Role of the Private Sector in Agricultural Development: hearings

Meeting report

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
9 June 2003
ROLE OF THE PRIVATE SECTOR IN AGRICULTURAL DEVELOPMENT: PUBLIC HEARINGS

Chairperson:

South African Sugar Industry: Submission
South African Sugar Industry: Presentation
South African Protea Producers & Exporters Association (SAPPEX)
Pillman Tractors
Simo Consulting Services

SUMMARY
Various agricultural stakeholders were asked to explain their role and their contribution towards agricultural development in South Africa. Stakeholders were: the South African Sugar Industry, Simo Consulting Services, Golder Associates Africa, Pillman Tractors, South African Protea Producers & Exporters Association (SAPPEX) and Honey Bee Foundation & Products.

MINUTES
South African Sugar Industry
Mr J Van der Merwe, External Affairs Director, and Mr B Galloway of Canegrowers, presented. At present, the Eastern Cape and Mpumalanga are the principal sugar growing areas with R6 billion of sugar being produced per year. An exact figure that the Sugar Industry contributed for the period 1994-2002 is not available, though gathering the information is currently underway as a function of the newly formed Sugar Industry Development Desk. Independent consultants have verified an amount of R72 million contributed by all industry stakeholders in 2000.

The focal point of SA Sugar Industry's contribution is towards Small-Scale Farming Development, and Land Reform. In regards to the former, support is provided to small-scale farmers starting out, including the sourcing of resources and mentoring. A Trust Fund for Education has been set up, awarding 7500 bursaries for small-scale growers.

Land Reform is particularly high on the agenda, with the proposed sale of 70-120ha of farmland to medium-scale black farmers. This land is currently owned by various milling companies.

Discussion
Mr S Farrow (DA) asked whether SA Sugar Industry has looked at the impact of land restitution, particularly due to large drives in the Eastern Cape.

Mr Galloway answered that they are indeed involved in the process of impact-assessment, and are actively working with growers to this end.

Mr M Maphalala (ANC) asked about the Industry's relationship with labour forums. He noted the 2 000 unemployed people that are currently in training with the Industry and asked if these would be absorbed by the industry at large, or if they were instead being groomed towards entrepreneurship.

Mr Galloway replied that they are currently in consultation with labour and community forums, and that these discussions form part of their project frameworks. Regarding the 2000 trainees, it is not the intention of the Industry that they be absorbed, and that, yes, they are being trained as entrepreneurs, across 21 identified trades, including bricklaying and boiler-making.

Ms J Ntuli (ANC) asked, of the 2000 being trained, what are the demographics.

Mr Galloway stated that all are black, but he had no breakdown of the ratio of male to female.

Simo Consulting Services
Mr P Qwesha, owner and manager of Simo Consulting Services, noted that Simo was established in 2000 and is geared towards addressing the rural and local development challenges of South Africa.

The main operations include facilitating, training, consulting, informing and educating. Simo specialises in water, sanitation, access roads and community based development projects and the induction of workers in the Working for Water project.

Mr Qwasha pointed out that even though he is engaged in the development sector, he does not run a 'non-profit' organisation. Rates per hour for consulting work is usually around R200.

Mr Qwasha states his roles as being:
- establishing communities to a single unit, to represent the community as a whole;
- the institutional training of communities in the agricultural sector;
- during implementation of projects, Simo provides monitoring to ensure that the communities are producing agricultural products at market standard.

Discussion
Mr Masithela asked what role Simo plays directly in agricultural development.

Mr Qwasha answered that his company deals only indirectly with agriculture per se, as the programs are aimed at development on a broad scale in the rural sector. He provides training and facilitating on behalf of agricultural projects.

Mr D Dlali (ANC) asked if Simo does its work only in KwaZulu-Natal, or is nationwide. Did Mr Qwasha provide follow-ups to ensure that the processes put in place are indeed being carried out?

Mr Qwasha assured the committee that although 75% of his work is carried out in the Eastern Cape, he is not confined to this area, and has and can conduct work in other areas. Regarding following up on processes, he does provide this to ensure that those people selected by the communities are doing the work that they were selected to do.

Ms N Mathibela (ANC) wanted to know how much of the R200 per hour earned by Simo goes back into the community.

Mr Qwasha answered that these funds go towards catering for trainees at training workshops, and the accommodation in the community for the trainer.

Golder Associates Africa
Mr M Mosena, Senior Consultant, did not provide a background to his organisation, but instead launched into an explanation of what he considers his roles:
- the empowering of communities training and capacity building to be better able to manage their projects or appoint their management within the community;
- marketing and support services, for example the negotiating on behalf of communities with the Land Bank to acquire financial support;
- the exchange of expertise and knowledge, between the communities and parastatals.

Discussion
Ms J Ntuli (ANC) asked how Mr Mosena can empower these farmers to better acquire services. Also how can he ensure that small-scale farmers have access to irrigation that is customarily owned and controlled by the larger farms?

Mr Mosena answered that he has as part of his programme the ability to provide access to the Land Bank. With regards to irrigation, he does indeed negotiate on behalf of the small-scale farmers, and has partners in various services to help facilitate this.

Mr N Madau (ANC) asked if Mr Mosena is in support of agricultural cooperatives, and whether he has partners within these.

Mr Mosena answered that he does not support any cooperatives, for various reasons. He did not specify what these reasons were.

Mr P Gerber (ANC) asked if, in Mr Mosena's opinion, the 171 irrigation schemes currently in operation in South Africa are sustainable in their current state. He also asked for an example of a high-value crop in the Limpopo area.

