Hearing with Provinces on 3rd & 4th quarter expenditure report on Ilima/Letsema Projects Grant

Meeting report

The Chairperson said that there were apologies from the Member of the Executive Committee from the Northern Cape, Mr C De Beer (ANC, Northern Cape), Mr B Mashile (ANC, Mpumalanga) and Mr D Bloem (COPE, Free State).

National Treasury: Ilima/Letsema Projects Grant, 3^rd and 4^th Quarter Expenditure – 2012/13
Mr Emmanuel Pillay, Director: National Treasury (NT) said that the NT was responsible for monitoring the implementation of conditional grants in provinces. The Ilima/Letsema Projects Grant was a schedule 5 grant with specific conditions attached to it. Started in 2008, its overall purpose was to assist vulnerable South African farming communities achieve an increase in agricultural production and increased income, to invest in infrastructure that unlocked agricultural production, and to supply government markets with agricultural products, thus releasing them from the poverty trap.  

Outcome statement and key outputs
The outcome statement of the grant focused on increased production efficiency (doing more with less production inputs),an increase in agricultural production at the household and national level, improved farm income, job creation (maximized job opportunities), and a reduction of poverty.

The key outputs of the grant included: planting of maize; supporting beneficiaries/entrepreneurs; the establishment of new infrastructure through the grant; rehabilitating and expanding irrigation schemes; and production within the agricultural corridors -- for example, maize.

Spending as at 31 December 2012
Spending was at 51.9% of the total allocation.  Normally at the end of the third quarter, the National Treasury expected the expenditure of provinces (with the exception of big infrastructure grants) to be around 75%. A big output of the grant was the planting of maize and ideally provinces planted maize in the third quarter of the financial year. However, most of the provinces missed the target this time round, with planting done in the fourth quarter.

The Eastern Cape, Free State, KZN and Northern Cape spent below 40% of their allocations at the end of the third quarter. Free State projected to underspend at the end of the financial year, while the Eastern Cape projected a minor over-spend.  In terms of the year-on-year expenditure, provinces spent 7.5% less than they had spent in December 2011. The provinces with big drops were: Free State, KZN and Northern Cape.

Spending as at 31 March 2013
The preliminary figures that had come through to the National Treasury indicated that the expenditure of the provinces had increased to 90.9%.  KZN, Mpumalanga and Western Cape had achieved a 100% expenditure of their allocations.  There was a marginal increase in the year-on-year growth, with provinces spending 2.8% more.  

The Committee was informed that the Eastern Cape spent 88.4% of its budget, with an under spend of R5.089 million.  The late delivery of production inputs to the end-users was cited as the reason. The Department and the end-users had also experienced breakages in the tractors and implements that were used in the production processes.  The machines were not fixed regularly on time, causing more delays. The National Treasury had been informed that some of the tractors were not licensed and had no number plates, and yet they operated on main roads. The delay in delivery meant that the province was unable to plant in the third quarter of the financial year. Provinces normally planted in the third quarter because of the high rainfall received and the soil moisture that enabled the seedlings to germinate.

The Free State had also under spent -- something that was attributed to ‘unsound planning’. There was a late appointment of implementing agents, causing a delay in the expenditure and the planting. The Department had to ensure that implementing agents were appointed on time and monitored according to their contracts for performance. Gauteng’s under-expenditure was R11.1 million, and the reason was ‘unsound planning’.  A large number of the deliveries could not be done on time because the size of the trucks that had been contracted to deliver production inputs were not suitable, resulting in under delivery and late delivery of production inputs to the end users.

Limpopo’s under-expenditure was R3.7 million, and here the issue was the late delivery of production inputs, in particular, fertilisers. There were price concerns with the service providers which were never resolved on time owing to blockages in the supply chain management. KZN had a problem in the third quarter with their irrigation system, but this was fixed by the fourth quarter. The Northern Cape under-spent by 22% (R14 million).The reason was that the Department lost some capacity during the financial year, which made the management of contracts on the grant difficult.  In addition, plan schedules were not followed as expected. The NT had since advised Northern Cape to replace the lost capacity as soon as possible, and also to manage the contracts more carefully.    

