The Chairperson introduced the first day of public hearings on the Recapitalisation and Development Programme (RADP) in the agricultural sector by noting that the Committee had done oversight in the Northern Cape of the farms that were beneficiaries of the programme, and now wanted to hear the outcomes of the independent evaluation of the programme, and also hear from beneficiaries.
The Department of Rural Development and Land Reform (DRDLR) gave a lengthy presentation on why government wanted to have the RADP, its intentions, the key findings and recommendations. In principle, the RADP was a good one with noble intentions, the strategy of what it wanted to achieve was clear, but it was not spared of problems. The first problem was that there was misunderstanding of what Recapitalisation (Recap) was about and therefore, there were instances where farmers who should not have benefited had done so, whilst others were passed over. The main challenge arose through administrative failures that led to great negative impact on the farmers, such as late payments not enabling them to plant in time. Also, the monitoring and evaluation aspect was failing, as the Department would only discover, after the fact, where there had been mismanagement, and such mismanagement and corruption were problematic with both strategic partners and farmers. The Department of Performance Monitoring and Evaluation (DPME) had been asked to do an independent evaluation. It had cited a number of problems and challenges, and the main recommendations were a change in the funding model and recognition that farming had different sectors and different types of farmers, so that a one-size-fits-all model was not realistic. The Department agreed with most of the evaluations, and had started implementing almost all them. However, it did not agree on suggestions that RADP funding should differentiate recapitalisation needs from farm development or growth needs, and believed that changing to loan funding would increase the coverage of RADP in terms of the number of beneficiaries assisted, as the money paid back would become available for on-lending to more beneficiaries. It wanted to ensure that RADP beneficiaries would not approach financial institutions before being given the necessary training. RADP was not going to fund fully in the future, and co-management and share equity had been introduced in new policies, to ensure that strategic partners invested and an integrated funding model involving National Treasury and Department of Agriculture, Forestry and Fisheries had been agreed upon. Performance since inception was described, with figures for number of farms, hectares, money distributed, beneficiaries and jobs created in a number of sectors. In total, there were 1 319 farms and 1 274 639 hectares redistributed in all nine provinces; 1 800 claims and 575 766 hectares restored; and 1 459 farms and 1 380 781 hectares in the Recapitalisation programme. KwaZulu Natal was the highest recipient. The impact of the programme on the key commodities of red meat, broiler production, grain and sugar and grapes were outlined. Some of the challenges and the steps that DRDLR had taken to address them, including internal workshops with farmers and strategic partners, were described. The independent evaluation had recommended that, in the long term, there should be a complete overhaul of the support programme, and agreement that it could not be totally grant-based, and must draw distinctions between different types of farmers. In the meantime, however, steps would be taken to continue with the current programme, with changes to improve the process.
The Committee was appreciative of the programme, and the evaluation, but asked how the Department qualified strategic partners, what it was doing to improve accountability, and what was in the checklists, as also how the sample of respondents was chosen and what questions they were asked, and what percentage of overall budget was spent on the programme. They wanted more explanation for problems of market access, how the programme success was being measured, how the Department was dealing with downstream integration, and what the capacity problems were in the Department, and how they were being addressed. The Committee requested timeframes on the plans of the Department, particularly for filling vacancies in critical positions. The Committee proposed that there should be more aggressive support structures for beneficiaries.
The South African Sugar Association (SASA) highlighted the impact the sugar industry had on the country and the role it played within the RADP. SASA commented that the RADP had been a great resource and was highly beneficial. However, it outlined a number of problems, mainly of an administrative nature, and said that it had engaged privately with the DRDLR to try to find solutions. Statistics were presented on the growth of this industry, and how the SASA had provided a range support structures to farms to cater to their specific needs.
Grain South Africa also made a presentation on their challenge as an association, from which it was apparent that grain growers faced more constraints than the minimal ones highlighted by SASA. The Committee members requested a meeting dedicated to understanding both industries and their relevant associations, and why they had different experiences; and also wanted to know more about the ownership of land and farms by new farmers and the benefits of the individuals that lived on the land.
Izindonga Ze Africa and Marinda farm shared their stories as emerging farmers, citing success in both instances as they had managed to move from being emerging farmers to commercial farmers. Mr Maya of Izindonga Ze Africa defined its story as a “zero to hero”, but also set out some of the challenges faced, which he firmly believed could be overcome. The Marinda Farm cited how, with government support, it could finally buy the necessary stock and pedigree cattle and sheep to engage fully in the market and compete with commercial farmers. Both appreciated the support given and agreed that whilst there were constraints, they could be overcome. The Committee applauded these stories and noted, in response to questions, that the farmers' success in both instances had been a direct result of taking full ownership and persisting with their applications and communicating with the Department even when administrative systems made this difficult. The Department had noted that the strategic partnership were a crucial element of the RADP and had realised that some of the failures were rooted in weak contracts that did not enforce rules and each party’s role in the collaboration.
Presentations continued in the afternoon session, with the submissions addressing the extent to which the RADP had empowered emerging farmers. Some cited successes, others felt that the programme had undermined the rights that people enjoyed on the land they occupied and had given people a few less choices about their own livelihoods, because it emphasised agricultural productivity above all else.
The Selame Poultry Farm was one of the success stories. The Department of Agriculture, Forestry and Fisheries (DAFF) had evaluated the farm and accredited it as an exporter of live carcasses, and the farm had then signed a contract with that Department, to take on students for experiential training. Already, the University of Pretoria has committed to send students. Annually, it generated an income of R5,2 million.
The Bela-Bela Communal Property Association described the recapitalisation programme as the best land restitution and development model in South Africa, one which had improved the lives of many people. Over 6000 ha of prime land had been restored. In 2010 a community food programme was launched. Every month each family received 12,5kg of mielie meal, 4kg of sugar beans, a bag of mixed vegetables and 4kg of beef. There were training and empowerment programmes for the youth. As a result of these efforts, the enterprise had launched a CPA book.
The Qwabe Cooperative noted that it was owned by the community, and saw the Recap programme as having created massive opportunities for employment, and as having got plans moving. Its injection had transformed a once deserted, poverty stricken area into a ‘green mine’. The enterprise was making a profit of R30m every year. It had 60 permanent employees and 600 seasonal workers.
The SuperGrand Agric Feed started to operate in 2010. Its core business was to manufacture animal feed which was then sold to emerging farmers who made up 90% of its current market. The animal feed was distributed to clients in Gauteng, Limpopo, Mpumalanga and North West provinces and also to countries like Zimbabwe, Mozambique and Uganda. To date, according to financial audited statements, the co-operative was self-reliant. Other brief presentations describing their enterprises and how they had developed since receiving RADP assistance were given by Riet Rivier Project and Onverwacht 509.
Concerns about the RAP were expressed by the Land Access Movement of South Africa, which noted that strategic partners were proving to be problematic for the beneficiaries. The fact that strategic partners were identified by the Department and had knowledge that the grant came from the government rendered the beneficiaries powerless. These strategic partners saw the partnership merely as their conduit to access funding and tended to inflate prices on every item purchased.
To further this argument, the Community, Law and Society Research Unit of the University of Cape Town suggested that the recapitalisation programme should be understood in the light of all the other policies the Department has developed. It said a closer scrutiny of the Communal Land Tenure Policy revealed that people had been stripped of their customary rights and that it had undermined the rights that people had on the land they occupied.
Members wanted to know if the entities were now able to stand on their own; enquired if the farm owners relied on the technical assistance from the Department or used their own educational qualifications to run their projects; asked if the farm workers were also registered as beneficiaries; and commented there was a problem of fragmented support to the farmers, and the Committee needed to define the meaning of rural development. They also highlighted that a consistent point coming out of all presentations seemed to be the lack of leadership.
Recapitalization and Development Programme (RADP): Public hearings, day 1
The Chairperson, in opening the meeting, highlighted the importance of the public hearings and why there was a need for the Recapitalization and Development Programme (RADP or the Programme) The policy was needed to ensure that land reform farms could be fully productive, to rekindle a class of black farms that was destroyed by colonial and apartheid system, and reduce the rural – urban population and resource flow.
