A budget analysis of the Department of Agriculture, Forestry and Fisheries for 2015/16 financial year was carried out by Committee Researchers. Only the first and second quarter of the 2015/16 financial year were included in the analysis. The total budget decreased by R65.8 million between 2015/16 and 2016/17. The private sector only contributed R350 000 of the targeted R334 million toward Operation Phakisa during the 2015/16 financial year. Issues raised were that, from the State of the Nation address, agriculture, agro-processing value chains and agriculture business and the implementation of the Agriculture Action Policy Plan had been marginalised. The Department had not briefed the Committee on the progress of the Integrated Development Finance Framework. The veterinary strategy had not yet been developed; this was of concern as animal disease outbreaks were increasing. On smallholder producer support, only 11% of the targets for the 2015/16 financial year had been met thus far. The verification of the reported smallholder producer data was of concern, however the Department introduced measures to solve this problem. From the Department’s assessment 12.3% of the agriculture sector contracted due to the drought, this led to certain targets being revised down for the next financial year. Only 16.2% of the Department’s target for the land under irrigation scheme had been met by mid-year.
Under policy priorities for the 2016/17 financial year, the Department would focus on the revitalisation of agriculture and agro-processing value chains. This would tie into the plans of the National Development Plan for the Department, given that the National Development Plan identified the agricultural sector as being one of the key job creating sectors.
Committee Members suggested that a fact sheet be produced with all the figures so that the Department’s progress could be tracked without referring to various documents.
The Chairperson noted that Parliament’s programme had changed for the day to allow political parties to meet before the plenary later that day. Therefore, the Department’s budget performance review that was to be presented by the Financial and Fiscal Commission (FFC) has been pushed forward. The Department of Agriculture, Forestry and Fisheries (DAFF) would present on Thursday, 21 April 2016.
Briefing by Committee Support Officials
Budget Analysis: Vote 24
Ms Nontobeko Qwabe, Committee Researcher, said the introduction of the Vote 24 document highlighted what the Committee should be looking out for in the Department’s Budget and outlined what the Department covered in its APP together with the outcomes of Medium Term Strategic Framework (MTSF). Annexure A indicated Medium Term Strategic Framework (MTSF) outcomes four, seven and ten, the sub-outcomes that were relevant to DAFF and the Department’s various programmes that contributed to the outcomes. It was difficult to isolate the specific targets that corresponded to the sub-outcomes of the MTSF outcomes due to the way in which the Department presented its APP. However, over time it should be possible to link all the indicators of the APP main goals to the MTSF outcomes.
Overview of the 2015/16 financial year
The Committee only dealt with the first and second quarter budget reports of the Department, therefore the analysis only included these quarters. The National Treasury mid-term report on the budget expenditure performance of the Department was covered in this section. From this report, the main issue was that, based on The State of the Nations Address (SONA), agriculture, agro-Processing value chains, Agricultural Business (AgriBus) and the implementation of the Agricultural Policy Action Plan (APAP) had been marginalised. The Department had not provided an adequate progress report on the implementation of the APAP sector and crosscutting interventions, which were linked to the revitalisation of the agriculture and agro-processing value chains.
On the Integrated Development Finance Framework that was supposed to be developed and approved in 2015/16, the Committee had not yet been briefed on it. This had been carried over to the 2016/17 APP and whether there was work done in the previous period had a bearing on what could be done in the current period. The other issue was that a veterinary strategy was meant to be developed, which had been of concern since 2012/13 when the World Animal Health Organisation (OIE) undertook a risk assessment and identified gaps and challenges in how animal diseases were managed and controlled in the livestock sector and several issues that the Department was meant to address in order to minimise the risks, more particularly of diseases such as Foot and Mouth Disease (FMD. Therefore, if the strategy were not developed in 2015/16, it would determine whether or not the Department could adequately respond to some of the animal health risks in the 2016/17 term and moving forward. This was also important for the export market of South African livestock.
Another issue of concern from the 2015/16 period was the support for smallholder producers. The Department reported that 15 950, which is only 11% of the target of 145 000, smallholder producers were supported by the mid-year. The problem was that even if the Department did meet its target, there was normally an issue with the verification of the data reported. The Department introduced some measures in 2015/16 to try to address this; the impact of these measures was yet to be determined. The Department indicated that due to the drought, the smallholder producer support targets would need to be revised down. It was difficult to determine whether the scaling down of smallholder targets was a sufficient response to the plight of the smallholder producer. From the assessment made by the Department, there was a 12.3% contraction in the agricultural sector due to the drought. This meant that the target for smallholder producer support for the next period would also be revised down, as they were the most affected.
