DAFF Quarter 2 performance & ARC Implementation Plan Progress on Audit Outcomes for 2016/17; with Minister and Deputy Minister

Agriculture, Forestry and Fisheries

30 January 2018
Chairperson: Ms M Semenya (ANC)
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Meeting Summary

The Department of Agriculture, Forestry and Fisheries has spent 24,0% of its budget during the second quarter of the 2017/18 financial year.

This is what the Portfolio Committee on Agriculture, Forestry and Fisheries heard when the Department tabled its second quarter preliminary organisational performance report, recently. It briefed the Committee, amongst other things, on the achievements and non-achievements of the six programmes, transformation in the sector, the Department’s Audit Plan and Agricultural Research Council Audit Improvement Plan, Ncera Farms transfer, Vrede Dairy project, and Preservation and Development of Agricultural Land Bill.

The Department also briefed the Committee on the current status of the avian flu (HPAI H5N8). It said South Africa has never experienced an outbreak of HPAI in chickens or any domestic birds other than ostriches, which makes this current outbreak a very significant and serious one in South Africa’s animal health history. The industry commissioned a study to determine the exact economic impact of the current outbreak. Expected date of release of the study is early March 2018.

The Western Cape has the highest outbreak due to ostrich farming. The Minister has set up a team to guide the Department on the vaccination process which is still controversial at the moment. The decision on vaccination has been done through broad consultation and by taking all the available scientific information into account. The Ministers’ Committee on the Budget approved R40 million for paying compensation. The Minister approved guidelines for compensation for the culling of uninfected birds. The work continues between the Department and industry to process claims.

The Department reported that government has many levers to be utilised in terms of BEE, but have not utilised them. There has been a major challenge to determine the Broad Based Black Economic Empowerment Status level of the Agricultural Sector. As an intervention, the Department embarked on the process to develop the Draft AgriBEE Enforcement Guidelines in terms of Section 10 of the Broad Based Black Economic Empowerment Act No. 53 of 2003 (called principal Act), as amended. These services are for issuing licences; permits; authorisations; grants; incentives; procurement contracts to agricultural enterprises allowing them to conduct business operations in the sector. 

Section 10 of the BBBEE Act outlines the Government’s leverage for the implementation of BBBEE in the economy. Enterprises which make use of these levers should contribute to Government’s Programmes to address inequality in the economy. The levers are going to be inevitable to speed-up the implementation of the radical socio-economic transformation in the agricultural sector as they could be used to enforce compliance to the AgriBEE Sector Code.

The Department further spoke about disciplinary actions within it. The Minister is addressing the issue of the suspension of the Director-General (Mr Mlengana). The suspended Director General brought a case against the Department in order to be allowed to resume his duties. The Minister opposed it. The matter would be heard in court in March 2018. Regarding the Harris Nupen case, the matter was referred to the Hawks for investigation and they are still looking into the matter. An investigation on the awarding of a tender for the sale of Abalone is currently underway. The matter is handled by an independent team.

The Department took the Committee through the guiding framework for the implementation and monitoring of Comprehensive Agricultural Support Programme funded projects and the use of R60 million. The R60 million received from National Treasury was ring-fenced to strengthen Comprehensive Agricultural Support Programme management, oversight and monitoring. The Deputy Director-General for Food Security and Agrarian Reform ensured that the programme management and oversight role of Comprehensive Agricultural Support Programme office is strengthened and identified key positions to be filled. This meant that the structure although falling within the Department’s Compensation of Employees budget must be approved and positions advertised or reorganisation happens internally. As such the R10 million was not spent at the end of 2016/17 for this purpose due to Human Relations related delays in concluding the work study. A monitoring schedule was developed and different teams were sent out to provinces to monitor and verify implementation of the projects.

The Agricultural Research Council briefed the Committee on the implementation plan progress on audit outcomes for 2016/17 financial year. The irregular expenditure is not a result of non-compliance in supply chain process, but is a result of an expenditure that exceeded the approved budget, and previously was not identified as irregular expenditure. The Council did not seek approval to exceed the approved budget expenditure from the executive authority.

The Audit Improvement Plan has specific timelines and responsibilities and was compiled and submitted to the Audit and Risk Committee and Council. It is aimed at eliminating root causes and findings, encourages regular reporting to the Council, and calls for the retraining of staff. The Audit Improvement Plan comprises a total of 332 treatment actions directly aligned to the total of 152 findings raised by the Office of the Auditor General of SA. Treatment actions were developed in order to deal with and close out the root causes of all the findings raised.