Mr Bonginkosi Zulu, Chief Director: Service Delivery and Coordination in the Land Distribution and Distribution branch, Department of Rural Development and Land Reform, made a presentation on the Recapitalization and Development Programme to give background to the public hearings. The National Development Plan (NDP) identified six policy imperatives, which would be the focus areas in this Medium Term Strategic Framework (MTSFO period, and of the six; one specifically targeted the development and support of smallholder farmers for agrarian transformation.
In 2009, the Department of Rural Development and Land Reform (the Department or DRDLR) undertook an evaluation of the implementation of the Land Reform Programmes since their inception. The evaluation identified that many land reform projects were not successful and were in distress or lying fallow. There was a lack of adequate and appropriate post-settlement support. Numerous properties acquired through various sub-programmes, such as the Land Redistribution for Agricultural Development (LRAD), were on the verge of being auctioned or had been sold due the collapse of the project, resulting in a reversal of the original objectives of land reform.
RADP was therefore introduced in 2009 in order to address these challenges. RADP targeted properties acquired since 1994 through Restitution and Redistribution programmes, and aimed to contribute to the transformation of the rural economy through establishment of enterprise and industrial development in the various agricultural value chains. This was to ensure national and household food security, and also to promote job creation. Implemented correctly, RADP would result in the significant reduction of the rural – urban population and resource flow.
The RADP policy had three strategic objectives. It aimed to ensure that Land Reform farms were 100% productive, that the class of black fledgling commercial farmers destroyed by the 1913 Natives Land Act was rekindled, and that the rural-urban population flow was reduced. The policy sought to provide black emerging farmers with the social and economic infrastructure and basic resources required to combat poverty, unemployment and income inequality; reduce the tide of rural-urban migration; and complement agricultural development programmes of the Department of Agriculture, Forestry and Fisheries (DAFF).
The Programme Strategy
The new strategy had taken into account and tried to address challenges that had been identified in the old RECAP policy, through the following strategic partnership arrangements:
a) Mentorship of emerging farmers and/or land reform farmer;
b) co management;
c) Share-equity arrangements
d) Contract farming and concessions.
In the RADP policy, emphasis was placed on assessing the capability of emerging farmer and assessing farm needs with regards to RECAP. These would determine what kind of partnership was appropriate for the farm. A milestone based performance agreement with a termination clause would then follow, with steps after that to be deploying partners and monitoring performance, analysing social and economic impact, and a close out report at the end of five years. These would determine the lease termination or continuation.
Programme Funding Model
There was a tripartite collaboration model between the Department, strategic partner/s and farmer/s or entrepreneurs. The Department would be involved both financially and at project management level for a period of five years. The contribution of the DRDLR would decrease from the first year to the fifth year, whilst the contribution of both strategic partners and farmers or entrepreneurs would increase, both financially and at the project management level.
Implementation Evaluation Findings And Recommendations by Department of Performance Monitoring and Evaluation
Mr Zulu noted that the Department of Performance Monitoring and Evaluation (DPME) had conducted an implementation evaluation of the RADP, from 2010 till July 2013. The DPME was a custodian of the evaluation and Business Enterprises, at the University of Pretoria, was a service provider.
The evaluation sought to provide strategic information on the implementation of the RADP as a post-settlement support programme, since inception, in order to compile lessons learned and make recommendations to strengthen the implementation of RADP, and analyse the stakeholders’ effectiveness during the implementation of the programme. The evaluation was also done to establish whether the programme was on track to achieve its intended objectives, and to advise on what needed to be done to ensure better implementation of the programme. The presentation listed key questions that were asked during the evaluation, particularly on whether the programme was achieving what it was set out to and how it could be strengthened (see attached presentation for full details).
Respondents for the evaluation were identified from 640 farms, and were classified into categories, as follows:
- Project/farm management: A structured questionnaire to the management (emerging farmers) of the farms/projects
- Focus Groups: (emerging farmers other than project managers): A checklist was used in cases where, in addition to the project manager, there were other beneficiaries
- strategic partners: Interviews with strategic partners using a checklist
- Project officers: DRDLR officials responsible for the Recapitalisation and Development Programme project facilitation and coordination with strategic partners and mentors were interviewed, using a checklist
- Provincial leadership (provincial government officials): A checklist was used for interviews with DRDLR provincial managers responsible for land reform and the Recapitalisation and Development Programme
- National leadership (national government officials): A DRDLR official (Director) at the national level responsible for the Recapitalisation and Development Programme was interviewed using a checklist.
Mr Zulu set out the key findings from the evaluation. It was found that the RADP had made some progress towards achieving its intended objectives, but there was room for significant improvement. About 540 additional jobs were created (111 full-time and 429 part-time) on the 98 farms under evaluation after the RADP was implemented. The number of jobs created was found to be too small to justify the amount of investment in the RADP. There seemed to be insufficient emphasis on job creation within the RADP.
Most of the RADP stakeholders interviewed believed that food security had improved after recapitalisation. With regards to agricultural production, it was on-going in 70% of the projects included in the evaluation. Both crop and livestock production increased after recapitalisation. One area in which the RADP seemed not to have made much progress was facilitation of market access for farmers.
The conclusions were that the RADP objectives were too ambitious and involved aspects that were normally outside the control of the programme. Key terms used in the objectives were not clearly defined, resulting in possible misinterpretation by those implementing the programme. There were varying degrees of understanding amongst stakeholders of what the RADP entailed. There was no clarity on the selection criteria for beneficiaries and farms to form part of the RADP, which had resulted in the inclusion of beneficiaries who did not necessarily deserve to be assisted. The grant funding approach in the RADP was not sustainable, given the limited resources available, and it promoted dependency on state funding among beneficiaries. The approach limited the coverage of the programme in terms of the number of farmers that may be assisted.
It was decided that in the meantime, the RADP should continue to run while a lasting solution was sought, and strengthening it in the interim was to be pursued. However, the best and longest-lasting solution would entail a redesign and overhaul of all public agricultural support programmes, and doing away with the existing silos of funding for agricultural support services. This would entail the establishment of an all-inclusive fund to support land acquisition, extension services and mentorship, agricultural finance and market access.
Recommendations to strengthen RADP
Mr Zulu noted again that efforts would be made to strengthen the RADP In the interim, whilst lasting solutions were being pursued. The initiatives to be taken would be the following:
- Defining the meaning of key terms used in the programme (e.g. distressed farms, recapitalisation, development, commercial farmer)
- Ensure a common understanding of the RADP among its stakeholders by engaging in an all-inclusive process to discuss the nature, operation, purpose and objectives of the programme.
- Develop clear and specific selection criteria for beneficiaries and land reform farms for recapitalisation and development in line with the objectives of the RADP. The criteria should be developed to ensure that only deserving land reform farms and beneficiaries were selected for participation in the RADP.
- Replace the current RADP grant funding with loan funding. Changing to loan funding would increase the coverage of RADP in terms of the number of beneficiaries assisted, as the money paid back would become available for on-lending to more beneficiaries.
- Establish guidelines to limit the amount of RADP funding per project, in order to widen the coverage of the programme and ensure that the funding model was adapted to the various agricultural production systems.
DRDLR's response to findings and recommendations
Mr Zulu read out recommendations from the findings from the evaluation that had been addressed with the management of the Department. The Department agreed with almost all the recommendations and had already taken steps towards implementing some. However, it disagreed that the current RADP grant funding should be replaced with loan funding. RADP funding should differentiate recapitalisation needs from farm development or growth needs, with a view to encouraging beneficiaries to take responsibility for their enterprise/farm growth. It believed that changing to loan funding would also increase the coverage of RADP in terms of the number of beneficiaries assisted as the money paid back would become available for on-lending to more beneficiaries.
