Minister of Agriculture, Forestry & Fisheries on the Annual Report 2011/12

Agriculture, Forestry and Fisheries

08 October 2012
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

The Minister of Agriculture, Forestry and Fisheries and her senior management team presented the Department Annual Report highlights to the Committee. The Department was pleased to report an unqualified audit and achievement of 99.8% spending of its budget. The Minister said it was important to consider the plight of the communities the Department endeavoured to assist in order to be able to fish and farm. The Minister clearly stated that her Department would not tolerate corruption and would prosecute and discipline without fear or prejudice. The sector contributed over R50 billion in exports in the year ending 2012 and therefore made a very important contribution to the economy. It was also a significant employment provider employment for over 200 000 people in the sector.

The Department had a total budget of R5.9 billion which was 0.9% of the total government budget. The Minister and Senior Management said that the Department’s budget was very minimal considering the work it was required to do in such an important sector of the country. A request was put to the Committee to support the Department in its effort to increase the budget.

The Committee on the other hand did not share the optimism of the Department in its achievements and outlook. The Committee pointed out that it appeared the Department had only achieved 20% of its targets and queried such a huge spending of 99.8% of the budget against this under achievement. They did not approve of the performance awards paid by the Department to its staff members. Committee members expressed concerns about the high staff turnover especially as it affected service delivery much needed by the poor communities. The Committee felt that the Department needed to display more achievements and improved performance before it could ask for a budget increase. The Committee said that what the Department was reporting and what they had seen on the ground did not match. It asked for further explanations about spending in the communities and in the usage of tractors. The Committee was pleased to hear the Department would not tolerated corruption but it pushed for more action on the matter. The Committee further queried the Department’s spending on foreign travel and was not satisfied with the answers provided. There were also queries about consultancy fees amounting to R1.5m and queries about alleged Department contribution to the Zuma Village Project which it denied ever making any contribution to.

Meeting report

Minister’s Introductory Remarks
The Minister of Agriculture, Forestry and Fisheries, Ms Tina Joemat-Pettersson, said she was pleased to present the report of the Department and the public entities reporting to her. She was proud to say that her Department had received an unqualified audit. All Annual Reports to be presented had been tabled by the due date. She complimented the Acting Director General and Senior Management Team from the Department and the CEOs of the entities for their work and cooperation. The reports represented a rich mine of information about the Department and its work and deserved close scrutiny while holding themselves accountable. The Department also needed to give credit to the Chief Financial Officer and his team. The Annual Report was not just a financial report but also reflected the impact of the work of the Department and its entities. She reminded the meeting that it was a large Department helping a struggling community and its work involved, amongst, others ensuring that the community fishing folk could fish and use and sell their fish and ensure farmers were able to do the same. It was dealing with a multi billion dollar industry. She reported that the Department has been stablised and was on its way to meeting the goals of the strategic plan.

Department of Agriculture, Forestry & Fisheries (DAFF) Annual Report 2011/2012 briefing
Mr Sipho Ntombela, Acting Director General DAFF echoed the message of the Minister and also reiterated the importance of getting an unqualified audit report. He remarked that the presentation had not reached the Committee before the meeting because he had not been happy with the quality of the report and had to work a bit more on improving it, to accurately reflect what was in the Annual Report.

The Department had focused on implementation of a new approved macro structure to ensure maximum performance. DAFF directly contributed to Outcomes 4, 7 and 10 of the Presidential Outcomes. Its operating environment was influenced by the National Growth Plan, Industrial Policy Action Plan 2 and the Comprehensive Rural Development Plan. The Integrated Growth and Development Plan for Agriculture and Forestry Sector would ensure the sector responded to the above plans. The Department had focused on e
mployment creation and increasing the number of participants in agriculture, forestry and fisheries (AFF) through support for smallholders and processors; improving the income and conditions of farm workers, foresters and fishers; enhancing exports; and ensuring the sustainable use of natural resources.

Exports
The value of exports showed an increase of 10,5%, from R46 130 million in 2010 to about R50 994 million in 2011. The top five export products in terms of value for 2011 were, citrus fruit (R7 067 million); maize (R6 038 million); wine (R5 492 million); grapes (R3 398 million); and apples, pears and quinces (R3 337 million); the value of imports during 2011 came to approximately R44 920 million, compared to R34 618 million in 2010 — an increase of 29,8%.

