Department of Agriculture, Forestry and Fisheries, MLRF, OBP & PPECB on their 2016 Annual Performance Plan, in presence of Minister

Meeting report

Department  of Agriculture Forestry and Fisheries (DAFF) 2016 Annual Plans and budgets

The Chairperson welcomed the Minister of Agriculture Forestry and Fisheries and all other delegates, Members and guests.

Financial and Fiscal Commission (FFC) briefing on agriculture sector plans

Mr Bongani Khumalo, Acting Chairperson, Financial and Fiscal Commission, briefly apologised that he was not well.

Mr Ghalieb Dawood, Manager, FFC,  said that the Financial and Fiscal Commission (FFC or the Commission) is an independent, permanent, statutory institution established in terms of section 220 of the Constitution. It must function in terms of the FFC Act. It has a mandate to make recommendations, envisaged in Chapter 13 of the Constitution or in national legislation, to Parliament, Provincial Legislatures, and any other organ of state determined by national legislation. The Commission’s focus is primarily on the equitable division of nationally collected revenue among the three spheres of government and any other financial and fiscal matters, including legislative provisions or executive decisions, that affect either provincial or local government from a financial and/or fiscal perspective.  This includes regulations associated with legislation that may amend or extend such legislation. On these, the Commission must be consulted, in terms of the FFC Act.

The current submission on the 2017/18 Division of Revenue will focus on the impact of the Inter Governmental Fiscal Reviews (IGFR) instruments on rural development.

Mr Dawood said that despite the small contribution of agriculture to the economy (less than 3% since early 1990s), agriculture was still an important sector and it had large linkages with rest of the economy, which boosted its overall input. In 2015, agriculture contributed approximately 5% of total exports, making it an important earner of net foreign exchange. However, employment in agriculture was lower than other comparable countries with the same agriculture size.

Fisheries contributes roughly 0.1% to GDP but plays a significant role in local economies with a strong fisheries sector. The Forestry sector maintained a trade balance of R22.8 billion in 2014. Most of the investments in forestry are in rural provinces and therefore the sector can play a significant role in contributing to rural development.

South African agriculture is dualistic in nature since it include commercial and emerging farmers. Commercial farmers produced about 95% of agricultural output, but their numbers had dwindled because of consolidation of farm units. Most emerging farmers were located in 27 priority districts and lack infrastructure. The market destinations for agricultural products were divided, with the EU accounting for a 32% share in exports; Africa with 31%; Asia 20% and USA 3%, in 2014.

There had been a consistent decline in agricultural employment, from 1.8 million in 1962, to 879 000 in 201. However, this may increase as the trend has been positive in the past year with the labour force survey showing nett job creation in the agriculture sector in all four quarters of 2015, compared to 2014. There was a noticeable impact of the drought since the contraction of around 5% through the three quarters of 2015 contrasted to the average growth of 1.5% in the previous and normal years of 2013 – 2014. South Africa was set to become significant net importer of grains in seven years, with an estimate that 5 million tons of maize and 2 million tons of wheat will be imported between May 2016 and April 2017. Against a backdrop of currency depreciation and rising global grain prices, this would result in significant costs: R11.5 billion for imported grains plus increased pressure on timeous and efficient delivery of imports due to constrained infrastructure capacity for agricultural bulk operations at Transnet. Although food inflation was lower than CPI inflation in 2015, it is unlikely that this trend will continue in 2016. Forecasts suggested that the outlook for 2016 is expected to put further upward pressure on food prices with the recent drought, exchange rate depreciation and other policy updates such as the increase in the fuel levy.

The National Development Plan (NDP) envisaged the agriculture sector as one of the key levers for job creation and ensuring food security in South Africa. The NDP identified the following objectives for the sector:
- Create one million jobs in agriculture, agro processing, and related sectors by 2030
- Increase investments in new agricultural technologies and research and development
- Realise a food surplus with one third of food  produced by small-scale farmers or households
- Create security of tenure for communal farmers, especially women.

A reduction in the growth of government expenditure due to lower than anticipated economic outlook is likely to have an impact on the medium term spending plans of DAFF, as well as its strategy, to achieve NDP goals. This would be done by reducing costs in non-core expenditure areas and improving spending efficiency.

Mr Dawood then turned to an analysis of the DAFF over the MTEF and its Annual Performance Plan (APP). DAFF ran under six programmes (see attached presentation) and six entities report to and fall under the budget of the DAFF. The overall mandate relates to value chains, inputs, production and consumption in the agriculture, forestry and fishery sectors. This Department contributes to Outcome 4 (decent employment through inclusive economic growth), Outcome 7 (comprehensive rural development and land reform) and Outcome 10 (enhance environmental assets and natural resources). The focus of the Department over the medium term is informed by NDP.

The budget for 2016/17  is R6.3 billion, increasing to R6.99 billion in 2018/19. This represents a real annual average decline of 3.2% per annum over the MTEF. The sizeable decline in growth of allocations to Forestry and Fisheries programmes continues over the 2016 MTEF, despite increased attention being given to aquaculture as an area for potential job creation. It was was included in Operation Phakisa in 2014) Priority programmes such as Agricultural Production and Food Security are also declining over the 2016 MTEF period.

