GrainSA & ARC on Grain industry challenges; DAFF Fisheries progress report, with the Minister

Meeting report

Grain SA: Presentation

Dr Marinda Visser, Manager: Grain Research & Policy Centre: Grain SA, informed the Committee that maize accounted for 59% of the grain crop. 16 million tons of maize were produced annually in SA. The country was capable of producing its own crop and food for the nation. The Free State province was important for both yellow and white maize. Input costs had increased by 369%.

South Africa was a net importer of wheat. The country was not food secure in terms of wheat. Interventions were needed to turn around the situation. Prices for both white and brown bread had remained marginally high. The country needed to look at export markets for white maize, because there was a surplus of it.

Grain SA had raised concerns about crop biosecurity. A great deal of work had been done to manage the problem. The main challenge was to get information locally and from other African countries. The Fall Armyworm (FAW) was not reported by many African countries. FAW existed across the globe. The Western Cape was the only province that had reported it. Grain SA was also worried about the Maize Lethal Necrosis (MLN), which had moved from Kenya to Tanzania.

Dr Visser said the plant pest surveillance programme had been carried out in all provinces, especially those that produced grain. The Maize Trust was funding the programme, and was working closely with North West University and the Agricultural Research Council (ARC).

In her conclusion, she said there was a need to update the regulations in order to reduce the burden on the industry and to provide national leadership. The biggest risk was the lack of regional cooperation and information sharing. Other African countries never officially reported the presence of FAW on the official International Plant Protection Convention (IPPC) portal. Reporting within the Southern African Development Community (SADC) was also problematic. Grain SA had urged SA to use its chairmanship of the SADC to increase collaboration with other African countries to use bio-surveillance technologies to monitor the threat of infestation by pests. A dedicated grains biosecurity focus within the Department of Agriculture, Forestry and Fisheries (DAFF) was crucial, and the grain value chain needed to form a working group with DAFF.

Fishing Rights Allocation Process (FRAP): DAFF update

Ms Siphokazi Ndudane, Deputy Director-General, Fisheries: DAFF, provided an update on the status of the implementation of the recommendations of the Emang Basadi and Harris Nupen Molebatsi reports on the readiness to deliver on FRAP 2015/16, in order to prevent the recurrence of the short-comings of FRAP 2013. She reminded the Committee that the 2013 FRAP process was the subject of controversy, with allegations and perceptions of irregularities, manipulation, unlawful or arbitrary decision-making and unprocedural conduct. On top of that, the South African Traditional Linefishers Association had brought an urgent application to set aside the allocation of rights in the traditional linefish sector.

In light of these allegations and misperceptions, the then Minister, Ms Tina Joemat-Petterson, had commissioned an independent audit of the process to ascertain whether the concerns raised by certain parties in relation to the process had any substance, and Harris Nupen Molebatsi Attorneys were appointed in February 2014 to do the audit.

For FRAP 2015/16, fishing rights were allocated in nine commercial fishing sectors: Patagonian toothfish, hake inshore trawl, horse mackerel, large pelagics longline, West Coast rock lobster, netfish, seaweed, abalone, KwaZulu-Natal (KZN) beach seine, and fish processing establishments.

In order to ensure the Department’s readiness to deliver on FRAP 2015/16 and to advise how appeals should be handled, Minister Zokwana had commissioned Emang Basadi to review and assess the Department’s capacity and work processes. The focus of the Harris et al audit report comprised 17 critical areas, and in each area there were findings and possible recommendations made by the auditing team. The following were some of the critical areas:

