and contributions by the private sector.

Current job creation projects were identified.

National Red Meat Development Project (NRMDP)
Its funding value was R42 million spread over 5 years. In order to realise this, funding must be secured; infrastructure must be developed; there must be market information; there was a need for training; and special programmes should be designed per custom feeding programme

Vineyard development scheme

Its investment value was R62 million for 570 ha of vineyard. Funding was required for infrastructure, operating capital, training and extension services, and market linkages.


Grain crop development scheme

Its investment value was R140 million. Funding was required for operational and risk mitigation funding, training and extensions services, on farm storage, and mechanisation.

Other projects had been identified:

Deciduous Fruit Trust  - tree planting project, +- R5.1 million Comprehensive Agricultural Support Programme (CASP) funds administered in 2010
Total = R12.2 million.   1st Phase = 1 000 ha by 2014 – 600 ha in the Western Cape in partnership with the Western Cape Department of Agriculture (WCDA).

Winter Cereal Trust - Commercialisation of and promotion of wheat production amongst developing farmers in the Free State, Western and Southern Cape. Total expenditure for the development project was R4 067 549.

Maize trusts
- funding to the Grain Farmer Development Association to assist small holder farmers in soil preparation, input costs, harvesting and storage of grain.

Oil and Protein Seed Trust - its aim was to assist 165 emerging farmers to plant 15 100 ha of sunflower. A total of 1 250 temporary job opportunities would be created during the season.


Trading issues

NAMC was publishing a magazine called TradeProbes. It profiled who bought what, and focuses on trade related topics. Six editions were produced every year.

Fruit Trade Flows was another publication that comes out every week. These publications were currently used by the Government departments, non-government organisations (NGOs), industry associations, and media.

NAMC had also staged promotional activities in three countries, namely Hong Kong, Singapore, Malaysia. Several hyper- and supermarkets participated, e.g. Giant, Shop N Save, and Cold Storage. In total 499 hyper- and supermarkets participated.

The objective of this exercise was to increase sales and awareness of the total range of South African fruit and vegetables available at the time of the World Cup, in particular during the last 2 weeks of the World Cup, and to grow sales and the range of South African products from after the World Cup till end of October. Marketing actions that were undertaken included:

In-store displays
In-store competitions
Press advertising
Point of sale material
Aggressive bulk displays
Hard and soft copies of newspaper advertisements, copies of pictures of displays and point of sale materials and some of the winning displays

Results

The total U$ purchases for the group from South Africa, for 2010 vs. the purchases for 2009, grew from ± U$14 million to ± U$18 million in 2010. There was a 28.5% sales growth in U$ terms. The Total Container Volume for 2010 was +108 Containers Vs 2009 Volume. There was a 48% increase in volume.

Export promotion through statutory levy funding.

Wine

It was indicated that WOSA (Wines of South Africa) was promoting South African wines, mainly in the European Union, but also in USA, Canada, key African countries such as Angola and Nigeria, as well as India, China, Japan and South Korea. In 2008, South Africa exported over 400 million litres. The export strategy was aimed at:

 Enhancing the image of South Africa
 Developing new markets
Assisting in building capacity
Improved infrastructure for exports  via Wine-on-line
Current budget  allocation was approximately R37 million per annum.

Deciduous Fruit

This included fruit like apples, pears, plums, apricots, peaches and nectarines. A Market Development Campaign in the United Kingdom (UK) and Germany was done. The producer funded (R20 million per annum) as well as received a grant from the Department of Trade and Industry (DTI) to the tune of R10m per annum. Volume growth target of 10-15 % over 5 years had been set.

Information exchange

This was a complex issue due to the structure of the primary and secondary agricultural sector. There were no case laws in South Africa to provide guidance.  What happened previously was that several companies were found guilty for non-compliance with Competition Act. Thereafter, some of these companies pulled out of industry associations. This, amongst others, meant they were not willing to share information. Problems was that this information was necessary to, for example, calculate gross domestic product (GDP), Consumer Spending, Logistics Planning, Employment Numbers, etc.

So, the NAMC decided to compile a document for the Competition Commission spelling out detailed needs at the industry and country level. The document would be workshopped with the Competition Commission, and guidelines would be set for industry on information exchange and it would work on a proper public agricultural information system.

Training

Making Markets Matter Training Course

It was an intensive 5-day business development-training workshop for African agribusinesses. It was offered in partnership with the University of Stellenbosch and Cornell University. 80 agribusinesses attended the course. Farmers were trained on issues like cash flow management, marketing strategy and financial analysis.

