Comprehensive Agricultural Support Programme, MAFISA, Ilima-Letsema, Landcare & new programmes: Department of Agriculture briefings

Agriculture, Forestry and Fisheries

06 August 2012
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

The Portfolio Committee, joined by Chairpersons of provincial portfolio committees, was briefed by the national and provincial heads from the Department of Agriculture, Forestry and Fisheries (DAFF) on the performance of the Comprehensive Agricultural Support Programme (CASP), Ilima-Letsema, Micro Agricultural Financial Institutions of South Africa (MAFISA), and the Landcare Programme.

The report on CASP noted that an allocation of R1 billion was made for the period 2011/12, and 87% of the total budget had been spent. Gauteng and North West struggled to meet the 90% expenditure goal were Gauteng and the North West. 10% of funds had been spent on the training of farmers, and further amounts were earmarked for support of extension services and the upgrading of the qualifications of extension officers. R50 million had been allocated for the development of agricultural colleges, which existed in all provinces except for the Northern Cape and Gauteng. Figures were given, in respect of all provinces, of funding available and spent, projects implemented, beneficiaries reached, jobs created, farmers trained, extension officers recruited, and upgrades to facilities. Challenges and mitigatory steps were also outlined, which included delays in procurement, inability to retain technical staff, poor planning and lack of skills. A decision was taken to decentralise procurement processes, and Occupation Specific Dispensation would attempt to address skills problems, whilst a database of contractors was to be created. Provinces struggled to afford the escalating costs of building materials. National  Treasury had allocated R157.8 million to improve the state of agricultural colleges.

The Ilima-Letsema programme focused on increasing food production and rehabilitating irrigation schemes and other value adding projects. A list of the grants that had been allocated to each province was given, together with statistics on households, schools and communities assisted through the various Food Security Programmes. 14 029 jobs were created through the programme in 2011/12. Challenges were cited as frequent lack of detailed plans on the duration of project support, and a proper exit strategy.

MAFISA was a government-supported financial scheme that aimed to increase productivity in farming and agribusiness operations. MAFISA had nine intermediaries, both public and private, who were registered with the National Credit Regulator, and details of their names, allocations, lending and repayments were provided. MAFISA charged farmers 8% interest and retained 7% as payment for its services. DAFF had transferred R320 million of its R500 million budget to various participating intermediaries, and was reviewing performance annually at present, but would increase this to quarterly reviews. Reports were given of intermediaries struggling to recover funding, who were likely to withdraw, and another whose contract was to be terminated. Lists were provided of projects that had succeeded or failed. MAFISA had created 19 853 sustained jobs over the past three years. It challenges included lack of insurance, and lack of plans for recovery if intermediaries were not able to repay. In response to previous queries from Members, Land Bank had agreed to lend the money to intermediaries at an interest rate of 4% instead of 8%.

A report was given on the numbers of tractors and other implements delivered or outstanding, noting that all provinces other than Free State and the Western Cape showed a 100% delivery rate.

The allocations for the Landcare Programme were outlined, noting in particular fencing and soil conservation spending, and outlining progress. 150 projects had been implemented, creating a total of 8 445 work opportunities. Challenges included difficulty in implementing the new reporting system for Expanded Public Works Programmes.


Members felt that the presentations were not sufficient. They particularly questioned the
accuracy of employment figures in the CASP presentation, interrogated the job statistics, and questioned why millions in expenditure seemingly resulted in “a handful” of jobs. There was contention over the ambiguity surrounding “working opportunities” and “full-time employment”. Members agreed that presentation of statistics on spending meant very little if it did not reflect the reality on the ground. The Department was asked to explain the criteria that were used to allocate funding to individual provinces for Landcare programmes. It was suggested that beneficiaries of Landcare Programmes should be identified by name. There was concern over tractors and other implements that were not delivered, and general agreement on the need to develop emerging black smallholder farmers to become commercial farmers in order to improve food security and reduce dependency on imports. Members also asked why the Department’s presentation failed to address ways in which the field of aquaculture could be developed, but noted the later announcement that the Free State was planning to launch a massive aquaculture centre for the use by the entire Southern African Development Community. A DA Member felt that the figures were being manipulated, and an ANC Member commented adversely on the chaotic state of affairs and financial mismanagement of MAFISA. Although the Department undertook to respond to several members’ queries in writing, the point was later made that written responses took so long to arrive that they were of little use. Members also noted a move for the Committee to hold bi-monthly talks with the Minister, and were urged to prepare a list of questions for the meeting with the Minister on 28 August.

