National Agricultural Marketing Council & Perishable Products Exports Control Board Strategic and Annual Performance Plans 2013

Agriculture, Land Reform and Rural Development

29 April 2013
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

The Perishable Products Exports Control Board (PPECB) and National Agricultural Marketing Council (NAMC) presented their Strategic Plans and Budget for 2013/14 to the Portfolio Committee on Agriculture, Forestry and Fisheries (Committee).


While PPECB quality inspection was at the heart of the value chain, costs had increased and exports had not increased. However, PPECB had succeeded in cutting costs without compromising on service delivery. Currently the biggest challenge for the PPECB was Citrus Black Spot (CBS). If exports of citrus to Europe had to stop, this could lead to a R40 million deficit within the PPECB. Important plans for PPECB were electronic verification of information which was vital for the industry; providing a more cost-effective service so that their customers could reduce their prices and be more competitive; and strengthening capacity in South Africa to reduce the number of customers using overseas laboratory testing of products. The Agricultural Products Standards (APS) Act and Cold Chain Act/PPECB Act were expected to be passed in the current year or early the following year and these two Acts would have a significant impact on modernisation of PPECB business, its financial model and future sustainability. The PPECB programmes were outlined and the budget was explained. There was a shortfall of R5.6 million for funding of efficiency-improvement projects, such as tablet technology, laboratory equipment and vehicles. It was expected that these projects for efficiency gain would translate into long-term savings.

Members asked what measures were in place to prevent CBS; how PPECB planned to turn around the past three year’s stagnation in exports; if there were reasons other than the economic crisis for SA’s export market not growing; if the De Doorns strike had impacted table grape production negatively or positively and if it had affected exports. They further asked to what extent domestic conduct affected international exports; what MRL testing was and why it was accredited; if PPECB could provide a list of the listed produce groups and their performance; what IT investment would cover and how far the Department of Agriculture, Fisheries and Forestry (DAFF) was in terms of the PPECB Act.

NAMC objectives were to increase market access for all participants, promote efficiency in the marketing of agricultural products, optimise export earnings from agricultural products and enhance the viability of the agricultural sector. NAMC had experienced a trying year as there was the global economic slump, import costs were increasing, primary producers were saddled with very high levels of debt and in the marketing chain and there was uneven system of primary producers having no WTO subsidies. NAMC had also dealt with the De Doorns sectoral determination. A focus was to assist farmers along the value chain to make their produce accessible to the African market. On a high level, NAMC was struggling with the impact of the 20% transformation levy collected by commodities and continued to meet with the Trusts to come to a solution. NAMC had contracted an independent entity to access the Board’s effectiveness and a report was expected be available in the near future. 


In the current year, NAMC would help industries collect over R400 million. Money spent on research went to the Agricultural Research Council (ARC) and universities and NAMC would be focusing more effort on transformation going forward.

Development Schemes to secure markets for small holder farmers included the Vine Scheme, Maize and Sunflower Scheme, Livestock Scheme and Dairy Development Scheme. The Markets, Economic and Research programme assisted with the coordination of strategic integrated projects 11 (SIP 11) on behalf of DAFF for engagement of the private sector to identify projects that should be implemented in partnership with government. Criteria for selection of projects included sector growth and job creation, food security, broad-based black economic empowerment (BBBEE) and private sector investment. NAMC had received R33.8 million allocation for 2013/14, R36 million for 2014/15 and R37.9 million for 2015/16. However, NAMC could assist to a far greater degree with additional funding.

Members asked if NAMC collaborated with research institutions on how to take the industry forward and how the various state-owned entities functioned together, as it appeared that mandates overlapped and there was lack of resource synergy; what role NAMC was playing to value-add products; which entity ensured that communal farmers received basic training; if universities were involved in practical training programmes; and what training NAMC offered. Members also asked for more information on the agreement with Walmart for small holder farmers to sell their goods; NAMC’s influence on the difference between the farmer’s cost of producing and the consumer retail price; and who was actually benefiting when the retail cost of food was being increased to the extent that people were going to bed without food. Members requested more information on the livestock programme; where farmers in the Eastern Cape were being assisted; how NAMC would promote the red meat industry; why the budget for the red meat programme had decreased by R1 million; whether CUSP programmes were having any impact; and how the ten dairy farmers in the Dairy Scheme would be assisted.

