Agricultural Research Council & Perishable Export Control Board on their 2015/16 Annual Reports

Agriculture, Forestry and Fisheries

20 October 2016
Chairperson: Ms M Semenya (ANC)

Meeting Summary

Annual Reports 2015/16 

The Agricultural Research Council noted that it is aligned to national priorities and policies, including the National Development Plan, New Growth Path and the 2014-2019 Medium Term Strategic Framework of outcomes, as well as noted its contribution to realisation of priorities and outcomes. Six strategic goals were established and had nine programmes. The workforce was composed of 76% black employees, 15% white employees, and 9% Coloureds employees. 59% of its workforce was male. For the 2015/16 financial year revenue was R1.2 million. Total revenue for the 2016 business plan was R1.1 million, whereas total expenditure was R1 million with an operating deficit or surplus was R81 000. The Council reported that the parliamentary grant was insufficient and had impacted on operating costs. The Agricultural Research Council’s external audit outcome was unqualified. A clean audit not being achieved was due to material adjustments to the AFS. The Council would address this through the audit improvement plan which was already in place. The Auditor-General findings would be addressed by end October 2016. Vacancies in its finance sector that needed to be filled. 
 
The Perishable Exports Control Board had four strategic programmes including corporate services, operational services, food safety services and transformation and development. During the course of the 2015/16 financial year, the Board inspected 324 701 containers and 481 cold storage. 57.9 million Cartons of grapes from foreign countries were inspected. Certificates processed were 113 837 and the number of food safety audited was 781. With regard to imported products, out of 57.9 million cartons of grapes inspected, 2.4% were below expectation; out of 44.7 cartons of pome inspected, 7% were below expectation; and out of 18.2 million cartons of stone inspected, 8% were below expectation. These fruits were imported mainly from Europe. Citrus exports markets included oranges, lemons, grapefruits and soft citrus. Minor products like maize, avocados and vegetables were inspected for exportation.  
 
The Perishable Exports Control Board’s human resources encompassed 451 employees and had 31 offices countrywide. Cerebrated achievements included the training of 219 small holder farmers, 14 farmers certified, 25 Agri-Export Technologist Programme students trained and seven harmonisation workshops. In the context of financial performance, the Boardreceived an unqualified audit. Revenue was R286 082 000 and expenditure was R284 277 000. The net result was R1 805 000. 67% of expenditure went to remuneration of employees. And 93% of targets were successfully achieved. 
 
Members sought clarity on a number of issues, including the progress of agricultural transformation, training of employees, African Growth and Opportunity Act’s impact on the Agricultural Research Council’s operation, on the impact of staff competency, delivering services to rural communities, the progress of land aggression, impact of inspection had on economy, and heartwater vaccine with respect to rural communities.

 

Meeting report

Briefing by Agriculture Research Council (ARC)
Prof Sibusiso Nil-Nkomo, Chairperson noted that it is aligned to national priorities and policies, including the National Development Plan (NDP), New Growth Path (NGP) and the 2014-2019 Medium Term Strategic Framework of outcomes as well as noted its contribution to realisation of priorities and outcomes. Six strategic goals were established andhad nine programmes. A summary of the ARC scientific output in peer reviewed publications was provided andtargeted support to smallholder farmers was highlighted. On this note, 8430 farmers were serviced, 55 young graduates were employed. For ensuring animal health for sustainable meat production, the attenuated heartwater vaccine was used and a live attenuated vaccine was developed by the ARC. 
 
With regard to employment demographics, Prof Nil-Nkomothe ARC noted that 76% of its workforce was black, 15% white, 9% Coloureds. 59% of its workforce was male. The ARC provided a summary of financial performance as follows: Revenue was R1.2 million. Total revenue for the 2016 business plan was R1.1 million whereas total expenditure was R 1 million. Operating deficit or surplus was R81 000.The Parliamentary grant was insufficient and that impact on operating costs. ARC external audit outcome was unqualified. A clean audit was however not achieved due to material adjustments to AFS. The ARC would address this through the audit improvement plan which was already in place. The Auditor-General findings would be addressed by end October 2016. The brief was concluded by noting that all vacancies in finance sector would be filled. 
 
