DAFF, OBP, NAMC, SAVC and MLRF on their 2015/16 Annual Reports, with Minister

Meeting report

The Chairperson welcomed the Minister of Agriculture, Forestry and Fisheries, Senzeni Zokwana.

Department of Agriculture, Forestry and Fisheries (DAFF) on its 2015/16 Annual Report
Mr Mike Mlengana, Director General: DAFF, identified the focus targets of the department and stated his commitment to ensuring that the department would contribute to the National Development Plan: Vision 2030 of creating of 1 million jobs as well as support 300 000 smallholder producers by 2019.

He provided some performance highlights: 9 639 jobs were created in 2015/16 and an aggregate of 37 282 in the 2014/15 – 2015/16 years. The 37 282 were green jobs reported by the provincial departments of agriculture (PDAs) and did not include the Comprehensive Agricultural Support Programme (CASP) and Ilima/Letsema jobs. 78 811ha of unutilised land was farmed in the 2015/16 and an aggregate of 183 204ha in the 014/15 – 2015/16 years. 219 908 households benefitted from food security and nutrition initiatives in 2015/16, this was significantly above the annual target of 40 000 households.

Some of the department’s key performance highlights included the establishment of the National Agriculture, Forestry and Fisheries Education and Training Forum which would allow for improved coordination of education and training across the sector. The implementation of the Citrus Emerging Excellence Programme (CEEP) that reached out to growers and offered them an opportunity to understand the citrus export market and other elements in the value chain.

South Africa’s exports of agricultural, forestry and fisheries products increased by 18.0% year on year making the country a net exporter. Trade with the African continent increased by 5.6% year-on-year, with 79% of trade with SADC, 12.0% West Africa, East & Southern Africa 7% and North Africa 2.0%.

He reported on bio-security success with reference to Foot-and-Mouth Disease (FMD), stating proudly that South Africa had been declared free of Foot and Mouth. Although there had been an outbreak in Limpopo in December 2015 and January 2016 this had not affected the country’s status. DAFF had ensured that all borders were manned with tight security to prevent the outbreak of disease as this could have been detrimental to exports.

Some areas of non-achievement included that only 78 077 ha of land had been cultivated by provinces against the annual target of 120 000. This was due to the drought as well as budget cuts. DAFF aimed to adopt integrated planning and reporting strategies through working groups in order to meet targets.

The Environmental Impact Assessments (EIAs) had also not been concluded as planned due to the drought which led to the study being split into two studies: affected by drought and those not affected by drought. This was to be implemented in two financial years where the first year would focus on screening of applications and the second year would focus on actual impact assessment.

He was pleased to report that DAFF had received an unqualified audit opinion with findings for 2015/16. The Auditor-General had drawn attention to inadequate review and monitoring controls over information received from the branches and regions for reporting purposes, the need for management to prevent irregular expenditure as well as internal control deficiencies which had resulted in the findings on the annual performance report and on compliance with legislation.

He stated his commitment to personally go to the various provinces to validate the reports DAFF received from the provinces with the actual work on the ground.

Marine Living Resources Fund (MLRF) on its 2015/16 Annual Report
Ms Siphokazi Ndudane, DAFF Deputy Director General: Fisheries, reported on the success South Africa had achieved in Taiwan managing to export 450 tons of the most expensive tuna which had earned the country R2.7 million revenue. She expressed optimism that this industry would create no less than 1 000 jobs.

She addressed concerns that had been raised about the monies MLRF received from fines and penalties. MRLF did receive revenue from fines and penalties and this was legal under section 10 of the MLRF Act. However it was a very small percentage. The MLRF also received revenue from the sale of confiscated vessels and donations.

She reported that the MLRF had six vessels, two of which were dedicated to research and to develop sustainability. The MRLF fisheries department was responsible for managing and developing management, monitoring and sustainable use of marine living resources in order to protect the integrity and quality of the marine ecosystems and ensure the growth of aquaculture.