• On the validity of the policies, it was recommended to the Department that next time it carefully considered, when selecting venues for consultation on the policy review, to ensure all fishers and communities affected by the policies were consulted. This recommendation had been implemented.
• The delegated authority should provide detailed reasons for the departure from the policies in respect of each fishery to a counsel, for advice on whether they constituted a rational basis for departure. This recommendation had been implemented.
• The Minister should consult with the Finance Minister to determine application fees for commercial and small-scale subsistence fishing rights. If the administrative cost of processing the commercial application required an increased fee, consultation should be done timeously. This recommendation had implemented.
• The process of granting exemptions under interim relief should be urgently reviewed, given the public criticism that this process had been used to appease unsuccessful applicants and their employees. This recommendation had been implemented.
• The decision of the apportionment between the new entrants and existing right holders ought to be taken by the Minister after consultation with stakeholders. This recommendation had been implemented. The apportionment split between the commercial and small-scale fishers was consulted with stakeholders. The decision not to exclude the applicants without vessels or suitable vessels could not be dealt with by the Minister on appeal, and an application should rather be made to court to set aside the granting of rights to those applicants who should have been excluded under the policy.
• There should be no need for deviation from the criteria contained in the fisheries policies, as the criteria were informed by particular needs of the fishery sector. Although it was permissible for the delegated authority to depart from the policy, all deviations must be justified and properly recorded. This recommendation had been implemented.
• Verification of applicants’ information should be conducted as soon as possible and run parallel with the appeals process.

The Emang Basadi Report focused on 16 recommendations, which included the following:

• The Minister to extend all rights which had expired in 2015, to allow more time to implement FRAP 2015/16. This recommendation had been implemented.
• The Minister to form a Fisheries Transformation Council, as legislated in the Marine Living Resources (MLR) Act. This matter was reported as work in progress.
• General policy and sector-specific policies needed to be reviewed and aligned with the MLRA. The policies had been reviewed. The general policy was to be reviewed for FRAP 2020.
• The development of application forms should be done simultaneously with the development of policies. This recommendation had been implemented.
• Creation of an independent appeals team. This recommendation had been implemented.
• There was a need for an adequate FRAP budget. This recommendation had not been implemented, due to budgetary constraints.
• Creation of additional capacity for FRAP processes on 18-month contracts, and training of new staff. This recommendation had been implemented.

Oceans Economy: DAFF update

Mr Asanda Njobeni, Director: Sustainable Aquaculture Management, DAFF, told the Committee that the total investment committed to Operation Phakisa aquaculture projects by the end of 2016 was R690m, of which government had committed R227m. Of the 36 aquaculture projects, only 26 were operational and were producing aquatic animals. Since 2014, these 26 farms had created 1 806 jobs. The projects had produced 3 500 tons.

Unforeseen natural events had affected the abalone production in Hermanus, as it had suffered severe losses due to a serious red tide between January and March 2017. As a result, 220 tons had been lost. The final damage had not been quantified. The farms were currently recovering and ensuring jobs were sustained. While some projects were expanding and progressing, many other projects were experiencing various challenges around funding, water leases, land leases and authorisations.

The Aquaculture Development Bill had been signed off by the National Economic Development and Labour Council (NEDLAC) in September 2017. The Bill was due to be presented to the Cabinet in early 2018. Suitable aquaculture development areas had been screened and reviewed by key stakeholders through consultative workshops. Once the project was completed, the areas suitable for aquaculture development would require limited, or no further, environmental studies. The norms and standards for abalone were gazetted in February 2016, but would most likely be incorporated within the Strategic Environment Assessment (SEA) process.

Mr Njobeni said that since the Interdepartmental Authorisations Committee (IAC) was established, it had received the final report on the mapping of business processes pertaining to aquaculture authorisations required by various departments; it had signed off seven approved leases; and 140 hectares had been made available to 10 projects in Saldanha Bay, of which eight were long-term and two were short-term leases.

The Saldanha Bay aquaculture development zone had the potential to unlock an additional of 780 to 2 500 direct jobs, over R400m investments, and over R800m turnover per annum. Direct jobs could contribute up to 25% to current unemployment figures, and further upstream and downstream jobs would increase this.

On the establishment of a globally recognised monitoring and certification system, the DAFF and National Regulator for Compulsory Standards (NRCS) service level agreement to undertake independent food safety sampling had been signed, and was being implemented. The European Union (EU) Residues and Public Health Audit had audited the aquaculture sector in February 2017. Various interventions were identified during the visit, which ultimately might lead to SA being able to apply to be registered to export abalone and finfish to the EU.