The Department felt that the RADP was established to ensure that farmers were given full support and assistance as most of land reform projects were not productive and others were fully indebted to financial institutions because of lack of government support. This had resulted in some Land Reform projects being auctioned or needing bail out. RADP wanted to ensure that before beneficiaries went to financial institutions they were given start-up support and skills training. Mr Zulu noted that RADP was in future no longer going to fund 100% needs and development of the farm. Co-management and share equity strategies were introduced in the new policy. This would ensure that strategic partners invested in the programme. An integrated funding model that had been developed with DAFF and National Treasury would address this finding, once implemented.
RADP Performance Since Inception
Mr Zulu repeated that it was felt that, despite the challenges in the implementation of the RADP, significant progress had been made. The key strategic objective of the programme was to provide comprehensive farm development support to smallholder farmers and land reform beneficiaries for agrarian transformation by 2019. There were 1 459 farms under the programme in terms of the five year funding model. This constituted 1,4 million hectares under the programme. Payment for the interventions was done in tranches, based on the approved business plans. Expenditure of R3. 318 billion, for recapitalisation and development, had been incurred from November 2009 to March 2014. There were 612 strategic partners currently supporting farmers. The support varied but included production inputs, infrastructure, machinery and implements.
In total there were 1 319 farms and 1 274 639 hectares redistributed in all nine provinces; 1 800 claims and 575 766 hectares restored; and 1 459 farms and 1 380 781 hectares that were in the Recapitalisation Programme. The highest number of recipients of the recapitalisation budget, from 2009 to 2015, was KwaZulu Natal with R621 001 835 being spent in that province.
Impact of RADP on key commodities
Mr Zulu then went on to describe the impact of the RADP on four key commodities.
Red meat value chain
A Bloemfontein abattoir was the key strategic partner under the Red Meat Value Chain. Many of the farms had reached 85% to full production levels. The total number of 3 939 cattle across Free State, Northern Cape and North West were acquired for 58 396 ha. The jobs created under this partnership were 132 permanent and 1 187 temporary.
DRDLR had recapitalized seven broiler projects, six in North West and one in Free State since inception. The national poultry plan had been developed to increase poultry meat supply and projects from Limpopo, Mpumalanga, North West,Gauteng and Free State had been prioritised. There was a poultry value hub being initiated in the Gauteng Province and environmental impact assessments (EIAs) were being done. These farmers were now commercial broiler producers and each farm was running at least seven cycles per annum. Collectively, they supplied about 2 359 000 ready to slaughter broiler birds to the contract market. The highest black commercial producer assisted by RADP was producing 528 000 birds per cycle, in the North West Province.
There were 16 farms under the programme of Grain SA. These farmers had collectively planted 2 400 ha under maize and sunflower. The farmers had been assisted with machinery, implements and input costs. Grain SA interventions were rolled out in Mpumalanga, North West and Gauteng in this current financial year. and 30 farms would be planted. The impact on the sugar cane and grape industry was also highlighted.
Alongside the great success that had come with the programme, there were also many issues that the DRDLR had noted as challenges. These ranged from deviations from the approved business plans to non compliance to tax legislation by farmers, and fraudulent activities on the account.
Several internal workshops with strategic partners and farmers were convened, to deliberate on the key challenges in the implementation of the programme at a Ministerial level. All RADP Contracts were being reviewed, a process that would be completed by end March 2015, and capacitation of provincial offices with the necessary skills at district level was under way.
Mr Mduduzi Shabane, Director General, Department of Rural Development and Land Reform, added that the goals and the objectives of the programme were noble and forward looking, and were framed in direct response to a lot of criticism from various actors in the sector, that the State had invested a lot in agricultural land acquisition but without giving sufficient support to farmers. As with all good and noble programmes of government, the RADP programme had had its fair share of challenges over the last four years.
He reminded Members that the DRDLR itself was established in 2009. The Department lacked, at that time, the critical set of skills needed at the inception of the programme. The Department had to build the skills as it was moving forward, which was the reason for some of the weaknesses. The independent evaluation by the University of Pretoria also made the same point.
The evaluation was a response to criticism justified at the time, that for the beneficiaries of land reform to have a fighting chance to succeed or at least to reach the same level as their counter parts that came into the sector during the previous dispensation, more would have to be done. The pre-1994 farmers had a whole array of support institutions. The new generation farmers that government was trying to rekindle were not offered that support infrastructure. There was now a collaborative relationship between the Department of Rural Development and Land Reform, and the Department of Agriculture, Forestry and Fisheries, and the provinces. In this process there was assistance from National Treasury, who did a thorough analysis of available resources of support programmes of government for farmers.
Obviously, the needs of farmers were very diverse, and the independent evaluation recommended that the long term solution was a complete overhaul of the support programme. There was agreement that it could not be grant-based alone, but it had to take into account the various needs of the people who needed support. There were, for instance, small holder farmers in the former homelands, farming at a small scale, producing for themselves, who needed a very different kind of support from a beneficiary of land reform who had been given a 2 000 hectares citrus farm. Any overhaul of the support agricultural package for black farmers needed to take into account the differentiation of needs, so that the government did not again attempt to develop a one-size-fits-all solution to a diverse range of needs.
Hopefully, with the help of National Treasury and the Land Bank, there may ultimately be a small loan element for recipients of farms who had the skill but just needed working capital to be able to carry through the overhead and input costs required. The Department was looking into different solutions to move forward.
Mr M Filtane (UDM) appreciated the initiative of the programme and the fact that it existed for the benefit of the citizens of South Africa. He also expressed appreciation that within a short space of time, the DRDLR had deemed it prudent to do an evaluation of the progress so far.
Mr Filtane asked how the Department qualified strategic partners, since the report from the Department highlighted a number of issues where it was apparent that that strategic partners could be problematic and could stall the process. He questioned what the Department was doing about the lack of accountability by the strategic partners as reflected in the report. He questioned what impact the possible withholding of funds would have on the production of the farmer. He also wanted to know how the impact of the strategic partners was actually assessed, what was included in the questionnaire and the checklist that would reveal their lack of accountability. When so many people were consuming food, he questioned what exactly was the problem with accessing the market.
Mr Filtane agreed that a one size fits all model should be done away with and the loan approach should be looked into.
Mr Zulu said the accreditation process was part of the review, and in line with the review of contracts the accreditation criteria were also being developed for strategic partners. Previously, the Department had advertised for strategic partners, who could apply and then be appointed, or farmers would identify and introduce strategic partners to the Department, and sometimes a farmer and strategic partner would make a joint proposal to the Department. However, when the agreements were signed, the relationship between the farmers and the strategic partners was not firm, it became apparent that some strategic partners were there just to make money and not necessarily to support the farmer, and that was where relationships could go sour.
Mr Edwin Mashabela, Director: Recapitalisation and Development, DRDLR, said when the funds of the RADP were withheld, a team would go down to assess the project. Where it was found that there was an urgent need of intervention on the project, a proposal would be sent to the Department and internal procurement system, so that the project was not unduly held up.
Mr T Walters (DA) asked how the sample of respondents was identified for the questionnaire, and the criteria used. What percentage of the current financial budget was spent on the Recap? He also questioned how the Department would, as an institution, deal with beneficiaries who misused the money allocated to them or contravened the terms of the agreements. He further asked what were the measures that were going to be used to assess the business liability in order to leave a viable business that could compete in the market.
Mr Walters asked how much of the budget was used in the land areas. Noting that the presentation had highlighted that food security had improved, he wondered if that was measured by the input of the respondents, or whether the Department used output volume to measure.
Mr Walters also said the presentation made reference to market access, which was an area of concern. If the Department supported farmers yet they were not integrated into the value chain that took their product into the market, the fundamental problem would still not be addressed, and the viability of the enterprise after the funding would still be affected. He wanted to know how the Department was dealing with the downstream integration?
Reference was made to the integrated funding model, what was contained in that funding model. The presentation referred to a manual policy to deal with the objectives assessed, and he wondered how that had been correlated with the research findings.
Mr Walters noted the reference to capacity problems and filling of vacancies in the Department, and asked if it was possible to get a breakdown of the capacity problems and the shortages of skills in the Departments to support the Recap.