Under Programme 5, Forestry and Natural Resource Management reported that by mid-year, the Department revitalised 40.5 hectares, which was 16.2% of its target, under its irrigation scheme. The annual targets had been altered. As of 2016/17, the Department would no longer measure targets by the number of hectares that be been revitalised, but by the number of projects supported. Although there was an issue of water scarcity in the country, the need to develop the agricultural sector needed to be taken into account. The National Treasury mid-year report reflected that the Department would not meet its annual targets set for the number of hectares planted in the forestry programme. The annual targets were revised downwards due to the freezing of some posts, the reprioritisation of funds toward the forestry congress, and the reduction in the budget due to anticipated under spending. The issue of underperformance and under spending was a longstanding one. The underperformance was linked to the under funding of the Department, and the underperformance is due to the under spending. The budget for the Department was increased by 4% for the 2016/17 period.
Policy Priorities for 2016/17
The 2016 SONA was a report back on the 2015 SONA, with emphasis placed on the revitalisation of agriculture and agro-processing value chains. Ms Qwabe suggested the Department should brief the Committee on what was achieved in the 2015/16 APAP and how it would roll over into the 2016/17 APAP. The imperatives of the National Development Plan (NDP) around the issues of increased production, among others, were the following
- Increasing land under irrigation
- Bringing under-utilised land in communal areas into commercial production
- Supporting commercial area production areas with relative comparative advantage for higher growth and employment.
The NDP further identified agriculture as one of the key job creating sectors, with the potential to create job opportunities for 300 000 households in agriculture smallholder schemes and 145 000 jobs in agro-processing by 2020. When trying to estimate the number of jobs created by the agricultural sector annually, figures from Statistics South Africa (StatsSA) showed that the sector had been shedding jobs overs the years since 2008. The sector had positive job growth only in 2012, 2013 and 2015. The Department’s report on jobs in the agricultural sector did not give a clear indication on the trend of job creation. It was unclear whether the sector was creating or shedding jobs based on what the Department reported. Furthermore, there was no indication of the factors that drove the job-shedding or job gains from the Department’s report. It was important that the Department gave a clear indication of these factors and the interventions put into place to create jobs, if it was to achieve its sector employment targets.
4.1 Overall Budget Allocation, Expenditure, and Impact Trends
Ms Qwabe compared the Department’s change in budget between 2015/16 and 2016/17 and found that the budget decreased by R65.8 million, not taking into account the inflation rate. However when factoring in inflation, the budget had reduced by R257 million. Programmes two, three and five were consuming the largest portion of the budget. Programmes two, three and six had had negative growth in their budget. It should be noted that programme six was slightly under funded. When looking at the trajectory of DAFF budget allocation between 2014/15 to 2018/19, the budget grew at N average rate of 3% annually, however when considering inflationary pressures, the budget was likely to fall.
In terms of food security (Outcome 7), one of the impact indicators that the Department was responsible for was reflected as the ‘reduction in the percentage of households vulnerable to hunger’. The 2014 General Household Survey (GHS) by StatsSA indicated that the percentage of households vulnerable to hunger declined from 23.8% in 2002 to 11.4% in 2014, including a spell during which the percentage increased to 16% in 2008 before continuing to decline. It must be noted that the MTSF target for 2019 was below 9.5%, of which 10.5% of households was achieved in 2007. As much as the MTSF focused on households vulnerable to hunger, there were still other categories of people who were food insecure and not covered under the target group. The StatsSA report highlighted that there were individuals susceptible to hunger in terms of having limited access to food, and that statistic was still high. Therefore from the intervention by the Department, it could be expected that by 2019 these numbers would also be reduced. The 2014 GHS indicated that 18.3% of South Africa households were involved in agricultural production during the 2002-2014 period, and only 13% of those households reported getting agricultural-related support from the government. Ms Qwabe suggested that a database be established for smallholder farmers in order to link the level of demand for government support to the amount of support given by the Department.