Meeting report

Chairpersons’ opening remarks: contextual background
The Chairperson said the aim of the meeting was to establish whether, and in what way, agricultural support programmes were being implemented at provincial level. Agriculture was a matter of national competence, but effective implementation required collaboration between the national Department of Agriculture, Forestry and Fisheries (DAFF) and the Heads of Provincial Departments and Committee Chairpersons in the provinces. Support services should be coordinated to ensure an impact and improvement on the lives of ordinary persons. Previous reports by DAFF had stated that the budget for the Comprehensive Agricultural Support Programme (CASP) had increased incrementally over the years, and emerging farmers were now better known as smallholder farmers. The aim of CASP was not to encourage dependency, but rather to assist black farmers, in particular, to become successful, autonomous agricultural experts. Resources should not be wasted, and there should be measurable progress in the longer term. Consultations on agricultural development between the National Planning Commission (NPC) and DAFF were already under way. It was important that black, commercial farmers increase local production and reduce imports, in order to work toward a food-secured South Africa.

He noted an apology from Ms Tina Joemat-Pettersson, Minister of Agriculture, Forestry and Fisheries, and the Deputy Minister, Dr Pieter Mulder, the MECs from Mpumalanga, North West and Gauteng, as well as Committee Members.

Ms A Steyn (DA) was concerned that Mpumalanga had not sent an official representative.

The Chairperson suggested that the meeting continue nevertheless.

Department of Agriculture, Forestry and Fisheries presentations
Mr Sipho Ntombele, Acting Director-General, DAFF, thanked the Chairperson for providing a contextual background of the meeting and its purpose. He recognised that some Members had expressed concerns during previous presentations.

Comprehensive Agricultural Support Programme (CASP) presentation
Ms Elder Mtshiza, Chief Director: CASP, DAFF, said the presentation would focus on the performances of all nine provinces during the 2011/12 financial year. The Financial Service pillar of CASP was the Micro Agricultural Financial Institutions of South Africa (MAFISA), and was responsible for providing loans to eligible farmers. An allocation of R1 billion was made for the period 2011/12, and 87% of the total budget had been spent. Provinces that struggled to meet the 90% expenditure goal were Gauteng and the North West. 10% of funds had been spent on the training of farmers, and another amount was earmarked for the Section Recovery Plan, which supported extension services in general and the upgrading of the qualifications of extension officers in particular. R50 million had been allocated for the development of agricultural colleges, which existed in all provinces except for the Northern Cape and Gauteng.

The detailed outline of each province’s performance included figures for the amount of funds available, funds spent on various commodities, projects implemented, beneficiaries reached, jobs created, farmers trained, extension officers recruited, and the extent to which facilities had been upgraded (see attached presentation for further details).

The presentation also mentioned the challenges that each province faced, as well as mitigating steps that were being taken to remedy the problems. Many provinces experienced delays in procurement practices and struggled to retain technical staff, causing inadequate resource and skills capacity and poor planning. The provinces had decided to decentralise authority in order to speed up the procurement process. The provinces would also make better use of contracted engineering services, and would retain skills by implementing an Occupational Specific Dispensation (OSD). The lack of capacity of developing contractors would be addressed by setting up a log of contractors, by closely evaluating all bidding entities, and by monitoring the progress of those who were awarded tenders. Provinces struggled to afford the escalating costs of building materials, and DAFF had undertaken to explore opportunities for alternative markets, such as schools or hospitals. The implementation of projects in KwaZulu-Natal (KZN) and Mpumalanga was negatively affected by floods and droughts. Mpumalanga province had received a special allocation from DAFF to assist with the re-opening of the Marapyane College of Agriculture.

16 202 farmers had been trained across the country. National Treasury had allocated R157.8 million to improve the state of agricultural colleges.