Mr Mosena conceded that in regards to the irrigation question, communities must be mobilised. Profit margins for a lot of small-scale farms are understandably small, and in many cases, only one farm is contributing towards the irrigation of the area. He mentioned young farmers in particular, that these must be brought in and trained from early on in the value of cooperation with this resource. Mr Mosena gave two examples of a high value crop in Limpopo: garlic and chillies.

Pillman Tractors
Mr F Pillman, Managing Director, gave a brief overview of the history of the company, with the Pillman product being available in South Africa since 1919. The tractor component, and indeed the main component today, was launched in 1973. Pillman Tractors has designed and built, along with the Austrian company AVL, a tractor which be believes is uniquely suited to the South African climate and topography. The tractor is designed to be operated by low-skilled operators, and incorporates a 4-cylinder diesel engine. The engine is wholly mechanical, and does not contain any of the computerisation of more expensive foreign models. Comprised of 93% locally made parts, with an engine cast from steel, the engine has a 30 000 hour life-span with low fuel consumption and easy, inexpensive servicing. It is capable of 60kW nett at 2100 rpm, and 75kW when turbocharged.

The main features noted include an above average-sized sump, meaning less oil changes over the operational period, and a specially manufactured piston o-ring, to keep out the dust so prevalent in South African conditions. Indeed, Mr Pillman maintains, a study was undertaken across South Africa of dust particles, in order to manufacture these components to a very high standard.

To the small-scale farmer, this should prove invaluable. An easy to operate, easy to maintain tractor, with 93% locally produced spares, at an initial purchase price of half the nearest foreign competitor.

Discussion
Mr A Botha (DA) asked what Mr Pillman believes the tractor, developed some 25 years ago, will benefit agricultural development in South Africa, given various technological changes that surely must have come in over this period. He also enquired as to whether a dust filtration system was installed, to combat dust intake during servicing.

Mr Pillman answered that job creation during the manufacturing stage would be invaluable. And, as previously stated, the tractor would sell for half the price of imported rivals. He conceded that dust is always going to be a problem. The design specs went towards a piston that would keep dust out. In his opinion, he believes that no matter how good a filtration system is, dust intake always occurs.

Ms J Ntuli (ANC) expressed a concern that either though the tractor may be cheap initially, it still cannot be afforded by the poorest of new farmers. Given the 30 000 hour life-span, it would mean replacing the engine after five years. Many new farmers are still 'not on their feet' after five years of farming.

South African Protea Producers & Exporters Association (SAPPEX)
Ms C Middleman, Sappex Chairperson, pointed out that the figure of 3 660 tons of Fynbos exported in 1998 had risen to 4 690 tons in 2002. The Department of Trade and Industry had conducted an exercise that showed the industry capable of a tenfold expansion, provided that some financial support be forthcoming.

To clarify, Mrs Middleman explained that Fynbos, of which the Protea is a variety, covers some 200 species altogether. SAPPEX is a non-profit organisation that is recognised as the mouthpiece of the industry, which covers both the fresh and dried fynbos export initiatives by private enterprise.

In 1992 a voluntary levy of 10c/kg exported was imposed to support research into fynbos agriculture. Although funds were originally allocated to the ARC-Fynbos Unit, a sub-section of Roodeplaat Research Laboratories (Roodeplaat being perhaps better known as the laboratory set up by Dr Wouter Basson, SA's chemical warfare expert), it was found that research at the University of Stellenbosh horticulture and plant pathology departments had become important for the industry. Over the last four years, SAPPEX has contributed over R1 million for research at both institutions.

Although the role that fynbos cultivation may play in agricultural development in South Africa was not made wholly clear, Ms Middleman stressed that Black Economic Empowerment (BEE) is a policy readily being adopted by SAPPEX. She said that is hoped that through proper financial support, it will be possible to extend the industry towards initiating projects in BEE.

Discussion
Ms J Ntuli (ANC) asked whether such a BEE project was in place, and asked from where, in Mrs Middleman's opinion, the funding for the project should come.

Mrs Middleman answered that no project was currently in place, assistance in research and promotion is essential. She conceded that in the last four years, the total amount that SAPPEX has spent on promotion is equivalent to a half-page advertisement in an international horticulture magazine. She hoped that this funding would come from government to help expand the industry.

The Chairperson, Mr Masithela, requested Mrs Middleman to make a written submission to the committee in this regard.

Honey Bee Foundation & Products
Mr D Marchand described beekeeping as a profitable and sustainable agricultural resource, based on its low-tech craft and accessibility to thousands of people.

In partnership with the Agricultural Research Council, Mr Marchand undertakes to provide training to the 'untapped' rural communities who are most in need, including farm labourers. This could positively affect more than 10 000 people.

Mr Marchand explained that for approximately 20 minutes worth of harvesting time, R500 can be made from the 15-20 kilograms of honey produced. It has a very low initial capital layout, and he provides the advice and knowledge for this venture. He quoted the figure of R4 million that is made per year in the commercial beekeeping sector in the Western Cape alone.

Discussion
Ms J Ntuli (ANC) asked how he hopes to facilitate training in extremely remote rural areas.

Mr Marchand answered that his organisation has already trained over 500 beekeepers in so-called 'extremely remote rural areas'. He maintained that his program includes a 'Training the Trainer' component, which allows for the newly-trained beekeeper to train others in his community.

Mr P Gerber (ANC) asked what the current situation is with regard to 'alien' bees, and their rumoured invasion of the hives of indigenous bees.

Mr Marchand maintained that this was a problem unique to commercial farmers only, who often move hives around. For the rural, or small-scale beekeeper, this would not be a problem. They would not be affected, as the bees are more settled through not being moved around.

Meeting adjourned.