Challenges
The challenges faced were: early and sound planning was lacking in many provincial departments and this was the root cause of most of the problems - provinces had to consider an element of risk management in their plans to provide for mitigation in terms of late delivery; slow Supply Chain Management (SCM) processes caused the late delivery of inputs. The department had to unblock the obstacles in the SCM to allow for efficient delivery of inputs (Northern Cape and Limpopo were affected); late delivery of inputs resulted in many farmers deciding not to plant, as the window for crops had passed; poor performance of contractors and lost capacity in the department (for instance in the Northern Cape) – departments had to enforce the terms and conditions of contracts; poor monitoring of service providers had led to the services not being delivered on time or to the required standard; and performance information reporting had to be improved as there were gaps with quarterly targets not indicated in the reports, only annual targets. Some provinces were not keen on reporting regularly, with some not reporting at all.

Ms Elder Mtshiza, National Projects Coordinator: Department of Agriculture, Forestry and Fisheries (DAFF) agreed with the presentation of the National Treasury, adding that the challenges facing the provinces, as had been pointed out, were continuously being addressed by DAFF through quarterly review meetings after receipt of the reports. 

Discussion
Mr W Makhubela (COPE, Limpopo) asked what was being done by the DAFF in the quarterly review meetings to address the challenges faced by provinces – were any workshops being arranged?  

Ms Mtshiza said that during the meetings with the provincial departments, depending on the challenges picked up, there were discussions and explanatory presentations on what was expected of them.  These addressed capacity challenges and the unblocking of supply chain management blockages. Templates were provided and explanations given on targets and their layout, under-spending and business plans. In some provinces, agreed business plans were reviewed and changed. She added that provincial departments had not yet mastered succession planning – for instance, the Northern Cape could not attract enough skill in engineering and yet it was the only skill it depended on in terms of the revitalisation of the irrigation scheme.

Ilima/Letsema as a grant addressed poverty alleviation and increased food production. In terms of the beneficiaries of the grant, the focus was on subsistence farmers (households), small-scale landholders as well as commercial farmers. Support was continued until such time as the farmers were able to sell their produce and also had enough reserves in terms of seeds. The monitoring of the performance was done through quarterly review meetings, meetings at ‘Minmec’ with the Minister, and also through teams of employees in the provinces responsible for monitoring the performance on the ground, with reports sent to the DAFF. Quarterly performance review meetings were also held with provinces.

The Chairperson said that the response was unsatisfactory. The Committee was of the understanding that the plans of the provinces were approved by the DAFF and so to claim that there was unsound planning was strange - it would be understandable if one claimed poor implementation. He asked what the findings of the teams on the ground were with regard to their visits to projects in the provinces.

Mr D Joseph (DA, Western Cape) asked for clarity on ‘unsound planning’ and ‘early and sound planning’ – there was either poor planning or no planning. Was this responsibility part of the MEC scorecard? Why was there no progress following high level talks in meetings.
 
Mr Pillay said in response that ‘unsound planning’ was the same as poor planning. Sound planning involved the incorporation into the provincial departments of risk management, which was aimed at holistic planning for eventualities.

Mr A Lees (DA, KZN) asked if the NT measured non-financial performance, like on-ground performance. When were people left to stand on their own after receiving the grant allocations? What was the role of contractors? Contractors should be suspended in cases of non-performance.

Mr Pillay said that NT also measured non-financial performance through the quarterly reports received from provinces. There was however a challenge in gauging as to whether there was good or poor performance, because quarterly targets were missing. The NT had informed DAFF that when provinces were reporting, they had to do this against the targets because according to the grant framework, each output had to have a target. The NT was interested in non-financial information, but at present there was a need to refine the reports that came in from the provinces.