Forestry
The forestry sector (forestry and forest products) contributed approximately 1.2% to the GDP; the total investment in the forestry (trees) industry increased to R24.8 billion. This investment comprised 58.6% in trees; 19.4% in land; 13% in roads; 6.2% in fixed assets; and 2.8% in moveable assets; The Total book value of investment in the forest products subsector by type of processing plant amounted to R15.7 billion. This investment comprised 82.8% in pulp and board plants; 11.8% in sawmills and veneer plants; 1.0% in pole plants; 0.2% in mining timber and 4.2% in other plants; The five major import products in terms of value during 2011 were wheat and meslin (R4 346 million); rice (R3 687 million); palm oil (R2 992 million); poultry meat (R2 734 million) and soya-bean oil (R2 712 million).

The forestry sector employed approximately 201 025 people in 2009. The forestry subsector provided approximately 77 000 direct jobs and 30 000 indirect jobs. The pulp and paper subsector provided approximately 13 000 direct and 11 000 indirect employment opportunities. Some 20 000 workers were employed in sawmilling and 20 000 indirect jobs were created, while 6 000 direct and 3 000 indirect jobs were created in the timber board industry and 2 200 direct and 2 000 indirect jobs in the mining timber subsectors. A further 11 000 workers were employed in miscellaneous jobs in the forestry sector.

Fisheries
The fishing industry was a significant employer of mainly unskilled and semi-skilled labourers (mainly in the Western Cape). Direct employment in the industry constituted approximately 27 000 jobs (16 000 in the primary sector and 11 000 in the secondary and tertiary sectors), while an additional 81 000 people were indirectly employed in industries that were at least partially dependent on the fishing sector. Unlike most other sectors, growth was not dependent on labour and capital inputs alone. The binding constraint was the stock of fish available, as well as the annual harvest that it could sustain. South Africa was a net exporter of fish and fish products. In some cases, like rock lobster, squid, tuna and demersal longline, almost the entire production was exported, and the country was exporting approximately 54% of the total demersal trawl catches (economically the largest fishery). The main markets were Spain, Japan, Italy and the United States of America. The total value of the exports during 2010 was approximately R3.2 billion.

Department Performance Highlights
The Acting DG reported that the Department had a new structure which was bigger than the previous one. Hence, there were more vacancies that needed to be filled and he explained the variance in the report. The Department was committed to achieving the targets and it was monitoring the vacancy rate and was working on filling the positions on an ongoing basis. The Department was also in the process of implementing a Master ICT System plan as the different divisions had different systems. Forty percent of the work was still outstanding. The Marine Living Resources Act and regulations needed to be reviewed in order to implement the small scale fisheries policy. A legislative review had already been conducted.

Finances
Mr Jacob Hlatshwayo, Chief Financial Officer, reported that the Auditor General had raised concern over the usefulness and reliability of information and the concern had been addressed already. There was also an issue about the procurement of three quotations and the Department would need to come up with controls to address that. The Department was initially allocated R4.7 billion which had been adjusted. The Department had underspent by R36m. In the previous year, underspending had been about R100m. Most was related to items in the bidding process which had not been finalised. They included Mobile IT Clinics, and IT equipment. The transfers had not been made due to the MOU not being finalised. The wasteful and irregular expenditure in the current financial year was R6.1million – this was mainly based on items that officially did not go through a procurement process. The Department had been able to detect that before the audit and it was reported to the Auditor. Fruitless and wasteful expenditure amounted R10 000 for the current financial year.

The Minister remarked that the Department’s budget was a very small one of R5 billion in relation to other Departments. The Department was working hard to reverse the situation and she requested the Committee to consider the matter as agriculture was an important part of the South African economy and livelihood.

Discussion
Mr S Abram (ANC) gasped with disappointment as he commented that he did not share the optimism that the Acting Director General had because the Department was reporting 98% spending and yet it seemed that it had only achieved 20% of its targets. He asked the Department for an explanation.

The DAFF Acting Director General disagreed with Mr Abram saying that he was not sure how this calculation was made, but he disagreed – but did not want to go into a debate about the issue at this level.

Mr Abram reminded the meeting that the Department had been changing Accounting Officers since 2009 and that there had not been much stability in the Department. Losing key people since the 2009-2010 financial years had contributed to the instability within the Department and therefore under-delivery.

