SA SME Federation; Association of Meat Importers & Exporters' ITAC complaint; AfricaBio on GM labeling; Department of Agriculture on Orion case

Meeting report

Briefings
South African Small and Medium Enterprises Federation (SASMEF)
Mr Carl Lotter, SASMEF founder, said the idea for SASMEF originated in the call by the President, in his State of the Nation address, for a partnership with the private sector. SASMEF would be the one voice for SMMEs, similar to the Brazilian SABRAE model, to pull together fragmented SMEs. SASMEF had spoken to a number of government and private bodies and with those dealing with small business and even universities to motivate the idea.

Mr Harry Azima, Executive Chairman of SASMEF, said it wanted to play a mediating role as the distribution of wealth in South Africa was unequal and the business environment was not suitable for SMMEs. Comparing Brazil and South Africa, he said South Africa’s percentage income attributable to SMMEs was 7% of Gross Domestic Product (GDP) while in Brazil it accounted for 30%. South Africa was creating jobs at a higher cost and the private sector could do it cheaper. The ideal economic structure would be a pyramid shape but that South Africa’s was more like an inverted cone. Challenges faced were the unsustainability of SMMEs, limited access to funding and management skills and the fact that the supply chain was tightly guarded. The top echelon was not talking to the bottom and a new approach was needed where a public-private, bipartisan partnership presented a balanced approach between government and corporations seeking to get sustainable SMMEs to ensure larger, more diverse SMME businesses. SASMEF has been in existence since January 2012 and wanted to be mandated to become the SEBRAE of South Africa.

Discussion
Mr W James (DA) asked how SASMEF assisted SMMEs on the ground and how did SASMEF assist them to get access to credit. He related the case of a woman in Paarl who had been assisted by an American politician.

Mr N Gcwabaza (ANC) asked for job creation costs to be clarified and asked what an acceptable job creation cost would be. What experience did they have in reaching out to SMMEs?

Mr B Radebe (ANC) asked if SASMEF played a part in the recent NAFCOC conference in the Eastern Cape and what was their position on NAFCOC’s call for a ministry of SMMEs.

Mr Lotter replied that giving money to the lady in Paarl was “like putting a bandage on the issue, it was Red Cross work”. In Brazil the SEBRAE board contained three ministers and representatives from the banking industry and business. SASMEF supported NAFCOC’s call for a ministry of SMMEs and there was a member of FABCOS, which was affiliated to NAFCOC, on SASMEF's board.

Mr James said that the last thing that was wanted was the establishment of another government department which would just increase bureaucracy, what was needed was an increase in SMMEs. He said assisting entrepreneurs like the one in Paarl was not Red Cross work as entrepreneurs needed access to finance and credit and needed support to do so.

Association of Meat Importers & Exporters of South Africa (AMIESA) complaint against ITAC
Adv Dirk van Zyl, representing the AMIESA, said its submission broadly related to the importation of poultry products from Brazil and in particular the endemic problems AMIESA had encountered in its dealings with the International Trade Agreement Council (ITAC). He said there was a systemic failure at ITAC and asked that the Committee ask ITAC to report back to it on what procedures and practices ITAC had put in place to ensure that its internal procedures on a case by case basis complied with the Constitution and ITAC’s obligations in terms of domestic legislation and South Africa’s international trade relations obligations. It wanted ITAC to respond to criticisms raised by AMIESA in its submission to the Committee and it wanted to know how ITAC was complying with the issues raised by the Minister of Trade and Industry in August 2012 in respect of the poultry case [dumping of frozen chickens from Brazil].

AMIESA expected ITAC to fulfill its role, as mandated by the ITAC Act, to be independent and subject to the Constitution, trade policies and the Minister of Trade and Industry’s notices and that ITAC, as an organ of state, be governed by democratic values and principles as enshrined in S195(1) of the Constitution. AMIESA would like the system to be fixed so that ITAC was impartial, fair and transparent. It wanted ITAC to adhere to proper procedure when conducting investigations as, when ITAC had been challenged about verification reports, ITAC had been reluctant to engage with AMIESA. AMIESA had looked at recent ITAC reports and had found them to be scant and deficient and the Committee needed to address these issues. Brazil had already complained, with other states lining up to do the same, which would be an embarrassment and a debacle for South Africa. In conclusion, he wanted ITAC to have more transparent interaction with interested parties when conducting investigations. There was a lack of appreciation of the statutory obligations it had to uphold in the way it operated and AMIESA had preferred approaching the matter through the Committee rather than go through the courts to seek redress.