With regard to farmers standing on their own, he said that once they were given production inputs like seeds and ploughs, the responsibility was on them to take the process forward and to ensure that there was sustainability.

Contractors were responsible for the delivery of production inputs like fertilizers and seedlings. The non-performance by contractors was due to blockages in the system that had to be addressed, such as poor planning. Although the provinces had under-spent at the end of the financial year, the money had been committed to identified activities and where this was not the case, the money had to be returned to the NT. There was a commitment from provinces that the under-spent funds had been committed to identifiable projects, and that there were invoices and orders reflecting that position.

Department of Agriculture and Rural Development: Free State Report
Ms Mamiki Qabathe, MEC: Free State Department of Agriculture and Rural Development, agreed with the NT with regard to the challenges that the provinces were facing. The late appointment of agents had impacted on the performance of the province – the use of implementing agents was new to the province, with the Department previously doing the work. Over and above this, the province was dependant on the tractors from the DAFF to do most of the planting. When the province received the 72 machines, cooperatives had had to be set up and trained on the use of the tractors. Money had to be given to the cooperatives for purposes of buying diesel and maintaining the tractors, in addition to training the drivers. The appointment of a security firm to protect the tractors also played a role in affecting the performance of the province.

The Chairperson, in guiding the presentation said that although the presentation was covering other grants comprehensively, the focus was to be limited to the Ilima/Letsema Projects grant.

2012/13 financial year grants expenditure
Mr Peter Thabete, Head of Department: Free State Department of Agriculture and Rural Development said that the total amount of grants given to the province was R126 million, with Glenn College receiving R4.5 million, training (mentorship) R5.5 million, the Extension Recovery Plan R25.1 million, Ilima/Letsema Project grant R54.6 million, and Disaster Relief R12 million. There was 100% expenditure of the Ilima/Letsema project grant. He added that the figures that had been given to the NT and the DAFF were preliminary figures.

Project performance and expenditure trend
99.9% of the grant allocation, representing R54.6 million, had been spent.  In terms of the expenditure trend since 2008, the department was comfortable with the way the grant was being handled, as there was no huge under-expenditure. The emphasis was not on the spending, but rather the delivery. Farmers were being asked to sign off certificates referred to as ‘happy letters’ as a way of confirming that the money had been spent.

Beneficiaries and farmers supported, jobs created and food security programmes
The Department had targeted 714 beneficiaries, but could achieve only 652 supported beneficiaries owing to delays that led to a late start in the planting. There was an increase in the number of hectares for beans compared to maize. There were three categories of farmers (subsistence, smallholder; and black commercial) supported by the department. 282 farmers were supported under the subsistence category, with 23 hectares planted; 190 farmers supported under the smallholder category, with 1 348 hectares planted; and 482 farmers supported under the black commercial category, with 1 641 hectares planted.

The grant was for acquiring production input and that is why it did not create many permanent jobs. Most of the jobs under the grant were temporary – a total of 139 jobs had been created in the implementation of the grant.

Speaking on the food security programme, he informed the Committee that through the Mohoma Mobung programme the department was able to reach 3 389 households and 51 schools. Many households had been reached to ensure that they ploughed and planted within their yards using the grant.

Discussion
The Chairperson asked for more clarity on the Mohoma Mobung programme – was money given to the households and how was the monitoring of implementation done? The province had a lot of new tractors that were not being utilised for a year – what were these tractors meant for, and why had they not been put to use?

Mr A Lees (DA, KZN) said that the figures presented concerning the use of the grant for the servicing of 1 641 hectares were incorrect, because this indicated that R33 272 was being spent on each hectare, which was very wasteful expenditure. Smallholder farmers were also commercial because they produced more than they could consume and a result, sold off the excess.  This in essence qualified them as commercial farmers, so the category of smallholder was not necessary. What was the purpose of the cooperatives – did they control areas of land or tractors and who were the members? Who decided how tractors were going to be used and where they were to be used?

The Chairperson asked for clarity on the exact expenditure of the department – was it 100%?