Mr Shabane said the question of access to market was a big problem in a number of ways. However, looking across the whole spectrum of commodities in which government had invested money, some showed that access was not an issue. For instance, in the sugar industry, there was no farmer who had been assisted by the Department on the substantial sized farms, who could say that s/he did not have access to the market for in that industry there was guaranteed off take. The same applied to the grain industry. However, not all commodity organisations were linked to the value chain for the beneficiaries at the moment. For example, in the poultry industry, the Department wanted to achieve exactly the same integration between the farmers and their organised commodity groups. Currently, the industry was dominated by particular players that were huge, and although the DRDLR was supporting other players, it happened that the group of five major players who exercised great dominance in the industry actually effectively had control over the stock (the hatcheries), dominated the feed industry which contributed massively on the input, and there was no competing with them in terms of prices. Incoming producers would struggle to be part of the market. The market was there, but entry was not easy for someone farming at the smaller scale.
Mr Zulu said the Department was given a time frame to finalise the review of all Recap contracts, which should be concluded by the end of March. There was a team led by the Department’s legal services and an advocate was appointed for the work. There had already been reviews that were presented, and what was done was to place enforcement of contracts at the forefront, to deal with around issues of roles and responsibility of the farmer and the strategic partners. In order to deal with the problems that arose with the current contracts, there were termination and penalty clauses included in the new agreements. The Committee could see the performance contracts if it wished.
Mr Mashabela answered the question on downstream integration, noting that with the volume of the product the farmers were producing, and resources available to government, it was difficult to allow each farm to have its own abattoir. Currently, farmers were being put in clusters in order to pull their resources and produce together and sell it to reach volumes and build the quality of the cluster brand. This was already happening in the Free State and in Gauteng, but sometimes it was a matter of collaborating with existing structure, like in the poultry industry where farmers had their own abattoirs.
Ms A Qikani (ANC) asked for clarity on the sustainability of the grant funding approach. If the resources were limited did it mean that the Department would be limited in the implementation of the Recap in the next financial year?
Mr Shabane said that on 11 March 2015, government departments would be presenting their Annual Performance Plans for 2015/16. The Committee would see that the Department was trying to map out particular commodities where the Department would be investing. For instance, there was a list of commodities that the Department would be deliberately targeting, with plans as to what land the Department would buy, where, and for whom. Once that land was bought for those beneficiaries, there would be market support, technical support and value addition, and all of this would be elaborated upon when the DRDLR presented its plans. This would also cover the question of the funding model, as raised by Mr Walters.
He added that another initiative the Department had taken over the past two years was to look at assisting the farmers in the former homelands who had a huge number of livestock. Black farmers owned about 40% of the country’s livestock but had very little market penetration, and until there was structural support put in place by government, the farmers would still be exploited.
Available resources would continue to be a challenge. There were currently 1 450 farms that were on the Recap, but the Department had acquired more than 5 000 farms. Recap was implemented in 2011 but there were farms that were bought in 1994, there would always be a need for assistance that would outstrip the fiscal envelope. This was the reason that the Department wanted to diversify support. It did not follow that a person assisted on a particular farm should necessarily (irrespective of own means and personal income) be given Recap, and this was one of the criteria that the Department hoped to implement at the beginning of the financial year.
Mr A Madella (ANC) asked about the amount of the investment and the outcomes in relation to job creation, a major question when investing in projects. He wanted to know more about what strategies were implemented by the Department, to make sure more jobs were created. The issue of access to markets needed to be dealt with, as there would be no growth for farmers if access to the market was not achievable. Another important point was the tripartite relationship between the beneficiaries, the service provider (who was a mentor), and the Department. There needed to be some formal Memorandum of Understanding or agreement that would bind the three parties, and the Department should effect some kind of monitoring and evaluation system, perhaps an official in charge of monitoring the relationship on a regular basis. Otherwise the Department would always be the last one to find out about breaches in agreements.
Mr Shabane conceded that this was the biggest weakness of the Department. There were 1 540 projects on the ground receiving money. Initially, monitoring and evaluation was outsourced, but this had been discontinued. This had made the Department reactive, as a problem would be uncovered only when it had already happened and money had already been embezzled. However, the Department wanted to rely on the farmer and the Strategic Partner to be honest partners in the relationship.
The Department agreed that it was its duty, as it was investing money, to ensure that there were controls in place, and this was another area that could do with improvement. Turnaround times were a problem, Recap was a very good and noble programme, but when the Department introduced the programme there were not sufficiently trained people to run it. The challenge was to manage incoming applications and the time it took to process them and release funds, for the delays would then affect the farming cycle of the beneficiaries.
Mr Shabane said the National Development Plan spoke to the potential of creating 6 000 jobs in agriculture. Working with DAFF, the Department had mapped out a number of commodities, and assessed how many jobs would be created per hectare of wheat, livestock, fruit and various other commodities. The medium term strategic framework planned to create a specific number of jobs over the next five years, increasing on the number in the last five.
Mr Zulu said the Committee could be provided with a time frame for the filling of posts, and information on how many were prioritised to capacitate the directorate. The Department was spending as it was supposed to; it should have been at 75% but, because of the reviews, the Department had to hold back on the transfers to beneficiaries. There had been communication to all the strategic partners and farmers in relation to the review of the contracts. There were interim contracts, and from the end of the financial year (October/November) expenditure would hopefully improve up to February to be where it was supposed to be.
Mr E Nchabeleng (ANC) noticed that in the presentation there were cases cited where strategic partners did not honour their agreement with the beneficiaries and the Department, failing to supply or provide what they were supposed to, to balance what the government had put in. Mr Nchabeleng asked what criteria were used to appoint the strategic partners, and said that if people appointed to this role did not have the capacity or funds, the process was doomed to fail. Furthermore, he enquired how rapidly the Department, through internal monitoring and evaluation, could pick up whether any of the other parties were not honouring their side of the deal.
Mr Shabane said the Department had done a review of some of the contracts and had found weaknesses when it came to the controls, and these were attributed to the fraudulent activity. It needed to be noted, upfront, that the mischief was not only from strategic partners, but also some farmers.
Mr T Mhlongo (DA) asked if the Department could share with the Committee the contracts with strategic partners in order for the Committee to do its oversight work. He was worried that it took time for non-performing strategic partners to be disqualified. Mr Mhlongo asked when the investigation would be concluded. The presentation noted that there was a capacity issue in the Department, yet no time frame was given as to when vacancies would be filled.
Ms P Magadla (ANC) asked for the Department's plan of action for land owned by foreign nationals, and suggested fast tracking an audit so that more communities may benefit out of the programme.
The Chairperson said the subject of land audits and foreign land ownership was a separate matter, and would be dealt with in a separate meeting with the Department.
South African Sugar Association submission
Mr Anhwar Madhanpall, General Manager: LRRD, South African Sugar Association, briefed the Committee on where the Association (SASA) was and where it fitted into the picture.
He described the contribution to the economy. The total industry income, per annum, was R12 billion, export earnings amounted to R2.5 billion a year. Average value of sugarcane production was R7.7 billion per annum. In the industry there were 79 000 direct job opportunities, and 350 000 indirect jobs. Sugarcane production was a rural based industry and the key economic driver in many small towns in KwaZulu-Natal and Mpumalanga. Sugarcane was the second largest South African field crop by gross value. Production represented 17.4% of total gross annual field crop production value.
Sugar was the most progressive commodity in terms of land transfers. 74 624 hectares were transferred (22% of freehold commercial land under sugar cane production), and black ownership would exceed 50% as the pace of restitution gained momentum.
Growers needed support from government, as markets in America and Europe were flourishing under assistance of the government yet were struggling in South Africa due to the lack of that support.
Describing the participation in the RADP, he noted that millers responded to the public tender process in 2010, and were appointed as strategic partner for specific projects. Policy changes thereafter resulted in the accreditation of millers as mentors and service level agreements were signed with each participating miller. Project-specific tripartite agreements were signed with DRDLR, miller and the grower; and joint bank accounts opened for each project so that the grower and strategic partner were in control of the funds.