MLRF had four major directorates which included the growth promotion of the aquaculture sector as an alternative source of livelihood for coastal communities, fisheries research and development for the promotion of sustainable development of fisheries resources and ecosystems, marine resource management for the fostering of sustainable use and equitable access to marine living resources as well as monitoring control and surveillance that ensured the protection and promotion of sustainable use of marine living resources by intensifying enforcement and compliance efforts.

DAFF under the Working for Fisheries Programme had created 658 full time equivalents with 58.6% being youth, 55% women and 2% disabled.

In terms of achievements the MLRF received an unqualified audit report for 2015/16. The MLRF had 9 annual targets in its annual performance plan and managed to achieve four of these. The achievements included the four Operation Phakisa aquaculture projects that were supported through the provision of technical and advisory services.

A research report to indicate fish stock levels for West Coast rock lobster, deep-water hake; and abalone for 2015/16 had been compiled. 47 joint investigations operations had been conducted with partners in order to protect coastal areas.

In terms of marine resources management, the fishing rights allocation framework for 2015 had been finalised.

She reported on the financial status on the MLRF, noting that revenue had increased from R747.8 million in 2015 to R795.2 million in 2016. However MRLF expenditure had increased due to transportation and printing costs from the fishing rights allocation which then led to an even larger deficit of R18.6 million in 2016 up from R6.1 million in 2015.

MLRF total assets were valued at R592.4 million; this figure did not include the value of the Africana vessel which was undergoing refurbishment. She expressed concern that the MLRF had to adjust its financial planning due to increasing budget cuts it had been receiving year on year from Treasury. In 2015/16 budget cuts were valued at R120 million and would increase to R160 million in 2016/17.

She reported fruitless and wasteful expenditure of R12 million that arose due to the extension of a PWC monitoring contract.

DAFF responses to DPME, Auditor-General and Financial and Fiscal Commission concerns
Mr Mlengana gave responses to the matters raised by the Department of Planning, Monitoring and Evaluation, Auditor-General and Financial and Fiscal Commission.

On the 2015/16 irregular expenditure, DAFF ensured that letters were written to different DDGs and relevant directorates about the expenditure and the DDGs were requested to investigate and take disciplinary action and measures to prevent irregular expenditure from occurring. The audit matrix was also to be used to address audit findings and move towards achieving a clean audit.

He clarified that staff debt was as a result of leave without pay, salary overpayments, study debts and losses of departmental assets. The debt was written off for 2015/16 was for ex-employees and ex-students. All reasonable steps had been taken to recover the money.

On the vacancies that had not been filled, he stated that the R2 billion ceiling for compensation of employees was affecting the filling of vacancies. However DAFF was identifying critical posts for immediate filling.

He addressed DAFF spending 100% of its budget while achieving 80% actual performance. DAFF’s performance components did not refer to targets in the annual performance plan only but also to services which were essential and demand driven in nature and actually where the bulk of the budget was spent. 80% of the targets were achieved in spite of the budget cuts experienced.

On the 1 million ha of unproductive land that had been transferred to previously disadvantaged individuals, he stated that the CASP/Illima Letsema grants had been matched with private sector funding in partnership to grow smallholder and large scale producers. The finance disbursement model was reviewed. The alignment of support functions between DAFF and the Department of Rural Development and Land Reform (DRDRL) has been agreed upon on 7 October 2016.

He reported that the mechanisation draft policy had been set in place and submitted on the 23 September. The policy awaited finalisation. He commented on the state of preparedness for the 2016/17 summer planting season and informed the committee that the launch of the season had been conducted by the Minister on 7 October in Bloomfontein.134 164 ha had been reported in the readiness plans but this was 19 962 less than that in the business plan.

He reported on the deregistration of Ncera Farms and stated that the internal audit function still existed and had been outsourced on contract but started during the course of 2015/16. National Treasury had in principle agreed to sign off the deregistration of Ncera until due diligence was complete and an agreement signed with the Agricultural Research Council (ARC). The decision to transfer to Ncera had been taken and was supported by local stakeholders.