The MEC, in response to the questions and in clarifying the categories of the farmers, said that with the previously disadvantaged communities, there were farmers who went into farming mainly because they were retiring and wanted a farm to relax and sustain themselves; there were those that were engaged in farming, not because they wanted to be business people, but because they liked it as a result of growing up on a farm (subsistence); and there were those that were engaged in farming for business, but were not part of the bigger market (smallholder farmers). Commercial farmers were those that participated in a formal commercial industry and traded with major entities.

Ms T Memela (ANC, KZN) said that the market issue was very crucial.  She gave the example of Malawi as a country of good farmers, but lacking proper market planning, which meant that most of the produce was wasted. Starting a project without planning the market was wasteful.

The MEC in response said that when it came to farming communities, there were complexities, especially with regard to the market, given South Africa’s history. At the Bloemfontein abattoir, for example, the farmers were saying that there was a difference in prices paid to a ‘white farmer and a black farmer’. As a result, some farmers were hesitant to take their cattle to the abattoir because of an anticipated loss. The same applied to auctions in the province, where farmers were complaining about the differences in prices received by white and black farmers. Ms Memela said that she was speaking broadly, and not specifically about the Free State alone. The point was that MECs had to scrutinise all aspects of the market.

Mr Lees said that he was ‘disappointed’ that the MEC had chosen to racialise the matter. He gave an example of auctions in KZN that were very open and at which commercial farmers of all races had the option of accepting or rejecting the price for their livestock. This was not a racial issue. Quality was the key in the sale of livestock like cattle, and the Department was supposed to be helping in this area.

KZN Agriculture and Environmental Affairs: Ilima/Letsema Project Grant
Dr Meshack Radebe, MEC: KZN Department of Agriculture, Environmental Affairs and Rural, informed the Committee of the various challenges that the province had had to deal with.  One was the outbreak of rabies that had caused the death of four people and as a result, 600 000 dogs and other animals had been vaccinated to fight the scourge. The Department also had to deal with rhino poaching to prevent the practice – a summit had been held in this regard, in addition to the recruitment of 400 ambassadors to educate the people on the problem. The Justice Department was not helping much, as criminals involved in poaching and released on bail went after witnesses. Despite all the challenges, the Department had spent the R63 million grant allocation.

The MEC informed the Committee that there was no proper database to track the province’s tractors, and their location. The department had since ensured that there was at least a service provider in each district to carry out maintenance work on the tractors. Registration of those taking tractors had to be done at the municipal offices to help the Department to keep track of their location.

With regard to the farmers, some had started cashing in on yellow maize with a high demand from companies like South African Breweries (SAB). In one of the municipalities, women were going to make a profit of R13.5 million. A supply of five tons of yellow maize was going to be made to the SAB.  An executive decision had been made that government departments were supposed to find markets for the farmers. Three MECs had been appointed in the province to specifically deal with markets.

Members in the communities were being advised to sell some of their healthy livestock, as opposed to keeping the livestock forever without deriving any income from it. The department was also going to make use of earrings on cattle to help prevent accidents, in addition to using trackers to track and locate stolen livestock.  This would cost R1 billion, but it would be worth it. The ‘one home, one garden’ strategy was a priority for the Department to ensure that it happened for each household. The R63 million was good but not enough, and the request was that it should be doubled for the next financial year.   

Budget performance
Mr Eckard Habemann, Acting Chief Financial Officer: KZN, said that in Quarter 3, the scheduled transfer was R25.2 million and R13.5 million had been spent. In Quarter 4, the scheduled transfer was R12.6 million but the expenditure had been R49.4 million. A total of R63 million was received for the 2012/13 financial year and the entire amount had been spent.
 
The low expenditure in Quarter 3 and high expenditure in Quarter 4 was due to incorrect allocation codes on the financial system, which required correcting journals to be processed in Quarter 4, and the bulk of mechanisation and food security expenditure was incurred in Quarter 4, in line with the seasonal agricultural activities.