Due to time constraints, the meeting was adjourned before all the questions were answered. NAMC would provide the answers in writing to the Committee.

Meeting report

 

Briefing by Perishable Products Exports Control Board (PPECB)
Mr Louis Vorster, Chairperson, Perishable Products Exports Control Board (PPECB) introduced the PPECB delegation and presented a short review on current issues. The biggest challenge for the PPECB was citrus black spot (CBS), which was a threat to the citrus industry. If exports to Europe had to stop, this could lead to a R40 million deficit within the PPECB; electronic verification of information was vital for the industry; the two revised Acts would be presented to parliament during the year and could have a significant impact on modernisation of PPECB business and its financial model and future sustainability; human capital development was also important.

Mr Stuart Symington, Chief Executive Officer (CEO) of PPECB presented the progress and challenges going forward. As had previously been presented, what had been done in 2012 set the scene for 2013/14. 2012 was a tough year, with a great deal of pain for gain. Necessary changes were instituted with the support of Department of Agriculture, Fisheries and Forestry (DAFF). While PPECB quality inspection was at the heart of the value chain, costs had increased and exports had not increased. PPECB had succeeded in cutting costs without compromising on service delivery.

PPECB was anxious for parliament to push through the two Acts in the current year. The Cold Chain Act (better known as the PPECB Act) was last promulgated in 1993 and was thus 30 years old. PPECB had spent the better part of 2012 revamping it and it was an important act in that it covered the sterilisation cold treatment of the chain, equipment certification and temperature management, and the Act appointed the board and CEO. Shipping had been removed from the Act as PPECB no longer handled shipping. The Agricultural Products Standards (APS) Act was 23 years old. It covered food safety, maximum residue levels of chemicals allowed on products going overseas and end-point inspection standards. PPECB looked forward to having the right to audit customers who qualified for an audit rather than visiting them daily on an end-point inspection basis.

Challenges included the conversion from a manual system to electronic platform for handling of data as soon as possible; providing a more cost-effective service so that customers could reduce their prices and be more competitive; and strengthening capacity in South Africa to reduce the number of customers using overseas laboratory testing of products. The PPECB and DAFF were working hard to stop the European Union (EU) market from closing on citrus due to CBS. Only a 2% sample of product was inspected and the problem with CBS was that it was not visible or the sample was too small. However, a 10% sample could also miss the presence of CBS, which manifests over time. DAFF also inspected the product for phyto-sanitary issues, but could also miss CBS there and sometimes the inspectors overseas mistake CBS for something else. The bottom line was that despite Australian, New Zealand, American and South African science stating that CBS could not infest European orchards, European scientists were not convinced.

The PPECB structure had evolved to having three statutory operations - North, South and coastal operation regions, which had to be mindful of complying with the regulatory mandates of the PPEC Act and APS Act. IT had moved from the finance portfolio as it had an important role of its own - inspectors would be using mobile technology to enhance efficiency. Laboratory testing would also become a stand-alone function with much growth opportunity. HR initiatives were in place to develop staff and a new division of corporate affairs to enhance interaction within the organisation. With the arrival of containerisation in the country, inspectors had to certify products at 1500 pack-points and PPECB had taken steps to save R3 million through travel efficiency.

R11 million rand had been invested in the Harmonisation Programme to ensure uniform standards for inspectors across the country. The Laboratory Programme had been beefed up to deal with statutory rather than commercial work, in accordance with Treasury and the Director-General (DG) of DAFF believing that PPECB should not compete with private sector organisations. The Finance Programme was under pressure, particularly with the potential loss of the EU export market of South African citrus. The Development Programme focused on smallholder farmers; internships in human resources (HR), information technology (IT) and finance; unemployed graduates; and agri-export technologist students.

Mr Johan Schwebus, Chief Financial Officer (CFO), PPECB, said that while PPECB budgeted for break-even, there was a shortfall of R5.6 million in the budget for funding of efficiency-improvement projects, such as the IT rollout of tablet technology, laboratory equipment and vehicles. It was expected that projects for efficiency gain would translate into long-term savings.