4.2 Transfers, Grants and Subsidies Trends
The Comprehensive Agricultural Support Grant (CASP) had decreased by R150 million over the medium term to meet government’s immediate national priorities. The grant would fund fewer infrastructures as a result of the decrease. R60 million of the grant that would usually go to provinces would be retained in the national department for the monitoring and evaluation of provinces’ use of the grant over the medium term, including project plans and grant indicators, and project reports. The Department was committed to ensuring that subsistence and smallholder farmers were enabled to enter the mainstream agricultural economy.
From the summary of conditional allocation to provinces and municipalities between the periods 2017/18 to 2018/19, the following funds from each programme would be transferred to transfers and subsidies:
- Programme 1: 2.3%
- Programme 2: 67.4%
- Programme 3: 84.5%
- Programme 4: 55.06%
- Programme 5: 16.7%
- Programme 6: 55.2%
Ms Qwabe highlighted that under Programme 4: Trade Promotion and Market Access, the following entities received the allocation: National Agricultural Marketing Council, Land and Agricultural Development Bank of South Africa and the Forest Sector Charter Council. She then raised a concern that based on the Integrated Development Finance Framework that was supposed to be developed, the Department indicated that this would be done in conjunction with the Land Bank programme, therefore it would be difficult to have one comprehensive financial support package. The Department would be transferring R36,7 million to the Land Bank, therefore would the Integrated Development Finance Framework still be relevant? Or had the Department channelled some of the finances to the Land Bank? The Lank Programme was relatively successful. She questioned how well functioning the Forest Sector Charter Council was, given that R3.93 million of the funds in Programme 4 were transferred to it.
4.3 Programme 1: Administration
The Department planned to submit three Bills to the Minister during the 2016/17 financial year. The Committee should note that one of the Bills that the Department planned to develop was the Preservation and Development of Agricultural Land Framework (PDALF) Bill aimed at addressing the loss of prime agricultural land to other sectors. The Committee would need to be briefed on how it would work and how this Bill would manage the powers between the Ministers of the Departments involved in each case. Would the Bill address the current deficiencies that existed? The Committee should note that various pieces of legislation governed land use such as mining and fuel exploration, Mineral and Petroleum Development Act, as well as residential and commercial use, Spatial Planning and Land Use Management Act. Given the urgency of the matter, was it necessary to develop another bill, or were there other avenues that could be explored to deal this matter?
The upward shift between 2012/13 and 2018/19 in the budget for internal audit indicated an improvement in the internal audit sub-programme of the Department.
4.4 Programme 2: Agricultural Production, Health and Food Safety
The Department did not implement the monitoring of the Animal Improvement Scheme but by the Agricultural Research Council (ARC). However this function done by the ARC on behalf of the Department was under funded. In terms of the budget, there had been a decrease in the funds allocated to the function.
Based on the AGOA deal, the Department indicated that ramifications were in place because there is a consignment that needs to be accepted that is of a certain standard from another country. Previously rejected standards based on the same standards could no longer be rejected therefore the Department needed to increase its capacity in terms of Inspectors, more especially for food and meat. This had to be catered for in the budget, however there was no significant growth in the budget to accommodate this.
Ms Qwabe raised concern of how adequately the Department was resourced to deal with the increasing outbreaks of various animal diseases, given that the budget did not increased significantly.
- Programme 3: Food Security and Agrarian Reform
Given that the food security initiative was launched in 2013, the Department should give the Committee the annual reports for the past three years (2013-2015) in order for the Committee to gain an understanding of the performance of the programme so far, as well as receive a workable plan for the remainder of the MTSF period. Furthermore, the Department should indicate how it planned to ensure that bought under production in previous years remained in production in subsequent years. When looking at the food security programme, it did not appear that the plans of the Department were adequate to meet the targets it was trying to achieve, when also taking into account the StatsSA figures. There was a gap in this regard.
4.5 Programme 4: Trade Promotion and Market Access
The aim of this programme was to revitalise agriculture and agro-processing value chains. In terms of the Agro-processing value chains, the Department was developing a strategy to support 12 agro-processing entrepreneurs in the 2016/167 period. However, the Committee had not been briefed on this. Therefore, what the Department said it was implementing, was it as what as in the agro-processing strategy?
- Programme 5: Forestry and Natural Resources Management
The Committee was familiar with the issue of land that must be brought into irrigation. The Department did not meet its targets with regard to this. National Treasury had revised down the targets for the Department in terms of the number of hectares of land that must be brought under irrigation. The reason was that Treasury says more work was done than was expected and therefore there was no need to plan for further targets. From the performance of the Department over the past three financial years, there were no other over achievement of targets under this programme. The Department stated that they had a study from the Water Research Commission and they are basing their targets for land under irrigation on that.