Discussion
The Chairperson thanked DAFF for the reports and commented on the marked improvement in the reports from DAFF. She requested DAFF provide a report on the impact of its programmes.  

Ms A Steyn (DA) echoed the Chairperson in appreciating the improved report from DAFF. She stressed to the Minister and the DG the importance of their visiting the provinces and the various programmes to actually see the work on ground. She asked what the progress was on her receiving the list of boreholes.

She proposed that there was need for the MTEF targets to be linked to the realistic needs on the ground. She asked that DAFF provide baselines for their projects to Treasury as Treasury required this.

She asked DAFF if they were experiencing a shortage of staff and if they were aware that they had underspent on drought disaster relief.

An MP asked why there had been a delay in the implementation of the three year risk based internal audit plan. He asked why the revitalisation of agriculture formed part of the agriculture policy action plan.

Inkosi R Cebekhulu (IFP) asked what had happened to the tractors that were meant to assist the communal land communities.

Ms Z Jongbloed (ANC) asked when the rights allocation of small scale fishers would occur as this project had been in the pipeline for a long time. It was already nearly the end of 2016 and the rights were still yet to be allocated. She asked what was being done about the poaching of abalone as the last time she had asked, the DDG had said that DAFF was not in control of the monitoring and policing of the abalone.

She questioned DAFF if the stories she had heard from the media that a large proportion of the MLRF Fund was funded from the sale of poached abalone was true. She asked why DAFF had only been able to allocate net fishing rights which were subject to appeals by small scale fishers and no long term rights were given.

Mr N Paulsen (EFF) said that although DAFF was happy about achieving an unqualified audit report he found this to be unsettling as nutrition insecurity was still prevailing. He asked DAFF how much it put into aquaculture and how it was making this industry open for new entrants. He could not see DAFF dealing with drought issues and asked if it was being innovative in how it dealt with the drought.

Mr N Capa (ANC) asked that DAFF present more information about the resolution with Rural Development and not be too vague. He asked how DAFF was spending 100% of their budget yet achieving only 80% of their targets. He asked how DAFF was dealing with the poor conditions of farm workers when there was very minimal support from the government.

The Chairperson asked for clarity in terms of the MTEF and asked if there were two different figures. She asked what kind of misconduct was mentioned in the Annual Report and if this had been resolved.

She stated that the Committee would like the irregular expenditure in the Fisheries department to be part of the audit matrix. She commented that the audit matrix action plan had been established but was not being implemented and this issue was to be raised to the Auditor-General.

She was worried to note that the number of small scale fishers was decreasing. She asked the Minister if he would like to respond first to the questions.

Minister Senzeni Zokwana replied that he could not respond to speculations from the media and that it would be best if questions based on facts were asked. He replied that poaching was not limited to black people and that large companies were also being caught poaching.

He apologised about the delay with the borehole report and assured the Committee that it was available and would be presented to the Committee.

He emphasised the need for strong bio-security, noting the risk of exclusion from the international export market if it was not dealt with.

Mr Mlengana gave assurance that he would ensure that no more projects would be cooked and he would personally be on the ground to monitor projects.

He replied that there were no delays in the implementation of internal audit and risk controls. He stressed that in terms of HR, critical skills were vital and there was a need to prioritise them in order to meet mandates.  The challenge of skills in DAFF was that skilled labor from DAFF was opting to go to other departments offering higher salaries. There was therefore a need to ensure uniform salaries amongst departments.

The cases of misconduct were related to workers being absent without notification and the misuse of government vehicles. 43 cases of disciplinary action were undertaken and 20 transgressors had been suspended without salary.

The Minister stated that DAFF was carrying out land care projects and ensuring that that unused land was utilised to prevent the growth of wattle trees on that land as these would make it harder to utilise the land. Putting land in use was also important in the promotion of food security.