Ilima-Letsema presentation
Ms Mtshiza said the Ilima-Letsema programme focused on increasing food production and rehabilitating irrigation schemes and other value adding projects. The presentation included a list of the grants that had been allocated to each province. It also mentioned the numbers of households, schools and communities that had been assisted through the various Food Security Programmes of each province. 87 731 hectares of agricultural land had been planted during 2011/12. The Ilima-Letsema programme had created 14 029 jobs during 2011/12. There was a lack of detailed plans on the duration of project support, and many project plans did not include a proper exit strategy.

MAFISA presentation
Mr Jacob Hlatshwayo, Chief Financial Officer, DAFF, said MAFISA was a government-supported financial scheme that aimed to increase productivity in farming and agri-business operations. MAFISA had nine intermediaries, both public and private, that were required to be registered with the National Credit Regulator in order to participate in the scheme. The presentation listed all intermediaries, the funds that DAFF had allocated to each, the funds it lent to farmers, the funds it received in repayments, the numbers of beneficiaries and jobs created by each intermediary. MAFISA charged farmers 8% interest on annual repayments, of which it retained 7% as payment for its services. DAFF had transferred R320 million of its R500 million budget to various participating intermediaries. The Department presented annual review workshops to monitor and evaluate the performance of intermediaries, but in future workshops would be held on a quarterly basis.

Hlanganani Farming Finance, an intermediary operating in Limpopo, was said to be struggling to recover the funds it had disbursed to farmers. Hlanganani Farming Finance had subsequently informed DAFF that the intermediary would withdraw from the MAFISA scheme in order to focus on collecting the disbursed money from farmers. DAFF had decided to terminate the contract with the Mpumalanga Economic Growth Agency, following the intermediary’s mismanagement of funds and the improper investment of money.


Mr Hlatshwayo said he would save time by skipping over an analysis of projects that had succeeded and a list of projects that had failed (see attached presentation for details). He noted, however, that MAFISA had created 19 853 sustained jobs over the past three years.


Mr Hlatshwayo said one challenge that faced MAFISA was the lack of insurance, which meant there was no plan in place to ensure the recovery of funds if an intermediary was not able to repay DAFF. The Department was in the process of reviewing the credit policy of MAFISA, and considered partnerships with commercial banks, commodity organizations and other institutions.


Mr Hlatshwayo recalled a query raised by a Members during May about LandBank, and said that DAFF had subsequently allocated funds to LandBank, who had agreed to lend the money to intermediaries at an interest rate of 4% instead of 8%.


Mechanisation (progress report) presentation
Mr Bonga Msomi, Manager: Conditional Grants, DAFF, briefed the Committee on the numbers of tractors and implements that were either delivered or still outstanding in the respective provinces. All provinces, except for the Free State and the Western Cape, showed a 100% delivery rate. The national delivery rate, on average, was 90% for tractors and 95% for implements.

Landcare presentation
Ms Sebueng Chipeta, Acting Deputy Director-General: Forestry and Natural Resources Management, DAFF, outlined the strategic and national objectives of the Landcare Programme. The total allocation to this programme was outlined (see attached presentation), and so far R55 million had been used to build fences. Other expenditure included funding for soil conservation schemes. DAFF worked in collaboration with the Department of Water Affairs (DWA) , the Department of Environmental Affairs (DEA) and the Extended Public Works Programme (EPWP) to carry out the mandate of the Landcare Programme, which was to preserve natural resources. The presentation outlined the Landcare Programme’s progress for the first quarter of 2012/13. During this financial year 150 projects had been implemented, creating a total of 8 445 work opportunities. The presentation also showed the schedule according to which money was paid out to the various provinces.

Provincial officials were struggling with the new reporting system that was developed by the EPWP. The EPWP had arranged for the training of officials.


Discussion
Mr P Van Dalen (DA) wanted to know the difference between a work opportunity and full-time employment. He was of the view that too much money was being spent yet too few jobs were being created.

Ms Chipeta responded that full-time employment was understood to be the number of working opportunities, divided by the number of working days in a year (220).

Mr Van Dalen accused Mr Chipeta of playing with words. He said that 13 000 working opportunities divided by 220 days per year was equal to only 59 permanent jobs. He was outraged at the thought that more than R100 million had been allocated to create only 59 permanent jobs.

A representative from DAFF said the figures in the MAFISA presentation were not completely accurate. She said that provincial officials may have made mistakes or errors due to the lack of familiarity with the new reporting system that was developed by the EPWP.