Discussion
Mr Radebe said that the AMIESA input was disturbing as ITAC was supposed to be there to assist South African businesses.

Mr Siyabulela Tsengiwe, Chief Commissioner of ITAC, said the vast majority of AMIESA’s claims were incorrect, containing only one valid criticism.

The Chairperson said that although the poultry matter, as a trade matter, fell under the Committee, ITAC fell under the aegis off the Economic Development Department (EDD) and the Committee would have to engage with that Portfolio Committee on Economic Development.

Mr Tsengiwe said that ITAC conducted its investigations in compliance with domestic laws and World Trade Organization (WTO) agreements. The procedures which were followed in an anti-dumping case were complex and involved and took approximately ten months to complete. All interested parties were invited to comment. While the poultry meat importers’ comments were not included in the final report, it did not mean to say that it was not considered.

Mr Steven Hannibal, representing the Department of Trade and Industry, said there was a need for a balanced view. While imports were important, there was also a need to develop local producers and many manufacturers had complained that ITAC was too slow to act against dumping.

The Chairperson said she was not satisfied with the timeframes it took for investigations to be addressed. She would consult with the EDD and schedule a meeting on the matter for early in the following year.

Ms S Van der Merwe (ANC) asked that a chronology of the matter be supplied to Members.
 
Adv Van Zyl said there was a chronology of events in Schedule A of AMIESA’s submission.

Labelling: Department of Agriculture, Forestry and Fishing (DAFF) briefing
Dr Botlhe Modisane, Acting Deputy Director General: Agricultural Production, Health and Food Safety in the Department of Agriculture, Forestry and Fishing (DAFF), said its submission would deal with the alleged illegal importation and re-labeling of food stuffs, food safety legislation and the role different departments played and the monitoring of religious certificates.

In the matter of the Orion case, he said Orion operated a cold storage facility which was registered with the Department and this facility was also approved for the import and export of meat and meat products by the Department. It had been inspected and found to be compliant. Importers had to obtain a permit which specifically determined the specie, quantities and times, sanitary and other conditions that had to be complied with. Upon arrival in the country, the veterinary authority did an inspection and issued a veterinary certificate declaring that all conditions had been met. Orion had met all legal and safety issues.

In the matter of brine injections into poultry, he said this was a matter of contention between AMIESA and the SA Poultry Association (SAPA). SAPA was concerned that AMIESA was injecting brine above the 8% limit allowed for moisture content.

In the matter of pork hearts being sold as halaal meat, he said that DAFF did not have the orientation to certify that meat was halaal or kosher; that religious certification was internationally regarded as a “private” standard and that a decision needed to be taken in conjunction with the Department of Trade and Industry (dti) and the Department of Health on how the issue would be addressed in future. There were challenges in the certification of meat as being halaal. DAFF had noted the complexities in the regulation of food and food safety and in the labeling, marketing and potential deception of consumers. The Minister had instructed the Department to look at establishing an inter-ministerial committee to look into these matters.

Discussion
Mr Radebe felt the Department should have placed an advertisement in the media placing the facts as presented to the Committee, in the public domain.

Mr James asked what role the Department played in inspections and enforcing regulations and did they have the manpower to do oversight.

Dr Tembile Songabi, DAFF Director of Veterinary Public Health, said that the constitutional framework placed abattoirs in a different sphere of government and each province had oversight, but that where national standards needed to be maintained, this was overridden.

Dr Mpho Maja, DAFF Director of Animal Health, said farm inspections and the chain of integrity compared with chain of responsibility.

Adv Van Zyl said the Red Meat Industry was engaged with the Department on the issues raised and was making progress. Muslims had been severely affronted that pork hearts had been imported from Ireland and relabeled and sold as sheep’s or lamb’s hearts. He felt strongly that the changing of a label was an offence. The interdict case had been settled out of court with Orion conceding. He said that AMIESA had done its own tests to back up its claims. He said water buffalo too, had been relabeled but that AMIESA was struggling to get the prosecution off the ground.

Dr Modisane said that court cases had been settled, with Orion claiming it had been acts of sabotage and that the products had never reached the consumers. The Department was aware of the legal limitations of labeling. The Minister had said that they should correct this and they would be involving industry and cultural and religious parties. They were aware that there were breaks in the chain of responsibility as responsibility was different at different stages for example at the abattoirs and the supermarkets.