Mr Abram continued as he raised his voice in further disappointment that he had read in the papers that the Department Director General, Mr Langa Zita, had been suspended from the Department without any explanation to the Committee. He demanded an explanation from the Department of the circumstances that lead to his suspension.

Mr Ntombela confirmed that the DAFF Director General was terminated on August 16, 2012 but the circumstances regarding his termination could not be discussed in the public forum. He said that the Department will provide a written communication to the Committee regarding the matter.

On the lease of vehicles, Mr Abram displayed further dissatisfaction that the contract of leasing vehicles had expired but the Department continued to lease vehicles on a month to month basis. He demanded an explanation on how long the contract had expired, how much it was worth, and how much the Department had been spending in continuing to lease vehicles. He also asked about the gifts the Department was receiving and if they were recorded.

The DAFF CFO explained that the Department had an universal contract with the leasing agent Pakisa. The Forestry Division hired vehicles from them and he was not aware that there was a month to month contract with the agent. The Annual Report referred to contracts with the Public Works Department for buildings. They go out and source buildings for the Department. The Department kept records of gifts from everyone such as the one from SA Breweries, Total SA for Arbor week, sponsorship from the World Bank and the FAO.

Mr Abram also raised his concern about the Department liability of R50m paid to ‘Dr’ Phil Mohlahlane, Land Bank's former acting chief executive. He asked the Department for further explanation on this amount and what the claims were. He asked for explanations on the amounts of R1.4million for outsourced services and R7.8m for unspecified expenditure. He queried why R30.76m was paid out in performance awards for people who had under performed, given the targets had not been achieved. His problem with the Department was that he was not sure the same people sitting in the meeting would be there in six months time as he was sick of promises being made that were not achieved.

The DAFF CFO explained that the claims against the Department referred to liabilities which catered to the contingent liabilities line item which was a provision made for purposes of people claiming against Department. A written response would be given to the Department regarding the case of Dr Mohlahlane as there was a case pending against him.

Mr Abram asked about for a breakdown of foreign travel asking the Department for more details.

The DAFF CFO explained that the Department only approved foreign travel where it had a mandate. South Africa had bi and multilateral agreements that the department had to oversee hence the travel obligations.


Ms A Steyn (DA) said she was also not as positive as the Acting Director General. She thanked the Department for bringing reports in on time. She also agreed with the Minister that the Department budget was very small and this affected service delivery to the people who needed the Department.

Ms Steyn said that the Department was not achieving what it was supposed to achieve and agreed with the Minister that its policy needed to be discussed. She referred to page 12 of the Annual Report on the closing gap between exports and imports because SA was not performing optimally.

Ms Steyn agreed with Mr Abram that the reasons for suspending the former DG for the DAFF should be made known.

Ms Steyn said that the Committee had also been asking for information about what was happening on the ground. She referred to the piggeries and farmers shearing sheds in her community and their requirements. She reminded the Department that it was not about spending the budget but about the impact on what was happening on the ground.

Ms Elder Mtshiza, Chief Director for the Comprehensive Agricultural Support Programme (CASP), responded that the Department did share her sentiments in terms of adequate controls on spending conditional grants. It had since embarked on deploying a member to do on-the-spot check ups. A small team has been engaged to focus on monitoring CASP on the ground.

Ms Steyn said that she still needed an answer on why the Disaster Management Funds had not been spent in the provinces. She queried the vacancy rate which had gone up to 13% saying that it was even more of a concern because the Senior Management posts were not filled and the more senior the posts, the higher the vacancy rate. She asked the Department to explain why it was so high.

The Acting DDG Corporate Services said that the vacancies had actually reduced to 13% and the reason for the rate was the Department was continually creating posts. There was an attempt to fill certain posts.

Ms Steyn said that she really thought the Minister should be held responsible for the Department as she felt that the Department was failing the agricultural society of South Africa. She asked about the irrigation scheme target of 5% and what it related to.

Ms Steyn said that she had been reading in the newspapers that there was a serious food problem coming to African countries – especially in Lesotho. She wanted to find out if there was a Minister that was taking agriculture seriously.