Implementation of the RADP
Mr Madhanpall said that no mentorship fees charged, so 100% of funds reached the farm gate. Agricultural project officers were deployed to support growers, sot here was on-farm support to the grower. Systems were in place for approvals of quotations, payments and accounting of funds.
177 projects were being recapitalised. Generally, growers had been committed to programme and there were no proxy growers in the programme. There was a retention saving for the farmer, to cover operational costs for the next season. There were also quarterly performance review meetings between DRDLR, strategic partners, and participating growers.
Describing other supporting mechanisms, he noted that co-ordination arrangements were in place, and there were Land Reform Development Committees at regional level. Industry provided training - by way of on-farm practical training for the grower and farm workers, support by business and financial management training. A Governance Support Project was being implemented. Industry had invested R16 million in the project to stabilise large restitution projects – building governance systems, business training. There was a Sugar Industry Trust fund for Education, established in 1965 which had assisted 9 800 students in rural communities with bursaries, building classrooms, installing boreholes, and supporting various interventions at a school level, particularly for maths and science.
Mr Madhanpall gave a graphical overview of the impact of funds received. There were 2 797 established hectares, 229 black contractors, 971 permanent jobs and 12 718 seasonal jobs created.
Impact of the RADP
Ntonga Co-Operative recently received top production award from TSB Pongola Mill. PLAAS Farm purchased 170 hectares under cane and 5 800 tons of cane in 2007. RADP Funds received in November 2011 amounted to R3.94 million, with additional tracts planned. Production estimation in 2014 was 15 000 tons cane, 48 job opportunities created, farm machinery and infrastructure upgraded. Growers had invested own funds, complementing RADP grants. R3 million was received for replanting, rattoon management and irrigation infrastructure for bananas. This had resulted in a 61% increase in production, nine permanent jobs and 70 seasonal jobs created.
At Glendale Valley (KwaDukuza / Illembe), development had been driven by local leadership, Nkosi Qwabe, and the community. The industry provided technical support. There was a holistic approach and with sugar cane as a primary crop 730 hectares were under cane and under irrigation, 10 hectares under cash crops, while housing and electrification were under way. There had been input of R30 million annually into local economy, 38 permanent and 225 seasonal jobs created. There were plans for commercial livestock, energy or commercial centre to be built by ENGEN.
In the sugar industry, the main challenge was to balance farm size against sustainability, which resulted in issues of production finance. It was most successful where growers did the contracting themselves. With regard to beneficiary selection, there also needed to be a consideration of good business acumen in addition to agricultural expertise. RADP funds needed to focus on infrastructure and cane development.
There was a delay in the transfer of funds, and when funds came late it was impossible to spend within 120 days. There was a loss of invoices and reports between province and national, and there were too many committees in approval process. Alignment between Restitution and Land Reform branches was needed to ensure that restitution projects are allocated funding.
Mr Madhanpall then addressed the question of what now needed to be done.
On the operational side, there should be joint planning in October/ November each year for the next season. Transfer of funds should be done by June of each year. The reporting system should be modernised with electronic invoicing and project reporting systems. There needed to be registration of Notarial Deeds to prevent freehold growers selling farms after recapitalisation, and alignment of services of various branches. Despite the challenges the industry was most appreciative of the support and was improving the programme and systems.
On the strategic side, a commodity based approach was needed, with formal agreements with the commodity and oversight of strategic partners support to farmer, evaluation of business plans and monitoring of impact. He suggested the need to move a loan /grant financing model using Development Finance Institutions (DFIs) or Commodity Financing Vehicles.
Grain South Africa submission
Ms Jane McPherson, representative for Grain SA, concentrated, in her submission, on why there was a need for agricultural development and recapitalisation.
Since 1994, South Africa had been a united country and there was a need for a prosperous agricultural sector. There needed to be one common and united voice to ensure household and national food security, economic development in rural areas, job creation, profitable and sustainable production, and successful land redistribution.
The mission for Grain South Africa (GSA) was to develop capacitated and sustainable grain farmers, and contribute to household and national food security, with optimal use of the natural resources available to each farmer. The question was “how to measure success for transformation and rural development?” Consideration had been given to using figures for total tons produced per farmer, total hectares planted per farmer, but the final and best answer was by assessing sustainable production on every hectare.
The most important aspect of development was to empower people through support, training and skills development so that they could take ownership. The farmer required skills and knowledge, secure land tenure, production inputs, mechanisation, markets and a safety net. Over the past ten years more than R190 million had been invested in this programme.
Ms McPherson set out some of the projects in the programme. These included training, skills development, empowerment, through:
- Study groups
- Demonstration trials
- Farmers Days
- Farmer of the Year Competition
- Support to Advanced Farmers through mentoring
-Pula Imvula monthly newsletter
- Training courses (26 different courses)
She then described some of the challenges preventing the country from attaining the goals.
Getting production loans was difficult as there were security requirements by lending institutions. There was difficulty also in access to input insurance, then the input insurance was not enough to secure the loan. Farmers had a poor track record of repaying loans, and small margins did not allow for the learning curve. Tractors and machinery were not available, or were in poor condition. The use of contractors, who were expensive and focussed on their own profits rather than on the farmer, was problematic. There were also issues relating to land and soil, like land tenure insecurity, no title deeds (to use as collateral), phosphate status and soil pH, contours and waterways, low-potential soil being cropped and lack of proper fencing.
Grain South Africa had some suggestions to make. It believed that farmers should be assisted to farm for themselves – they should not be “farmed for”. Farmers should own their own equipment and not use contractors for all operations. All sizes of farmers could be assisted to use the land that was available to them, using modern methods of crop production.
Recapitalisation was life changing, if done correctly. It put farmers in a position to use what they knew to be correct practice, enabled them to take ownership of their farming business, and would enable real transformation in the sector. Partnerships with government were essential for success.
Grain South Africa thus believed that recapitalisation was the key that could unlock the door for transformation in the sector. Whilst it would like to see the RADP programme continue, there were some challenges that needed to be addressed.
There were apparent communication problems; since there were no responses to emails sent by Grain South Africa; no communication about approval or of business plans; and national and provincial departments attempted to shift the blame to the other. Beneficiaries also complained of the lack of regular meetings and when plans were not approved, the DRDLR did not tell the farmers and expected the strategic partner to communicate with the farmers.
She asserted that in regard to business plans, the technical committee was insisting on the impossible, the recommendations were not practical and there was no guideline according to which Grain South Africa worked and had to constantly rework the plans. The money had to be spent in 120 days but it was impossible to tell when it would be received. Particularly for cropping, timing was of the essence, and if the money was late then the plan could not be implemented. The requirement for written permission to deviate from time lines meant that it could take up to six months for a deviation to be approved.
There was no grant making calendar, the money was always too late for a good crop and this was keeping farmers poor. The money would be too late to implement the plan, there were seasonal implications.
In regard to the Recap policy change, Grain SA was concerned that the change was unilateral, and there was no new Service Level Agreement (SLA) although numerous attempts had been made to get one in place. The five year agreement changed without consultation with either parties, although there was an expectation on the part of the farmers. There were variations on the number of years farmer received the grant for, and there were no reasons given as to why they could not be funded further.
In regard to the Financial reporting requirements, Grain SA pointed out that copies of documentation had to be repeatedly sent to the DRDLR. The reconciliation of expenditure system was not user friendly; and parties had to start from the beginning instead of continuing where they left off. There were also too many parties involved – district, province and national (with more than one individual in each place).
There were problems with farmers, when they did not adhere to business plans, did not use joint account for deposits and failed to perform proper management of assets. There were no punitive actions taken against farmers who did not comply. Farmers resented being selected for exit, so consideration had to be given to setting parameters for when they should exit the recap programme.
Ms McPherson noted that there were also problems with payment of mentors. Part time mentors were paid R5000 and full time mentors were paid R15 000, which was unrealistic, and the quality of most people that could be employed for that was not what beneficiaries and strategic partners were looking for. Strategic partners were expected to contribute what they did for free, whereas there were costs incurred in the writing of business plans, visits to farms, financial administration and reporting. No money was allocated to compensate them. Farmers were neither willing nor able to pay for mentoring, preferring to save the money, although they were not actually in a position to farm independently.
