MLRF, Onderstepoort BP, National Agricultural Marketing Council, Ncera Farms, Perishable Products Export Control Board, SA Veterinary Council 2011/12 Annual Reports

Meeting report

Chairperson’s opening remarks.
The Chairperson welcomed everyone and indicated that the Department had provided the written response requested on matters arising from the meeting on 9 October 2012. Matters included: explanation on the Department’s cases against former Director General Mr Langa Zita, Dr Mohlahlane, the status of the Tractors in the Free State during the oversight visit by the Portfolio Committee, explanation for the Department’s foreign travel expenditure, the Draft Mechanization Policy, Service Level Agreement with Agricultural Research Council, and Small Holder Producers Data 2011/2012.

Mr S Abram (ANC) said that he was not happy with the nature of the information provided on foreign travel and that the Department would need to provide further breakdown.

Marine Living Resource Fund (MLRF) Annual Report 2011/12 Highlights
Dr J Augustyn, Acting DDG Fisheries Management, summarized the highlights of the MLRF Annual Report. The main activities funded by the MLRF during the period under review included: marine resource research and biological stock status assessments; monitoring, control and surveillance efforts; marine resource management involving both offshore and inshore fisheries; development and promotion of the aquaculture sector including both marine and freshwater fisheries; and financial and corporate management.

Dr Augustyn said that the Small Scale Fisheries policy was approved by Cabinet in the past year, promoting access of communities. The Integrated Fisheries Security Strategy (IFSS) was also developed and implemented. The initiative had major successes in combating poaching by syndicates involved in crime and improved cooperation between law enforcement agencies. It also increased tip-offs from communities leading to successful arrests. The Zero hunger and Food Security Strategy was introduced to the fishing sector. Ten projects were established for the Working for Fisheries project which created more than one thousand jobs.

The Fund’s operating revenue had decreased from the previous year from R117 428m in 2011 to R114 495m in 2012. Though other income had gone up from R153 412 000 to R229 729 000 the donor income dropped a significant amount from R5 582 000 to R898 000. He said that the budget was inadequate considering the entity was running research and patrol vessels to the cost of R170 million. The Department did recognize the shortage of resources. The MLRF was proud to present an unqualified audit report.

Discussion
Ms A Steyn (DA) asked about the targets not achieved and what the entity was doing to move forward to achieve them. She noted that there was not a lot of information about freshwater fisheries (aquaculture). She asked MLRF to give their assessment of an article she had read recently that SA was behind in terms of developing aquaculture and it was lagging far behind China and Japan.

Dr Augustyn explained that SA had limited development in aquaculture due to lack of freshwater. However there had been a strong initiative to develop it in the dams. SA was looking at various areas and trying to develop resources and encourage entrepreneurs to develop their activities to increase farming of selected species such as cod, sea urchins and scallops. A lot still needed to be set up especially the technology needed and the environmental impact.

Mr Abram asked for further explanation on what it meant for a species to recover and what it meant for it to be overfished. He asked about the amount of money the MFLR generated from confiscated products, particularly abalone and what were the numbers confiscated. He asked about the process the confiscated abalone would be taken through before marketing them. He wanted to know if there were impediments in the current laws in doing that. Lastly, what were the possible ways to arrest poaching for which the syndicates were responsible?

Dr Augustyn said that MLRF monitored all major resources through surveys and measured it through the cash per unit effort to determine if they were recovering or not.

Dr Augustyn explained that 22 tons of abalone had been confiscated though the actual weight was less than that. The size of the abalone being poached was getting smaller and smaller.

Mr Jacob Hlatshwayo, Chief Financial Officer, clarified that the confiscated abalone was processed and dried before being exported. The Department had a register of all the processing plants in the country and they were the only ones who could participate in an auction.

Dr Augustyn remarked that poaching syndicates seemed to appear from China and many arrests had involved Chinese nationals. The abalone poaching was linked to international crime which involved human trafficking and drugs. The Department was looking into an integrated way of solving the problem and the main focus was to keep the fish in the water. The Department was utilizing veterans to assist on land based patrol to counter syndicate operations. The penalties were too small and negotiations were being done with the Department of Justice to increase them. Two specialized courts were set up in the previous year but were done away with by the Department of Justice which was not good as it really helped with the conviction rate.