The DAFF had mentioned the sector challenges, but it was not clear how it had introduced strategies to address these challenges, which included lack of sufficient infrastructure and the erosion of competitiveness of commercial farmers. DAFF and the provinces had taken various measures to address the drought crisis, but it was not certain whether the measures taken, or the funding, would be sufficient to avoid an adverse impact on the sector as a whole. The APP was silent on any assessment of whether the current implementation was sufficient to address the crisis, and whether any gaps still needed to be addressed. FFC welcomed the Department’s initiative towards climate-smart agriculture as a way of mitigating the impact of drought. Putting land under crop production is a major initiative under the food security programme, but a missing link was how the Department would ensure land was cultivated according to agreed-upon standards. The Department reported a very low compliance rate against standards in its 2014/15 Annual Report.

Mr Dawood concluded that the NDP envisaged a major role for DAFF in creating employment, growth and ensuring food security. The following aspects required attention:

- The Department's oversight role in relation to provinces needs to be strengthened
- Underspending on grants generally, as a result of weak procurement processes in provincial DAFF
- The role that DAFF can play to enhance performance of provincial departments.

The Commission welcomed the retention of R60 million from the Comprehensive Agricultural Support Programme (CASP) to improve national oversight over agriculture grants.

Finally, the FFC felt that the quality of performance information in the APP does not allow for effective oversight over the Department’s performance, and repeated that it was unclear how sector challenges would be addressed.

Discussion

Ms A Steyn (DA) said that her main concern was on drought, and slide 9 that spoke to food inflation prices. She asked if there was any kind of projection done on food inflation and whose role it was to do this, taking into account the impact of fuel increases and other basic needs.

Ms Steyn was also concerned at the FFC's assessment that the Department had not given a full assessment of the current crisis and whether any gaps still needed to be addressed. Some programmes were going on as if the situation was normal, and it was not. The Department is also not clear on the difference between an activity and a performance indicator; she felt the latter should have shifted to reflect that money or programmes should be changed to assist with the current crisis, to give more real support on the ground, before it was too late to help the farmers.

Ms Steyn noted that recommendations should focus on government needing to clarify the role of municipalities on food security and food price increases. The Department needs to put a plan in place for food security, and she asked whose role it would be to compare plans between normal and difficult years.

Mr C Maxegwana (ANC) asked what the real decline in the budget, as set out on slide 7, meant for the DAFF and the economic cluster departments, and looking at the economic growth of the country.

Mr Maxegwana asked the FFC to share its views on how DAFF might deal with the drought issues to ensure that it would not have a negative impact on employment.

The Chairperson asked the FFC to comment on the impact of the non-performance on the new allocation, particularly to the priority programme mentioned.

The Chairperson also asked for clarity on the role of municipalities in ensuring food security. The Department of Planning, Monitoring and Evaluation (DPME) had done a study and discovered a deficit of R2bn on the programme of food security. Funds had to be transferred to this programme from CASP/Ilima Letsema. She suggested that FFC should be recommending that National Treasury should reconsider the allocation because the allocation, generally, on food security did not respond to the needs of smallholder farmers and was not helping the food insecurity.

In relation to the Rural Development and Agriculture programme, the Chairperson was happy to hear that this was regarded as a Treasury priority. She asked how long the process would take, to clarify or relocate the money, and for clarity on the role and responsibility of municipalities on this programme, and how that process could be accelerated.

Mr Z Mandela (ANC) asked for clarity on slide 6. This talked about the consolidation of farms, and he asked whether there were findings that consolidation did lead to negative impact on production; he would have thought that consolidation would actually strengthen commercial farmers, ensuring an effective and sustainable production.

Mr Mandela referred to the statistics on the market export destinations and whether European Union (EU) was the preferred buyer, or whether its higher take reflected a failure by Government to strengthen relations with neighbouring countries on the African Continent.

Slide 10 mentioned that agriculture would be the key sector for job creation and food security, and the first objective is to create one million jobs by 2030. He asked FFC whether the DAFF had worked to achieve these targets, and whether it had been able to measure whether the goals were likely to be attained.

Mr N Capa (ANC) asked what recommendation FFC had made on the land that is not used, and what has to be done to ensure that the land is utilised to counter the problem of food security. He wanted to know what “contractor challenge” was and how it should be addressed. He also asked about the implication of the poor performance information, other than the difficulties experienced by the Auditor-General and what might be done to correct it.

Ms Steyn asked what the main reason is for the increase in the budget for the Administration programme from 11% to 12%, whilst others showed a decline.

Ms Steyn asked if any studies had been done elsewhere which showed if there was an increase in the agriculture budget, there might be a multiplier effect . She wondered if the decrease would be linked to decrease in GDP.

Mr Khumalo said that the FFC submission that will be tabled for the 2016/17 Division of Revenue at the end of May had answered most of the questions raised by Members. He said that he would not like to respond with specific recommendations now on some questions, because more research was needed. The submission today had really focused on using intergovernmental fiscal relations instruments  to deal with the challenges of the rural economy, in line with the prescriptions of the NDP. When speaking about the multiplier effect of agriculture, this meant an examination of the whole range of industries that are linked to the agricultural industry, such as transport networks, and how each of the linked sectors would contribute to economic growth and employment creation.

