Agricultural Research Council; Onderstepoort Biological Products; National Agricultural Marketing Council; Perishable Products Expert Control Board on their 2014 Strategic Plans; Minister & Deputy Minister in attendance

Agriculture, Land Reform and Rural Development

07 July 2014
Chairperson: Ms M Semenya (ANC)
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Meeting Summary

The Agricultural Research Council (ARC) registered 30 new cultivars to improve yields and mitigate the effects of pests and diseases. At least 21 new cultivars were released to farmers to enable competitiveness, sustainable production, resistance to pests and diseases and mitigate the effects of climate change. There was a 6-10% increase in external income. The R171 million Economic Competitiveness Support Package (ECSP) allocations for 2014/15 were assumed to be the last year of allocation, because there had been no confirmation of continued support.

Onderstepoort Biological Products (OBP) has 53 vaccines, but the majority of the vaccines were not commercially viable. The decline in sales could be ascribed to the slower economy, an outbreak of Rift Valley Fever, as well as production challenges related to upgrading the facility. OBP generated income from mostly commercial farmers, from the Department and by selling vaccines to outside countries. The unaudited figures showed a loss of approximately R13 million in 2013/14. This was because the commercially viable vaccines were about 20% of the product portfolio but they had to subsidise 80% of the product portfolio. OBP's financial and cash position were outlined with the full cash amount totalling R156 million at the end of March 2014 because of the recapitalisation funds allocated toward the upgrade of the facility. The breakdown of how the recapitalisation funds would be applied and received was outlined over the phases of the upgrades and the amount totalled R492 million.

The Committee discussed the coordination of the objectives of these four entities and how they could support the Department in delivering on its mandate. The discussion focussed on job creation, workforce transformation policies and how the strategic objectives would impact food security and disease management. During the discussion, OBP stated that it should be the preferred supplier across all provinces but noted most provincial departments bought their vaccines via RT12 tender through Treasury from an international company who won the tender. Its main challenge was the Good Manufacturing Practice (GMP) certification which showed how the production processes were managed and if the equipment was GMP certified. Some countries, both in Africa and the rest of the world, wanted GMP certification before they consider doing business with OBP.

The Minister agreed that coordination of strategies was key. Entities and provinces, MECs and municipalities should be engaged, both to market entities better, but also to address coordination.

The National Agricultural Marketing Council (NAMC) said the Strategic Integrated Project (SIP) 11 assisted project owners to strengthen thire project business cases to raise funding, coordinated reporting on existing and new high-impact rural infrastructure projects. The Development Schemes included the National Red Meat Development Programme, the Supply Chain and Logistics Development Programme, the Macadamia Project and training and capacity building programmes. The allocated budget through the Department was R36 million for 2014/15  which was a 6% increase. Other sources of income were the R240 million for the National Red Meat Development Programme allocated by the Department of Rural Development over a period of five years, R15 million for SIP 11 and R40 million allocated by the Northern Cape Department of Agriculture, Land Reform and Rural Development for the Vineyard Development Scheme in the Northern Cape Province.

The Perishable Products Export Control Board (PPECB) had roughly 600 inspectors around the country to inspect the quality of products and to inspect the facilities in the cold chain such as containers, ships and refrigerators. The safety regulations for exports were stringent, but it was R20 billion foreign exchange that came into South Africa annually. The most innovative effort was the mobile technology where all inspectors’ clipboards would be replaced with tablets. The entity employed a ‘break even’ model as it related to finances by deciding what the cost would be to run the business for a year, and then setting the levies to cover that cost.

The Committee discussed the importance of a renewed focus on local and African markets and implored the four entities to include details of how job creation and food security would be addressed, as well as more detailed plans on how relations with neighbouring African countries could be strengthened. The coordination of projects between departments, provinces and municipalities was discussed, with a focus on empowering small and rural farming communities, as mandated by the President.

The Deputy Minister of Agriculture, Forestry and Fisheries, General Bheki Cele outlined the priorities of the Department and he said profits were often prioritised above food security, but it needed to be balanced where entities should be able to make money, but also contribute to food security and job creation. The Department needed to spend its budget responsibly and the Department was committed to accountability.
 

Meeting report

Afternoon session
Agricultural Research Council (ARC) 2014 Strategic Plan
ARC Board Chairperson, Mr Jonathan Godden, gave an historic overview of the organisation that included the vision, mission and mandate of the organisation. The ARC was a premier science institution that conducted research with partners, developed human capital and fostered innovation to support and develop the agriculture sector.