Briefing by Perishable Exports Control Board (PPECB)
Mr AG Peterson, Chairperson, noted that it had four strategic programmes including corporate services, operational services, food safety services and transformation and development. With regard to statutory operations, the PPECB inspected 324 701 containers and 481 cold storage. 57.9 million Cartons of grapes from foreign countries were inspected. The PPECB noted that some were, after inspection, rejected, reasons of being dirty. Taint, damaged panels, and oxidisation. Certificates processed were 113 837 and number of food safety audited was 781. 
 
Fruits were inspected. Out of 57.9 million cartons of grapes inspected, 2.4% were below expectation; out of 44.7 cartons of pome inspected, 7% were below expectation; and out of 18.2 million cartons of stone inspected, 8% were below expectation. These fruits were imported mainly from Europe. Citrus exports markets included oranges, lemons, grapefruits and soft citrus. They were too inspected. Minor products like maize, avocados and vegetables were inspected for exportation
.  
Mr Peterson noted that the PPCEB’s human resources encompassed 451 employees and had 31 offices countrywide. Celebrated achievements included the training of 219 small holder farmers, 14 farmers certified, 25 AETP student trained and seven harmonisationworkshops. 
 
Mr Peterson noted that the PPCEB received an unqualified audit. Revenue was R286 082 000,and expenditure was R284 277 000. The net result was R1 805 000. 67% of expenditure went to the remunerations of employees. 93% of targets were successfully achieved. 
 
Discussion
Mr M Filtane (UDM) sought clarity on the progress of agricultural transformation (how did the transformation move and what were indicators used to measures the progress), on whether the training of employees was inhibiting operation of the ARC, on AGOA’s impact on the ARC’s operation, and on the impact of staff competency. 
 
Ms ASteyn (DA) congratulated both entities for their overall performance and sought clarity on the number of graduates, and whether these graduates were all retained and what could be the impact if farms could not import enough.
 
Mr L Ntshayisa (AIC) sought clarity on what impact the ARC had on rural communities, and what was found to be the main problem with the imported products.
 
Mr P Maloyi (ANC) commented that the ARC was assigned by the Land Commission to assess the land aggregation, and sought clarity on whether there could be any progress. He also expressed his concern about the audit action plan that might not be progressing. With PPECB, he sought clarity on 
discrepancies in the demographics provided in the presentation and annual report. 
 
Mr N Capa (ANC) sought clarity on the storage or preservation of maize, on whether there was a link between the ARC research and the PPCEB and on what impact inspection had on economy (did it make economy grow?). He sought clarity from ARC on heartwater vaccine with respect to rural communities who needed it for their livestock. Why could the heatwater vaccine be availed in the period of 24 months? 
 
The Chairperson sought clarity on what the ARC was advising farmers with regard to drought, on persisting material findings in respect of financial performance, on whether new action plans were developed in order to deal with the Auditor General’s findings, and on why products were imported from Europe only and no imports from African countries.
 
ARC Responses
On agricultural transformation, Prof Nil-Nkomo noted that there were a range of factors to measure successes. This included the development of black farmers. Various services were provided to black farmers including training in different areas.  Agricultural transformation was a long-termprocess and not something that could take place overnight. The ARC was working towards having a cohort of black farmers out of land programme. More than 2500 small holder famers were trained in the OR Tambo District on how to produce various kinds of fruits like banana and citrus. They were also trained on how to process them and this helped them to raise income. 
 
On the training impact, tProf Nil-Nkomo responded that those individuals who were trained were trained and funded by the ARC as the studies undertaken were relevant to the ARC. They worked with it and were encouraged to upgrade their skills for the ARC and to remain productive in agricultural sector.  On the question of retention, the ARC primarily focused on retaining graduates it had trained. Individuals were not trained to remain with the ARC as researchers but were trained to work as agricultural experts that could work in various areas of the agricultural sector. They were trained to contribute to the development of the agricultural sector. 
 
On employment equity,Prof Nil-Nkomo stated that figures were not matching given that figures of foreign employees were not included in the presentation’s statistics. Foreign employees were omitted. With employment equity, the ARC looked at land designated and non-land designated areas. 