The year-on-year increase in income of 8.9% came from the increase in levy. Expenditure on operations was up 10%, a R20.1 million increase on the previous year’s estimate on expenditure. A total of R15.3 million went to operations, of which R13.6 million went to statutory services and R1.7 million went to laboratory. There had been a 23% year-on-year increase in expenditure on laboratory services.


Of total expenditure costs, employee expenditure represented 61% and activity constituted 18% (travel km, subsistence allowances, accommodation). The remainder of costs included computer costs 4%, which would increase as focus on IT infrastructure development increased; office accommodation 3%; technical equipment 3%; training 3%; other 8%. The 13 year trend for inspection tariffs showed that increases in tariffs compared with long term inflation and consumer price index.

Discussion
The Chairperson asked how PPECB planned to turn around the past three years' stagnation in exports.

Ms A Steyn (DA) asked if there were reasons other than the economic crisis for South Africa's export market not growing.

Mr Symington replied that the reason for the stagnation in exports was not a PPECB issue. The economic crisis had caused a dampening in demand and exports; the rand had been strong in the past but had subsequently become weak and this would attract exports. Other factors for the appeared current stagnation was that Limpopo had replaced citrus farms with dams; Mpumalanga prime agricultural land was being lost to coal mining and investment in shopping centres; in KZN, citrus was being replaced by sugar cane as it was an easier crop; and in many land reform programmes, while new owners were up-scaling, there tended to be a decline in volume.

Mr Vorster added that exports, specifically to the European markets, were under pressure because of the current economic climate, but there was also positive sentiment. The apple industry had increased sales within South Africa and Southern Africa. Regarding investment in South Africa, in some areas there was negative sentiment. De Doorns had created some discomfort but PPECB was focusing on going forward. Economic forces had caused the demand for mangoes to start to disappear from an export point of view but there were initiatives to access the Chinese market and the various role players to turn the mango market around. By focusing on the positive there were opportunities to create new markets.

Mr Cyril Julius, General Manager: Operations Services, Coastal Region, PPECB, said that from a citrus perspective, the good news was that there was a 4% increase in volumes forecast for the coming season.

Mr Sarel Van Wyk, General Manager: Operations Services, Southern Region, PPECB, said that while there were pockets of excellence in volumes growth, the national footprint had flattened. For example, stone fruit volume was expected to grow 30% year-on-year for the following four years, but from a volumes perspective, stone fruit constituted 10 to 15 million cartons and citrus R100 million cartons.


Weather conditions in different parts of the country also affected volumes. For example, in the lower Orange River region, 3 million cartons were lost due to rain. Additional cultivars for export were being explored and had added to the reason for current decreased volumes. For example, more than 1000 hectares of pome fruit had been replaced with wine due to more favourable climatic conditions.

Ms Sinovuyo Matai, Operations manager: North region, PPECB, said that the local market sometimes determined whether farmers would export or not. For example, confidence in local markets for litchis would lead to a farmer tending to want to export litchis. As in other regions, orchards, mangoes and citrus have been replaced with sugar cane or other products. A further reason for stagnation of volumes was that housing estates had been developed on what was agricultural land. Also, export of products such as ground nuts would decrease to make way for pecan nuts which had been planted but which took 10-12 years to grow before being exported.

Mr Simington added that South Africa (SA) should be proud that it was the second biggest citrus exporter in the world after Spain and this was an achievement. To keep growing to more than 100 million cartons was a big request with so many factors at play. Also, growers of the export fraternity had moved a massive percentage of products to the Eastern markets. Had South Africa continued to be Euro-centric, 80% of citrus would be under threat, as 80% went to the EU market 10 years ago and currently only 45% went to EU market and this percentage was lowering. The big buyers of South African citrus were Russia, India, China, South East Asia and the Far East. PPECB was grateful that exporters had diversified their market base otherwise PPECB would be experiencing a potentially bigger hole in its budget.

Dr Boitshoko Ntshabele, Director: Food Safety and Quality Assurance, DAFF, echoed comments made by PPECB. He added that internationally, in terms of World Trade Organisation (WTO) rules, the use of tariffs was coming to an end and countries were relying more on non-tariff barriers (NTBs). For example, the issue with CBS in SA and EU had been a long-standing issue, around 20 years, and in March, a meeting with the EU on the topic indicated that the EU was not budging on its stance. However, it was also natural that they protect their own citrus interests and consume citrus products from Spain rather than import from the world’s second largest exporter. The volume of exports to Indonesia and Thailand from SA had also been negatively affected by NTBs.