Key Issues for Consideration by Parliament
In terms of the organisational environment, the post establishment of the Department indicated that 6336 posts hd been approved, but as at end of January 2016, only 5604 posts were filled. This presented a vacancy rate of 11.55%, however it had to be considered that the Minister of Finance was trying to cut down the wage bill. Ms Qwabe suggested that the Committee should analyse the trends from previous financial years, Auditor General of SA findings on such matters, as well as the budget cuts of the 2015/16 period going forward.
2016/17 Budget and Annual Performance Plan Analysis of the Fisheries Management Branch
Legislative and Policy Priorities for 2016/17
Mr Joseph Ginindza, Committee Researcher, said the main issue of concern regarding policy priorities of the DAFF for the Aquaculture Bill was the lack of an overarching legislation. The development of the Aquaculture Bill had been in the works for some time and it was one of the targets from the previous financial year that it would be tabled in Parliament. It was rolled over to the next financial period, therefore it was expected that it would be tabled within the current financial year as it was given the go ahead from the parties that were consulted. The Department was working on the Aquaculture Bill, however it happened to be during a period when the Fiscus was tight, therefore the budgeting for this would need to be clarified. Although the Bill was still being developed, it was already being implemented. He raised the concern of whether the funding for this already existed.
On the Marine Resources Act, the amendment of the Act by the Department to accommodate small-scale fishers had not yet been finalised.
Another issue of concern was the implementation of the NDP. Part of the ideas of the NDP was the transformation of the fisheries sector through the allocation of fishing rights. The APP targets did not address the issue of fishing rights. Issuing of fishing permits was not the same as issuing of fishing rights and the Department needed to look into prioritising the issuing of fishing rights first and make the issuing of fishing permits the last stage. Mr Ginindza suggested the Department have a timeline of what it aimed to achieve so that the Committee could hold it to account for what was achieved against what the targets were.
Based on the Department’s research report, some of the fishing resources that were doing well were under utilised and those not doing well were under pressure in terms of the active fishing rights. The NDP said there should be a focus on expanding the existing fisheries sector. The Department had not addressed the issue of deploying additional resources to solve the problem of under utilised fishing resources and expanding the sector.
When looking at the implementation of the plans for small-scale fishing, the Department tended to focus more on the West Coast, in particular the Western Cape, whereby the resources had higher value, and little focus was placed on the South Coast whereby the resources had low value. Mr Ginindza suggested that a different approach was necessary.
The Aquaculture Lab Report indicated that South Africans consumed very little fish. The Department wanted to increase the consumption of fish in the country; however there were no targets or timelines for this matter. Most of the country’s high-value fish was exported; therefore the Department had not indicated how it would roll out its plans of increasing fish consumption in the country. The Aquaculture Incubation Scheme, under the National Infrastructure Plan, was not addressed by the Department. On the proclamation of more fishing harbours, the Department said it would be done in the 2015/16 period, but had been rolled over to the 2016/17 period. However there were no targets for the 2016/17 period regarding the number of harbours to be proclaimed. The Department would need to look into this. Besides the infrastructure, the human and financial resources needed to run the harbours would need to be considered. In line with this, regarding the fish processing establishments that would be dealing with the allocation of the fishing rights that would be given to small-scale fishers, there seems to be no plan or targets concerning how many would be built for the benefit of the small-scale fisher. In the Aquaculture Lab Report, there was mention of fish processing establishments, but these were for commercial fishing. Therefore the Department needed to clarify whether fish processing establishments for small-scale fishers would be accommodated or if the resources would be shared. Furthermore, regarding the small-scale fishers that were in rural fishing towns, who had to use aquaculture operations in neighbouring towns, the Department needed to address how the resources would be shared.
Another issue raised was that some of the projects that were state funded and were successful ended up dealing with fish that could not be processed. There was no further production cycle after the fishing, therefore there was no market linked to these projects since there was no value addition.
On the Operation Phakisa budget, the President mentioned that the private sector had contributed R350 000. According to the plans of Operation Phakisa, for 2015/16, government was supposed to contribute R288 million and the private sector R334 million. There was a gap in what the private sector had contributed and what was expected towards the aquaculture project. An explanation was needed for this difference.