On funding and engagements, Prof Nil-Nkomo reported that more funding that might be coming in since it had submitted its funding proposal to the African Development Bank and the African Union. They were looking for grants in countries such as Ghana, Netherlands, and Kenya. The ARC received four million Euro from Netherlands and was enjoying support from the South African Weather Services. On the other hand, the parliamentary grant was cut down and this had some implications on funding hence match funding. The issue of funding the ARC should be taken seriously because if its financial status declined it would have various implications on overall operations, including, inter alia, human resources and productivity. 
 
On the impact of ARC on rural communities, the ARC had conducted projects similar to OR Tambo project. Fruit trees were distributed for homesteads to have a resource of income. 
 
On the question of being commissioned by the Department to assess land aggregation, there was progress. Land aggregation came about in various ways. 
 
On indigenous knowledge, there was a maize preservation and precession empowerment facilitated by Mexico. Indigenous products which South African farmers were exposed to, were processed.
 
On the delay on vaccine, Prof Nil-Nkomo responded that it was developing scientific medication in order to vaccinate animals.
On the drought, Prof Nil-Nkomo stated that it was not using thedrought as an excuse, because it usedseveral trials in planting the seeds, but its activities were cut by lack of funding. 
 
Responses from PPECB
On the AGOA impact, Mr Peterson responded that 2016 was an unusual year. It was difficult to make fair comparison. However, it believed that AGOA would have a positive impact, but it would report back once it had verified information. On the grants, the PPCEB reported that it was not relying on grants but on its own revenue raised through inspections. In prior years, it had lost seven million due to drought. 
 
On the essence and relevance of the ARC, Mr Peterson responded that the ARC research was relevant because it was relied on in its operations. On the annual performance, the PPECB stated that 93% of targets were achieved and not 83% as reflected in the presentation. 
 
On the impact of inspection on economy, Mr Peterson responded that the inspection had a positive impact. This could be drawn from the mission, objective and vision of the PPECB. Its role was to ensure that there were increases in the imported and exported products.
 
Mr Maloyi, with reference to the Auditor General’s comment that there should be material adjustment so as to improve financial performance, expressed his wish that the next audit report should be clean. He sought clarity on a low demand and on what the ARC was doing to improve it. With regard to PPCEB, he expressed his happiness on its overall performance and remarked that it was doing well in all its programmes. 
 
Mr Capa expressed his unhappiness with regard to maize storage or preservation and sought more clarity.
 
Mr Steyn sought clarity from the PPCEB on how it dealt with financial instability and risk management and from the ARC on what it was advising famers to do with respect to the South African currency inflation. She sought clarity on the progress of enactment of the PPCEB legislation. She said the Department had never taken the challenge of taking seed to farmers to assist them. The Committee should write to the Minister that it was unacceptable that in time of drought seed was not planted to test which seed could grow in that environment.
 
The Chairperson stated that the Department would come to brief the Committee on its performance and issues being raised by Ms Steyn would form part of the discussion. She sought clarity from PPCEB on whether it was participating in the Phakisa in order to deal with challenges. 
 
Responses
Prof Nil-Nkomo responded that its target was to have a clean audit. 
On material adjustment, they thought that there was no issue when the audit was done; the AG raised the issue on grants that were allocated to the ARC when it was established as an entity four years ago. This occurred before this leadership took over. 
With regard to small agriculture development, there were projects around the small agriculture development that were part and parcel of agreements with the Department of Land Reform. In implementing these projects, the ARC had to do the following: Social mobilisation (including dissemination of information) and training farmers on how to manage the drought. 
 
The ARC had a number of experts who were part of Phakisa and the Chair could go there and engage with them. It was not sure whether the ARC was doing specific research on maize storage or preservation. However, the ARC would see what it could do to store maize. The ARC had done research on how to reduce fungus in the stored maize. On the indigenous knowledge in respect of storing maize, the ARC responded that it would revert back to the Committee in writing. 
 
With reference to the progress of enactment of legislation, the PPECB responded that the Bill was published for comments. It had gone through the assessment of social impact and the PPECB was waiting for the result. It would be submitted to the NEDLAC. By the first quarter of next year, theBill would appear before the Committee. The PPECB was participating in Phakisa. 
 
The Chairperson stated that there was improvement and that the entities should work to improve their performance.
 
The meeting was adjourned.