The Chairperson asked if the De Doorns strike had impacted table grape production negatively or positively and if it had affected exports.

Mr Neil Hamman, PPECB Board Member and a farmer in De Doorns, said that despite labour issues and minimum wage, availability of clean water was currently a major challenge in terms of exports. Also, table grape farming was in a consolidation phase whereby old varieties were making way for newer cultivars and varieties which created the impression that there was no investment. However, there had been a lot of investment but currently there was little growth. The De Doorns labour strikes had set the industry back a few years and farmers had to re-look at business models and consolidate. Yet the whole community was looking positively at ways of going forward and addressing the issues.

Ms Steyn asked what measures were in place to prevent CBS.

Mr Symington replied that, as he had mentioned earlier, it was difficult to identify CBS. Spraying of citrus was an added cost. He asked Mr Julius to add comment.

Mr Cyril Julius, General Manager: Operations Services, Coastal Region, PPECB said that it was well-known that even if the spray programme was followed 100%, CBS was progressive and there was always a chance that the fruit would get CBS. Intervention for CBS included DAFF now inspecting orchards and PPECB now performing inspections at any point in the pack-house in addition to the already-packed product. To arrest development of the disease, products had to be cooled within 4 days at 10 degrees maximum, including throughout shipping, so that the EU inspector would see it as the PPECB inspector saw it.

Mr B Bhanga (COPE) asked to what extent domestic conduct affected output in terms of international exports.

Mr Simington replied that producer organisations were taking steps to educate their members on the significance of CBS to eliminate the event of a producer innocently placing CBS in a citrus box without understanding the greater implications. The last resort was for PPECB to rely on political intervention and it would appreciate parliament’s support in that regard.

Ms Steyn asked what MRL testing was and why it was accredited.

Dr Dharmarai Naiker, Laboratory Manager: PPECB, replied that the lab was tasked with setting up testing for MRL, Maximum Residue Levels, which were essentially pesticides which were found on fresh produce. In March 2013, PPECB had embarked on recruiting analysts, equipment, developing methodology and accrediting the service in terms of International Organisation for Standardisation (ISO) accreditation according to EU requirements, which could take from 6 months to 2 years depending on methods requiring accreditation. It was expected to be accredited by mid-2014.

Ms Steyn asked if PPECB could provide a list of the listed produce groups and their performance in terms of income to PPECB.

Mr Schwebus replied that the largest income was from citrus inspection, which was R44.9 million, grapes R26 million and pome fruit inspection R19 million. On the cold chain sea export side, citrus was R21 million and grapes R7 million. Deciduous and citrus represented about 60% of PPECB income and the rest came from other product crops.

Mr Simington added that one of the challenges was that PPECB collected fees from customers who were anxious that money destined for inspection was not spent on the food chain development issues. An agreement was reached that PPECB should ring-fence 1% of turnover (R2 million). Anything above R2 million would go towards development. Ms Matai, the Agricultural Research Council (ARC) and others had succeeded in raising R3 million, which meant that PPECB suddenly had R5 million with which to work in favour of development issues and potentially in favour of PPECB and beneficiaries.

He also commented that customers had access to their own research divisions. Private companies operated in that same space. PPECB acted within its own mandate rather than replicating what had already been established. PPECB employees were invited to submit ideas for research and innovation which addressed day-to-day activities that made a difference rather than invest in research which would take years to make a difference.

Mr Bhanga asked for more detail on what IT investment would cover.

Ms Steyn asked how far DAFF was with the PPECB Act in terms of passing the Act.

Ms Gabbi Guess, Legal Affairs, PPECB, replied that the collaboration between PPECB and DAFF had been very good and that the proposed bill had been signed off at the operational level by PPECB and DAFF. It was expected to be passed at the end of the year or the first part of the following year. The bill did not address the funding issues as there were no provisions in the framework of the Act for Treasury to fund the PPECB. However, the PPECB had indirectly received a small amount of Treasury funding via DAFF. The new Act defined data, information and proposed changes in relation to information technology and a better link between PPECB and the private sector. Also, the old Act was developed in a framework where information on only one exporter’s shipping was arranged. However, information was critical for a producer/packer/exporter and thus the new Act allowed for information to be linked globally and this would assist with marketing decisions. Thus the information system in the new Act addressed PPECB inspection aspect, cold chain, interaction with the private sector, access to information and post constitution legislative framework. The new Act also addressed the constitution of the Board and defined the CEO, CFO, customers, experts and DAFF. No problems were expected with the Bill.