ARC Chief Executive Officer, Dr Shadrack Moephuli, said the entity had improved science through its publications and registered 30 new cultivars to improve yields and mitigate effects of pests and diseases. At least 21 new cultivars were released to farmers to enable competitiveness, sustainable production, resistance to pests and diseases and mitigate the effects of climate change.

Dr Moephuli gave a review of the organisation’s key performance indicators as it related to the entity’s mandate of research and development. These indicators included the development of the Kaonafatso ya Dikgomo (KyD) Scheme aimed at accelerating participation of small scale livestock farmers in mainstream industries, which increased to 7 000 participants, who together owned 60 000 cattle. These participants improved the quality of their animals and obtained higher market prices in the process. Other initiatives included the development of new methods for producing the Foot-and-mouth disease (FMD) vaccine, the training of at least 12 000 smallholder farmers on cotton production and the training of 2 400 grain farmers. The Council distributed more than 8 000 copies of the Maize Information Guide, conducted workshops for best use of guidelines in production systems and expanded the roll-out of rainwater harvesting methods in the Limpopo River Basin, affecting more than 15 villages in Botswana, Mozambique, Zimbabwe and South Africa.

Dr Moephuli said ARC had received unqualified audit reports from the Auditor-General for more than five years Improved financial management practices had improved confidence in the ARC which increased external revenue. ARC’s outcome-oriented strategic goals were to improve the productivity, production, competitiveness and sustainability of crop based and livestock based agriculture. It aimed to enhance the productive use and conservation of natural resources, to translate research results to support agrarian transformation and to achieve good governance, financial stability and a high performing and visible organisation. The research projects, outputs and the derived benefits of these strategic goals were outlined. These benefits included food security, food safety and improved shelf life, improved quality of animals, sustainable use of natural resources and enhanced competitiveness of sector from utilising ARC technologies.

ARC Chief Financial Officer, Mr Gabriel Maluleke, said the budget was prepared with the considerations that R120 million was cut in its operational parliamentary grant over the Medium Term Expenditure Framework (MTEF). Other considerations were the 7.5% increase in personnel expenses, the 5.4% increase in operating expenses and inflation of 5.4%. There was a 6-10% increase in external income. The R171 million Economic Competitiveness Support Package (ECSP) allocations for 2014/15 were assumed to be the last year of allocation, because there had been no confirmation of continued support.

Mr Maluleke outlined the annual revenue growths, the operating costs versus the parliamentary grant, a summary of the ARC’s consolidated budget and a statement of the organisation’s cash flow and financial performance. Key strategic financial goals were external income growth, replacement and upgrading of infrastructure and improved organisational processes to eliminate adverse audit findings.

Dr Moephuli said key challenges for ARC were external income growth, limited funding for capital expenditure (CAPEX), limited funding to fill the required number of critical vacancies and ARC’s competiveness for skills. These challenges could be mitigated by critical success factors that included the implementation of new organisational design and related business processes and the design of an ideal funding model. Other factors were an enhanced commitment to centres of collaboration with universities, implementation of a Disease Priority Matrix and to ensure ARC’s role in the Agricultural Policy Action Plan (APAP) and Bio-economy strategy.

Onderstepoort Biological Products (OBP) 2014 Strategic Plan
OBP Board Chairperson, Dr Harold Adams, gave an overview of the organisation that included the vision, mission and mandate of the organisation. The primary objective of OBP was to manufacture and produce quality vaccines for the prevention and control of livestock diseases in South Africa. He illustrated the workforce profile and said the entity had unqualified audits from 2000/1 to 2009/10 and 2012/13. The organisation received a qualified audit opinion in 2010/11 with significant declines in sales for the 2012/13 and 2013/14 financial years.

OBP Chief Executive Officer, Dr Steve Cornelius spoke on the OBP product portfolio and said the entity had 53 vaccines, but the majority of the vaccines were not commercially viable. The decline in sales could be ascribed to the slower economy, an outbreak of Rift Valley Fever, as well as production challenges related to upgrading the facility. He extended an invitation to the Committee to visit the entity to see both the challenges faced, as well as observe the work done by OBP.