Mr George Southey, former chairperson and senior member of AMIESA, said that the importation and the release of meat had followed correct procedures but that the manipulation afterwards was a crime of fraud in which people had to be brought to book. South Africa’s importing standards was very high and restrictive. He said that in another matter involving Orion, milk powder had been imported as animal feed at subsidised prices and then sold to the confectionary industry.

Mr Modisane said that the Department had not issued any import permit for Orion’s milk powder products.

Mr Radebe said he wanted to raise the issue regarding South African horses that could not be exported to the Mid-East while Australia’s horses could.

Dr Maja said the Australian horse disease and the South African horse disease were different. The Australian disease did not affect trade while African horse sickness imposed trade restrictions. The Department would be signing off soon on the Cape metro zone to be declared a horse sickness free zone.

Genetically Modified Product Labeling
Dr Nompumelelo Obokoh, CEO of AfricaBio, said AfricaBio was a nonprofit, membership-based organisation operating in South Africa and in Africa. It had conducted a survey on public perceptions of Genetically Modified (GM) foods which showed that only 30% of respondents had heard of the term GM. Of those that had heard of the term, 60% felt negative towards the term. However when told that 70% of South Africa’s maize production was GM, their negativity had decreased. Other current GM crops produced in South Africa were soya bean and cotton. The USA was the leader in GM crop production with 69m hectares under cultivation while South Africa ranked 9^th with 2.3m hectares under cultivation. She then discussed the South African regulatory landscape and the benefits of biotechnology.

On the mandatory labeling of GM foods, AfricaBio felt that it did not advance consumer health information meaningfully as GM crops were approved for food safety through the rigorous national regulatory approval process under the GMO Act 15 of 1997. AfricaBio supported advancing labelling standards for foods in cases where there was a change in nutritional composition, or if an added component could be toxic or allergenic. There was also cost implications to be considered and who would bear the costs. It proposed that labelling apply only to foods that wanted to be recognised as being non GM.

Mr Janusz Luterek, a consumer law attorney, made a presentation on behalf of the Consumer Goods Council, AfricaBio and the National Chamber of Milling on the draft GM labeling amendments.

He proposed a new definition for the term “ingredient” used in Section 24(6) of Consumer Protection Act 68, 2008. That “ingredient” mean any substance, including any food additive and any constituent of a compound ingredient, which is used in the manufacture or preparation of a foodstuff and wherein when used in the manufacture of the foodstuff, novel DNA is identifiable in the foodstuff.

He proposed that the draft amended regulation 7(2) under s24(6) read ‘This regulation applies to genetically modified commodities approved for commercialisation by the Executive Council for Genetically Modified Organisms established by section 3 of the Genetically Modified Organisms Act, 1997, and to goods which contain genetically modified commodities as ingredients in an unprocessed form.’

He proposed that the draft amended regulation 7(3) under s24(6) read ‘For purposes of section 24(6) of the Act, and subject to sub-regulation (2), (4) and (6), this regulation applies to all goods that contain at least 5% genetically modified ingredients, irrespective of whether the making or manufacturing thereof occurred in the Republic or elsewhere, and to marketing material in respect of such goods.’

He proposed that the draft amended regulation 7(4) under s24(6) read ‘Any good to which sub-regulation (3) applies may not be produced, supplied, imported, or packaged unless a notice meeting the requirements of section 22 of the Act is displayed on, or in association with the packaging of those goods in a conspicuous and easily legible manner and size stating, without change, that the good "contains genetically modified ingredients".’

He proposed that the draft amended regulation 7(6) under s24(6) read ‘It must not be stated that a good does not contain genetically modified ingredients unless such good contains less than one percent genetically modified ingredients, in which case a notice shall be used meeting the requirements of section 22 of the Act.’

He proposed that the draft amended regulation 7(7) under s24(6) read ‘Notwithstanding the provisions of sub regulation 7(6), a notice meeting the requirements of section 22 may state that the level of genetically modified ingredients contained in the good to which sub-regulation (2) applies is less than 5 percent’

He proposed that the draft amended regulation 7(8) under s24(6) read ‘If it is scientifically impractical or economically not feasible to test goods contemplated in sub-regulation (2) for the presence of genetically modified ingredients, a notice meeting the requirements of section 22 of the Act must be displayed on, or in association with the packaging of those goods, in a conspicuous and easily legible manner and size, stating "May contain genetically modified ingredients ".

He said that there were times when it was possible to test scientifically but that it was not economically feasible as the tests had to be sent to a laboratory, cost R4000 a sample and it took three to four days to get results back.

He said the draft amended regulation 7.9 if adopted would mean all foodstuffs would have to be labelled ‘may contain’ or ‘does contain’ GM organisms, both of which were not informative.