Mr L Van Dalen (DA) commented that investing in IT would have its future rewards and that the Committee should support an increase in funding to the PPECB for the efficiency-improvement projects as PPECB was self-funding and had undergone cost-cutting measures itself in order to responsibly stay within their budget.

Mr B Bhanga asked if skills development allocation was low due to the budget constraints. 

Ms N Phaliso (ANC) asked if Sector Education and Training Authorities (SETA) and/or external funding provided for skills development and in which part of the country internships were offered.

Mr Zakhe Makhaye, HR executive, PPECB, replied that PPECB collaborated with Agric-SETA with the DAFF and recruited students through the Advanced Training Programme (ATP) , sourced funding for interns through Agric-SETA and had managed to bring in four interns in the current year and would grow collaboration going forward. R10 million had been allocated to Harmonisation for skills development to ensure consistent application of standards in PPECB over and above training of PPECB HR.

Mr S Abram (ANC) asked if there had been reason to lay off any PPECB staff due to lack of integrity, incompetence, or dishonesty.

Mr Simington replied that he knew of only one case in the north region where one manager was dismissed due to incapacity to do the job.

Mr R Cebekhulu (IFP) asked if PPECB, in cost-cutting measures, had considered placing inspectors in satellite offices in the places where inspections took place.

Mr Simington replied that PPECB did have offices around the country. Tablet technology would solve the problem of misreporting and inspection results would be able to go directly to the main frame. PPECB always tried to avoid laying off of administrators due to technology by absorbing them elsewhere in the organisation.

Mr Abram commented that since government’s NDP saw agriculture as an avenue for creating jobs, PPECB should be assisted financially to continue to carry out its mandate. PPECB was a business in a system of free enterprise and anyone could compete against PPECB. Furthermore, the state expected PPECB to make a profit.

Dr Ntshabele said that it was important to note that by DAFF giving PPECB the sole right for inspections was one reason why PPECB could not compete with the private sector, as the right would make them a monopoly. PPECB could approach DAFF for alternative assistance where necessary.

Ms Steyn asked if the risk-based assessment service was the mandate of PPECB.

Dr Ntshabele said that regarding audits versus inspections, it was desirable to shift from inspections to audits provided that the industry had reached a level of maturity that it would not take chances. This would expose the entire industry to the risk of closing. The discussion over the past two years with PPECB around who would be audited resolved that for DAFF to protect itself, the criteria for the 2% selected for auditing would need to be written in legislation in terms of regulations, based on some degree of science provided by PPECB.

The following questions were not fully answered:
Ms R Nyalungu  (ANC) asked why the number of permanent employees 20112/3 was lower than in 2011/12.
Ms Phaliso asked for clarification on why the proportion of captured inspection in the north region would be lower than the south and coastal regions.
Mr Abram asked if investment in internal capacity for laboratory work was worthwhile or if it would be cheaper to continue to import capacity.  He also commented that PPECB should engage with farmers at inspections and act as a conduit of information from the farming community on important issues. He asked if producers were investing sufficiently and prepared to take the necessary risks themselves to ensure success.
Ms Steyn asked what PPECB would do with the citrus produce if it did not have the European market.


Briefing by National Agricultural Marketing Council (NAMC)
Ms Ntombi Msimang, Chairperson, NAMC, said that the objectives of NAMC were to increase market access for all participants, promote efficiency in the marketing of agricultural products, optimise export earnings from agricultural products and enhance the viability of the agricultural sector.