Mr Abram congratulated the MLRF for their report and emphasized that he was usually not very generous with praise. He was happy about the presentation of the foreign trips in the report and accepted that they were vital to the mission of the entity.

Mr Abram referred to the financial statements on page 21 Items 18 and 19 where a request had been lodged by the Minister of Agriculture into the procurement of goods and services in the manning of the ships from Jan 1999 to 2011. He asked why the Department was doing this investigation for this particular period of 12 years, if the previous Department did not do anything about it. He asked if the investigation had been completed and what the outcomes were, and if the perpetrators were charged.

Mr Abram queried Item 19 on page 21 of the report about the suspension of the previous Director General on 25 June 2012 pending the outcome of an investigation. He wanted to know what the outcome of the investigation was. He reminded the Department that anyone employed by government was paid for with tax money and reiterated again that the Committee deserved to know why this person was suspended and for what reason as the Department had given very vague answers the day before. He said he was generally satisfied with the quality of the report.

Mr Sipho Ntombela, Acting Director General: DAFF, indicated that the Department had already replied in writing to the request for information about the suspension of the former DG. The investigation about the procurement processes relating to the management of vessels was in progress and had not been completed. SAPS was involved.

Mr B Bhanga (COPE) asked how accessible the research reports were to the public in relation to aquaculture for emerging entrepreneurs. How many vacancies had MLRF and how many acting positions were there?

Dr Augustyn explained that there was a research unit of about 40 people which was not enough, and there was a need to establish fish farms for experimental purposes. The entity was badly underfunded in the research area but it had set up collaborations with some universities. There was an aquaculture plan that had been developed and approved by the Department but the issue was funding.

The Chairperson remarked that it was important to have one department and not duplicated functions. He asked what the conviction rate of the poachers was and the nature of penalties. He had been informed that fines were not harsh enough.

Mr Ntombela said that the functions of the entity related to the legislation that led to its formation and it was hard to change them unless the legislation was changed. The Department would try to integrate functions without destabilizing the entity. A proposal that the Corporate Services was working on would be presented to the Committee which would include time frames.

Ms Steyn asked about the high spending on overtime and about vessel transfer to the Navy and asked the Department if they were comfortable with their responsibility.

Dr Augustyn explained that overtime depended on the operation. MLRF worked with a lot of scientists who worked overtime and worked irregular hours. There was however strict control and the overtime was budgeted for. MLRF had times where there was peak activity such as when they needed to issue licences and then people would need to work overtime. The number of people on the ground was very small and there were a lot of vacancies. There were funding problems in the Department.

Dr Augustyn continued that the navy had problems getting the vessels out to sea, and they were hoping to get away by the middle of October.

Mr Bhanga said he was not happy with the response on investment on research and was concerned that the lack of focus on research and investing in it would result in people not getting the knowledge they needed.

Dr Augustyn explained that the low interest in research was not due to a lack of will but due to funding constraints. The fund did apply for R80m to Treasury to set up two experimental fish farms, and both requests were turned down. Aquaculture had R6m assistance including that from a Chinese University. A decision was made that the Comprehensive Agricultural Support Programme (CASP) needed to increase fisheries.

Mr Abram said that he would prepare ten questions to be sent to the Department to be answered. It seemed that the Fisheries unit was in the doldrums. He asked the Department to come up with a plan to develop aquaculture to help people make a living for themselves. He asked the Department to really think out of the box in coming up with solutions.

Dr Augustyn responded that there was a plan for development of aquaculture that was developed by the Fisheries Branch two years ago. He was not sure if the plan was presented to the Committee but it provided guidance. He would make it available to the Committee.

The Chairperson asked why there was a large amount of underspending.

The CFO explained that the underspending reflected in the project was due to projects that had already been approved but had not been fully implemented. The money had been committed already. Projects included infrastructure, land, EIAs and there were delays in some of the projects.