Grain SA suggested that the SLA with the DRDLR may need to adopt a sectoral approach and not a ‘one size fits all’. There was a need also to look more carefully at the selection of beneficiaries, to decide when and how a Strategic Partner could motivate for beneficiaries.
Mr Nchabeleng said the problems expressed by Grain South Africa were exactly those that the Committee had seen, first hand, when it carried out oversight visits in the Northern Cape, where farmers were very enthusiastic in the beginning but had been let down by the Department. Farmers were not necessarily administrators, and it was difficult for them to deal with a process where they had to send their documents four or five times to the same Department, so the Department had to at least try to meet them half-way. The administrative system needed to be improved or new electronic systems set up.
Mr Nchabeleng asked SASA to elaborate on the term “rattoon management” used during the presentation.
Mr Madhanpall explained that the cane seed, once planted, had an average lifespan of 10 to12 years, depending on the area where it was farmed and the harvest cycle. It had to be fertilised, herbicide applied, and there must be weeding to manage the root. This process was called rattoon management. it was intended to ensure the sustainability of the crop, and on average R6 000 per hectare was spent on the process.
Mr Madella said the SASA presentation was heart-warming and the successes of the programme were visible. Despite mention of the deregulations that the new government had brought in, there was strain on the sugar industry, particularly in comparison to the protective measures for farmers in Europe and America, although it was clear that some of the strain was being addressed. It was clear from the Grain South Africa presentation that the two industries were being treated very differently. This needed to be addressed by the Department, and the Committee needed to examine the matter in detail. There needed to be forums with more regular interaction between Grain South Africa representing farmers in their sector, and the Department, as such interactions would help make progress and finding solutions easier.
Mr Walters said the barriers to effective functioning could be fairly easily resolved. Some barriers were caused through basic administrative issues and it was disturbing to see such a breakdown. Consideration must be given to the massive difference in industry structures and the relevant market structures. It was, however, possible to see a workable model for land reform.
Mr Madhanpall advocated for an agency model to overcome the administrative problems and transfer of funds, which would allow government to make funding available without releasing responsibility by the Department. On an annual basis the agency could approve projects.
Ms McPherson agreed that the administrative problems were fixable, it was merely a matter of finding the right solution. In their programmes, Grain SA they had found that in the communal areas, there was 50% women ownership, but in the more commercial arena, there was a predominant male ownership.
Mr Mhlongo asked if SASA had any relationship with Ingonyama Trust and if there were any contractual arrangements. The land in KwaZulu Natal belonged to the Trust and there were people living on that land, and he asked if they benefited, and what mechanism was used to protect indigenous land. He noted the comment about deeds, and asked what impact that had on the individuals living on the land where sugar was being produced, and how small scale farmers were benefiting.
Mr Madhanpall said SASA, as an association, did not have a formal relationship with the Ingonyama Trust, but one of its milling companies did have a formal agreement with the Trust on how they worked with amakhosi and individual growers in order to access land and support communities with production. With regards to deeds, it was still possible to run a commercial operation without having access to title. Commenting on how small holders grew, and the individuals who were on the Ingonyama Trust land, he noted that some of the business units on the land had been consolidated into cooperatives. The industry had a supplementary payment fund for a grower who would be paid a premium for cane delivered. On average such growers would get R30 a ton in addition to the normal premium. Since 2006, small scale growers had been paid close to R208 million by way of additional payments.
Mr Filtane said he did not believe the rosy picture presented by SASA. For such a complex programme that involved the development of people, it was hard to believe that everything was as portrayed. He asked what programme was in place for black farm owners to be able to run their farms on their own.
Mr Filtane suggested that it would make sense for the Committee to dedicate a day to deal with the problems raised by Grain South Africa, as they were very complex and the entity was a great asset to the country in the work being done for poverty alleviation.
Mr Madhanpall said the presentation did note that there were administrative challenges, and SASA was engaging with relevant parties about them, and was confident that they could be dealt with. The "rosy picture" was also complemented by the support services that the Association provided to the growers to assist them in terms of sustainability.
Though he did not have expert information about how mills were structured, in terms of their ownership, Mr Madhanpall said Gledhow Sugar Mill had 24% ownership by the growers, Umfolozi Sugar Mill was 100% owned by the growers, and so was UCL.
Ms McPherson said there were 600 farmers in their programme that could benefit from RADP, who were farming on land larger than 10 hectares yet there were currently 32 beneficiaries. Subsistence farmers had no government help at all, although the Association helped where it could, but had to operate within the constraints of the budget.
Mr P Mnguni (ANC) said it was important for the Committee to be well versed with the internal operations of the Department, in order to help the Department in turn to offer assistance to the various associations. He asked that the Committee be provided with the transformation indexes.
Mr Mnguni asked for clarity from Grain South Africa as to why there were more funds allocated to sunflower production, but less to maize.
Ms McPherson said that in rural areas farmers produced more maize and there was hardly any sunflower produced. However, the farmers in Welkom looked at each yield and how much they would make. It was more profitable to grow sunflower than to grow maize. There was no real issue around it, but just a business principle.
With regard to marketing, she noted that South Africa moved away from single channel marketing controlled prices to a free market system in 2000. There were no issues with marketing, as growers did not seem to have a challenge with marketing their grain. There was a price to enter the market but it was not a barrier, unless perhaps to the very small scale rural farmers, but the Association had not been informed of any problems along this line.
Mr Nchabeleng proposed that the Committee should visit SASA and learn from it, so that there were meaningful interventions when engaging with the Department. He also proposed a joint sitting with the Department of Agriculture, Forestry and Fisheries, to look at the feasibility of any associations like Grain South Africa and SASA.
The Chairperson commented that where there were support structures, like SASA, the picture was not always gloomy. However, the Committee still had the responsibility of checking that the picture painted in reports actually reflected what was happening on the ground.
Izindonga Ze Africa submission
Mr Zakhele Maya, representative for Izindonga Ze Africa, explained that Izindonga Ze Africa (IZA) was a chicken grower in Greylingstad, Dipaliseng (CRDP) Municipality, Mpumalanga Province. It is a PLAAS programme leased farm that was run by women and youth. IZA had started farming in 2007 with chicken broiler production as the main enterprise. The farm was 220 hectares of arable land (under maize and soya beans), 200 hectares of planted and natural grazing pastures and 26 hectares of broiler-housing infrastructure.
Describing the arable land, he noted that the land was planted in partnership with Witpot Broidery in a 50/50 partnership over the last four seasons. Over 3 000 tons of grain were produced and sold at safex prices, over 2 500 bales were produced and there were over 50 cows obtained through the partnership.
Recapitalisation applied to the broiler production main enterprise, which was contracted to Astral. The Recap started in 2011 to 2013, and there was a total amount of R15 million in capitalisation, of which R11 million was invested in infrastructure and R4 million in production inputs. The first phase was complete and the farm was in full production, with Agridelights Consulting and Training as strategic partner. He said that there was a solid strategic partnership created, as Agridelights training and consulting provided strategic and tactical support without profit sharing. With the partnership, the business plan was implemented and was in full swing for the years of funding. The Recap was implemented internally. This Recap had brought the farm into operation after five years of inactivity. Over 500 jobs were created through recap and production. Production jumped from 0 to over 2 million chickens per annum, with revenue rising from a loss of R50 000 to over R 56 000 000 per annum.
There were challenges, as there was a need to increase the breed, lagging infrastructural development, constraints of contract markets, lack of control of the value chain, unstable market price (cheap imports), a need for better understanding of the specific farm environment and security of tenure.
However, Mr Maya acknowledged that IZA could not have had the same impact without Recap. Challenges persisted, but they were solvable. The programme needed to be strengthened to address infrastructural development and invest further in infrastructure to meet the demands of new breeds.