The Aquaculture Development Fund would be centralised and managed by the Land Bank. Based on the experience form the agricultures sector, the Land Bank had not been availing funds easily. The Land Bank would operate differently when dealing with the aquaculture project; more clarity was needed.
From the aquaculture project the Department planned to produce 20 000 tons of fish and create 2200 to 15 000 jobs by the end of the 2019/20 financial year. Currently, only about 5 000 tons of was being produced and the 2019/20 period was closed, the Department would need to explain whether these targets were practical. From the previous financial year, nine programmes were planned and nine programmes were implemented. However it needed to be checked whether the number of jobs from these projects matched up to the targeted number of jobs. There was a downward revision of targets for the Operation Phakisa projects to be implemented; the Department would need to explain to the Committee what led to this downward revision.
The Department terminated its contract with Ezemvelo. The Department should explain to the Committee how it planned to close the gap left by the termination of Ezemvelo’s role in compliance, monitoring and enforcement in the KwaZulu-Natal Coast. The 2016/17 APP did not address the fisheries protection mandate in the KwaZulu-Natal Province.
Ms A Steyn (DA) thought the Committee and the Department needed a plan or system that would allow the Committee to monitor the Department’s progress better. She suggested a page with figures and facts be drawn up that Committee members could refer to during presentations. She said that becomes confusing to remember all the figures that were mentioned in the presentation. The table should categorise figures according to targets and what was achieved to enable Committee Members to compare the figures during presentations.
Mr P Mabe (ANC) said that the shortcomings of the Department should be consolidated to make it easier to keep track of.
Mr L Ntshayisa (AIC) asked for clarity on the issuing of permits being an urgent matter.
Mr C Maxegwana (ANC) supported the point raised by Ms Steyn regarding a summary of the figures, and raised a concern about the reported R350 000 that the private sector contributed towards Operation Phakisa; that figure would need to be checked again.
Ms Z Jongbloed (DA) asked for clarity on the issue of the veterinary strategy. She asked if the strategy was developed or the Department indicated that the strategy would be developed.
The Chairperson, on the issue of the figures, said she spoke to the Acting Director General of the Department and said that there were baselines for the NDP. Therefore, the figures must be traceable on the APP when the Department presented. When the Deparment met with the Committee, they must clarify this. The reported targets must be continuous so that the Committee can see if the Departments were making progress towards meeting its end targets. Another Department had presented the budget on aquaculture; this needed to be clarified.
Mr Ginindza responded on the figures and the fact sheets. Overarching policies had different targets and some of the targets were shifting. At times the documents that were revised were not always available and when the Department made reference to certain documents, those documents should be available on their website. Both the Committee and the Department needed to follow up on this. On the consolidated document with the shortcomings of the Department, that could be extracted from issues raised in today’s meeting. On the issue of fishing permits, small-scale fishers were not given fishing rights. The fishing rights needed to be activated yearly and was not valid until a permit was issued. A permit spelt out the conditions on which a fisherman could exercise their right to fish - for example, during which seasons to fish, the amount of fish that could be caught and the gear that could be used. Rural fishers would get permits but not given fishing rights. The permit allowed them to fish during a certain season; therefore they could only exercise their right to fish for the duration of that season. However, the fishing right would allow them to fish for the duration of time that the species they were fishing existed. Therefore a fishing right had more power than a fishing permit.
Mr Ginindza said that the reported R350 000 contribution by the private sector toward Operation Phakisa was correct and that he checked it with the Presidency office.
Ms Qwabe said the issues raised had been adequately addressed and acknowledged that the frustrations were common amongst everyone. When she was trying to develop Annexure A, it was difficult to extract the different targets.
The Chairperson thanked the researchers for their clarity. If Committee Members needed clarity on the information in the documents they should contact the researchers after the meeting. The annual briefing by the Office of the Auditor General would not occur because there were no challenges found in the Department and the Department had followed was required by the Auditor General.
The meeting was adjourned.
- The 2016/17 Budget And Annual Performance Plan Analysis of Fisheries Management Branch
- Annexure A: 2014-2019 Medium Term Strategic Framework (MTSF) Outcome & Impact Indicators in Relation to DAFF
- Budget Analysis: Vote 24: Department Of Agriculture, Forestry And Fisheries
- Department of Agriculture, Forestry and Fisheries & Entities 2016 Annual Performance Plan