In relation to the markets and the EU holding a 32% representation, that was really a historic issue. The main challenge relates to the exposure that the sector has to what actually happens in the EU markets. At some point the EU economies were affected by the global economic crisis, so that the demand for some of these exports would have gone down, and that would have an impact on the South African agricultural sector. However, the more diversified that the export market was, the better.

Mr Khumalo wanted to emphasise that the decline in budget allocations over the MTEF happened when taking inflation into account. Other departments had also experienced that, and it is important to look at the fiscal consolidation exercise that is currently under way. Sectors have to be cushioned, when budgets are tabled, and one of the key messages from the Mid Term Budget Policy Statement was that government could not consolidate the budget on the back of the poor. The social sector departments have been relatively less restricted, but it is really about balance, and that point would come out strongly in the FFC submission.

It is important that when funds are allocated for any particular purpose, they are actually spent. In a time of fiscal constraint, it is necessary to look carefully at programmes that do and do not perform; the latter are most vulnerable, and if they cannot demonstrate their performance their allocation is likely to be cut when cuts are made. The Department said it was aware of this and he hoped that this would be addressed.

Mr Khumalo commented that the FFC had not actually done an in-depth assessment on the issue of farm consolidation and impact on production. However, there were some broad facts. Consolidation of farms, depending on the level of capitalisation, might result in loss of jobs, so the inputs made by each farm would have to be considered. The impact on productivity depended on whether one farm was more mechanised; productivity may rise if it was, but the social impact of job losses through mechanisation would have to be weighed up.

Mr Dawood repeated that most issues would be covered in the forthcoming 2016/17 Division of Revenue presentation.

Department of Agriculture, Forestry and Fisheries (DAFF) 2017 Annual Performance Plan (APP) and budget briefing

Mr Senzeni Zokwana, Minister of Agriculture, Forestry and Fisheries, noted that the Department would give an  overview of the Strategic Plans, 2016/17 Annual Performance Plans (APPs) and Budgets of the Department.

Mr Mortimer Mannya, Acting Director-General,  DAFF, outlined the topics to be covered.  He briefly described the compliance mechanism as set out in sections 55(2)(b) and Section 56 of the Constitution, and the role of the National Assembly and Portfolio Committee. The APP was tabled in Parliament on 10 March 2016, and is in line with the Public Finance Management Act (PFMA) and Treasury Regulations.

The APP was premised on key government medium-term priorities that in turn are informed by the National Development Plan (NDP) and the New Growth Path (NGP). Both reposition food security and agrarian transformation high on the economic development agenda of the country. Groundbreaking legislative and policy reforms were undertaken. These would allow the DAFF and others to collectively champion a cause for marginalised and vulnerable people in the sector through the National Policy on Food and Nutrition Security, the Agriculture Policy Action Plan (APAP), increased employment, livelihoods, exports and trade.

He outlined the key issues of the situational analysis. There is a challenge of  thousands of hectares of under-utilised arable land in homelands and communal areas. This will be put into production, with focused support for input access, mechanisation services, technical support and linkages to local markets. Increased movement of goods and people has led to increased risk to the country and the necessity for increased measures to anticipate and prevent possible introduction of animal diseases, plant pests and other undesirable articles such as unsafe food and feed, including agricultural remedies. The growing food insecurity is seen in the whole of Southern Africa, with climate change and inadequate investment in agricultural production. Market access for developing producers has also been identified as one of the key challenges for the Department. The sector must diversify its export destinations, as well as broaden the basket of commodities and value-added products that are destined for export markets. The challenge of growing the smallholder sector is closely tied up with the challenge of making smallholder agriculture more remunerative. Currently, more than half of all smallholder households live below the poverty line.

Mr Mannya reminded the Committee that agriculture is a concurrent function, while Forestry and Fisheries are national functions. Human resource planning is central, in order to maximise achievement, and five policies (see attached presentation) including youth employment and managing an ailing and ageing workforce were prioritised

The objective statement in Programme 2 for the next five years is to promote animal production and products, ,by monitoring the implementation of animal and plant improvement schemes for prioritised value chain commodities. DAFF must enforce regulatory frameworks to reduce the level of disease outbreaks in production areas to a minimum. It would do this by conducting risk surveillance and regulatory compliance audits for:
-  conducting planned animal (Peste des Petits Ruminants) PPR, African horse sickness and Avian Influenza risk surveillance
- Conducting planned plant (Exotic fruit fly) disease and pests risk surveillance
- Implementing regulatory compliance and monitoring interventions to prevent plant and animal pests and disease outbreaks. This would include quarantine, inspections, surveillance and testing.
- Ensure animal disease management and access to primary health care services through the implementation of the Animal Diseases and Management Plan.
- Implementation of Compulsory Community Services (CCS) by deploying veterinary graduates to rural areas and delivering primary animal health care clinics to provinces
- Ensure conservation of animal and plant genetic resources for food and agriculture through the implementation of the national plans to conserve diversity of animal and plant genetic resources.