With regard to the Aquaculture Development Fund, the final report and mechanism had been received from the Government Technical Advisory Centre (GTAC) at the end of March 2017. Fisheries was in the process of creating a Memorandum of Cooperation (MoC) between relevant departments and implementing the recommendations. Feasibility studies had been finalised on marine finfish, oyster and mussels. Further feasibility studies were under way for tilapia, trout, abalone, sea urchin, catfish, fresh water ornamentals, and aquaponic systems.

Concerning skills development and capacity, a skills and needs analysis assessment of the sector was currently under way to inform further interventions and skills requirements. The draft report was received for review in September 2017. In order to address the scarce aquatic veterinarian skills and services available in SA, the DAFF and Stirling University had signed an agreement for training of aquatic veterinarians and aquaculture specialists. Five veterinarians had begun training from September 2017 for a year. The Gariep Dam Aquaculture Training Centre was officially handed over to SA in June 2017, and it conducted training for farmers and interns.

New markets had been explored, and interest had been received from Iran for tilapia, China for farmed oysters, and Europe for finfish and abalone. The challenge was that the industry had limited capacity to drive the marketing initiative, as was planned in the Lab. The Year Two Review publication and Aquaculture Photobook had been published to raise awareness on the progress in the second year of implementation and to showcase the operations of the 13 farms. The first international conference and exposition of the World Aquaculture Society was held on the African continent at the Cape Town International Convention Centre from 26 to 30 June 2017.

Lastly, he reported interest had been expressed for aquaculture products from the Free State Economic Development Agency. Feasibility studies further illustrated the importance of preferential procurement opportunities that needed to be investigated. Key recommendations included:

• Need to explore government procurement.
• Undertake international market assessments.
• Invest in research to reduce production costs.
• Increase lease durations to secure investment.
• Establish and open further international markets.

Discussion

Grain SA

Ms A Steyn (DA) asked what could be done to curb the rising input costs.Dr Visser said there had been a 100% rise in input costs. It was important to look at what farmers paid for seed and fertiliser. Both small and big farmers paid the same price. There was a need for a policy directive to discuss the price of maize seed.

Ms Petru Fourie, Research Coordinator and Agricultural Economist: Grain SA, added that the North West had estimated input costs of around R7 000, while Mpumalanga had estimates of more than R10 000. It was not going to be profitable if the producer was making plus minus R2 500. For the planting season that lay ahead, it appeared the producer was not going to make money and had to look at alternative crops. There was going to be a shift to sunflower and soy bean production.

Ms Steyn asked Grain SA to explain in writing the difference between the North West’s R7 000 and Mpumalanga’s R10 000, because the difference was massive. She said it was important also to look at the Eastern Cape to see what the situation there was.

Dr Visser stated they would compile a proper document on pricing, rising costs and disparities.

Mr P Maloyi (ANC) wanted to know the type of government intervention on wheat input costs that Grain SA was talking about; and asked if Grain SA had interacted with the DAFF regarding the MLN virus.

Dr Visser explained they had started with the industry on wheat intervention programmes. The state was also involved -- in the form of DAFF in terms of policies, the Department of Trade and Industry (dti) in terms of tariffs, and the Department of Science and Technology (DST) in terms of research to get climate-resilient seed. These interventions were bearing fruit for Grain SA. On MLN, she said they had learnt other lessons. As a result, they had put together a group that got together to discuss wheat and grain crop import conditions.

Mr N Capa (ANC) asked how Grain SA was assisting the Department and Minister in terms of the Fall Armyworm.

Dr Visser said they were empowering the executive with information on why other countries were not helping on FAW and MLN. She said they were looking to the DAFF to make better communication with other countries.