Miranda Farm – Northern Cape submission
Ms Serena Vivashe introduced herself as a farmer from Upington in the Northern Cape and gave her personal testimony as a beneficiary of the Recap. She started farming in 1994 and in 2005 she started farming with 60 other emerging farmers. At the time the business started growing, in August of 2012, she received Miranda Farm from the Department of Rural Development and Land Reform. At the time she had 500 sheep. There were many challenges, due to the adaptability of the animals on the farm and predators.
Before she received the Recap she struggled due to losing the animals, problems with fencing, water and so forth. However, those problems were largely dealt with under the Recap programme, and she was successfully farming again. She asserted that many farmers would not have survived had RADP not been introduced and implemented.
Ms Vivashe said she had always had plans to extend her business, but saving the money to buy cattle took a long time. When she became a beneficiary of RADP, she managed, in one day, to buy 50 cows and two bulls, at a cost of R25 000 for a cow, and R30 000 for a bull. She said that RADP could move a farmer from being an emerging farmer to the door of commercial farming. She was thankful for the Recap. She added that prior to the Recap, she had bought ‘no name’ sheep, but could now afford the vuvuzela and snowball sheep, allowing her to compete with commercial farmers.
Mr Nchabeleng asked about challenges the farmers faced with their projects and how they had worked around those challenges to become the success stories they were, whereas others seemed to be failing.
Mr Maya said it would be untrue to say that the process was without frustration, and particularly cited the delays in getting funds. The organisation had "made a nuisance of itself" to the Department, following up on every step of the process. One of the mistakes that many farmers made was that they merely submitted documents to the Department and never followed up, and some over relied on strategic partners to do things for them. It was a matter of having perseverance and having faith in the process.
Ms Vivashe agreed the success of the farmers was also dependent on the farmers themselves taking responsibility and ownership of the process and the business, and it was also advisable to have good communication with the relevant officials.
Ms Magadla asked Mr Maya about his challenge and constraints of contract markets, and why there were so many constraints now when growers had been more successful than others before.
Mr Maya explained that contract growers produced chickens and the buyer would determine the price. Often, the price was performance based and there were lot of variables used in the formula to determine the price. Another painful reality was that the growers spent 35 days with a chicken, only to dispose of it in a market where someone else could make a bigger profit margin by just taking the chicken from the grower and slaughtering it. Growers did not determine the price and so they lost the additional value they would have if they both grew the chickens and had the resources to take them all the way through the market.
Mr Filtane asked if the farmers had reached a stage where they were actually making money for themselves, and where government could actually say that farmers were no longer dependent on government for funding. A high turnover did not necessarily translate into money in the pocket.
Mr Walters said it was good to see the changes and the volumes that the farmers were producing but wanted to see key business indicators of success, such as what the profit margins were and what they would be after the Recap.
Mr Maya said the IZA farmers were making money, but most of the money they currently made they were ploughing back into the infrastructure needs. They had drilled three boreholes that they needed, and they knew that going back to the Department to ask for more money would take time. However, despite the expenses they had still managed to make a substantial amount. The margins were fairly good. The poultry business was a high input business, and there was strength in numbers.
Ms Vivashe said she was just at the beginning of her business as a beneficiary. Before the programme she had managed to make money, but now, after the Recap, Marinda Farm would be more successful.
In the afternoon session, the Chairperson asked that, due to time constraints, all presentations be very brief.
Selame Poultry submission
Mr Ranthoko Rakgoale, Managing Director: Selame Poultry, informed the Committee that when he started his business he had to set up the infrastructure within eight months. He had a strategic partner though he did not rely solely on it. Challenges experienced were turned into strengths and opportunities. The main problems experienced were around auditing documents that could not be found from the previous owner.
So far he had made an income of around R5,2m. The bulk of the budget went to the animal feed, which he calculated to be around R3,2m, so this must be deducted from total income. He appreciated the opportunity he was given by the DRDLR. His farm had been evaluated by the Department of Agriculture, Forestry and Fisheries (DAFF) and he had been accredited as an exporter of live carcass. A letter requesting permission to revamp the buildings had been submitted to the Department, who actually owned the land.
He noted that transformation was the main challenge in the industry. Growers were struggling to get contracts from the distributors. He currently employed 18 workers at a salary of R2 500 per month. The majority of the employees were youth. Temporary workers also received training. To further its social responsibility, the farm had signed a contract with the Department of Agriculture, Forestry and Fisheries to have students for experiential training, and already the University of Pretoria has committed to sending students.
Mr Barrington Mabuela, Chairman: Bela-Bela Communal Property Association, described the recapitalisation programme as the best land restitution and development model in South Africa. White River Citrus was running four enterprises: Bonwa Phala Lodge; Game and Hunting; Cattle Farming (owned collectively by the community); and Crop Farming. Poultry Farming was a new addition.
Across the four enterprises, up to 80 people were permanently employed and 200 were seasonal workers. The business collaborated with Sector Training Authority Agri-SETA for learnership programmes. Its executive committee received training on issues of governance and management. Plans were being drawn to incorporate distressed communal property associations in the area to the project.
He described the RADP funding the Egg Project, and said in 2013 the Communal Property Association (CPA) applied for R23m for six layer houses. Only R12m was approved for three layer houses. The strategic partner funded the fourth house and provided production capital. By June 2014, all layer houses were completed and the enterprise was in full production. The equipment was sourced from Netherlands.
Each layer house had capacity for 1 500 birds. They were bought at 16 weeks and then sold at the end of the week 60, because they were part of the projected income. The enterprise also sold chicken manure. The production rate was standing at 90%, with a mortality rate of 2%. The eggs were sold through an off-take agreement with an established egg producer and distributor. Approximately 1,7 million eggs were supplied every month. An Environmental Impact Assessment (EIA) plan had been submitted for 18 houses, and plans were under way to build other four houses.
He believed that the land restitution programme has improved the lives of many people. Over 6000 ha of prime land had been restored. In 2010 a community food programme was launched. Every year each family received 12,5kg of mielie meal, 4kg of sugar beans, a bag of mixed vegetables and 4kg of beef. There were training and empowerment programmes for the youth. As a result of these efforts, the enterprise had launched a CPA book. The Bela-Bela community was the only community in the country that had written a book about land restitution, because nothing was archived as proof of ownership of land before.
Qwabe Cooperative submission
Mr Siyabonga Madlala, Chief Executive Officer: Qwabe Development, briefed the Committee on the project that was operating in the Qwabe community, which belonged to the tribal land authorities. In accordance with its development plan, Qwabe Development formed primary cooperatives – from production to management. These later started to secure funding in order to kick-start their projects. Business plans were developed, to assess how best to make use of 1000 ha of land
The community owned the project. It had created massive opportunities of employment. The recapitalisation project was seen as having got the plan in motion. Its injection had transformed semi-deserted, poverty stricken area into a ‘green mine’. The enterprise was making a profit of R30m every year. It had 60 permanent employees and 600 seasonal workers.
He noted that, with these kinds of projects, the farmers had learned to adhere to standards of production, manage the expectations of people and to involve local traditional leaders.
Riet Rivier submission
Mr Keith Middleton, Director: Riet Rivier Project, told the Committee his farm received R7,6m over five years. Within three years he was able to exit the programme and become self-reliant. He got 300 hectares of land farm. 150 hectares was held in partnership with commercial farmers who held water rights. He tilled the other 150 hectares.
He said when the recapitalisation programme came into play, he started to farm differently, started to grow potatoes and was also able to compete with commercial farmers. The farmer had planted hectares of early yellow maize, 35 hectares of late yellow maize and 70 hectares of lucerne, under irrigation. He also farmed 20 cattle and 240 sheep. The farm had created 10 jobs. He had now been running the farm for ten years, was excited about the future of farming in this country and had a clear picture of where he was going.
Onverwacht 509 submission
Mr Sibusiso Mabuza, Chief Executive Officer: SuperGrand Agric Feed, enlightened the Committee that the co-operative started to operate in 2010. Its core business was to manufacture animal feed which was then sold to emerging farmers who made up 90% of its current market. The animal feed was distributed to clients in Gauteng, Limpopo, Mpumalanga and North West provinces and also to countries like Zimbabwe, Mozambique and Uganda.