Capacity constraints/challenges
The change in the allocation codes on the financial system did affect the spending trends on the system.   However, this had been rectified and all expenditure correctly allocated. The unseasonal high rainfall had caused some initial delay in the implementation of projects such as mechanisation, as well as the construction of earth dams. The change in management of the food security programme due to the Senior Manager’s contract ending, had resulted in some initial delays in the programme. The Department had since appointed a Senior Manager, and was able to take corrective action and make up the lost time.

Monitoring capacity and reporting mechanism
The Department had in place a Monitoring and Evaluation Unit at a Director Level, responsible for monitoring performance of all activities, including those for conditional grants. Line managers reported quarterly on performance against set targets.

The Department reported monthly on financial performance, using the In Year Monitoring (IYM) report of National Treasury.  The IYM report was submitted to the Provincial Treasury and DAFF, in addition to the Quarterly Performance reports submitted to DAFF.  No transfers had been made to local government or public entities – the full allocation of R63 million had been spent through the provincial mechanisms.

Business Plan – 2012/13
In terms of the deliverables, the department had spent R15 million on the revitalisation of the Makhatini and Bululwana Irrigation scheme in order to improve production. The cost had included the rehabilitation of the main canal (30 kms), the engineering design of Bululwana Irrigation scheme; irrigation coupling for 300 farmers, the engineering design for Ndumu B irrigation scheme, the engineering design for an input store and nursery, and  the refurbishment of pump stations.  

In support of the SAB requirement for yellow maize, 5 800 hectares of yellow maize had been planted, 1 400 farmers assisted (670 subsistence, 534 smallholder and 196 black commercial farmers) at a cost of R12.5 million. The department had spent R13.2 million supplying starter packs to small indigent growers.  25 000 households had been supported with training and food security starter packs.

The department had spent R8.2 million in scooping 33 earth dams in 11 districts for stock water.  R6.6 million had been spent on 114 new boreholes.  Drilling was excluded from this cost, as it was funded by the DAFF. The Department also spent R7.5 million on 12 new dip tanks and 25 dip tanks were rehabilitated for improved livestock management.

Eastern Cape Department of Rural Development and Agrarian Reform: 3^rd and 4^th Quarter Expenditure of the 2012/13 financial year – Ilima/Letsema Conditional Grant
Ms Zoleka Capa, Eastern Cape MEC for Rural Development and Agrarian Reform said in her overview that the Department had received a budget of R38 million in order to meet the community demands and the budget had been divided according to the six districts in the province. She added that the department was not only geographically driven as hotspots (areas were people go without food) were being targeted.
 
The implementation of the project was being driven through a structural arrangement that consisted of: a senior manager (focused on a region), local municipalities, controllers and coordinators (focused on magisterial areas). Teams were established to focus on operations, and these included senior managers, controllers and coordinators, local economic development councillors, chiefs, extension officers, ward councillors and ward committees. The 72 tractors were also divided according to the regions in the province.    

Quarterly expenditure for the 2012/13 financial year
Mr Sydney Masebeni, General Manager of the Eastern Cape Provincial Department, said R43.9 million was the available budget for the financial year, including the roll-over.  During the Quarter 1, R1.4 million had been spent and because of the seasonality of the agricultural activities in the province, most of the grant was spent during the 3^rd and 4^th Quarters. R38.8 million had been spent by the end of the financial year, reflecting an 88.4% expenditure.

Letsema 2012/13 service delivery, outcomes and jobs created
Planting had been carried out on a total of 5 695 hectares, and 4582 farmers had been assisted during the financial year.  The estimated yield varied from area to area, with the highest yield estimated at 12 tons per hectare in the western district under irrigation. In the eastern side of the province, the yield  was estimated at seven tons per hectare. The department employed 24 tractor drivers and 20 rangers to guard unfenced production areas.