Mr Mlengana replied that he would look into the issue of the tractors and ensure that they were tracked. He highlighted the importance of agri-businesses and stated that the private sector needed to be encouraged to partner with farmers to share the resources they had.

The Chairperson asked what the progress was with the planting season and what the long term plans were to ensure preparedness. She suggested that DAFF enforce timelines to ensure delivery of targets.

Mr Mlengana stated that there was need to come up with a list of high value crops and these should be produced for export. DAFF needed to champion the production of macadamia nuts because it was in low supply globally and therefore a good export crop. This was a good target market for graduates to enter as farmers.

Ms Ndudane replied that the sale of stolen abalone was legal and the act allowed the sale of confiscated fish to generate income in order to fight the wrongdoers. The income generated from the sale was only 0.5% of the total MRLF budget.

She clarified that she had said that the MRLF was not winning the war against poaching not that DAFF was not in control due to staff incapacity. A single compliance officer was responsible for a 25km stretch of coastal land and therefore could not efficiently man the area. The inadequate technology to assist in surveillance also made the task of fighting poaching difficult

She highlighted that poaching was not a South African phenomenon only but other countries including New Zealand also had issues with it. There was need to legalise people and give them fishing rights in order to reduce poaching

Mr Mlengana replied that in dealing with the drought the provinces were given R212 million but this was unfortunately only being targeted to smallholder farmers, although the white farmers also required the assistance as they too had been affected by the drought.

An MP asked for a specific figure of what the value of the fishing sector was as it seemed to keep changing. He asked DAFF what the progress with the Ncera Farms was as there had been an agreement with Treasury about it but no progress had been made in the current financial year. He asked what had informed a salary increase of the CEO of 51.2% as this was a huge jump.

Ms Jongbloed stated that she was committed to the transformation of the fishery industry and this had always been on public record. Her question on the progress outcome of registration for small scale fishers had not been answered. She asked what the progress was with the issue of the rollover of fishing rights. She asked how much effort DAFF was putting in creating opportunities for aquaculture. She asked how many beneficiaries there were of the allocated land to start small scale subsistence farming.

Ms Ndudane replied that allocations of fishing rights had 15 year limits and no extensions were given beyond that. The two year extensions that were granted were exemptions for rights beyond below 15 years. She replied that the fishing sector had no specific value and this was a deliberate move. However, a figure that was given was approximately R112 billion.

Onderstepoort Biological Products (OBP) on its 2015/16 Annual Report
Dr Steven Cornelius, CEO: OBP, explained how the OBP was working to achieve its various strategic objectives. In its goal to build a high performing organisation equipped with modern technology and expertise develop and manufacture competitive products to achieve financial stability, the OBP currently had a skills enhancement programme that aimed to align technology processes and this improved quality standards. The OBP found this to objective to be critical in the reduction of costs, increasing of yields as well as in the improvement of efficiencies and productivity. He highlighted that for this to occur there was need to constantly improve business processes and practices and there was need to allow access to critical information that guided decision making in the short and long run.

He highlighted the OBPs objective to facilitate a more aggressive national and international market access and implement an effective distribution strategy. He stated that there was a need to increase and grow local and export market share to ensure the sustainability of the organisation and to ensure that the OBPs growth strategy was implemented in a socially and environmentally responsible manner. OBP exported vaccines mostly to SADC and Africa and to a limited extent the rest of the world. If the world’s livestock numbers were to be considered there was potential to grow OBP’s business.

The OBP was also focused on contributing to government priorities in respect to emerging farmers, food security and economic growth. The country’s current economic growth was at 2.5% with agriculture contributing 3.5% to GDP of which livestock industries contributed approximately 60% of this total. In terms of agricultural exports OBP’s share in the vaccine market was approximately R20 million. OBP was experiencing a decline in vaccine sales and market share and no jobs had been created or funding facilitated for smallholder farmers.