OBP Company Secretary, Ms Zodwa Mobeng, commented on the governance of the organisation that included an overview of the composition of the board, the executive management team and the compliance and standards the organisation adhered to.

Dr Cornelius said the strategic objectives were aligned to the National Development Plan (NDP), the Presidential Infrastructure Coordinating Commission (PICC), the Medium Term Strategic Framework (MTSF) and the Department’s strategic objectives. He gave a detailed overview of these linkages and said the objectives of OBP were to build a successful, high performance organisation, to build a profitable and sustainable company and to improve business processes and management practices. Other goals were job creation through direct and indirect ventures with clients and subsidiaries and to contribute to government priorities with respect to food security and economic growth. The baseline and justifications for these goals were illustrated with an estimated budget allocation to key initiatives of each strategic goal.

OBP Chief Financial Officer, Mr Matsobane Gololo, said OBP generated income from mostly commercial farmers, from the Department and by selling vaccines to outside countries. The unaudited figures showed a loss of approximately R13 million. This was because the commercially viable vaccines were about 20% of the product portfolio but they had to subsidise 80% of the product portfolio.

Mr Gololo outlined the recapitalisation of the organisation of the current financial year, as well as over the budget MTEF 2016/17. Similarly the financial and the cash position of the organisation was outlined with a full cash amount totalling R156 million at the end of March 2014 due to recapitalisation funds allocated for the upgrade of the facility. He outlined a breakdown of how the recapitalisation funds would be applied and received over the phases of the upgrades, which totalled R492 million.

Dr Cornelius outlined the performance monitoring guidelines put in place to monitor their goals as they would be implemented. OBP was in the process of investing profits to develop new vaccines and to replace critical equipment. Skills development and the upgrade of the facility were the highest priorities currently.

Discussion
Mr L Ntshayisa (AIC) referred to ARC and asked if the certificates issued by the entity were recognised by the South African Qualifications Authority (SAQA) and on what NQF level it was. He asked what OBP’s future plans were to avoid the risks of a financial loss again since they lost R13 million in the 2013/14 financial year.

ARC Senior Manager: Human Resources, Ms Makgomo Umlaw, said the training provided was accredited by AgriSETA which was the quality assurer for SAQA and it was on NQF level one.

Mr T Ramakhoase (ANC) referred to the ARC workforce that seemed to be majority African and asked if it was due to transformation processes. The past financials of ARC seemed profitable, but this had been steadily declining and he asked reasons for the decrease, as well as the entity’s plans for a more African focus. Competing in the international arena could lead to a lack of focus on the impact of agriculture in South Africa.

Mr Godden replied when ARC was created in 1992, not a single black scientist employed there. Over the ensuing period, there was a significant, thoughtful and responsible process, because no one was asked to leave, rather they tried to attract young black and female scientists through transformation processes. The organisation still was not fully transformed, because Coloured and Indian scientists remain under represented, but it could also be prescribed to career choices or the popularity of the field. Involvement on the African continent had been a priority of the Board and ARC had made major inroads in establish new relationships with sister organisations on the continent. It was true that ARC had partnership relationships with organisations in Europe and other developed countries, because it helped the organisation financially. ARC was also in support of strengthening relationships through the BRICS partnerships and it was keen to both learn from these organisations, but also to strengthen partnerships.

Ms Umlaw said that through partnerships with universities in Limpopo and the Eastern Cape, the ARC grew its agricultural capacity and skills were also sourced across the continent and the world.

Dr Cornelius said OBP had focussed on its transformation policies to address the predominantly white scientists employed since before 1994.

Mr M Filtane (UDM) said the OBP stated that they supported rural livestock farmers and he asked how the entity accesses these farmers because he, personally had been involved with the rural farming community in the OR Tambo area and had never heard of OBP. He asked what the impact of cross-border movement of livestock was on the quality of local livestock. He referred to the decline of commercial farming and asked what impact it had on food security. He asked for OBP's specific processes that related to job creation.

Dr Cornelius said OBP’s income from rural areas was less than R1 million and there were only three to four small distributors in the Eastern Cape and through the funding model sent to the Department, the entity showed how it could be expanded. OBP exported 80% of its exports to African countries and 60% of that was exported to the Southern Africa Development Community (SADC) countries. Serious animal diseases developed differently across the world, but there were income opportunities in tropical and sub-tropical areas in the world. If the funding model was sorted, exports could be focussed on in Africa and other such areas. Another issue was that most provincial departments bought their vaccines via the RT12 tender through Treasury from an international company who won the tender. OBP should be the preferred supplier across all provinces. Job creation efforts were included in the Annual Performance Plan (APP) with the specific Rand value targets of joint ventures OBP wanted to support.