Ondersterpoort Biological Products (OBP) Annual Report 2011/12 presentation
Dr Steven Cornelius, CEO of OBP reported that the animal health sector experienced a decline of almost 3.8% in the current financial year compared to 2010/11 as reported by the SA Animal Health Association. The ISO 9001:2008 had been retained and was extended to include the Pharmaceutical Inspection Convention scheme guidelines and would be used as the basis for Good Manufacturing Practice (GMP) compliance. The unit had successfully produced 1 259 305 units of viral vaccines, 684 198 bacterial vaccines, 95 862 units of protozoal vaccines and 1 074 776 units of sterile diluents. New collaborations and licence agreements were established with local and international research institutes to allow OBP to fast track new product development. A new vaccine was registered in SA, Coryzaplus, consisting of a number of antigens which would offer protection against Haemophilus.

OBP revenue decreased from R160.2m to R98.4m. Gross profit of 61% was realized as compared to gross profit of 73% for the same period in the previous year. Operating and administrative expenses were reduced by 21% as a cost saving measure. The investment income increased from R6.4m to R6.5m from the previous financial year.

Discussion
Mr Abram asked what corrective measures were taken to deal with fruitless and wasteful expenditure and other matters raised by the Auditor General. He queried why the entity had not yet received GMP certification. He asked if OBP had done any estimates to put the facility in shape. He urged the Committee to lobby the government on behalf of OBP to improve the facilities.

Dr Cornelius replied that the risk assessment already referred to the internal audit, risk assessment and the audit committee which was functioning correctly. The CFO had already presented to the audit committee a plan on how to address audit findings.

Ms Steyn agreed with Mr Abram about improving OBP facilities and urged the Agricultural Research Council (ARC) and OBP to discuss and work together to ensure the situation was improved so that SA farmers did not fall behind. She asked why staff were leaving, was it age related or due to disciplinary hearing? She wanted to hear more about the GMP application and discussion. She mentioned that there was still a lot of negativity towards GMP and something needed to be put on the website to show it was working on research or other stuff. The website had been under construction for a while now and it was not sending out a good message. She asked about the Rift Valley Fever virus complaints and how far the department had gone in addressing those. She needed clarity about whether posts were going to be filled. She asked for an explanation on what Other Income constituted. She asked if it was not possible to have a sticker on the vaccine on breaking the cold chain. What did Namibia NSR mean as mentioned on the website.

Dr Cornelius said that the GMP certificate was not easy to obtain as the cost was enormous considering the current structure, facilities and equipment and this made it impossible. If Treasury would not give OBP the funds needed, then it had contacted the Public Investment Corporation (PIC) and TDC who were willing to look at their request and consider a loan agreement to augment the shortfall. In terms of vacancies, he reported that the CFO, and CEO posts had been filled. An IT person had been interviewed but they could just not afford it. The Namibia NSR label on products was required for products being sold in Namibia.

The CFO said that other income was broken down in note 15 and it included the rental of the post office in front of the OBP complex.

The Chairperson mentioned that the black livestock communal farmers did not have access to the vaccine as it did not reach them. He said that the Bayer Company vaccine was confined to the white farmers’ interests and not the majority.

Dr Cornelius remarked that the cut throat competition environment amongst the 16 companies which included Bayer and two SA companies made it very hard to have access to vaccines. They were however looking at possibilities of partnering with BEE companies using a phased in process. Emphasis would be placed on Eastern Cape in relation to the communal vaccines.

Agricultural Research Council Annual Report 2011/2012
Prof Sibusiso Vil-Nkomo, ARC Deputy Chairperson, presented the highlights of the Council’s 2011/2011 Annual Report. The ARC had succeeded in delivering on the predetermined outputs and in many instances exceeded the set targets per strategic objectives. The ARC had successfully introduced 15 eco-technology projects throughout South Africa involving more than 10 000 farmers who were trained and encouraged to adapt the use of eco technologies – conservation agriculture, wetlands management, soil health, integrated pest management and sustainable natural resource use. ARC researchers had made important genetic breakthroughs potentially leading to development of wheat cultivars resistant to multiple pests and diseases.

In terms of finances, the parliamentary grant increased from R590m to R666m which included the Foot-and-Mouth Disease (FMD) Vaccine Development and Production facility which was still under construction. Administrative and other expenses were over the budget of R289m at R314m, the problem being the too big infrastructure. R26m of maintenance needed was underfunded. The surplus for the year was R124m, up from R59m the previous year.