OBP obtained a clean audit with no findings. In 2015/16 it received revenue worth R92.7 million and investment income of R27.5 million. Its expenditure was R99.1 million which saw it obtaining a net profit of R19.4 million. OBP saw a significant increase in its total assets from R407.3 million in 2015 to R679.9 million in 2016.

National Agricultural Marketing Council (NAMC) on its 2015/16 Annual Report
Mr Tshilo Rqmabulane, CEO: NAMC, cited NAMCs key objectives as increasing market access to all market participants, more efficient marketing of agricultural products, increased export earnings from agricultural products and well as the enhanced viability of the agricultural sector.

He stated that NAMC had partnerships with 12 industry trusts with a current asset value of R2424 million. It also partnered with 18 industry bodies that collected statutory levies amounting to R427.9 million in the last financial year. He identifies some of the functions that were financed through the statutory levies to include administration, research, quality control and well as plant improvement.

In terms of economic research, he stated that NAMC aimed to gauge the efficiency of the market for every agricultural commodity on the market as well as intensify research efforts on options to link smallholder farmers to agro-food value chains.

NAMC was running a number of agricultural development schemes including the vineyard development scheme which assisted 70 farmers, created a total of 1 371 job and generated income worth R3.2 million. The national red meat development programme that has 11 feeding programme facilities took 2 594 animals for feeding and generated revenue of R23.1 million.

He outlined the achievements of NAMC in partnership with AGriSeta and DAFF to include a total of 24 interns who were now permanently employed across four functions and 15 interns currently employed. He briefly explained that the Y- agriculture programme included four processes: a career guidance phase to learners followed by the awarding of bursaries to pursue careers in agriculture, mentorship and finally internships and learnerships to increase employability of the candidates.

The NAMC had 65 employees, 47 permanent and 18 contracted. Three employees tendered resignations while two were dismissed due to misconduct.

NAMC received a clean audit in 2015/16. It received grant income of R34.6 million, generated interest of R2.8 million and received sponsorship of R25.3 million. Its total expenditure amounted to R61.9 million and it incurred no fruitless and wasteful, irregular or unauthorised expenditure.

South African Veterinary Services (SAVC) on its 2015/16 Annual Report
Dr Clive Moritz, President: SAVC, said that SAVC had provided the Committee with biltong to assure it of its commitment to provide safe and healthy red meat to South Africa. SAVC’s key functions included the protection of the veterinary and para-veterinary professions as well as advise the Minister on matters connected to the profession.

He outlined some of SAVC’s key developments in the year to include the coming into operation of the Veterinary and Para-Veterinary Professions Amendment Act as well as the increased procurement of medicines through the practice number requirements.

A total of 5 961 veterinary and veterinary para-professionals were registered with the South African Veterinary Council on 31 March 2016. 625 persons were authorised to perform veterinary or veterinary para-professional services where a need was motivated

He reported on the one health approach which recognises the relationships between human, animal and environmental health and applies interdisciplinary tools to solve complex public health issues. He stated that the SAVC was concerned with the one health concept as the control of infectious diseases was central to one health and also SAVC.

Discussion
Mr C Mathale (ANC) commended the good presentations and asked the Marketing Council how far it had gone in trying to intervene and assist with radical economic transformation.

The Chairperson asked the Marketing Council how they assisted households to market their produce.

Mr P Maloyi (ANC) asked the OBP to clarify if they were saying the vaccines they listed in their presentation were actually available and if their credit facility for cooperatives was viable.

He asked SAVC why the number of vet technicians had not increased in the current year. He also asked what the current status of the signing of the memorandum of understanding was since only five vets had previously signed.

Ms Steyn asked the OBP if they believed they were keeping to their five objectives as there was no link to this given that there were some vaccines missing.

She asked the OBP why they said they were self-funded yet money had been allocated to them. She also asked when vacant posts and critical posts would be filled in the Veterinary Council.