Mr C Maxegwana (ANC) asked about OBP’s undertaking to transition from first to third generation biotechnology when applying vaccine technologies to manufactured products. He asked for clarification about the entity expecting increases in revenue from exporting OBP products into new markets.

Dr Cornelius said in biomedical terms, first generation technologies in manufacturing were the old fashioned technology of fermentation of bacteria to become vaccines, but third generation technologies used genetic information to develop specific proteins to manufacture vaccines. OBP had a quality management system in place to adhere to quality standards, but the main challenge was the Good Manufacturing Practice (GMP) certification. This certificate showed how the production processes was managed and if the equipment was GMP certified. Some countries, both in Africa and the rest of the world, wanted GMP certification before they consider doing business with OBP.

The Chairperson asked the Department how the work of these entities could be translated into support for the smallholder farmers to contribute to food security. Historically OBP had not received much funding from the Department and she asked if more support was not justified especially as it related to the Disease Management Programme of the Department. She asked why the FMD production facility was the ARC rather than OBP and if the ARC also sold the FMD vaccine as OBP did and if there was collaboration between the two. She asked what the financial return was for ARC in its attempt to translate research results to support agrarian transformation and the efficiency and competitiveness of the sector in sustaining the entity’s financial stability. She asked if the new approved organisational structure and the work done to support agrarian transformation was not a duplication of the work of the National Agricultural Marketing Council (NAMC), and whether the entity could measure the impacts of its outputs. She referred to the Animal Improvement Scheme and asked what the status of the Integrated Registration and Genetic Information System (INTERGIS) was. Noting ARC allocated funds for expansion services to smallholder farmers, she asked if it had its own expansion offices.

Department of Agriculture, Forestry and Fisheries (DAFF) Director-General, Professor Edith Vries, said at the dawn of democracy there was a review of the relationship of what the then Government would have with civil society, as well as with science councils. The assumption was that the Government would create entities that would serve particular agendas. That was the context in which several entities were created, but most science councils predated democracy. There mandates were confirmed that Councils would have to generate a percentage of the revenue themselves based on the value of their service. The role of the Department was to identify the linkages and to enable the work to go forward. Funding packages such as the ECSP and grant funding were initiated through the Department. The way in which the Department related to entities was in the process of being improved. New priorities had emerged and Treasury had made it clear that if a good and detailed business plan that spoke to growth and job creation, Treasury would find the money.

The Minister of Agriculture, Forestry and Fisheries, Mr Senzeni Zokwana, agreed the two entities did have a role to play and the issue of OBP would be dealt with, especially the fact that the provincial departments were not able to support the entity. Discussions would be held to market entities better and in the management of the cross-border diseases.

Dr Moephuli said the FMD vaccine was based on a response to a virus which meant it changed constantly and the capability to reconstitute the vaccine regularly was needed and that was why it was housed at the ARC research unit. ARC had one of the very few high level containment laboratories where the virus could be handled. The FMD vaccine stock was held at ARC on behalf of the Department and was distributed as instructed by the Department. At the time South Africa lost its ability to produce the FMD vaccine, the Department requested ARC to buy the vaccine from the nearest supplier. The nearest supplier was the Botswana Vaccine Institute, but that vaccine was expensive and almost double the dosage was needed to have the desired effect. On an annual basis DAFF ran a vaccination drive around the Kruger National Park to ensure those animals did not infect any animals in the Park as a sort of buffer zone. The rest of South Africa was considered FMD free and ARC provided technical knowledge on how to handle the vaccine and it was closely linked to research.