AgriBiz Training course for Women

The NAMC designed a 3 day training course specifically for women that were involved in agriculture. This course offers training in marketing, financial and strategic management. 30 women entrepreneurs attended it.  The NAMC was now conducting an after care programme so that participants could implement what they had learnt from the course into their businesses.

Budget Allocation

The NAMC had received an MTEF budget allocation letter for the period from the Department of Agriculture, Forestry and Fisheries (DAFF).
The budget allocations were as follows:
2011/12: R 35 899 000
2012/13: R 30 115 000
2013/14: R 32 220 000

This resulted in the following percentage fluctuation for the period:

From 2010/11 – 2011/12: 15% increase
From 2011/12 – 2012/13: 16% decrease
From 2012/13 – 2013/14: 7% increase.

The decrease of R5 million in 2012/13 was a result of the fact that the NAMC had in the previous financial years received additional funding to expand the export promotion programme meant for affording 100 emerging agribusinesses the opportunity to participate in international trade. This funding was for the Medium Term Expenditure Framework (MTEF) period 2009/10 – 2011/12 only.

Discussion
Mr S Abram (ANC) wanted to know the start up costs of the red meat project in the Eastern Cape. Secondly, he wanted to know how the NAMC was going to fund this project. Thirdly, he asked about the value of the imported poultry.

Ms Msimang replied that the red meat project was an inherited one. The NAMC was asked to baby-sit it. The NAMC did not start it from scratch. No funds were allocated to NAMC and it was so unfortunate that it was impossible to take it to other provinces due to a lack of funds. Regarding the imported poultry, she indicated its rand value was standing at R1.2 billion, and that details on the poultry issue would be forwarded to the Committee.

Mr L Bosman (DA) enquired if the NAMC was collaborating with the Competition Commission, and if there were programmes in place to promote exporters in order to meet the required high export standards.

Ms Msimang stated the NAMC had initially not had enough capacity to deal with other things related to competition. However, the Commission was trying hard to help NAMC and the NAMC was working hard to build that capacity in order to collaborate. With regard to export standards, certain policies in the country did not allow certain products to go to another country though the market was available. She gave the example of grapes that could not be exported because they were the harvest of a rainless season, but there was a market for them outside the country.

Mr N du Toit (DA) asked how the small-holder farmers were going to be financed.

Ms Msimang said the issue of smallholders was bit tricky. The challenge was lying on sustainability. There was a lack of coordination. Most of these projects got started but after a year or two everything dried up. She further said research had been done and a report produced on the situation of and support that should be given to smallholders. The document would be sent to the Committee.

Ms N Phaliso (ANC) wanted to find out if the training that was given to 30 women was a once-off or an on-going thing, and how they were recruited.

Ms Msimang replied that the NAMC was always on the look out for farmers that were currently exporting and get them into the export programme. Those who were in the database were getting support on an on-going basis.

Ms M Pilusa-Mosoana (ANC) enquired if there was a collaboration between the NAMC and ARC.

Ms Msimang stated the NAMC was doing collaboration with universities and ARC though it was not a technical research body.

The Chairperson noted there was a serious collaboration needed between the Department of Agriculture and its entities.


Forest Sector Charter Council (FSCC) Presentation
Mr Pasco Dyan, Chairperson, Forest Sector Charter Council (FSCC), told the Committee that the FSCC was launched on 22 May 2008 and was legally constituted as a Section 21 Company. Its main responsibility was to oversee, monitor and encourage implementation of the Charter. The Council was composed of people from the forest industry, Government, labour, communities, the Forest Industries Education and Training Authority (FIETA) and the Independent Development Corporation. Its main objective was to extend economic opportunities and benefits of the forest sector to the previously disadvantaged black communities.

The Forestry Broad Based Black Economic Empowerment (BBBEE) Charter was signed by the Minister of Water Affairs and stakeholders on 22 May 2008. The Forest Sector Code applied to the grower’ sub-sector, contracting sub-sector, fibre sub-sector, sawmilling sub-sector, pole sub-sector and charcoal sub-sector.