Ms Steyn asked about the tractors programme of the government – was the Department monitoring what was given out and its usage. She had seen a tractor in the Free State that had been standing in the same spot for three years with its plastic cover on.

The Deputy Director General for Food Security and Agrarian Reform, Dr Sizwe Mkhize, explained that there were issues relating to tractors and that one had been stolen as it had been working near the SA-Mozambique border. It was suspected that it was taken over the border.

Mr B Bhanga (COPE) said that the Department would not be able to do it alone without firm political leadership. The Committee could only assist but if the policies were not put in place and there was no functioning body to monitor the issues and problems then it would not help.

Mr Bhanga asked the Department if was true that it had given money towards the President’s Village instead of the people of the country.

The Minister clarified that R800million had never been allocated to the President’s Village as had been alleged. She had read about it in the newspaper but she had never made such an allocation.

The DAFF Acting Director General also confirmed that no money had ever been given to the President’s Village project and requested the Committee to bury such a story as it was simply not true.

The DAFF CFO confirmed that he had never authorised a payment of R800m towards the President’s Village project.

Mr L Gaehler (UDM) wanted clarity on assistance for small holder farmers and subsistence farmers. He referred to the report by the Department that it has established 90 cooperatives and registered 91 and asked the Department to explain the difference between being registered and being established.

The Chief Director: CASP explained the figures in the report did not include households but looked at small holding farmers with more than one hectare of land. CASP was being transferred to the provinces and was limited by its funding. There was a vision of a one stop financing model where the Department wanted to centralise funds nationally and to align CASP with the provinces. CASP needed to draw on partnerships with people to spend more on anchor projects.

Dr Sizwe Mkhize, DDG: Food Security and Agrarian Reform, added that support provided to subsistence farmers included fencing and mechanisation support in KZN, Eastern Cape, Limpopo and Mpumalanga. In KZN alone, the Department had delivered 20 000 hectares to poor people in farming. But it had to talk to the budget the Department had. There were different types of cooperatives being registered with DTI.

Mr Gaehler also asked the Department to explain why they had assisted the same colleges in the financial year under review as in the previous financial year. He queried the amount of R1.5m spent on consultants. He also asked for explanation on the CASP programme having being transferred to provinces, without being properly monitored.

The DDG: Food Security and Agrarian Reform said that CASP needed deep analysis as for a long time, government had been intervening instead of investing which affected sustainability. If one visited the beneficiaries from six years ago, one may ask where all the money went. Whether those farmers could stand on their own was another question.

Ms Sebueng Chipeta, Acting DDG: Forestry Natural Resource Management (FNMR), explained that the R1.5m for consultants in the Annual Report referred to road infrastructure costs which involved a bidding process. One of the roles of government was to create an enabled environment therefore there was a need for a consultant to do assessment of roads in all rural areas which included rail transport. It involved interviewing all smallholders in the areas.

Ms R Nyalungu (ANC) said she was worried about the high staff turnover as the staff did not know if they would be there tomorrow and it affected their performance. The Minister needed to check on this as it had too much impact on the department. She asked for an explanation of the R70m put aside to implement the Zero Hunger Programme which had not been implemented.

The Minister explained that department staff members can remain in the Department if they were not corrupt. She asked the Democratic Alliance to explain why they wanted to defend corrupt officials.

The Chairperson interjected saying it was an unwritten rule that no other party existed in the meeting.

The Minister said she recognised this and apologised for mentioning other parties.

The DAFF CFO explained because the project was stopped, the money was allocated for other purposes.

The Chairperson asked the Department to explain what they were doing about biofuels. He also raised concern about the aging farmers. Were there any initiatives to bring in young people to farming. He also asked what size budget the Department had in relation to the whole government budget.

The DDG: Food Security & Agrarian Reform said that government had only recently decided on blending levels for bio ethanol which presented an opportunity for the agricultural sector. Bioethanol investors were needed but there were issues that needed to be verified such as outlets and who would support them and link them to outlets. The Department was working in their programmes to train young people to become farmers. Young people would be identified from various provinces to have practical training so that when they leave a training facility, they would be proficient in what they had learnt about such matters as animal husbrandry or on how to vaccinate an animal. The first intake was 18 people (two per district).

The Acting DG DAFF said that the Department had a budget of R5.9 billion which was 0.9% of the total government budget.