Annual Expenditure trends for the Ilima/Letsema Grant over the four-year period 2009/10 to 2012/13
Out of a total allocation of R112 million, the department had spent R102.9 million, with under expenditure at 8.1% due to a number of challenges, including the dry season, service providers and tractor operators. The under-expenditure on the conditional grant was 19.2% in the 2009/10 financial year and 2.1% in the 2010/11 financial year.

The reasons for the under-expenditure were: the delay in the procurement and delivery of production inputs owing to unforeseen capacity constraints on the part of some suppliers; and a lack of implements by the some mechanization contractors. The Department was considering the use of term contracts to enhance effectiveness and efficiency and value for money in all the conditional grants.

Monitoring Capacity for the 2012/13 financial year
The Eastern Cape Rural Development Agency (ECRDA) and Ntinga Development Agency were used for the implementation of the programme during the previous financial year, and service level agreements (SLAs) were used to engage these two agencies. There was room for improvement in these agreements in respect of roles and responsibilities. Weekly meetings were held with the  agencies to report on progress made and to identify bottlenecks. Lessons learnt were considered during the planning for the next cropping season.

Reporting
The Department’s reporting was done in accordance with the Division of Revenue Act (DORA). The six districts, agencies and management met weekly to consider reports which were then consolidated and submitted to both the Department of Rural Development and Agrarian Reform and DAFF.

Discussion
Mr Makhubela wanted to know from KZN how the ‘one home, one garden’ strategy would be achieved, considering that water was one of the challenges in the communities? Of the 114 boreholes, how many were producing much water? He asked the Eastern Cape how many of the 72 tractors were in a good working condition.

Mr Lees said that beside KZN, which had detailed how the grant was being spent, the other provinces had given no such details. He asked for clarification on how many tons of yellow maize had been produced and how much money was estimated to come in? Where were the 5 800 hectares located? What controls were in place to maintain the resuscitated Makhatini and Bululwana irrigation schemes?  What was included in the starter packs given to the households -- R528 per household was a lot of money?  He said that R250 000 was a lot of money for earth dams, and it sounded like a ‘rip-off’. How were the 114 boreholes equipped, given the cost for each? Why was KZN going for dip tanks that were costly to construct and maintain and yet most provincial farmers were using the pour-on method – it seemed like farmers were being pushed into a technology that had been abandoned?

Stock thefts from Lesotho were a concern, but it was also to be noted that the branding which was a legal requirement was not being enforced by the Department. Tracking as a proposed method was commercially unsustainable, because the chips inserted into the livestock were expensive and to spend R1 billion was wasteful. This money should rather be used to control the border, for branding the animals and fencing to prevent cattle thefts. The ‘one home, one garden’ strategy was a good concept, but it required water, which was a big challenge in the communities.

What was the exact number of tractors in the Eastern Cape, and was the match 24 drivers for 72 tractors? Who were the agencies, how were they established and was money transferred to them?

The Chairperson asked for clarification on the difference in figures compared to those that had been presented by the National Treasury. How many hectares were used for planting maize and beans and what was the output? What were the real reasons for the continued under-expenditure?

Mr Thabete, in response to a question on the Mohoma Mobung, said that this was a Free State programme encouraging farmers to go back to the land and plough it – this was for all levels of production. The programme also had an element of partnering with the private sector and commercial farmers in order to assist the farmers.  The value chain was also being encouraged under the programme before the sale of the maize and beans, to maximize profits.

The Chairperson asked what exactly was being given to the households – was it seeds or funds to do work in the garden?

Mr Thabete responded that identified households were given starter packs containing implements, seeds and fertilisers. In some cases, through a partnership with the Agricultural Research Council, the Department was doing water harvesting in the areas faced with water challenges. Extension officers were responsible for ensuring farmers actually used the items distributed to them. Starter packs were allocated based on the size of land that a household had.
   