An amount of R11 500 000 was allocated to this project through the RADP, for the construction of a milling plant, office space and workers ablution facility. The farm had 68 permanent employees. The project manufactured and distributed animal feed from a facility with a capacity to produce 1 200 tons of feed per month in three shifts. The farm had planted and harvested over 780 tons of yellow maize and 320 tons of soya beans as inputs for the milling plant.
Super Grand also assisted local poultry farmers to get into production by securing markets and providing feed to them. The livelihoods of the beneficiaries were sustainable, as a result of funding from the programme. The 2012/13 audited financial statements indicated that the co-operative had reached the R4 million mark and was able to stand on its own.
Land Access Movement of South Africa (LAMOSA) submission
Ms Constance Mogale, Director: Land Access Movement of South Africa (LAMOSA), highlighted that before the recapitalisation programme came to play, land reform programmes were reliant on various funding programmes which were later deactivated and discontinued. Restitution Discretionary Grants and Settlement Planning Grants had been discontinued. In order to receive an RADP grant a person must provide proof of both a business plan and strategic partner. She argued that by imposing these new sets of policies, the land rights of people living in the former homelands had been made more conditional and less secure.
By the insistence upon business plans from applicants as a proof that they could use the land productively, she argued that the RADP was giving people less choice about their own livelihoods because it emphasised agricultural productivity above all else. This condition infringed upon the rights of the beneficiaries under the concept of restitution.
She also noted that strategic partners were proving to be problematic for the beneficiaries. The fact that strategic partners were identified by the Department and had knowledge that the grant was from the government renders the beneficiaries powerless. Many strategic partners saw this partnership merely as a conduit to access funding. The strategic partners were seen to be behaving like agents. They inflated prices on every item purchased and made profits where they could, irrespective of the 10% commission on the amount awarded. Furthermore, many of the strategic partners were said to be using bullying tactics and threatened the beneficiaries, who feared losing their funding and thus felt trapped within this arrangement with their strategic partners.
She further indicated that a lot of money already available was not well spent, and as a result, there was an imbalance between large amounts being to support badly conceptualised land reform projects, at the expense of helping the large numbers of needy black farmers in the former Bantustans. She maintained there should be an urgent shift away from parallel and conditional systems to a more rationed system that put the emphasis on community level infrastructure and market development rather than on-farm infrastructure.
Community, Law & Society submission
Ms Nomboniso Gasa, Senior Research Associate: Community, Law and Society (UCT), suggested that the Members and the public should look at the RADP in the light of all the other policies the Department has developed.
She said a closer look at the Communal Land Tenure Policy revealed that people had been stripped of their customary rights and that this had undermined the rights that people had on the land they occupied. For these projects to be successful and credible, they needed to be negotiated between traditional leaders, strategic partners and the community.
She noted that substantive right to land was part of freedom, and that was a critical issue. She warned that people and communities should not be afraid of being bullied by big businesses. She highlighted that the level of corruption within the government was on the rise, and this was crippling and was directly affecting the very same people who were supposed to be beneficiaries of these programmes. Some people in top positions were recruiting their friends to corrupt deals with the Department.
She mentioned that the restitution budget has been decreasing over time because of the economic downturn and "strife". Already R3 billion had been wasted, and if the recapitalisation programme was to continue, then the people should be in a position to know what was going to be compromised.
It was necessary to take a closer look into who qualified for the programme, who did not, and how strategic partners were selected. She concluded that a conversation was needed on how beneficiaries were selected, and there was a need to really challenge the issues, ask if the government was doing the right thing, and create space for sufficient dialogue.
Members asked both Selame and Bela Bela CPA to respond to questions related to farming:
Mr E Nchabeleng (ANC) wanted to know how many eggs were good for the market out of the 1,7 million produced, and what happened to the cracked ones.
Mr Mabuela replied that brown eggs were the only ones supplied to the distributor.
Mr M Filtane (UDM) asked Mr Mabuela if he was running a profitable business because it looked like his main focus was on restoration. He further asked what his understanding was of restoration of dignity.
Mr Mabuela explained that the enterprise was profitable. The Game and Hunting business was the one that kept the other business going and enabled the enterprise to give out food packages. In explaining how he understood "restoration of dignity", he said that dispossessing a person the land was painful, and he believed that dignity was restored when people got title deeds and could become owners.
Ms N Magadla (ANC) enquired if workers were beneficiaries in the Bela-Bela farming projects.
Mr Mabuela said workers were not beneficiaries. The beneficiaries were the farmers. Workers were not employed as beneficiaries for a number of different reasons. Once they were employed as beneficiaries, workers tended to demand more than the accepted wage level, or strike, or come to work drunk. Those were things that the enterprise was seeking to avoid.
Mr T Mhlongo (DA) wanted to know the title of the book referred to, and how Members could get it. He asked for an explanation on why the enterprise was only awarded R12m when it had requested R23m for six layer houses.
Mr Mabuela told the Committee that that book was available online; he had two with him in hard copy, for the Director-General of the DRDLR and Chairperson. The title of the book was Bela-Bela Land Claim: The Best Land Restitution and Development Model in South Africa.
On the issue of the R12m, he said each layer house had cost R4m.
Mr M Filtane asked Mr Rakgoale if the income of R600 000 was a net profit after salaries had been paid.
Mr Rakgoale replied that the amount quoted did not include overheads.
Ms A Qikani (ANC) wanted to establish if the stipends of the students were going to be paid by the Department or by the farmer.
Mr Rakgoale said the institutions would pay the students.
Mr Nchabeleng suggested the Committee should to visit these successful communities and then find out why others continued to fail. He mentioned that some of these inputs were pointing a finger at management in the Department because it was clear there were people who were recruiting their friends to engage in corrupt activities with the Department, while impoverishing the majority who were supposed to benefit. A follow-up had to be done on issues raised. He said the hearings highlighted both the good and bad stories.
Mr Mhlongo suggested that Ms Constance Mogale and Ms Nomboniso Gasa should come and make further input to the Committee.
Mr T Walters (DA) felt there was a problem of fragmented support to the farmers, and said the Committee needed to define the meaning of "rural development". Lack of leadership seemed to be another matter that came under the spotlight in many of the presentations.
Mr A Madella (ANC) said that he disagreed with those who suggested the recapitalisation must be abandoned, and stressed that instead, there was a need to fix what was wrong and review what was to be achieved. The main focus should be on community development and empowerment.
Mr P Mnguni (ANC) said the Committee welcomed the diversity of views presented, and stressed that policy makers should take responsibility for BEE and its broadening programme. He noted that restitution should not be confused with, or equated with, agricultural production.
Mr Filtane asked Mr Madlala how the Qwabe enterprise was managing to keep the community together, and wanted to know if the community members retained ownership of their own pieces of land.
Mr Madlala urged the Committee to visit Qwabe village. He explained that the enterprise, as a whole, had mobilised the community and came up with a vision of what they wanted to achieve. Workshops were held to manage people's expectations. Sound communication had been a key factor in its success. The community was kept informed on all issues and traditional leadership was involved from the beginning.
Mr Filtane enquired from Mr Mabuza if the Onverwacht project relied on their technical expertise to run the enterprise, or if they got assistance from the Department.
Mr Mabuza said the farmers relied on their own qualifications, not on the mentor or strategic partner.
The meeting was adjourned.
- Qwabe Comprehensive Rural Development Project (Glendale Valley) presentation
- Super Grand Agric Feed presentation
- Business Enterprises at University of Pretoria (Pty) Ltd Policy
- SA Sugar Industry presentation
- Department of Rural Development Recapitalization and Development Programme presentation
- Gran SA presentation
- Land Access Movement of South Africa (LAMOSA) submission
- Centre for Law and Society submission
- Izindonga Ze-afrika presentation
- Bela-Bela Communal Property Association (Limpopo) presentation
- Selame Poultry (Pty) Limited Progress Report 1
- Selame Poultry (NW) Presentation to Portfolio Committee
- Annex B: Improvement Plan and Quarterly Reporting Template
- Annex 1: Recommendations and management response