Programme 3 will institutionalise the National Policy on Food and Nutrition Security initiatives over the next years, up to 2019/20 through:
-  Coordination of the implementation of the National Policy on Food and Nutrition Security
- Increasing the number of households benefiting from food production initiatives by 200 000
- Supporting 80 000 smallholder producers
- Cultivating 600 000 hectares of under-utilised land in communal areas for production
- Improving delivery capacity in support of sustainable growth in the sector through the implementation of the sector capacity development policies (National Agriculture, Forestry & Fisheries Training and Education Strategy and National Policy on Extension and Advisory Services)
- Placement of 150 graduates and 100 extension support practitioners in APAP prioritised commodities by 2019/20
- Providing strategic leadership to ensure effective and efficient utilisation of all producer development support, through the development and implementation of the Comprehensive Producer Support Policy
- Creation of 110 000 jobs through CASP and Ilima/Letsema by 2019/20.

Programme 4 aims to improve market access through implementation of:
- Certification and accreditation programme for smallholders’ access to market
- 62 Agro-processing entrepreneurs being trained on norms and standard for agro-processing
- Implementation of the AgriBEE Fund;
-  AgriBEE enforcement regulation to be developed and implemented

In terms of the Trade Strategy and International Relations Strategy the following were planned:
- Trade Competitiveness Development Plan
- Establish 78 new cooperatives
- Support and training of 595 existing cooperatives
- Monitoring the implementation of the AgriBEE Sector Code and Forestry Sector Code.

Programme 5 is to ensure the conservation, protection, rehabilitation and sustainable forest management. This will be done by:
- Replanting of hectares in Temporary Unplanted Plantation areas;
- Conducting environmental impact assessments to enable Small Medium and Micro Enterprises (SMMEs) to obtain forestation licences
- Implementation of Agro-forestry Strategy
- Create 6 300 jobs through refurbishment of Category B and C plantations and 4 000 Full-Time Equivalent jobs through the Land Care programme
- Revitalize hectares on irrigation schemes
-  Promulgation of the Preservation and Development of Agricultural Land Framework Bill by Parliament
- Restoring 80 000 hectares of agricultural land and 1 500 hectares of state indigenous forests and woodlands through rehabilitation. This would include area fencing, controlling of weeds and alien invasive species, veld reclamation, clearing of alien invasive plants, tree planting, soil conservation works and natural regeneration
- Implement climate change mitigation and adaptation plan to improve adaptability and productivity of livestock and plant species.

Programme 6 is to create an enabling environment for sector growth. This would be achieved by:
- Implementation of  the Aquaculture Bill
-  Providing support to aquaculture catalyst projects for sustainable development of the aquaculture sector  as per Operation Phakisa and supporting research projects
- Creation of 2 251 job opportunities through Working for Fisheries Programme
- Develop and implement the Framework for allocation of fishing rights (access to harvest fish for a specific period of time) and the implementation of the Small-scale Fishing Policy to alleviate poverty, promote food security and  to ensure sustainable utilisation, as well as equitable and orderly access to the marine living resources
- Ensure compliance and management of fish stocks through inspections and joint operations (through the Operation Phakisa Initiative 5 of ocean economy) with partners.

Discussion

Ms Steyn welcomed the presentation and thanked the Minister for attending the meeting and giving  his plans for the year. She asked what will be the specific focus of the Department on drought interventions.

Ms Steyn commented that the Spatial Planning Land Use Management Act (SPLUMA) was promulgated two years ago but faced much resistance by traditional leaders, although many municipalities now wanted to implement it. She asked what the implementation of the Land Use Management Act was intended to achieve that could not be achieved in the SPLUMA, as well as the linkage between the two, questioning also why it was necessary to introduce more legislation that would take year to implement. She asked how the DAFF was working with the municipalities on agricultural land

Ms Steyn asked what the current status is of the Subdivision of Agricultural Land, as many applications had not been approved.

Ms Steyn asked if the contractors were paid that were used for planting in Limpopo; she told the Chairperson, in answer to her question, that she would send through details of that plantation. She asked what agreement there was with SADC on food exports, and what were the discussions or agreements with the Department of Water and Sanitation (DWS) on irrigation. Finally, she asked whether it was the sole right of AgriParks to have market access.

Mr N Paulsen (EFF) thanked the Minister, saying that he had noble ideas but the large corporates had monopolised the ocean economy and asked how this could be reversed.

He said that targets should be set for the empowerment of small holder farmers. He commented that nothing had been said about aquaculture projects. He asked whether the R44m allocated to aquaculture projects was sustainable and a justifiable solution for the industry; this industry needed viable and labour-absorbing projects that would prevent loss in the marine economy.

Mr Paulsen said that in Programme 3 the Department indicated that it intends to support 80 000 small holder producers, but in the Western Cape there are no small holder producers. He asked what the Department is going to do in this regard, and whether it was engaging with the Western Cape Government. There is a need to change the patterns of land ownership and provide access to agriculture activities and without ownership of farms passing to black people the Minister was “selling out” the people.

Mr L Ntshayisa (AIC) asked if the Department was considering giving compulsory service veterinarians an allowance for the work they were doing in rural areas. He asked how closely the DAFF would monitor forestry companies such as Sappi, to check what they were actually doing.

Mr Mandela (ANC) assured the Minister that he could not be seen as “selling out” the people, and indicated that even Madiba had been accused of being a sell-out. He did want to know whether the DAFF was meeting the targets – particularly the one on one million jobs created by 2030 and asked it to quantify what had been achieved so far between 2014 and 2016. Speaking to the target for the 80 000 hectares to be used, he suggested that this must be benchmarked against all departmental targets over the whole of the Fifth Parliament and again wanted to know how far the DAFF was to achieving this so far.