The sector was troubled and NAMC had experienced a trying year, especially around agricultural marketing. There was the global economic slump, import costs were increasing, primary producers were saddled with very high levels of debt and in the marketing chain and there was uneven system of primary producers having no WTO subsidies. NAMC had dealt with the De Doorns sectoral determination and the vulnerable workers. While R105 was not a sufficient farm worker salary, the farm producers had to be sustainable. Thus NAMC had walked a thin line, balancing both sides within the current climate, while considering the role of private and public sectors and how they affected the market. NAMC had also been dealing with market access for farmers along the value chain to make their produce accessible to the African market. On a high level, NAMC was struggling with the impact of the 20% transformation levy collected by commodities and continued to meet with the Trusts to come to a solution. Finally, she said that NAMC had contracted an independent entity to access the board’s effectiveness and a report was expected be available in a short while. 

Mr Tshililo Ramabulana, CEO, National Agricultural Marketing Council, briefed the Committee as set out in the attached presentation document. Total statutory levy expenditure over the past four years was R1.2 billion. Of that, R142 million was spent on export market development, R134 million on local consumer education, R354 million on research, R131 million on information and R259 million on transformation. In the current year, NAMC would help industries collect over R400 million. Money spent on research went to the ARC and universities and NAMC would be focusing more effort on transformation going forward.

Development Schemes to secure markets for small holder farmers included the Vine Scheme, Maize and Sunflower Scheme, Livestock Scheme and Dairy Development Scheme.
The Supply Chain and Logistics Development Programme objective was to integrate small agro-businesses into regional supply chains, increase market access and income earnings. Over the past two years, the programme had been implemented in the Western Cape and NAMC would be expanding the programme to other provincial departments. NAMC collaborated with FET colleges and Agricultural colleges to render services to small holder producers. The target was to capacitate 200 farmers during the current financial year and to facilitate four training programmes. The Markets, Economic and Research programme assisted with the coordination of strategic integrated projects 11 (SIP 11) on behalf of DAFF for engagement of the private sector to identify projects that should be implemented in partnership with government. Criteria for selection of projects included sector growth and job creation, food security, broad-based black economic empowerment (BBBEE) and private sector investment.

Ms Sarah Muvhulawa, Chief Financial Officer, NAMC, presented the budget for the MTEF period 2013-2016. NAMC had received R33.8 million allocation for 2013/14, R36 million for 2014/15 and R37.9 million for 2015/16. An additional funding request to Treasury resulted in an amount of R724 000, R972 000 and R1.2 million being allocated to the personnel budget for improvements in the conditions of service. The allocation per programme for the MTEF period as well as the 2012/13 vs 2013/14 budget per standard item were presented.

Discussion
The Chairperson said that after listening to a number of entities and departments over the year, having one body dedicated to agriculture research, rather than repetition and outsourcing, was food for thought. It was very worrying that even with all the role players involved, the De Doorns strikes had not taken the country forward but backwards three years. He asked if NAMC collaborated with research institutions on how to take the industry forward.

Ms Steyn agreed that DAFF needed to look at how entities functioned together and provide the information to the Committee as it appeared that entities were overlapping and yet which entity was finally responsible was not clear.

Mr Abrams agreed that there was overlapping of entities and the question would be whether there was lagging behind on some issues or not.

Mr Ramabulana agreed that a workshop on the roles of the entities and on understanding of marketing of agricultural products was warranted. Members were frustrated and wanted to know why the agriculture sector was not succeeding. Understanding the intricacies of why farmers were not succeeding and instituting farmer support programmes was the role that NAMC played. It was important for the Committee to understand why industries had to collect research money and why the money had to go to the Agricultural Research Council (ARC) to invest in understanding how to be competitive, to create jobs, be able to export and earn foreign exchange and to be able to buy diesel. NAMC had guidelines that provided indication that 70% of levy money should be spent on research, information and market development. When industries started to spend too much on market development, NAMC tried to bring them back to research as NAMC felt that the ARC did not receive enough funding for technical research.

Mr L Gaehler (UDM) agreed that the ARC was the research body for agriculture and questioned why more research entities were necessary. It was not clear what NAMC was doing to assist on the ground.

Mr Abrams said that by importing poultry DAFF was damaging the poultry and maize industry, as well as the prospect of job creation in the industry. He asked how DAFF planned to address the 3000 jobs lost in the industry while it pushed for a tariff on poultry.

Mr Ramabulana replied that the questions in terms of research are broad. Indeed the tariff on poultry would increase the price of food but it would create jobs. The technical research organisation expertise would not understand why this would be so and NAMC would not have the special skills to understand the complexity of their research. NAMC did not compete with the ARC when answering questions of market access.