The Chairperson remarked that Grain SA needed to engage with Treasury to contribute to biosecurity for grain, but Grain SA first needed to do an analysis and come up with a strategy that had mitigation and adaptation plans. The Department also needed to discuss this with relevant stakeholders. She commented that pricing and costs appeared to be a problem in general. The sector should look at standardising these two items. There was a need for research into what made these disparities, and to look at which legislation needed to be tightened up. She wanted to find out what could be done to ensure that all had a common understanding of the drought-resistant maize seed, because it could help smallholder farmers to raise their outcomes. Lastly, she commented that Grain SA was working with the Eastern Cape to engage with traditional leaders to relocate some hectares lost in Mpumalanga, because Grain SA’s research indicated the Eastern Cape was good for maize production.

Dr Visser, referring to the drought-resistant seed, indicated they had heard from GM Trading claiming that the seed was intolerant to FAW, but the claims needed to be scientifically confirmed. Work on this was being done at North West University. The ARC was also running other programmes on the drought-resistant seed. Concerning the Eastern Cape, she said the farmer development programme was taking place in the province. The Eastern Cape had potential for grain production. Continuous work was happening there.

Mr Senzeni Zokwana, Minister: DAFF, said that the Department had been working closely with the North West University, ARC and other scientific institutes. They were quick to come up with registered pesticides. As a result, South Africa had been appointed by SADC to lead on the FAW programme. The problem of neighbouring countries not speaking on FAW was something the DAFF was working on because it was the responsibility of all countries. He also commented that smallholders had storage capacity challenges because after harvesting they sold their produce immediately.

FRAP and Oceans Economy Presentations

Ms Steyn asked if the Minister was taking into consideration the information from the scientists, seeing that the basket was half empty. She wanted to know where tilapia was farmed in SA. She asked what was being done to address the limited capacity to drive marketing initiatives in the oceans economy. Was it possible to include small-scale fishing people in the oceans economy or aquaculture projects? She also sought clarity on the unrest that had rocked the fishing industry.

Ms Ndudane said the unrest had started at Hamburg, near Peddie. These issues were not linked to rights allocations. The issue was sparked by a meeting held by the Department and stakeholders, where the Department had raised a reduction of 59% in the catchment of the West Coast rock lobster. With regard to information from scientists, she responded that the Minister followed the recommendations, but did not set the total allowable catch (TAC). The Minister was not obliged to follow the recommendations. The reduction of TAC did not solve the problem. The problem was with those who fished illegally. That was why the Department had been saying it was important to curb illegal fishing. The rock lobster had been over-harvested. Science on its own was not a solution for things that needed to happen.

She said there would never be enough for the basket, and that was why they were looking at alternative livelihoods. The DAFF was focusing on species that were found in certain areas of the coast for small-scale fishers. Looking only at the West Coast rock lobster was not going to be enough for everyone. There would be other species in the basket. Concerning the inclusion of small-scale fishing people in the oceans economy, she said small-scale fisheries were incorporated in aquaculture projects to augment the activities of the Department. The Department was also looking at aquatourism during the off-season -- that is, activities that the fishing communities engaged in during the off-season. These could include things like preparation of baits, making of nets, etc. She said there was a project the Department was doing with Rhodes University, where abalone was being re-seeded to the wilderness.

Mr Njobeni responded on the limited capacity to drive marketing initiatives, and said interventions were done in the form of the development of the aquaculture value chain roundtable. It had streams like marketing and labour. The Department convened a regional conference every two years, where aquaculture stakeholders participated. The event had not been staged this year because of the World Aquaculture Conference held in Cape Town. He said tilapia was farmed in Gauteng, the Free State and the Western Cape.

Mr L Ntshayisa (AIC) wanted to know why, in the transformation of aquaculture, only one cooperative had been established.

Ms Ndudane said costs to set up one aquaculture facility were huge. Transformation should be driving the programme. Fish farming had to be done for employment creation.

Mr P van Dalen (DA) asked for clarity on the fees for rights allocations. He wanted to know what had happened to the petition that had been handed over to the Committee by fishermen. He was not happy with the way the public participation meetings had been conducted in the Western Cape, because no chances were given to individuals to share their views. The meetings were not proper public forums.