Clarifying the unused tractors issue, Mr Thabete said that these tractors had been allocated to the Thabo Mofutsanyana district. They had been received from DAFF in July 2012 and during that time they were not in a usable state, as they had been delivered in batches. Delivery was made in Bloemfontein and they still had to be assembled and the licensing and registration done. Following the handover of the tractors in September 2012, the Department had had to transport them from Bloemfontein and distribute them in the various areas in the provinces. Due to safety concerns, trackers had to be fitted in the tractors, diesel had to be bought (10 trailers of diesel) and tool boxes had to be secured for each tractor. A plan had to be worked out before the tractors could be sent to the various areas in the provinces and the Department was comfortable with the tracking system in place.

The Chairperson asked how the Department could be ‘comfortable’ when tractors had not been distributed six months into the financial year. This also made the buying of trackers and fuel wasteful, since the tractors were not being used for any work.  

Mr Thabete said that the plan for the distribution of tractors would be shared with the Committee, adding that 24 tractors had been distributed to Thabo Mofutsanyana.

Speaking on the number of hectares versus the expenditure per hectare, Mr Thabete said that the department would supply the Committee with additional information, because production input with regard to the grant did not only cover crops, but livestock as well.  This would be supplied to the Committee to clarify the figures and expenditure. He added that the consolidation had not been done, owing to time constraints.

The Chairperson said that the Free State had been given ample time to prepare the report before presenting it to the Committee.  A better report had to be prepared and the Committee would decide if this should be submitted in writing or whether a presentation was necessary.

Dr Radebe, in response to the questions raised, said that one of KZN’s foremost problems was the ‘stealing of officials’ by the DAFF, which had resulted in many acting positions in the Department.

Clarifying on the dams, he said that these differed in size depending on the number of animals and the cost of establishing them varied on this fact. He also said that the department was trying to ensure that everyone in the province had water and electricity. The engineers before setting up boreholes did assessments to determine how much was available and how long it would last.

Dr Radebe in responding to the dip tank question, said that a dip tank was more effective than the spraying method because it was impossible to spray under big animals. Dipping allowed for the whole body of the animal to be covered. The Department was now able to report on the dip tanks and the dams.

The Committee was informed that KZN was still struggling with the ‘one home, one garden’ strategy because in some cases, and especially at the borders, the farmers were in the habit of selling the seeds to the Mozambicans. A summit of four countries had been held between South Africa, Mozambique, Lesotho and Swaziland to see what measures could be taken to address the exchange and stock theft.

Dr Radebe said that a forensic investigation had been authorised to find out what happened during the purchase of costly tractors and equipment that were not suitable for the work to be done in the province. It was expected that some people would eventually be arrested.

Mr Harry Strauss, Acting Head of Department; KZN Department of Agriculture and Environmental Affairs, said there was a success rate of over 60% of useful boreholes. Information was available on all dip tanks, including the blow tests that had been carried out.

The 5 800 hectares included both yellow maize and beans. Yellow maize occupied 900 hectares and the expected average yield for this year was about 4.5 tons (this was genetically modified free maize, as SAB would not accept any modified maize). 

Mr Strauss said that there was a problem of water logging and salination of the main canals on the irrigation schemes, but this problem had been resolved, including replacing some of the underground pipes that had exceeded their life span. Although the revitalisation was expensive, it was expected that the irrigation scheme was going to serve its purpose for a very long time. Speaking on the starter packs, he said that these included seeds, tools and fertilisers.

The Committee was informed that the average size of a dam was in excess of 10 000 cubic metres. In terms of the pour-on method, Mr Strauss said that this was convenient on farms with few animals but for farms with many livestock, the use of long-acting ingredients in dip tanks was more viable and cheaper - the province had about 1 600 dip tanks. To prevent stock thefts, the Department was looking at dip tank brands and ear-tags. Mr Strauss said that the Sukuma Sakhe programme was being used to ensure that the packs handed out to the farmers were actually being used and the ambassadors in this programme were trained. 

Ms Capa, in response to a question raised on tractors in the Eastern Cape, said that the challenges that came with the tractors had now been resolved. The Department had received only 62 tractors, in addition to the already existing 12 tractors. There was a mismatch in some of the tractors with the implements, but other methodologies had been used to put the tractors to use. The tractors had since been taken to the various districts where they were going to operate. Overall, the tractors were undergoing maintenance in preparation for the harvest that was going to start next week.