He said the building of a facility that produced the vaccine in larger quantities was discussed to be able to both manage the disease in the country and enable the vaccine to be sold to neighbouring countries to contain the disease entering the country. ARC's 21 cultivars were released to farmers to assist in farming processes. ARC developed blood vaccines which were supplied to OBP to package and sell. The question of sustaining financial ability related to ARC’s ability to commercialise the technologies that came out of the organisation. There was a licencing procedure in place and currently ARC collected around R11 million in royalties on intellectual assets and it wanted to increase that amount. There was no duplication in work done by NAMC as the nature of the agri-economics analysis done by ARC looked into investments into agricultural research and analysis was done on key areas of importance in science and technology and included economic impact of certain kinds of research to measure the impact of outputs. INTERGIS remained fully and entirely under the control of ARC and was used within its premises as part of the service delivery to smallholder farmers. It was not necessarily expansion services, but rather a programme where the scientist engaged with farmers for trials on certain cultivars. The scientists would request a hectare of the farm to administer cultivars and the farmers would have to manage that process prescribed by the ARC. Follow-ups would be done and the results collected and then recommendations would be made to the farmer and it could possibly include expansion recommendations. Training was provided specifically in support of expansion through technical knowledge and disease management.

Dr Cornelius said OBP wanted to do more for the Department, over and above just vaccine manufacturing, but in the broader mandate of support of smallholder farmers and disease management. To achieve this, the entity needed to revise its business model, because income was currently primarily generated through commercial farmers buying the products on offer. This was problematic, because analysis showed that it was a static to declining market, but also as many as 23 other pharmaceutical companies were selling the same products. If DAFF could depend on OBP more, the entity could then be supported through the Department’s budget.

The Chairperson said the government had the capacity to deliver on its mandate and coordination was key in delivering the mandate. If policies were not realised on the ground, it had negative impacts on communities.

National Agricultural Marketing Council (NAMC) 2014 Strategic Plan
Acting Chairperson, Mr Andre Young, said  NAMC was an advisory body that advised the Minister on all matters relating to marketing of agricultural products. It increased market access for all participants, promoted efficient marketing of agricultural products, optimised export earnings from agricultural products and enhanced the viability of the agricultural sector.

NAMC Chief Executive Officer, Mr Tshililo Ramabulana, spoke about the organisation’s statutory measures and the expenditure paid by the statutory levies, which provided about 60% of its expenditure. In 2009, the horticultural industry started a project to establish 1 000 hectares of trees, including new cultivars, for black producers. By 2013, the industry had already succeeded in establishing 400 hectares and the aim was to establish approximately 40 hectares per annum, depending on available funds. The Lucerne Trust was donating lucerne seed to black farmers. The Trust already assisted 20 farmers on a total area of 200 hectares and the plan was to assist another 20 farmers on a further 200 hectares. Its Market and Economic Research Centre (MERC) gauged the efficiency of the market for every agricultural commodity and intensified research efforts on options to link smallholder farmers to agro-food value chains.

Mr Ramabulana explained its trade analysis and discussed the key advantages of being part of the Agri Benchmark Initiative. The baseline food and price analysis had been tracking and developing future scenarios on South African agricultural commodity and food prices and the framework was based on the global data feeding into the South African situation. The Strategic Integrated Project (SIP) 11 assisted project owners to strengthen their project business cases to raise funding, and coordinated reporting on existing and new high-impact rural infrastructure projects. The Development Schemes included the National Red Meat Development Programme, the Supply Chain and Logistics Development Programme, the Macadamia Project and training and capacity building programmes.

NAMC Chief Financial Officer, Ms Sarah Muvhulawa, said the allocated budget through the Department was R36 million for the current financial year which was a 6% increase. The projected budget would be R37 million for 2015/16 and R39 million for 2016/17 which was a 5% increase year-on-year. She gave an overview of the budget allocations per programme, as well as the expenditure categories. Other sources of income were the R240 million for the National Red Meat Development Programme allocated by the Department of Rural Development over a period of five years, R15 million for SIP 11, and R40 million allocated by the Northern Cape Department of Agriculture, Land Reform and Rural Development for the Vineyard Development Scheme in the Northern Cape Province.

Perishable Products Export Control Board (PPECB) 2014 Strategic Plan
PPECB Board Chairperson, Mr Angelo Petersen gave an overview of the organisation, its strategic priorities and its mandate and said the PPECB was on a journey of innovation. It was the nation’s quality assurer for perishable export products and was funded through industry levies.