Role of the Charter Council

1. To encourage, support and facilitate implementation of charter by reviewing yearly priorities, identifying new activity areas, defining work programme and role of task teams, reviewing business plans and highlighting prioritised budget activities, and providing access to information to stimulate further interactions with other stakeholders (e.g. Website, pamphlets)

Action plan
To hold a strategic session yearly
To draw up yearly business plans and budget
Populate website

2. To monitor and report on the implementation of Charter undertakings and BBBEE status. Charter obligations included:
Soliciting progress reports from industry and government
Tabulating actions and changes required
Identifying potential and emerging issues
Monitoring progress

Action plan
To monitor progress and provide guidance for proper
implementation

Regarding the progress on BBBEE status, the Charter had to:
Solicit scorecard information from verified enterprises
Average score of 61, sector a level 5 contributor
See to it the sector was performing well in enterprise development  and socio-economic development
To look at poor performance on management control and skills development
Make sure the status improves since Sappi & Mondi were now level 3 contributors

Action plan
To submit report to Minister and the President’s BBBEE Advisory Council to ensure accountability
To finalise the verification manual under the sector code
To finalise the web-based reporting systems
To update database of forest enterprises
To ensure total coverage of sub-sectors and annual reporting from forest entities
To review, tabulate and implement changes required to ensure effective implementation of the Charter scorecard and undertakings

3. To Publicise Charter & inform stakeholders about the benefits & opportunities like the outreach programme, finalised user guide which serves as a supporting document for the easy understanding of  the Charter, and financial models in the Companion document.
 
Action plan

Establish a call centre & helpline
Prepare information pamphlets
Post all relevant information on to the proposed web-site
Adopt proposed financial models

Discussion
Before the FSCC could present, a heated debate ensued between them and the Members. Mr Dyan had indicated that FSCC was not going to present the financials and that it was without an accounting officer because the latter was still suspended.

Mr Abram said their report was supposed to be accompanied by financials, and if there were no financials, there was no need to interact with the organisation.

Mr Themba Siyolo, FSCC Board Member, stated that their operating budget was R3 million, hence they did not have a financial officer. The Chairperson would present the transformation aspects, and the finances would be presented by Mr Siyolo because he was a member the finance committee. So, there was no reason why they could not present.

Ms Phaliso said there was nothing to be achieved in the presentation of the FSCC. As a Committee they needed first to familiarize themselves about the Council first. So, it was useless to let the Council present because they might be giving the Committee half-baked information if some documents were not available.

Mr Bosman intervened saying the Committee should listen to the FSCC especially because it was going to talk about the transformation issues on the forest sector, and that the Council’s mandate was not financials. Arrangements could be made regarding the finances.

Ms Pilusa-Mosoane disagreed saying the FSCC could have come with the whole package even if its budget was under R3 million, and it should have come prepared because it was a small council; therefore, it was supposed to be effective.

Mr Abram agreed with her stating that if the Committee tried to accommodate the FSCC when it appeared before it with a product that was not 100%, there would be a re-occurrence. The FSCC should have advised the Committee in advance. Therefore, an example should be set.

The Chairperson stressed that if the Chief Executive Officer (CEO) was suspended on an issue of a R3 million budget, that should be accounted for because those were public funds.

Mr Siyolo explained that the Council was dealing with an issue of incompetence. The CEO was asked to draw up a budget but could not deliver on the agreed time. No valid reason was given. As a result, relations between the FSCC and the CEO broke down. Hence they found themselves in that mess.

The Chairperson resolved that the financials should be sent to the Committee. The Committee allowed the Council to present as above.

Mr R Cebekhulu (IFP) wanted to know if there were groups who benefited from the sector-claims, except the group called SiyaQhubeka from KwaZulu-Natal.

Mr Dyan explained they had asked the Government to provide time frames on land claims but with no success because the FSCC had got plans in place. He went on to say earlier in the year some benefits were dispensed to various communities. Communities related to SiyaQhubeka and Sizingisa from the Eastern Cape had received their benefits. The payment of the benefits was an on-going issue, not a once-off, and there were contracts in place.

A member of the FSCC Board added that the separation of the Department of Water Affairs from Forestry was a good move. This meant the Minister was in a position to consider licences for afforestation because in the past, when the Departments were together, the Minister was the referee and player.

Mr Bosman commented that compliance in the sector, as far as he was concerned, was on an average. He wanted to know if the Board of FSCC intended to transform the body into a profit making one.

To which Mr Dyan stated the Charter was a Section 21 company that made no profit, but the AgriCharter was making profit and was funded by the Government.

Ms Thwala wanted to know how was the Council planning to address capacity challenges when it had a budget of R3 million.

Mr Dyan explained that that issue was raised in a document provided to them by the Government. The Council was supposed to have 12 employees according to the Government document, but because of budget constraints it had only three.

The Chairperson said a separate session was needed to focus on the transformation matters in the sector.