The Chairperson suggested that DAFF look into the matter in order to establish where the mistake had been made. She said the Department should respond to the Committee in writing with the correct information

Mr Ntombele said that the funds allocated to provinces were not meant only for job creation. Other outputs also must be considered, such as land that needed to be improved and new infrastructure and equipment that needed to be bought.

Mr Van Dalen said the figures in the MAFISA presentation were misleading. The amount of money that was spent through the Eastern Cape Rural Finance Corporation did not correspond with the numbers of jobs that were created. He said that it was all good and well to present impressive figures, but numbers meant very little if they did not reflect the reality on the ground.

Mr Hlatshwayo said the project to which Mr Van Dalen was referring was an example of a failed project, and that was not the general tendency for all projects.

The Chairperson said there seemed to be a disjuncture between the information presented by DAFF and the real state of affairs.

Mr Ntombele said that the provincial Heads of Department had to verify any information that DAFF had cited, in responses to the questions and queries of Committee Members. Therefore, he asked the Chairperson how inputs from both DAFF and provincial HoDs should be aligned. He said he would provide a high level response. He acknowledged that there was always room for improvement in the way that agricultural projects are monitored and evaluated. He said the difficulty for DAFF was that projects were implemented at a provincial level. 

Mr Ntombele also noted that DAFF had taken a collective and conscious decision to evaluate the intermediaries who participated in the MAFISA scheme. 

The Chairperson said that the national DAFF should provide responses first, after which provincial HoDs could give an input.

Mr Ntombele admitted that the DAFF’s presentations did not discuss the impact of agricultural support programmes. The CASP presentation included figures from recent years, but in order to perform a useful and scientific impact assessment, it was necessary to use data from at least five or ten years back. He said he was aware that certain figures did not add up. He was paying special attention to improving the quality of reports that were presented to Parliament.

Dr Limakatsi Moorosi, Head of Department, Free State Provincial Department of Agriculture, said that this Department had already begun working with DAFF to discuss the impact of CASP projects, and to determine how much progress had been made with CASP. Once the report was complete it would be submitted to Parliament. 

Mr Mosebenzi Zwane, MEC, Free State Department of Agriculture, responded that Landcare projects in the Free State were going well, and he agreed with the figures as presented by DAFF. He said that compared to other provinces, the Free State was less affected by MAFISA.

Mr Mkhangu Ramashiya, DAFF, said that never before had a full impact assessment study of MAFISA been performed. He said that DAFF would start work on such an assessment in due course. Whilst he was not currently in a position to comment on the funds stolen in the Eastern Cape, he assured Members that the Committee would receive a detailed written response after the matter had been properly investigated.

Mr Brent Walters, (DA, Western Cape Provincial Legislature), said it was gratifying to learn of increasing investment in agricultural colleges in KwaZulu-Natal. He questioned the accuracy of the figures as presented by DAFF. He said food production and food security were crucial issues, and wanted to know how DAFF calculated the figures that represented projected yields. He said vast pieces of land were not being utilised optimally.  

Mr Phila Nkayi,
Chairperson, Eastern Cape Portfolio Committee on Agriculture, Forestry and Fisheries, said it was important that all stakeholders had time to consult reports and documents before meetings. He wanted a more detailed explanation of the policy that regulated the distribution of tractors.

Dr Moorosi said that DAFF required provincial structures to draft their own policy to regulate the distribution of tractors. He said that due to reliable security services at Free State agricultural colleges, theft of tractors and other implements was not a big concern.

Mr Nkayi wanted to know how much land was being used for the implementation of the Landcare Programme.  

Ms Chipeta said that DAFF was in the process of shaping a framework for the implementation of Landcare programmes. The framework was expected to be completed fairly soon, and at that stage it would be known exactly how much land was involved.

The Chairperson noted that no representative from the Gauteng provincial legislature was present to give feedback on the presentations. He also noted that no chairpersons or representatives from the provincial legislatures of Mpumalanga, Northern Cape or North West were present to give feedback on the presentations.

Mr Themba Mthembu, Chairperson: KwaZulu-Natal Portfolio Committee on Agriculture and Rural Development, said he shared the sentiments of Mr Nkayi. 