The Chairperson asked to what extent NAMC collaborated and coordinated with infrastructure entities, such as Transnet, on marketing of agricultural products and with the IDC on support for agriculture in SA.

Mrs Msimang replied that NAMC, particularly the CEO, worked closely on collaboration with all the state owned enterprises because NAMC did not have the budget and therefore could not make a difference without partnering them. NAMC worked closely with the Department of Trade and Industry (DTI) and the Constitution Commission on the challenges in the agriculture sector.

Mr Gaehler asked whether NAMC had advised DAFF to resuscitate irrigation schemes to ensure job creation and food security and if so, for a briefing on the plan.

Mr Ramabulana said that to create the job target of the NDP, NAMC ensured that infrastructure – irrigation, pipelines, silos, transport, etc, was optimally used, especially in the former homelands, to ensure that farmers’ product could have access to the market. There had been challenges around the irrigation schemes but NAMC’s role was to address the problems.

Ms Steyn asked what role NAMC was playing to value-add products and its influence on the difference between the farmer’s cost of producing and the consumer retail price.

Mr Ramabulana replied that a food cost review of wheat and maize value chains had been conducted the previous year so that NAMC could understood the market. Others would be reviewed in the current year. There was not a single industry in the world that did not grow once the market was understood. Further documentation would be submitted to the Committee.

The Chairperson asked who was actually benefiting when the retail cost of food was being increased to the extent that people could not afford food, meanwhile there was a surplus of food and high grade food was being exported.

Mr Ramabulana replied that due to time constraints he would be willing to provide the Committee with documentation on food prices to help the debate going forward. A workshop for understanding of the market would assist.

Mr Van Dalen asked for more information on the agreement with Walmart for small holder farmers to sell their goods.

Mrs Msimang replied that Massmart had technical expertise which they paid for themselves. This helped NAMC understand the market requirements and thereby assist farmers.

The Chairperson asked for more information on the livestock improvement programme.

Mr Gaehler asked where in the Eastern Cape cattle farmers were being assisted.

Mr Ramabulana replied but much of his answer was inaudible. He said that the NAMC would provide the Committee with information on the facilities and the Comprehensive Agriculture Support Programme (CASP) money used for the facilities. The Committee would be invited to visit the facilities.

Mr Abrams said that the budget for the national red meat programme had decreased from R1.7 million in 2013 to R724 000 in 2014 - a decrease of R1 million. He asked why this was so and if NAMC planned to expand the programme.

Mr Ramabulana replied that the decrease of R1 million in the budget was due to the Eastern Cape government giving NAMC R1.6 million the previous year and R3.6 million in the current year. This was CASP money used to feed the livestock.

Mr Abrams said that there were a number of issues that emerged from the presentation. He recalled the objectives as set out by the Chairperson of NAMC and asked how NAMC proposed to achieve the objectives in the face of all the challenges. He asked how the ten dairy farmers in the Dairy Scheme would be assisted and suggested that the farmers who had shown competence and success be given the necessary support. It was a highly competitive industry and these farmers were leaving the industry at the rate of one per week.

Mrs Msimang replied that NAMC had met with management the previous year to address issues around the Dairy Scheme. R16 million of roll-over funds from the dairy industry statutory levies was ring-fenced to support small dairy farmers in the Free State province and innovations such as ensuring electricity and dairy equipment, supply of animals and market access were the types of support that NAMC offered.

Mr Abrams said that the new sectoral determination on wages was not sustainable for small-scale farmers. While wages may not have been the best, farming was the only economic sector where the farmer provided housing, medical service, rations and grazing rights - costs that were not brought into the equation. The unintended consequences of increased wages would be that there would not be job creation, farmers would mechanise and the small farmer would be out of business completely.  He asked what markets NAMC would open for access if there were no commodities at the end of the day.

Ms Msimang agreed that the wage increase was a game-changer and had introduced a new way of looking at agriculture. It would never be the same again. The strike started in De Doorns where there was a high malnutrition rate in children and the town consisted of a mix of populations, most of whom were not employed.  However, the strikes could have started anywhere. NAMC was engaging on how to achieve a vibrant agricultural sector, but R37 million for NAMC was inadequate for the work NAMC was doing.