Ms Ndudane reported that an amount of R11 million was spent on rights allocations. The Department made a loss instead of profit. It paid out more than it collected. It collected only R7 million. She said people were allowed to apply, but there were no guarantees that one would be successful. Concerning petitions, she said there had been subsequent protests by a group which called itself “Collective.” The group had met the Minister and the Department several times. The Department had made a record of decisions taken, and it was continuing its engagements with this group. On public participation, she said PriceWaterhouseCoopers was the company that was auditing the process, and the Committee was free to talk with it. She was not in a position to say the public participation meetings had been right or wrong.

Mr A Madella (ANC) commented that black Africans should own and drive the entities that were funded by the government and intensify the fight on disparities, because there was a need to close the gaps. It was a big problem that previously disadvantaged individuals (PDIs) made up only 10% of the aquaculture sector. He added there were no figures reported on those with disabilities in the aquaculture sector, and that was a violation of the employment equity policy.

The Chairperson asked how transformation was going to be addressed in the commercial sector, because blacks were seen to be employed only as workers. She remarked the presentation had said nothing of inland aquaculture projects. She wanted an update on the investigations that were being conducted in the Department. She sought clarity on the non-exclusion policy for those who did not have fishing vessels. She was under the impression interventions were there to capacitate the PDIs, but now they were being left to negotiate with the owners of vessels. Was enough to train only five aquaculture veterinarians, or was it a question of not having enough money?

Mr Njobeni said transformation was a work in progress. The DAFF realised they needed to look at suitable sites and do an environmental impact assessment (EIA) which usually took time, and there were no guarantees. There were successful stories in Qolorha, Hamburg and Camdeboo, but there had been resistance in some areas around Port Elizabeth. On inland aquaculture, he pointed out that Operation Phakisa had been more ocean-based from the beginning. Later on, it was decided to include inland fresh water. Some of these projects that had not delivered on their mandates and had had to be taken out, but the door was still open. Concerning aquaculture veterinarians, he said the country did not have institutions that trained veterinarians for aquatic animals. The University of Pretoria did not have a module on aquatic health. The Department used technicians to help.

There were two investigations being carried out in the Department. There were issues in the Harris Nupen Molebatsi and Emang Basadi reports. A disciplinary process was going to follow on the investigation involving an official of the Department. With regard to the Harris matter, there had been changes in the fisheries branch. They had met with the DDG of Fisheries to ensure processes were followed because the Department did not want to be seen to be doing nothing.

Ms Ndudane, pertaining to allocations to those with no vessels, reported that at first they felt the Minister should decide on that, but later they had decided that the court had to make the decision between the vessel owner and the one who had no vessel. However, the Department had realised the negotiation process between the parties concerned would leave the industry untransformed. This meant they had to allow foreign vessels to help. She said the Department had to look at this matter thoroughly, and not leave people negotiating, because money was not only received from fishing, but from processing as well. Aquaculture plants were different. For example, the Gariep aquaculture had its own way of doing things and was attracting lots of people.

She indicated that the catch agreements contracts were being adhered to. The DAFF needed only to monitor what was happening, but it was difficult to intervene on the agreements between the parties involved. That was why they had decided to negotiate with companies in Namibia. They had to report collusion and monopoly to the Competition Commission. The Commission was doing research on the matter to ensure blacks fully participated in the sector.

Mr Maloyi remarked that when it came to transformation, the sector was not moving forward. Five white-owned companies were dominating the fishing industry. The MLR Act was clear on the Emang Basadi. He said what had been happening all these years clearly showed somebody was sleeping, and that person had to wake up.

The Minister said when the DAFF came back to report on all the concerns of the Committee, it would provide details in its report. They needed to get the industry to accept transformation. In the fishing industry, there had to be a dialogue with everyone on the allocation of other fished products that were not allowed. On skills development, the Department needed to interact with provincial departments to give them a list of people who had been sent to training. Others had been sent by the national Department.

The meeting was adjourned.