Mr Mashaba, Chairperson: Limpopo Portfolio Committee on Agriculture, Forestry and Fisheries, said it was unclear whether emerging or smallholder farmers were developing into successful commercial farmers.

Ms Mtshiza said that most smallholder farmers were producing and selling food, and therefore, in essence, they were seen as commercial farmers. Furthermore, she said that DAFF would undertake to determine more specific definitions of the different types of farmers.

Mr Mashaba said there was too little elaboration on the reasons why certain intermediaries of MAFISA failed or succeeded. He asked if DAFF had any plans in place to ensure that people working for intermediaries were empowered. He said there had to be better synergy between DAFF and other departments, like the Department of Human Settlements and the Department of Health, because a person with too little land could not be expected to run a successful farm or agricultural garden.

Mr B Bhanga (COPE) asked whether MAFISA had any mechanisms in place to facilitate the allocation of funds to intermediaries, and to ensure the spending of entire budgets. He also wanted more information on any monitoring and evaluating mechanisms that DAFF might have in place.

Mr Hlatshwayo responded that DAFF ordered intermediaries to provide the Department with monthly reports. He said officials from DAFF were responsible for double-checking the accuracy of the reports. He said that quarterly reviews would be held in future so that problems could be dealt with more speedily.

Mr Bhanga asked how DAFF would ensure that tractors were not stolen before they could reach their beneficiaries. He recalled the Minister having spoken about the importance of aquaculture, yet the presentations did not address any issues related to aquaculture.

Ms Mtshiza responded that aquaculture remained a national responsibility and provinces had not yet taken on board plans to develop aquaculture. Aquaculture was not mentioned in the Division of Revenue Act, and this dwarfed the market value of aquaculture business. As a result, provinces were not prepared to make budgetary commitments to develop aquaculture.

Mr Hlatshwayo said aquaculture fell under the fisheries branch of the EPWP, and was thus budgeted for under that branch.

Dr Moorosi said the Free State would soon launch a pilot project focused on aquaculture development. He said that fish ponds had been constructed on farms in Springfontein and other areas in order to start with the breeding of fish species.

Mr Nkayi said there was an improvement of the quality and accuracy of information and data since the last meeting. He asked how DAFF would ensure that the information submitted to the Department by the provinces was accurate.

Ms A Steyn (DA) asked for clarity on the criteria that were used when funds were allocated to provinces.

Ms Mtshiza responded that DAFF funds were distributed according to a funding framework that was in line with the Division of Revenue Act. She said allocation criteria included a number of variables, such as competitive CASP performance, land area, the delivery of restituted land, and production benchmarks. She said that Gauteng had received a relatively small allocation due to its limited land space.

Ms Steyn asked why the provincial departments of Gauteng and North West had spent only 63% and 84% of their budgets. She suggested that the failure to spend the entire budget may be linked to the criteria for fund allocation. Finally, she said it was extremely problematic that money was spent, yet provincial departments were unable to point toward any physical proof of what had been purchased with the money. She suggested that the provincial departments compile a list containing details of all the tools, equipment and infrastructure that had supposedly been purchased. 

Ms Mtshiza responded that the lists to which Ms Steyn was referring did in fact exist, showing  details of all projects and beneficiaries.

Mr Hlatshwayo assured Ms Steyn that a detailed list of the location of beneficiaries could be made available to her.

Ms Steyn said she was “disgusted” at the disorganised and chaotic financial affairs of MAFISA. She said figures were too general, and whoever was in control of MAFISA should ensure that specific names were listed under beneficiaries. She asked whether MAFISA had ever heeded the Portfolio Committee’s request to provide a written report of the mismanagement of MAFISA funds.

Mr Hlatshwayo responded that he was not aware that any MAFISA funds had been misused. He said he would respond to Ms Steyn’s comment in writing. He said that although there was a degree of chaos, contracts with intermediaries could not be renewed until intermediaries complied with all the clauses in the agreements between DAFF and the intermediaries.

Ms Steyn said that Landcare was a crucially important part of agriculture, and she was concerned that no-one was prepared to take responsibility for Landcare programmes. She was worried about the lack of a comprehensive national plan for Landcare. 