Discussion
Mr Abram congratulated the ARC for making it out of the doldrums and making progress. He thanked the ARC for sharing success stories of its work in the community and encouraged them to keep the relationships in the sector. He asked ARC what the costs of embryo transplant were, specifically flushing and transplanting. He said that semen needed to be made available. He asked how many embryos could be transplanted in the coming year. He asked what the ARC was doing to ensure a one stop financing model vaccine covering a variety of problems the sheep farmers face.

The ARC responded that it worked to maintain relationships as it got that mandate from the board. Embryo transfer and transplant involved specialist skills and there were only a few people in the world who could actually do that - as it involved actual injection of sperm into the egg. The cost per transplant was R1m. They would inform the Committee once enough calves were born. ARC was conducting training on artificial dissemination and was engaged with the provincial and national extension officers to deliver a new redesigned system. The ARC would look into the one stop vaccine model and report back to the Committee. They did provide services for the Wool Growers Association.

Ms Steyn asked ARC to clarify about income from royalties. She asked who decided the research agenda for the ARC. She noted that there were a high number of people whose contracts were not renewed and asked if interviews were conducted for the people who left to determine the reasons they left. She mentioned that she had attended a meeting on stock theft and she said that what was used in SA was not useful. She asked how ARC was keeping track of animals being used on the research farms.

The ARC explained that the royalty income related to all the cultivars ARC produced as they got plant breeders rights. They license them out for use. It had decreased due to sustained underfunding from the last 10 years. The research agenda was client driven. The branding of animals was done through a DNA database. The animals used for research were kept track of and they were moved for research or donated or auctioned.

The Chairperson asked how the “Statistics Integers” information compared to those provided by Stats SA. He was confused about the function of the OBP in relation to ARC. He wanted to know what the challenge was in FMD being taken over by ARC and asked for more information about agro-processing. There was a State-Owned Enterprise (SOE) report out there that he would like the ARC to comment on.

The ARC said that “Statbook Integer Systems” was withholding information from ARC but it had got hold of the information and the system was working once again. They were still discussing the issues and trying to resolve them. In relation to the vaccine manufacture between ARC and OBP, some virus needed to be linked to the laboratory. The FMD facility for biosafety was a level 3 and the facility was at ARC instead of OBP. It was largely determined by scientific technicalities but there was a close working relationship between the two. The ARC did give a lot of information towards the SOE report. In terms of agro-processing, ARC was involved with the Department in training at the farms. There was no conflict between ARC and the Department in this area.

Mr Bhanga referred to page 88 of the Annual Report referring to the number of people being terminated and if some of them came back to work as consultants.

The ARC explained that terminations were broken down on page 88 of the report. No one actually returned as a consultant. Most of those who left went to work with other research institutions and they were collaborators. The ARC had a retention policy where experienced skilled scientists were attached to young researchers.

SA Veterinary Council (SAVC) Annual Report 2011/12 Presentation
Dr Rebone Moerane, SAVC President, said SAVC focused on its mission to promote food security/safety in all sectors of the economy and develop and promote preventative medicine/disease strategy at farm level including subsistence farmers. Throughout the period under review, SAVC explored solutions to ensure food safety and security for the people of SA; to address the shortage of people working in the field of production animals and veterinary and public health; to conduct an adequate epidemiological study into the needs of the training institutions.

The total income for SAVC amounted to R5 443 787, up from R5 150 332 in the previous year. Total expenditure for the year amounted to R4 781 573, a reduction from R4 900 462.

Discussion
Mr Abram said he was concerned because he had seen some supermarkets in the rural areas selling poultry that seemed and smelled like it was not fit for consumption yet people were buying them. He told of a case in Limpopo where a supermarket had thrown chickens into a dump and people had taken them to eat. He asked if SAVC looked at such issues and if the health of the nation was looked after through animal health.