Mr Capa asked the reasons for land being under-utilised in the rural areas. He asked if there were sufficient laws to prevent diseases from food imports, and whether they were implemented effectively.

Ms Z Jongbloed (DA) said that the forestry sector was lagging behind, and last year, funds had been diverted to a forestry conference that was held in Durban. She asked what effect that had on the rollout of projects under Programme 5, whether DAFF would catch up and whether targets would be redetermined. She asked what activities were happening under the budget for forestry operations.

Ms Jongbloed asked what is happening with Ncera  Farms, and how far was the recommendation that it be de-registered.

Ms Jongbloed asked if the Department is going to adjust the target of having one million hectares of land in production by 2019, or if this was likely to happen.

Mr Maxegwana thanked the Minister for his inputs in the political overview. He urged that the mandates and roles of DAFF and the Department of Rural Development and Land Reform (DRDLR) must be clearly defined to prevent overlap.

Mr Maxegwana said that it was also important to ensure that food that has been produced would be properly stored and asked who was trying to help with this.

Mr Maxegwana asked for clarity on the jobs to be created in forestry, as he did not think the figures mentioned may be generally accepted.
 

Mr Maxegwana asked how DAFF verified what provinces were doing on what had been given to them and if there was capacity. He also wanted clarity on the R60m that had been retained for monitoring and evaluation of provinces under the Comprehensive Agricultural Support Programme Grant, noting also that it had been decreased by R150m over the medium term to meet Government priorities.

The Minister responded that on the previous day, the Minister of Rural Development and Land Reform gave a comprehensive report on the new act on land use. The Department is now launching the programme “One family one hectare” because of the problems in the trusts and the Community Property Associations (CPAs). It aimed to get around the problems; there had been some delays in ensuring that the work actually would happen. He thought the Committee should be briefed by both DAFF and DRDLR, because success depended on buy in of traditional leaders, who remained a formidable force. However, some of the programmes were also self inhibiting, because when land was allocated in a trust under kings or chieftains this made it difficult to use it.

There were two processes. Firstly land that was allocated to families as a group was put under trusts or CPAs, but regrettably they were a law unto themselves, not answerable to communities. Other land had either been leased back to former farmers or had been sold. The SPLUMA was trying to change that and allocate land to individual families, The programmes embarked on were quite successful because they were implemented by commercial formations like Grain South Africa.

The Minister then spoke to food imports and drought. DAFF had  involved the commercial farmers, believing that both commercial farmers and small scale farmers appreciate and understand what is at stake. The DAFF had developed programmes with them looking to  importation of grains. It is not merely because of the drought that more was being imported s South Africa did import about half of what was consumed, an economic factor quite separate from the drought, and was also importing more soya beans, even prior to drought, which was part of the high input costs into poultry and animal feed.

According to the researchers of the South African Weather Services this drought should end in some of the areas by June to July. This could give rise to flooding and the issue was then how to improve the capacity of dams as well as other forms of storage to deal with water harvesting, and that required an investigation of how to ensure water orders for  agriculture,  forestry, mining and also for human consumption. The Inter-Ministerial Committee would be looking at those in an upcoming meetings. Another consideration was whether to use more water presently allocated to sugar cane since only 40% of the maize production is under irrigation, and 50% is under dry land.

The Minister had touched on some of the matters that Mr Paulsen had raised. He agreed that there was a challenge in Western Cape allocations to small scale farmers but this was partially because the land was not demarcated for agriculture, and therefore any subdivisions would affect those farming on the land. The DAFF needed to do a study on how to ensure that funds that focussed on Ilima Letsema was actually reaching the people it intended to reach.

The Minister then spoke to small scale market access, and noted that there was an agreement that government should have 30% out-take, to ensure that the State would buy in when a particular product was produced; for instance it had memoranda of understanding with China on maize and apples. However, this was dependence on capacitating those who   were supposed to deal with infrastructure development, including road infrastructure in the farms and feed lot in communal areas. He agrees that the DAFF needs to target particular markets.

Responding to Mr Mandela’s question the Minister said that DAFF had already applied to National Treasury to try to change the level of allocation, so that there could be a stringent rule that says, for example, that a province must convey the plans for planting, to check, prior to this happening, that someone was assigned to monitor and if all was in place, failing which funding might be retained until proper answers were in place.

This also had to be linked with the projections that were to be done on AgriParks, which spoke of the agriculture value chain. A town like Butterworth, which was a hub of agricultural development in the former Eastern Cape Government, had been turned into an Agripark area, so it was necessary to look at how the production would feed into that, and how to quantify what might happen, so that farmers would not merely plant one crop and then sit back and wait to harvest. This would be discussed with the DLRLR.

The Minister agreed with Mr Capa that the fencing was part of agriculture, and so was building of dipping tanks, to deal with issue of diseases in animals and pets.

DAFF had to ensure that no foodstuffs would come into the country which not gone through a stringent health process. He was confident that DAFF had the best professionals since the President of one of the international Agricultural organisations was himself a DAFF employee. from DAFF. More time would be spent on attending to this issue.