Agricultural Sector Education and Training Authority (AgriSETA) Presentation
Mr Jerry Madiba, Chief Executive Officer, Agricultural Sector Education and Training Authority (AgriSETA), concentrated his presentation on six key areas.

Overarching aims for 2011/12

To disburse 78% of possible mandatory grants totalling R85m
To disburse 100% of all discretionary funds valued at R84m
To disburse 100% of all pivotal grants amounting to R22m
To roll-out the large scale land reform project worthR64m over 3 years
To increase focus on commodity organisations
AgriSETA to remain one f the leading Sector Education and Training Authorities (SETAs) in offering occupationally aligned qualifications
To continue promoting learnerships, skills programmes, bursaries, internships, mentoring and Adult Basic Education and Training (ABET)

AgriSETA priorities to National Skills Development Strategy (NSDS) 111

Sector Intelligence: to offer credible skills planning, and career and vocational guidance
Responsive management information system (MIS): to offer credible skills planning, and career and vocational guidance
Scarce skills information: to offer credible skills planning, and career and vocational guidance
Responsive to rural needs: to support coops, small enterprises, etc
Integrated rural support: to support coops, small enterprises, and to form partnership with government
Impact on black economic empowerment (BEE) and equity: to find better use of workplace learning
Decent work: to provide access to occupational learning
Responsive provider sector: to promote growth in the further education and training (FET) sector
Provincial presence: to form partnership with government

Allocation of the R106 million discretionary funds for 2011/12

Sector Intelligence – R1.3 million
MIS Revised and aligned to NSDS 111 – R0.3 m
Career Information available throughout sector – R0.6 m
Skills development support to the rural economy – R45 m
Development of Extension Officers – R2.0m
Agri-BEE Charter supported – R0.3m
Decent workplace work – R38.9m
Provider Development and integration – R3.8m
Environmental Focus – R1.3m
Good governance and decent conduct – R3.9m
Provincial presence – R0.6m

4. Learning Programmes to be supported

800 learnerships – R14.7m
1 200 skills programme (employed) – R5.3m
800 skills programmes (under resourced) – R3.5m
80 apprentices – R3.4m
160 foundational learning programmes – R5.3m
40 bursaries – R1.5m
50 new venture creations – R1.8m
Rural structures, commodity organisations – R12.5m

5. Research Activities

210 post-graduate research programmes had been funded
26 Agricultural Research Council (ARC)-specific post-graduate research bursaries had been funded
Every 5 years extensive research into the agri-sector was being conducted
During 2011/12 a sum of R0. 3m was allocated into Agri-BEE research
R1.3m for 2011/12 was set aside for research into environmental matters

6. Challenges

AgriSETA experienced delays in obtaining service level agreements from the Department of Higher Education and Training (DoHET)
Rural development required high level of commitment of Government departments
Poor and Ad-hoc access to National Skills Fund
Low levels of education in agricultural sector
Few young people entering the sector

Discussion

Mr Du Toit commented that there was a bigger need to accelerate training but this needed a lot of money. He further wanted to know how the AgriSETA differed from others because SETAs had acquired the reputation of being useless.

Mr Madiba responded saying ‘training’ was a favourite subject in most entities. He said they come from an era where ‘training’ was loosely and carelessly used. But today when one talked of ‘training’, one talked about it in the true classical sense of the word. He also noted there were 12 agricultural colleges in South Africa, except in Gauteng and Northern Cape. AgriSETA was working hard to reposition them so that it was able to train smallholder farmers. The National Treasury had disbursed funds to the tune of R50 million to these agricultural colleges in order to strengthen them.

On the issue of negative perceptions, he explained that AgriSETA was trying hard to fight that by going out to communities to provide help.

Mr Bosman commented that learnership was one training model that could be used in agriculture. It should be included in the sectoral development programme.

To which Mr Madiba explained that the sector determination for learnerships had stipulated the amount of money that needed to be paid to the one doing the learnership. Most people were not aware that if they take on a learner they got to pay 25% less on tax.

Mr Cebekhulu wanted clarity on two issues. First, if there were attempts to recruit illiterate people who were passionate about agriculture to participate in the sector, and secondly, if the AgriSETA office was accessible to anyone who would like some help from it.

Mr Madiba explained that AgriSETA had never considered the issue of taking up illiterate people until there was a group of disabled who wanted to do a learnership. At that stage AgriSETA did not have a programme for people living with disability. Lastly, he emphasised that AgriSETA was not able to provide access to everybody, anytime. People should organise themselves into a group and AgriSETA would gladly assist.

The meeting was adjourned.

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