Ms Steyn mentioned that on oversight visits it was clear that small holder farmers in communal areas did not have training assistance from DAFF on basic cattle farming.

Mrs Msimang replied that this was a national problem which NAMC tried to understand.

Mr Ramabulana added that NAMC strategy included: ensuring that animals were moved from communal areas into a feeding facility; ensuring that farmers understand the value of the animal and of providing the right feed; illustrating that by taking care of their livestock they could access markets and make money. With adequate funding, all communities could be assisted in this regard.

Ms Steyn felt that the type of training offered may be aiming too high and was neglecting basic training. She asked which entity ensured that they received basic training and if universities were also involved in practical training programmes.

Mr Gaehler asked what types of training NAMC offered.

Mrs Msimang replied that NAMC worked closely with almost all universities, including those in Limpopo which were not main stream.

Mr Ramabulana added that NAMC worked with four colleges and Stellenbosch, Free State University and Pretoria. The lists of programmes and courses provided by them would be submitted to the Committee.

Mr Gaehler asked whether CASP had any impact and if so, where in the Eastern Cape it was effective.

Mr Ramabulana replied that the R1.6 million, R3.6 million received to assist CUSP facilities to understand how to structure programmes better, they have performed much better, but he was not in a position to talk about all the CUSP programmes.

Mr Van Dalen asked if NAMC was effective and worth the tax payers’ R33 million allocation per annum.

Mr Ramabulana replied that industries that NAMC worked with would be in a better position to answer the question. He would like the industries that collected money to come before the Committee for Members to get an appreciation of the work that NAMC did.

Mr Andre Cronje, Council Member, NAMC and Tiger Brands, said that KOO was the number one brand in SA and four years ago, SA had started to extend procurement into the local market. In the past, bean imports were from China or North America. This had been partially replaced with a system and slogan “from Africa for Africa”. In the current year, SA was expected to get 80-90% of its beans from the local market. The Committee was invited to attend a meeting at Marble Hall on 9 May at 12pm to learn about what was being done for beans in SA and what could actually be done for every South African agricultural product.

Mrs Msimang concluded that it was clear that it was necessary to plan sessions with the Committee which would assist them in understanding the work that NAMC did.

The Chairperson said that the meeting had been disadvantaged by time. NAMC would submit the outstanding answers to the Committee.

The following questions were not fully answered:
Mr Abrams asked NAMC to submit whether the NAMC was involved in the formulation of the mechanisation policy. He also said that levies collected for the livestock industry made up the single largest amount, R18 billion. This showed the importance of the industry, particularly in the communal areas and with all schemes working properly, this could obviate the nonsensical goods imported into the country. He asked NAMC to inform the Committee on the channels to plan for the country producing its own super-quality beef, promotion thereof, training courses and a future scenario for the industry.

Ms Steyn said that the red meat industry was a massive industry but was struggling with massive problems. She asked what influence NAMC had in ensuring the research and marketing development was funded and the industry problems could be resolved.
The Chairperson asked NAMC to inform the Committee on what entities were involved so that there could be synergy with these programmes and resources could collaborate rather than repeat similar functions.


Ms Steyn asked what body checked the food that was imported into the country. It seemed no one was taking responsibility for monitoring imports to protect the consumer.


Ms Steyn asked who decided on the percentage of levy on each commodity and what influence NAMC had over that.


Mr Abrams suggested that the NAMC examine the market for rhino horn and promote rhino farming and thereby look after the rhino population. 


Mr Van Dalen asked how many of the annual targets in the shareholder compact had been reached and what percentage of the budget had been spent.


Mr Van Dalen asked if the money from DAFF was invested and if that was in line with PFMA. He also asked what body would be responsible if the investment lost it value.


Mr Abrams said that in the 2013 estimates of national expenditure, the trade promotion and market access programme would ensure transfers to the NAMC and Land Bank. He felt that the Land Bank should appear before the Committee to share information on their involvement. Through the transfers, DAFF planned to establish 27 commodity-based co-ops and support nine agri-business deals per province over the medium term but this was not reflected in the NAMC operational plan. He asked how much funding NAMC had received and if there were any collaborative activities with the Land Bank in this regard.


Mr Gaehler asked why the target for filling of vacant posts was only 70%.

The meeting was adjourned.
 

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