Regulation 7(10), which was unchanged, read ‘This regulation will come into effect six months after the commencement of the Act.’, yet the Act had come into effect on 24 April 2009. He proposed that it read ‘This regulation will come into effect 24 months after the promulgation of the amendment thereto.’, as products had a shelf life and needed to be changed over to new labelling over time.

Discussion
Mr James said that what was being targeted in the submission on GM foods was improving the immune response to diseases of the crops. However the immune response was not inheritable (in the crop) so the economics of having to continually buy this type of seed needed to be taken into account. He said choosing between GM and non GM foods was a middle class luxury and that GM foods could be dangerous when it came to the use of growth hormones. He said the SA Bureau of Standards was developing four additional laboratories to manage the problem. He said excessive labeling could scare people away and increase the price of the product

Ms Van der Merwe asked if the proposals had been presented to the Department.

Mr Hannibal said Government had a positive position on GM, as South Africa was a water scarce country and needed drought resistant foods; however it also wanted consumers to be aware of what they were eating. He himself sat on the Genetically Modified Organisms Executive Council where there were concerns about food security and food costs.

Mr Lulama Potwana, Deputy Director General: Consumer and Corporate Regulations Division, said that in the consultation period no-one had approached the Department around the matter of the costs of labeling and the costs had not been quantified. He said the regulations could not be used to say what the Act said. People had asked for an extension period which had been accommodated.

Dr Obokoh said that farmers were not complaining about the cost of the seed as they saw the benefits and it benefited the small-scale farmer greatly.

Mr Luterek said that the labeling issue rightly belonged to the Department of Health not the Department of Trade and Industry. He acknowledged that the definition could not conflict with the Act but that it could be clarified in the regulations if it had not been defined in the Act (as was the case).

Mr James said the labeling was complicated and that every tomato, for example, would then have to be labeled which would have cost implications.

Dr Obokoh said that the Department of Science and Technology had conducted a study on the cost implications of GM labeling.

The meeting was adjourned.

Appendix
Itac defends itself over handling of chicken ‘dumping’

29 Nov 2012 | LINDA ENSOR

Exporters association criticises handling of investigation into allegations of dumping of frozen chickens from Brazil
THE International Trade Administration Commission (Itac) was on Wednesday called upon to defend itself against stinging criticism by the Association of Meat Importers and Exporters over the way it handled its investigation into allegations of dumping of frozen chickens from Brazil.

The heated exchange took place during proceedings of Parliament’s trade and industry portfolio committee, which considered a number of outstanding matters before MPs depart for the Christmas recess.

Workers at chicken producers Country Fair and Early Bird last week started a strike that is feared might spread throughout the industry. A few hundred workers at each company are demanding a 13% salary increase, and the employers are blaming cheap imports from Brazil and Thailand.

Local producers complain the imports are so cheap they are forced to cut their own prices so low that they cannot afford higher wages.

Trade and Industry Minister Rob Davies sent back Itac’s final determination to impose antidumping duties on frozen Brazilian chickens in August, following complaints by the Brazilian government which has also taken the matter up with the World Trade Organisation (WTO). This resulted in a lapse of the interim duties imposed in February.

The commission now has until December 24 to make a final decision on the duties, otherwise a fresh complaint will have to be laid and a new investigation started.

The association, which is represented by advocate Dirk van Zyl, said the deficient way that Itac handled the Brazilian chicken case was "endemic" to its systematic failure to meet its own constitutional obligations, the requirements of the law and its international trade obligations when it investigated cases of antidumping.

He said the commission lacked transparency, failed to communicate with stakeholders and failed to comply with its obligations.

"If you look at the reports coming out of Itac they are scant and deficient," he said.

He said the US and the European Union intended joining in the chicken dispute if Itac continued in the same "seriously flawed" vein.

The situation threatened to become an "international embarrassment and debacle".

Itac’s chief commissioner Siyabulela Tsengiwe rejected the accusations. He insisted that the commission complied with all the requirements when it conducted its investigations. While the comments by meat importers in the poultry case were not included in the final report, this did not mean that they were not considered.

Department of Trade and Industry chief director of agroprocessing Stephen Hanival called for a "balanced view" on the issues, pointing out that the association had defended the importation of poultry products while the government’s industrial policy action plan aimed to protect local producers as far as this was allowed by WTO rules.

Mr Hanival said the department had received many complaints from manufacturers that Itac and the department had been too slow to react to complaints about antidumping and unfair trade.