The DAFF was still waiting for a letter from National Treasury to decide what was to be done with Ncera Farms but the DAFF was committed to ensuring that the decision of the study group is realised to make sure it was achieving the goal that has been set.

The Minister agreed with Mr Paulsen on the monopoly by multinational companies. It was not only the monopoly, but also how the fishing industry had evolved, because deep hake fishing required big boats, and access to some of the infrastructure is an inhibiting factor to transformation. The DAFF had tried its best to clear the backlog of appeals. It was trying to ensure that the DAFF's process was transparent, that everybody participated and, whilst accepting the challenges, it hoped that in the long run things could change. DAFF also needed to work on ensuring that fishing villages and fishing communities also were involved in the processing of the fish. It would ensure an improved ability to monitor.

The Minister commented on the “sell out” challenge that DAFF was not in the business of selling anyone out. In Western Cape it would need to engage with DRDLR to see if there could not be a focus on buying commercial farming areas to distribute land. The land acquisition in the Western Cape involved a twofold process, since the land belonged to the Department of Public Works and municipalities. All needed to take up the process; it was not something that could be done overnight or without proper consultation to ensure that any land demarcated had not already been earmarked elsewhere for something like housing.

It is a process which need all of them to take and it is not an area where one could wake up in the morning and declare a piece of land undermining local authorities in demarcating land for housing. 

Mr Mannya said that there were indications that no contractors were employed in this year in Limpopo, and the only areas planted were those under irrigation schemes. He added to the comments of the Minister on rationalisation around irrigation and said that mitigation and adaption strategies recognised that there would have to be some reorganisation in both technology and in the arrangements around water allocation. The DAFF clearly wanted to go for water efficient systems and the revitalisation of the irrigation schemes was trying to do that. The NDP spoke about 500 000 hectares under irrigation, whilst other indications spoke to around 80 000. However, DAFF believed that the revitalisation should happen first, to release more water, because it was clear that it would not get additional water from the current supply system, unless additional storage systems were provided. Water reform measures would have to ensure that the smallholder sector was properly accommodated.

He added to comments on Agriparks also. Production areas were concentrated in certain areas, with a good example being the Springbok Pan in the North West where storage facilities that had fallen into disuse were being revitalised and refurbished, so that farmers and producers would be able more easily to link up with the market. In other areas, there were no facilities but production could happen if facilities were provided. That was something being looked at jointly between DAFF and the Department of Trade and Industry (dti), as well as looking to further market arrangements because the DRDLR would only provide the infrastructure. There was a need to ensure that the markets are located and are linked.

Mr Mannya also expanded on the aquaculture projects. An amount of R44 million had been allocated, but not directly to the DAFF, although it could call upon that funding, and further aquaculture project funds were found with the dti. The President had mentioned, in the State of the Nation Address, that the DAFF funding came largely from the Aquaculture Development Fund within the dti. When the Aquaculture Bill was concluded, there was an intention to establish an Aquaculture Development Fund, and this would not necessarily remain with dti.

Mr Mannya noted that DAFF was considering an allowance for veterinarians and a suitable model. However, it also wanted to improve their working conditions in the remote rural areas, to be able to place these young graduates where most needed.

Mr Mannya could only comment on the targets of the NDP that actually related to agriculture. If one looked only to DAFF and provinces the targets would not be met, because the DRDLR had to become involved and account for them. There were other partnerships with the private sector in the communal areas, including the funding from Motsepe Foundation. The DAFF was also in discussion with the Department of Traditional Affairs, to try to track utilisation of all land in the communal areas, and bring that also into account.

Mr Mannya noted that there had been a question to the FFC around information on farmers. There had not been any agriculture census for quite some time. .Statistics South Africa had indicated two years back that it would require R330 million to do that censors, and wanted DAFF to fund it but unfortunately DAFF simply did not have the funding. It had made  a submission to National Treasury under the augmentation window in 2017/18 to request that. At the moment, everyone accounting for small holder farmers basically used small projections and estimates, and a farmer register would also be needed to help all bodies to account more accurately for activities at that level.

Mr Mannya spoke to the question of under-utilised land. There were many contributing factors. One was historical because in communal areas there was marginal soil but no good planning. Livestock, cropping and residential activities all happened in the same place, and livestock farmers struggled when livestock passed through cropping fields in order to find grazing. Resourcing was not adequate and it was important to emphasise that although the NDP had set certain targets, the funding remained the same, at R1 billion. DAFF was to request, in the augmentation window process, for various components that would raise that to R10 billion for DAFF and another R1 billion for the entities. Communal areas will in reality require a lot of support. Even the Land Bank is struggling to assist the Department with financing. 

Governance systems in the communal areas or rural areas was not fully consolidated. For instance, there were irrigation systems that Government revitalised, but in one scheme, when the harvesting was done, disagreements between members of the scheme meant that they were unable to access their disputed funding of R2 million from the bank for around four months. DAFF needed to work on the governance models for the cooperatives. Another factor was the need to manage contracts of those who partnered with communal farmers, to ensure that they would not exploit the farmers.

DAFF did have sound frameworks for disease control. It had the right skills, but not necessarily enough skilled people. It was supposed to take over the meat inspection services, which were currently outside government, but needed to employ around 100 inspectors to add inspection services for cooperatives. DAFF was looking at other models, including placing this service where it could be implemented through an entity, on a cost recovery basis.