She expressed joy at seeing the one health concept and asked if there was capacity to deal with transformation within that concept and what was the relationship with DAFF was to ensure achievement of this concept.

She commended the OBP on it producing vaccines that met the standards of the European Union and asked how many Africans could afford their products.

She asked if they had measured the socio economic impact on supported farmers and to what extent they had put in effort to integrate black and white farmers.

She asked how one qualified to be a distributor of vaccines.

Mr Paulsen congratulated the OBP for their clean audit report and asked what control measures had been put in place to manage imports given that it was losing market share.

He asked what the OBP was doing to provide neighboring countries with vaccines.

He expressed concern that the SAVC delegation was all white and old and asked what they were doing to ensure sustainability and youth contribution.

Ms Jongbloed asked SAVC what their transformation status was.

She expressed concerns about reports about the overworking of medical students and asked what SAVC was doing about this.

She asked if they were satisfied by the number of students they were attracting to be vets.

Inkosi Cebekhulu asked NAMC who was responsible for control of the release of vaccines.

The Chairperson congratulated OBP for its clean audit and asked if they were advertising to small business.

Considering the change in climate which led to various diseases associated with droughts and floods, she asked if SAVC was responding in an innovative way in its production of vaccines.

She asked if NAMC was taking seriously the 30% procurement policy as directed by the President.

She commented that NAMC was failing to establish a framework to create markets for households to sell their produce and that they should bear in mind that the government should be the first market.

She stated that the one health programme should include indigenous knowledge systems which have been successful in practice.

Dr Cornelius replied that the OBP were not the only producer of vaccines in the country and there were two other companies producing locally. Due to zero tariffs on pharmaceuticals, the OBP was operating in a very competitive environment. The OBP only produces 4 to 5 vaccines exclusively.

He replied that to be a distributor of vaccines one had to just apply and would be admitted providing one met the required standards. A tender had been issued however all the bidders who applied had not met the tender requirements.

He replied the OBP did follow the climate change and tried to predict when diseases would strike in order to address them appropriately.

He replied that the OBP did sell vaccines to neighboring countries including Zambia, Mozambique, Botswana and Zimbabwe. However they faced a disadvantage that they, unlike their competitors, did not sell combination vaccines.

Mr Ramabulana replied that there were 22 fresh produce markets in municipal areas and cited the Mandela market in Gauteng as one of the largest.

The Chairperson asked why the market was called the Mandela market and said it was a derogatory to the name of the country’s icon.

Mr Ramabulana replied that he was not quite sure why the market was named after the icon, however he would research it and inform the Committee. He suspected however that the name was chosen as it united all people.

He replied that the South African agricultural industry was not growing as it was facing competition from other countries but the government was not assisting and as a result smallholder farmers were suffering.

He would respond to the Committee’s other questions in writing as they required comprehensive explanations.

Dr Marwick replied that the number of animal health technicians had decreased. There used to be a large number of animal health technicians but due to failure and unemployment, the number had decreased. There was however an increase in the number of veterinary nurses.

He said that questions had been raised in a prior meeting as to why Compulsory Community Service (CCS) veterinarians were placed in cities and not in rural areas. This was not accurate as the placements were in rural areas however some vets chose to travel there from the city.

Dr Marwick said that he did appreciate that the delegation appeared very white however it is unfortunately a fact that veterinary science is predominantly white. The Minister was responsible for appointing 8 members of the Council. The current council included 11 whites and 8 people of color.

Ms Lynette Havinga, Director: SAVC, replied that the R3 million that had been asked prior had been invested in paying off a bond for a building SAVC had procured.

Dr Marwick replied that there were no new vaccines and South Africa did not have and would probably never have a pharmaceutical industry as it is a very costly industry. The UN had however met and created a fund to invest in research for new vaccines.

He replied that there were not enough vets that were trained and this was an area of concern. It was important to get more vets trained as it had an impact of food security.

The meeting was adjourned.