Dr Moerane replied that the issue of poultry in the supermarkets was not their mandate but they could advise the Minister through the Department dealing with food safety. He said their mandate ended when the animal was slaughtered at the abattoir. Once it got to the supermarket, the Department of Health was responsible. He said that a proposed solution could be that the people trained as vets could be trained to do that kind of work. They usually came in, when the public complained that the vet was aware of the issue but not acting.

Ms Steyn asked if SAVC had met with the Minister in the current year and asked what was being done to address the matters that three slides were dedicated to in the presentation. She referred to the letter she had seen on the internet about people selling vaccine and asked who was responsible for such matters.

Dr Moerane said that the issues he raised had been discussed for years and eeded to be evaluated. There had been informal complaints about the vaccine selling and dealing with the issue required key role players.

Mr Bhanga asked about the unemployed vets and inquired if the recently passed legislation attached vets to projects.

Dr Moerane said that it was always better to train technicians on the ground.

The Chairperson asked if SAVC could comment about rhino poaching.

Dr Moerane said that the Council was aware of the allegations that vets were using anaesthetics to immobilise animals so they could be poached. They had seen a loophole and had come up with rule where a vet cannot prescribe such to farmers. A tracking system was needed for every bottle of anaesthetics out there.

National Agricultural Marketing Council (NAMC) 2011/12 Annual Report presentation
Mr Tshililo Ramabulana, CEO: NAMC, presented the Council’s Annual Report 2011/2012 Highlights. The Council was pleased to report 100% compliance in all of its predetermined objectives for the year under review. The Council welcomed new members representing rural farming, academia and research, markets and the business sector. Agricultural research focus was mainly on agro-food chains, trade, linking farmers to markets and knowledge management. The Agri benchmark initiative had gained momentum in benchmarking farming systems across the globe in a systematic manner in order to do policy analysis and understanding the nature and scope of agriculture as it changes.

The MTEF baseline allocation for 2011/12 increased by 16% as compared to 2010/11. Expenditure for 2011/12 was R36.6 m which included R27 000 for straight lining operating leases, depreciation and amortization on assets amounting to R458 000, leave pay provision amounting to R574 000. NAMC rolled over R1.6m from 2011 to the 2012 financial year. The 9% increase in personnel expenditure resulted from annual salary adjustments. An increase of 22% on operating expenditure was due to increase in the number of Section 7 and workgroup investigations in which NAMC was involved. The rental expense went up by 0,5% which was a result of straight lining operating leases. A decrease of 11% in professional services was a result of the decrease in budget allocated to research projects, agribusiness technical assistance and the national red meat project in 2011/12. There had been a reduction in administrative expenditure due to a decrease in the audit fees charged by external and internal auditors and a decrease in refreshment and catering expenditure resulting from a reduction in staff functions. NAMC received funding of R36.049 m from DAFF whilst other income amounted to R555 000 and interest generated of R937 000. Total expenditure amounted to R36.585 m

Discussion
Mr Bhanga asked why the Schools Assistance Schemes could not continue.

Mr Abram congratulated NAMC for achieving 42 out of 50 targets which came to 84%. He encouraged the Council to aim for 98% achievement. He asked about soya bean product development if other departments came to the party such as the Department of Home Affairs who was supposed to help with visas of the Indian delegation who came to help. He asked why the schools were not helped given they had a surplus.

Mr Ramabulana, CEO: NAMC, explained that schools in North West and Limpopo had been adopted and they were working to build a proper library.

Ms Steyn asked about the NAMC and the International Trade Administration Commission (ITAC) role and its contribution to meetings as she got the feeling that Agriculture was not taken seriously. She referred to thecCommittee set up for the import of maize and asked if imports had increase. She asked if NAMC was involved in biofuel planning and how it looked in the local market.

Mr Ramabulana said that the support of other Departments was needed in helping other black farmers for example who were not growing. The CASP money needed to be put into supporting them and there was a need to align functions to serve single objectives. Their strategy was to target a few and support them to success. ITAC had a different focus than NAMC which focused on rebates, levies and tariffs and their input in meetings was taken seriously. The supply and demand committee on grains was engaged in issues such as the grain trading environment and they had a number of dry runs. In relation to the local market, NAMC was often involved in issues such as feeding of livestock and others, so they could find products good enough to market.