PPECB Chief Executive Officer, Mr Stuart Symington, said the organisation had roughly 600 inspectors around the country to inspect the quality of products and to inspect the facilities in the cold chain such as containers, ships and refrigerators. Those facilities were accredited so that the entity could manage the transport and the temperature of the overseas export. Food security was as important overseas as it was locally and Mr Symington commended the Department for working tirelessly to combat the outbreak of Citrus Black Spot, because it constituted approximately R40 million of the PPECB export market. Food safety was an important issue, but it was worrying that an enormous amount of time, money and resources were spent on looking after the international market’s food safety requirements and it should be refocused to both imports to the country, as well as local production. The safety regulations for exports were stringent, but it was R20 billion foreign exchange that came into South Africa annually. Climate change was important to the industry, because it led to massive losses when it impacted the quality of products. BRICS countries grew tremendously and it was great for the income and trade, but the controls exercised by especially China, was a barrier to the citrus market. It highlighted the need to address access to the market as emphasised by the Minister. Africa was untapped potential, because approximately 30% of the cost of the value chain was in transport and South Africa would do well to invest in that market.

Mr Symington gave an overview of the newly strategised organisational design and legislative amendments that could transform the business model of the entity. The most innovative effort was mobile technology where all inspectors’ clipboards would be replaced with tablets. The aim of the tablets was to make the information on the export certificate accurate and that it matched the physical consignment it accompanied. The strategic objectives were enhancing the credibility of the South African export certificate, supporting the export competitiveness of South Africa’s perishable products and to strengthen the PPECB’s capacity to provide a professional suite of services. These strategic goals guided the entity’s nine strategic programmes and through local partnerships, 152 small holder farmers were assisted with local and export market issues. Partnerships with AgriSETA enabled training and job creation opportunities.

Mr Symington said the entity employed a ‘break even’ model for its finances by deciding what the cost would be to run the business for a year, and then setting the levies to cover that cost. The entity was driven by its employees and 65% of the budget was spent on personnel. NAMC's key risks was the integrity of the export certificate and an unsustainable operational and business model. The presentation ended with a video insert of PPECB operational managers commenting on the innovative new mobile technology and the impact it would have on business processes.

Discussion
Mr Ramakhoase referred to the NAMC and its goal to analyse local and international markets for commodities and he asked when would there be a clear plan that focused on African countries. He asked what the PPECB was contributing to poverty alleviation and when would there be a dedicated programme focused on local markets. The NAMC’s baseline and food price analysis was based on a global framework, and although it could be utilised, he asked if it was really a framework that could be applied when addressing poverty. He referred to the PPECB and the protocols surrounding the BRICS countries and he asked the Department to look into that issue.

NAMC Council Member, Mr Andries Cronje, replied that the focus of economic analysis was not only on Africa, but also on other emerging markets, because that was where economic growth in the world was located. Even though it was from a low base it was a good principle to know what was happening in those markets. The principle should not only be on exporting raw materials, but also focused on adding value locally, before exporting internationally. In the poultry industry the recent investigations focused on whether chicken was being sold at lower prices than it was being produced internationally. That was an example of how the baseline and food price analysis was recently applied: to assess whether there were advantages to the genetics used in the poultry industry. The value chain studies and the benchmarking initiative supported the International Trade Administration Commission (ITAC) in making an informed decision.

Mr Symington said R20 billion came into the entity and a portion was taxed and went back into the State purse. There were at least 276 000 jobs in the fruit industry alone attached to the horticultural industry which was largely rural.

PPECB Board Chairperson, Mr Petersen, said export markets were high value markets and the focus should perhaps be on how to take emerging farmers to become mainstream commercial farmers and take them to high level markets to earn an additional income. People produced exports so as to double what could be earned through the local market.

Mr Filtane said when the focus was exclusively on the export market, the socio-economic impact could only be measured by the number of jobs supplied. The goods that were being produced for the overseas market, should have local inputs so that a value chain could at least be established. Local economic development and people on the ground should benefit from these initiatives. He referred to NAMC and asked in which area the lucerne seed was donated to black farms and what selection criteria were used to assist 20 farmers on 200 hectares in the Trust Intervention Programme. Who did the quality assurance on products in the NAMC’s goal to intensify research efforts on options to link smallholder farmers to agro-food value chains? This was important, because through quality control guidelines, certain sections of the value chain could be excluded. He asked where the 800 infrastructure projects the NAMC would be reporting on, were located. He commended PPECB that levied their services, because some organisations relied exclusively on government grants and transfers with no initiative to generate their own income.