He added briefly that National Treasury was requiring a number of things to be done before de-registering Ncera.

In terms of the monitoring capacity of the Department, the FFC had said that the DAFF needed to support the provinces on planning and monitoring and the graduate programme would be part of that monitoring and strengthening. A project management system was being introduced to harmonise planning across the provinces and to get them to account. All farmers funded in the current year will be on the farmer database, and be registered.

Onderstepoort Biological Products (OBP) briefing

Dr Steven Cornelius, Chief Executive Officer, OBP, outlined the historical background to the OBP. In 1908 the Onderstepoort Veterinary Research Institute was established and in 1968 a dedicated vaccine facility was established. In 1980 the Vaccine facility operated with a trade account and was able to begin to funding own operations from sale of vaccines. In 1992: OBP separated from OVRI, which then became part of the Agricultural Research Corporation (ARC). In 2000, OBP was incorporated under the OBP Incorporation Act No 19 of 1999. In  2001, OBP received funding of R9 million. In 2005, State owned land and buildings officially were transferred to OBP. In 2013 it was allocated funding from National Treasury to refurbish its manufacturing plant, and also received research funding from the Technology Innovation Agency.

The OBP had received an unqualified audit for 2014/15 financial year. There had been a decline in sales revenue, and it also had seen a significant increase in capital expenditure to recapitalise and modernise the company. In terms of governance, OBP was a Section 3B entity, falling under the DAFF and was governed by the OBP Incorporation Act. It had corporate governance codes and protocols, and ISO standards and business specific regulatory authorities. It was regarded as a national key point.

He described how the annual strategy review process took place and what it covered. The SWOT analysis included a review/identification of strategic goals, key outcomes and targets of goals were identified, and OBP then considered available internal resources required to successfully implement strategy and prioritisation. It aligned its strategy to government initiatives and plans; and complied with National Treasury frameworks on all plans.

OBP would strive to contribute towards the following programmes/initiatives:
- National Development Plan: Economy and employment, economic infrastructure, inclusive rural economy, positioning SA in the world.
- Presidential Infrastructure Coordinating Commission Strategic Infrastructure Project SIP11:  Agri-logistics and infrastructure
- Outcome 7: Vibrant, equitable, sustainable rural communities, contributing towards food security for all.
- New Growth Path –  Job driver 2 – Improving job creation in economic sectors: Agricultural value chain & Manufacturing, and Seizing the potential of new economies: Knowledge economy.

DAFF’s Strategic Goal 2 was to increase profitable production, employment and economic growth in the sector and Strategic Goal 3 was to enable the environment for food security and sector transformation. The Agricultural Policy Action Plan (APAP) looked at the livestock sector and specifically Bio-security and disease control.

In terms of the performance monitoring, the following goals were to be adhered to:
- Effective implementation of strategy
- Impact of strategic initiatives
- Achievement of KPIs
- Sustainability
- Positively using the experience in annual reviews, quarterly performance monitoring and  annual performance reporting
- Complying with National Treasury regulations and the precepts of the Auditor General in relation to pre-determined objectives, performance management of employees, alignment to organisational strategy; and quarterly or bi-annual performance monitoring of employees.

He concluded that it would be important to invest profits in the following:
- Development of new vaccines
- Replacing critical equipment to maintain manufacturing capacity
- Emerging sector
  Support through provincial government
- Rural vaccine distribution opportunities
-  Skills development prioritised with learnership and internship programmes, supported by bursaries and a development programme
- Training budget to be increased
- GMP project to be high priority in terms of Bursaries and development programme; Training budget should be increased; and the good manufacturing process (GMP) project should be high priority.

Discussion
Ms Steyn asked what the time frame is for the completion of the implementation plan and scheduling for new facilities, what is happening currently, whether there were any backlogs, and, if so, what were the reasons.

Ms Steyn noted that the targets for the supply of vaccines to small holder farmers was to increase by 500 doses annually, and asked for an explanation on what exactly that meant, and what was the baseline. It seemed very little. She also asked what the provinces were doing, because mobile clinics had no vaccines in provinces. She wanted to know how much of that went to provinces, and how much to smallholder farmers.

Ms Steyn asked what kind of communication OBP had with its stakeholders, and how it would improve stakeholder relations.

She asked for an explanation of strategic goal, and what was meant by “no jobs created”.

Mr Paulsen asked for clarity on the decline in sales revenue mean.

Mr P Mabe (ANC) asked if OBP will be able to sustain itself if Government cuts funding to the entity, given the sale of its vaccines. He also wanted to know how it interacted with rural communities, and if they found it accessible.

Mr Mabe asked for clarity on the internship programme, skills development, transformation in the organisation, whether there was any succession plan.

Mr Capa asked if OBP has any relationships with other veterinary agencies of Government or any competing private veterinary institutions. He asked if OBP produced PhD graduates internally or recruited those already in possession of PhDs from outside.

Mr Maxegwana asked what are the stumbling blocks in penetrating other countries so as to expand the OBP market. He asked if the 22 competitors of OBP were inside the country and what skills they had that were different from those of OBP.

The Chairperson asked if OBP had capacity to produce enough vaccines, given its objective to assist small holder farmers, and what it meant about the vaccine bank. He wanted to know about coordination with the DAFF.