The MEC said that the infrastructure was not included in the report because this was not funded from the R38 million. The decision of the cabinet was that the R38 million should be dedicated to ensuring that there was food and feedstock. She added that the Department was targeting 300 000 hectares in the rural areas. The Department was able to spend the R38 million that had been allocated to it.  It had also received another R38 million from the Department of Rural Development and Land Reform (DRDLR) and the DAFF that had also been completely spent because of the vastness of the land.    
 
With regards to under-spending, the MEC said that the tractors were not able to assist the farmers because the system of allocating them was flawed. They were given to individuals that had no land. In some instances, service providers contracted for five years were being paid without doing any work because the owners of the tractors were also doing the mechanisation part, and in some cases the service providers were supplying fertilizers with no actual ploughing taking place. Tractors were no longer being given to the individuals but rather belonged to the Department, which was paying for the diesel. The Department had also exploited the planting of winter crops so that planting could go on during the year.

The Department was able to make estimates of the expected yield from beans and crops as a result of scientific analysis of moisture content in the soil. The Department was also determined to buy from farmers (30% of the produce) for redistribution to areas were ploughing had not taken place. Given the amount of work that had to be done, the province needed R1 billion.

Mr Masebeni, speaking on the issue of agencies, said that the Department had not established any agency. The municipalities had their own agencies and the planning was done together with the Department. Money was not transferred to the municipalities and money could only be claimed for work actually done. In instances where a municipality had no agency, the Department would use the Eastern Cape Rural Development Agency.

Speaking on the inconsistencies in the figures, Mr Masebeni said that the Department was using the same report it had submitted to DAFF and NT, but the figures would be looked at again. As far as under-expenditure was concerned, there was R38 million from DRDLR that was all spent.  However, with the R38 million for Ilima/Letsema there had been some invoices that could not be paid because of late submission by contractors, bringing about an under-expenditure.

The Chairperson asked the Department to meet with the NT to address the difference in figures and send back a report to the Committee with the correct figures within five days.

Ms Qabathe apologised to the Committee for presenting an unstructured report on the Free State that included other grants that were not the subject of the presentation.  She acceded to the fact that there were tractors in the province that were not being utilised. There was a tractor from which a battery and tyres had been taken, causing a loss at R7 000. Efforts were continuing to ensure that the tractors were utilised as expected.

In terms of the household budgets, the Department was dealing with home gardens, school gardens and open parks within communities that were not put to use. The Department was engaging in talk shows to educate communities on the backyard gardens. Some households were complaining about water, and yet they had flowers that they were watering.  These households were being encouraged to plant vegetables. The Department was going to create competition in the communities among households and schools with gardens that were sustainable and water saving. The Department had partnered with a person who, with two litres of water, could water three different products.  The Department was going to work on improving its planning, spending and tracing the yield.

Mr Kgadima Mannya, Deputy Director-General: Agricultural Production, Health and Food Safety, in addressing mechanisation process issues, said that in the quest for improving household food security and working towards the one million hectares of unused land, national government through the DAFF had capitalised the mechanisation required for this number of hectares. The hardware and equipment purchased had since been transferred to the asset books of the provinces. The understanding was that DAFF would provide a framework for the provincial departments, but that the various provinces would use their own operational models, considering that the provinces already had mechanisation processes in place. Due the problems that the provinces were facing, DAFF was refining the framework to close the gaps and the refined framework would be provided once the assessments had been finalised.

Mr Makhubela said that the DAFF should submit a report to the Committee on the performance outcome of the grant from its inception in 2008/2009. The Chairperson added that this report should be sent through to the Committee by May 24, 2013. 

The officials from the Northern Cape were not expected to present to the Committee, because an apology had been received from the MEC.  
 
The meeting was adjourned.