Mr Cronje said the Lucerne project was piloted in the Taung area and if the pilot was successful, it could be rolled out in other provinces. To address exclusion from the value chain, the whole value chain should be evaluated, not only the supplier. PPECB did do quality assurance in some instances, but in most cases NAMC got involved in the seed industry based on genetic analysis. The contracts were awarded beforehand, the quality was assessed beforehand and once the seeds were planted, assistance was offered through advice and support through the whole process. The 800 infrastructure projects was a massive project and the details about the specific provinces involved would be forwarded in a written response to the Committee.

Mr Symington clarified that PPECB did not receive any assistance from Treasury and all income was raised from customers.

The Chairperson said the NAMC’s role was entrenched in rural development which was an objective of the DAFF. The PPCEB’s role was ensuring standards were being met and she asked how these projects could be coordinated to assist the smallholder farmers to understand the market. The small initiatives in provinces should be pulled together, because there were greater opportunities if it was a coordinated and unified effort. Similarly for infrastructure, small projects were being initiated by provinces and municipalities and the Minister’s plan to engage everyone, could bring about harmonised change. Infrastructure should be addressed holistically, as well as the spiking prices of goods and products that were in excess in some provinces, but were basically unaffordable in supermarkets. Government had invested billions over the years and now was the time that change on the ground should be tangible. PPCEB should be able to tap into local and African markets and at the next meeting the organisation should come with a plan on how these markets would be utilised. It was also important for PPCEB to make themselves known to local municipalities and people on the ground. The local market should be investigated, because ARC should be able to inform the entities where the focus should be. In Venda, nuts were imported from Brazil and she asked why these nuts could not be produced locally.

Mr Cronje replied that in recent times South Africa was an importer of peanuts, even though a number of years ago, the country was an exporter of the product. Recent industry crop statistics showed it has doubled its product since last year and there was no reason imports should be done.

Mr Symington explained that last year the ground nut industry was devastated by drought so imports were necessary, but it did improve drastically this year.

Mr Maxegwana referred to the Macadamia Project and asked for clarification on what benefits this project brought to the country.

Mr Symington said macadamia nuts were the next "best opportunity" and most farmers in the North had been planting macadamias furiously.

Mr Ntshayisa said the lack of control on the border between Matatiele and Lesotho was a worrying factor, due to goods being brought into the country and the killings that happened in the mountain and he asked if the Department could look into the issue.

Prof Vries said that DAFF would like to present the Agriculture Policy Action Plan and the Integrated Local Development Policy to the Committee at some point. It spoke to key action programmes and the various value chains to show there were mechanisms in place that spoke to these issues that arose.

Mr Ramakhoase said the focus on local and small farming communities was mandated by the President and the plans by the four entities on how the issue would be addressed should be clear in their APPs. If radical change was to take place, there should be less rhetoric and more action and practice.

The Deputy Minister of Agriculture, Forestry and Fisheries, General Bheki Cele, said the priorities of the Department were food security, job creation with a focus on women and the youth, and contributing to the Gross Domestic Product (GDP). It was easy to forget that it was initially structured for black youth not to embrace mathematics and science and it was also historically structured for black youth not to view agriculture as a friendly terrain. It was a big priority of the Department to transform if radical change was to happen. Profits were often prioritised above food security, but it needed to be balanced where entities should be able to make money, but contribute to food security and job creation. Support was needed from these entities and the Department should also be supportive of these organisations and their strategic objectives. The Minister rightly emphasised the importance of climate change which in turn emphasised the importance of science going forward. There was a national and local market, but the standards that were applied to the export market, should equally be applied to the local market. Smallholder farmers should eventually be able to expand and make space for new farmers. The integration of the initiatives was key and the Department of Trade and Industry, the Department of Public Works and the Department of Transport had roles to play. The Department needed to spend its budget responsibly and it was committed to accountability.

The Chairperson said it had been a productive meeting and she thanked the Department for their responses - it was only the work on the ground that remained. The Department should improve efforts in realising a food trade supply with one third produced by small scale farmers to ensure household food and nutrition security. It was imperative for the Department to see how the Fetsa Tlala Initiative would respond to its mandate. She gave a brief overview of what had been discussed and emphasised the value of ARC to inform initiatives, the value of OBP as the primary supplier of vaccines and the importance of coordinating initiatives. Disaster management should also be focussed on in future, because it impacted the small scale farmers and she encouraged the investigations into alternative markets. Support to all these entities should be maximised to achieve the goals of food security and job creation.

The meeting was adjourned.
 

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