The Chairperson was taken aback at the vision and mission and asked if NAMC could unpack its vision. He asked for further clarifications on the biofuels policy and the decline in the levies collected.

The NAMC CEO responded that the money the Council received was drop in the ocean considering the need for them to support farmers.

Ms Steyn said that the marketing system in SA had a big impact on food security.

Mr Bhanga asked about the R956 000 surplus, asking for explanation on why there was a surplus.

The CFO NAMC explained that it was mainly interest from investments and it was used for other projects as their budget had been cut by 30%.

Perishable Products Export Control Board (PPECB) Annual Report 2011/2012 presentation
The Deputy Chairperson of PPECB, Ms Zipporah Maubane, said that the entity had a difficult time in the past few years mainly due to the exchange rate fluctuations. The PPECB had contributed about R20 billion to the GDP of the country. Due to the slowing down of the economy, the cost of doing business had increased and the entity ended with a shortfall of R16m.

Mr Stuart Symington, CEO of PPECB, presented the highlights of the Annual Report 2011/2012. He said that due the slow recovery of the economy, their top priority was to focus on performing their statutory mandate in working together with their main stakeholders and engaging more proactively with their clients in the private sector. He pointed out that it was important for PPECB to restore its reputation and stakeholders' confidence given that it had attracted quite a bit of criticism in recent years. Quick response time, attention to detail, immediate execution of requested tasks and ensuring customer satisfaction would be the service mantra for all PPECB employees in 2012.

The PPECB made a financial loss due to a number of circumstances. The PPECB had an unqualified audit report. The income was R186m up by 4.8% on budget. Expenditure was R202m, up by 10% of budget. Debtors’ collection was 36 days against a target of 59 days. Fruitless and wasteful expenditure was R80 000 and R78 000 of it was collected. Irregular expenditure was R80 000

Discussion
Mr Bhanga said that he hoped that the graduate development scheme was in line with the graduates identified field and not just serving coffee.

Ms Maubane assured Mr Bhanga that the graduates involved in the programme did not make any coffee at all! In 2011, 35 graduates went through the PPECB for a Training Initiative with DAFF and they wanted to have more. There was an unemployed graduate programme which was aimed at phasing out retirees who were seasonal workers. They wanted to focus on young workers and those who could sign export certificates.

Mr Z Makhaye, HR Executive PPECB, said that there was programme for unemployed matriculants in the cold chain discipline where four interns were taken in per year.

Ms Steyn queried the discontinued operations asking for more clarification. She asked if the Draft Framework along with the Plant Protection Bill mentioned by the Department the day before had an impact on their work. She asked for an explanation of the 13% decline in export. She asked for further comment on the impact of the strike on the transport of fruit.

Mr Symington, CEO: PPECB, said that the strike problem had cost R1 billion so far as it meant the product could not get to the ports and had to be stored which cost a lot and the shipping ripple effect added to the cost. The 13% loss probably resulted in a loss of business for three months.

The Chairperson asked for further explanation on the deciduous fruit ban by Thailand.

Mr Symington, CEO PPECB said that there had been a ban on deciduous fruit by Thailand and SA lost between R150 to 200million to that market which was exporting apples, pears, and grapes. The reason given to him for that was due to SA not accepting Thailand’s fruit imports.

Ms Steyn said that it was important to get a cost of the strikes on agriculture as it severely impacted on the economy and due to quality control standards not being met.

Ncera Farms
Mr Abrams expressed his severe frustration at the quality of the report that had been given to Committee. He said that it was basically a cut and paste exercise form the report of DAFF and a lot of it did not make any sense at all. He accused the Department of not checking on the quality of the report to ensure it was accurate. He queried items such as the 3000 cabbages grown and that animals were sold without mention of the income from it. The report was not worth the paper it was written on.

Ms Steyn suggested that it was important to place the issue in front of the Department and to determine who was supposed to assist them.

The Chairperson interjected that the best way forward was to organize a Committee visit to the Farms before they can come and present to the Committee.

Other Matters
Mr Bhanga raised concern that only three MPs had been present during the hearings and that it was not acceptable.

The Chairperson agreed that it was important to address the issue with the other members.

The meeting was adjourned.