The Minister remarked that there was a need to understand the legislative, parliamentary, administrative and judiciary responsibilities of each member of the Department. She referred to the double load of engagements of both the portfolio and select committees expected of the Minister of Agriculture to attend. She felt that no minister was expected to attend parliamentary committee meetings as much as the Minister of Agriculture was.

The Minister continued that the incidence of corruption in the Department could not be overlooked and that the Department would never mask corruption of any form. They would charge people without fear, favour or prejudice. She made it clear that once there was factual information, the Department would act on it.

Ms Steyn said that she did not want the Department to think that the Committee was being negative as they had been on the ground and had seen what was going on out there. She pointed out that the Acting DG had told the Committee that he would give an explanation in writing about the suspension of the former DG to the Committee and the Committee had not received it. She asked if the matter was a state secret.

Ms Steyn asked the Chairperson if the Committee could get the biofuel plan. She asked the Department if the 2009 figures on pages 12-13 of Annual Report were the latest ones for forestry as the consultant’s contract had finished and it affected the report.

Ms Chipeta, Acting DDG: FNRM, confirmed that the latest figures were 2009 as they were behind a year with the statistics.

The Chairperson asked the Department to submit written feedback the next day to the Committee about the former DG and Dr Mohlahlane.

Mr Abram pointed out that sometimes it was necessary to remind people that section 55(2) of the Constitution gave the power to the National Assembly to ensure the executive was accountable to it. He reminded the Department that he had asked for details on small farmers in May 2012 and he had not received anything from them. He said that the Department had provided pie in the sky figures, not aligned with the budgets they had and what they delivered. He challenged the Department to prove them wrong, that their achievements made up less than 20% of the targets yet the spending was 99.8% of department budget. Then he would be prepared to fight for the budget increase for the Department.

Mr Abram congratulated the Department for saying that they would fight corruption but he wanted to see the action. He wanted more information about the beef farmers figures and he wanted the Department to show him where they were.

Mr Abram was frustrated with the CFO’s response to his query about the R17m spending on foreign travel. He wanted to know who travelled, for what purpose and other details. He asked again about the explanation for the unspecified spending of R7.8m on page 119 of the Annual Report. He also asked the Department to explain the performance awards to state who got them and why.

The Acting DG DAFF explained that the performance awards referred to Levels 1-12. If performance was satisfactory, then it went up by 1 notch progression. Performance awards included paid progression and it happened every year for employees. For Senior Managers at Levels 11/12 no performance award was granted.

Mr Gaehler was also not happy with the answers. He queried a report in the newspaper about three months before, where the Daily Dispatch newspaper in the Eastern Cape reported that the Minister was giving R800m to assist the Bizana area with ploughing. He reminded the Acting DG about the meeting they had had for a policy for tractors in the provinces to harmonise and standardise the fees being charged for using the tractors. He told the Forestry DDG that he was very disappointed that she did not return his call the day before as he had an urgent matter to discuss relating to tenders and small holdings – in that the tenders were not evenly distributed. He asked Forestry what they had to do with roads if it was not the mandate of the Department of Transport.

Dr Sizwe Mkhize, DDG: Food Security and Agrarian Reform, said that it was complicated to deal with issues about some land package in the country. In the area east of Bizana the department, both national and provincial, have engaged those communities in terms of access to land. The Department had put a plan on the table for the Makathini farmers to say winter vegetables could use land in winter and then in summer it would be for cotton farmers. But people were not interested in sharing, they preferred to keep their own land.

Ms Chipeta, Acting DDG FNRM, apologised to Mr Gaehler for not answering his call as she had not received a message and it could be that the PA had channeled it to the person directly responsible. She confirmed that the road infrastructure was a forest sector obligation and the commitment was needed to develop forestry road infrastructure. The Department of Transport dealt with road requirements for national, provincial and local. The Forestry roads went into forestry and to the sawmills.

Ms Nyalungu asked the Department if they had recovered the tractor that had been reported during a Committee oversight visit to have been released to someone by mistake, due to a wrong signature. She asked what had happened to the perpetrator.

Ms N Twala(ANC) asked about the difference between Northwest and Eastern Cape with respect to training.

Dr. Mkhize DDG: Food Security and Agrarian Reform confirmed that there was need for tractor policy and that the Department would follow up.

The meeting was adjourned.

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