The Chairperson asked for more information on equity employment and if OBP employed any disabled staff.

Dr J Mashaba, Executive Director, OBP, responded that for the past two years OBP had submitted to DAFF a proposal for the support of small holder farmers in the livestock industry. The costing of that was around R50 million, to work with DAFF for the support of small holder farmers. Unfortunately, it had not been able to get that funding from National Treasury. National Treasury has asked DAFF to find the money and work with OBP on this programme, but to date it had not secured that funding.

OBP was selling vaccines as a business. It did not accumulate enough resources from this to push itself also into developing and supporting smallholder farmers. Donations of dosages were being given. As it was expanding  production that should enable OBP to export to the new markets, and if this happened, it would hopefully be able to generate enough funding that some could be redirected to small holder farmers. There was simply not enough money available from government to support such farmers at present, or indeed to execute projects on behalf of DAFF.

Dr Mashaba noted that in the work with the provinces, OBP had achieved better sales last year than in previous years; it had been difficult for it because of procurement processes, and their competitors competed in terms of sales to the provinces. This issue had been put to MinMEC, and there had been discussion on how it could be handled. It was currently contributing around R2.3m to the provincial department. Given the regulations that exist in procurement and the Competition Commission considerations, OBP could not be singled out as the main source of government vaccines. It had to be an open market, and it would have to sell to the provinces, via the DAFF.

OBP was convinced that once it had the GMP paper slate up and running, the OBP would be able to attain the status of a world class pharmaceutical company. Once that was done it should be able to expand its capacity and expand its market share globally; currently it was unable to venture into Europe without the GMP paper slate. 

The Chairperson noted that there were time constraints and asked that any remaining questions be answered in writing.

Perishable Products Export Control Board (PPECB) briefing

Mr Lucien Jansen, CEO, PPECB noted that the strategic goals included the fact that PPECB should enable its customers to become the preferred suppliers of perishable products worldwide. Strategic objective 1 was to enhance the credibility of the South African export certificate. Strategic objective 2 was to support the export competitiveness of South Africa’s perishable products industries. Strategic objective 3 was to strengthen the PPECB’s capacity to provide a professional suite of services for its customers. Strategic objective 4 was to contribute to the socio-economic transformation of the agricultural sector. He noted briefly that the contextual environment included the NGP, NDP, IPAP and Agricultural Policy Action Plan (APAP) and the SONA, as well as the Nine-point plan.

SONA 2106 stated that there should be development of Public Private Partnerships, investment into ICT infrastructure, creation of jobs through innovation, and the introduction of cost cutting measures.

APAP required that there should be an annual increase in gross value add for Agriculture, Forestry and Fisheries. There was also to be an increase in the number of small holder farmers and the number of jobs by one million jobs, by 2030. There must be an increase also in the contribution of processed products to manufacturing annually. The Nine-Point Plan of the President required that there should be revitalisation of agriculture and agro-processing and a more meaningful role played by the State Owned Companies.

He highlighted some of the factors that were influencing the current work of the PPECB:
- Citrus black spot (CBS) was not resolved with the EU
- The effects of the drought on farm output
- The position of the SOCs who were the implementing agencies, against government as the policy makers
- Assistance to SADC countries
- The specific position of Namibia
- Training and assistance to small holder farmers
- Need for investment in mobile technology.

The focus areas for PPECB in 2016/17 included looking to re-capacitate the R&D department within PPECB. It would drive transformation through core competencies to add to government’s transformation agenda. It would align the current inspection methodology with global trends. It was hoping to re-position the PPECB Laboratory,  to increase support to government and the export industry. It would be looking to create a stable infrastructure to support mobile technology.

Discussion

Ms Steyn asked about inspections and why it was required to have DAFF give the final signature. She wondered if the PPECB needed a change in its legislation.

Ms Steyn asked whether there was any red tape restrictions or difficulties that would have to be overcome to get more smallholder farmers into the market.

Ms Steyn asked what impact did load shedding have on the economy for exports.

Mr Paulsen asked what the PPECB and DAFF were doing to ensure that food from abroad met good quality standards. He pointed out that South Africa was exporting good quality products to the USA, but it seemed that South Africa in return was being flooded with cheap and dangerous chicken products.

Mr Paulsen asked how the PPECB will ensure that halaal food is certified and become sustainable and plays a good role in terms food security in the country.

The CEO said that inspection is a matter of the mandate of the PPECB and he was not aware of any red tape that PPECB had particularly to deal with.

Dr Mashaba said that the PPECB had increased its customers'  market access to countries such as Thailand in the Far East but each and every country has its own regulations in terms of market access.

The CEO noted the comments on the imports, but said that the PPECB focused only on the export market. It was not involved in halaal Certification but it is something that it could look at in the future.

The Chairperson said that the chemical to prevent black spot in citrus is too expensive. She asked if it was not possible for the PPECB to engage with farmers and encourage them to diversify their products and not concentrate on producing one product only, and persuade them that diversification could be profitable.

The CEO responded that there were some programmes being run with small holder farmers, where advice was being given in terms of diversification and other means of productivity.

The Chairperson asked that any remaining questions should be answered in writing and forwarded to the Committee. She thanked all involved.

The meeting was adjourned.