Ms Chipeta said she agreed that too little money had been allocated to Landcare. She said DAFF had already approached National Treasury to request more funding for soil conservation schemes and the building of fences. She said provincial departments were required to write to DAFF if they desired more funding for their Landcare programmes. So far, only Limpopo province has put in a written request. The implementation of Landcare programmes proved difficult in areas near the former homelands, due to a lack of engineers and soil conservation technicians.

Ms Steyn was outraged at the neglected state of commonage land near municipalities. She wanted to know whether there was an understanding between local, provincial and national government as to who would be responsible for taking care of commonage land.

At this point, The Chairperson excused himself from the meeting, and asked Ms N Twala (ANC) to act as Chairperson.

Ms Twala asked what DAFF meant by the “upgrading of extension officers’ qualifications”. She wanted to know more about the minimum requirements that were necessary to become qualified, and asked whether certain officers with PhDs were not perhaps over-qualified.

Ms Mtshiza responded that there was no policy in place to prescribe the qualifications that extension officers required. Instead, DAFF had regard to what was being done in other countries, to decide on the level of qualification that was necessary for extension officers. She said the review of the Extension Recovery Plan would culminate in a summit, around October or November, and that process would include consultations with community organisations and farmers’ unions. 

Ms Twala asked for clarity on the current state of agricultural colleges, with details of student intake, finances and accreditation

Dr
Mmamakgaba Mogajane, Head of Department: Agriculture, North West, responded that her Department was still waiting for a feedback report from the Council of Higher Education, which had been promised by June.  Her Department had plans to construct a prestigious centre for the study of irrigation systems in particular, to be used not only by South Africa, but by the whole Southern African Development Community. 

Ms M Pilusa-Mosoane (ANC) congratulated DAFF on the improved accuracy of the information that the Department presented. However, she commented that the budget for Landcare programmes was insufficient. She questioned how, and according to what criteria, money was allocated to provincial departments.

Ms Mtshiza said that the allocation of funding to provinces was based on the market value of the projected yield of agricultural production within a province. DAFF consulted with production teams during quarterly review meetings. When provincial structures reported to DAFF, close attention was paid to the number of hectares that each province had planted.

Dr Moorosi said that this Department would write up an all-inclusive report on the current state of food security that would include details of cultivated areas and projected yields.

Ms Pilusa-Mosoane wanted to know more about the “special allocation” that DAFF provided for the re-opening of Marapyane College in Mpumalanga. She asked from where the money came, and how much was provided. She urged that departmental presentations should contain sufficient details.

Mr Mokutule Kgobokoe, Acting Deputy Director General, DAFF, said that Marapyane was not an independent college. Instead, it was established as a satellite campus of the Lowveld College of Agriculture in Mpumalanga. DAFF had allocated additional funding of R2 million to Mpumalanga in order to finance the rejuvenated of the infrastructure on Marapyane College.

Officials from DAFF were given permission to leave the meeting at this point, so that Members could discuss issues of concern.

Members’ further deliberations
Mr Van Dalen felt that DAFF should be more precise and clear about where, when and for what purpose the allocated funds were used. He was suspicious that departmental officials were manipulating the figures, and urged the Committee to interrogate those fully. He said the Department should come up with clear-cut definitions, so that there would be less confusion about the difference between a job and a job opportunity.

Ms Steyn reiterated that it was of little use to present figures of spending, without details or proof of value achieved, and said there was disparity between what as discussed in meetings and what was happening on the ground. She doubted whether extension officers actually visited farms. She suggested that instead of giving columns filled with statistics, it would be more useful if DAFF’s presentations included, for instance, half-page reports using practical examples, to give more clarity on the state of agricultural support programmes in the country.

Ms Twala said she was frustrated with DAFF. She felt that the Department’s responses to questions were too vague and officials were deliberately evading pertinent issues. She felt it would not help to request a written response, because that could take up to six months.

The Chairperson said there was a lack of communication between the Chairpersons of the provincial portfolio committees and this Committee, and urged for better coordination. He also said there were plans to arrange for bi-monthly talks between the Minister and the Portfolio Committee, as these meetings with the Minister would present a good opportunity to deal with pertinent issues. A meeting with the Minister was scheduled for 28 August 28, and he urged members to prepare questions.

The meeting was adjourned.

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