The Agricultural Research Council reported that progress updates on the status of the treatment actions were done on a weekly basis, starting from October 2017 to December 2017. During this period, the Council Internal Audit independently reviewed and verified all weekly status updates. The status update reports were compiled and communicated to the Agricultural Research Council Chief Executive Officer, Chief Financial Officer, Council Audit & Risk Committee, ARC Council, and Office of the Auditor General SA.

The process has not been without constraints and challenges. There were delays in the appointment of a suitable service provider, identified as being key in enhancing the functionality requirements of the current Enterprise Resource Planning system. There is a shortage of skilled people while the entity’s staff is still required to do their normal work activities including the completion of treatment actions. There have been extended engagements with key external government departments and agencies. The entity also experienced the resignation of key personnel such as the Chief Financial Officer and Group Financial Manager.

Members asked how far the Department is regarding investigations on the suspended Director General; wanted to know the impact of the budget constraints on the capping of staff salaries; why the Department has been struggling to finalise the Ncera project and its heavily paid Chief Executive Officer because since 2016 there have been many extended dates; asked if the Department had received an opinion from the State Law Advisor before it indicated the Prevention and Development of Agricultural Land Bill is not constitutionally sound; asked for clarity on the issue of the preliminary report the Department  presented to the Committee instead of a final report; and wanted to establish how far the Department is in its report regarding the commercialisation of black farmers.

From the Agricultural Research Council, Members wanted to establish if there were a need for a forensic audit into the financials of the Council; asked if there is an opportunity for selling some assets to make the entity viable again; if the Council, seeing that it is talking of a shortage of skills, has considered funding university students to work at the entity during holidays so that they could get an opportunity to be employed by it; and asked if the Council had a relationship with the Department of Science and Technology.
 

Meeting report

DAFF Presentation
Mr R Ramasodi, Acting Director-General: DAFF, briefed the Committee on the achievements and non-achievements of the 6 programmes, transformation in the sector, DAFF’s Audit Plan and ARC Audit Improvement Plan, Ncera Farms transfer, Vrede Dairy project, and Preservation and Development of Agricultural Land Bill (PDALB).

Programme 1

This programme has spent 14% of its budget during the quarter under review. It has managed to present the Reviewed ICT Disaster Recovery Plan (DRP) to the ICT Control Advisory Board and Departmental Information Technology Committee. The sector economical and statistics baseline information for Quarter 2 has been compiled and updated. Branches of the Department have been consulted on the Master System Plan. The annual report on the implementation of the Sector Research Agenda through the Research and Technology Fund (RTF) programme has been submitted to EXCO. One quarterly project on verified projects with recommendations has been submitted to EXCO for approval.

However, this programme has not achieved in the following areas:

  • Coordination of key strategic intergovernmental engagements
  • Training of business continuity champions with accredited service provider
  • Conducting project risk assessments
  • Reviewing of core directorate business continuity

Planned actions are around doing an analysis report regarding non-compliance and issue recommendations regarding risk assessments. A consolidated report is undergoing an approval process with regard to key strategic intergovernmental engagements. The Business Continuity Steering Committee is to strengthen respective business continuity plans. The budget has been secured to conduct the training during the current financial year.

Programme 2

Its expenditure is standing at 30%. The research on cultural and economic importance of indigenous breeds has been conducted. The quarterly report on regulatory interventions (quarantine inspections, surveillance and testing) has been implemented. The monitoring report on seed crops and seed potato schemes has been compiled and submitted. But this programme has failed to collect data from Kaonafatso ya Dikgomo (KyD) and poultry participants; manage surveillance actions, verify and analyse collected information; and notify applicants on approved placements of the 126 Compulsory Community Service (CCS) veterinarians to be deployed.

The Department has tabled the report on poultry participants with regard to collection of data from KyD and poultry participants. On surveillance actions, the matter has been tabled at MINTECH and a strategy to address the issue has been developed. Concerning the failure to notify approved applicants for CCS, the Department has resolved to carry over graduates from the 2016/17 financial year. There also has been a discussion on whether those not sponsored by the government should do compulsory service. But the matter has not been finalised. With foreign students there is an expectation to do compulsory service.

Programme 3

The programme has spent 47% of its budget and has managed to conduct the needs analysis for 2018/19 intake of graduates. At least one of the provincial extension coordinating forums is operational in one province, North West. However, the programme did not register any achievement in the National Policy on Comprehensive Producer Development Support recommended by MINTECH and MINMEC and in coordinating the quarterly review report on National Food and Nutritional Security interventions.

The Department indicated the National Food and Nutritional Security Coordinating Committee addressed the matter on 30 November 2017 and the coordination of reporting by Provincial Departments of Agriculture (PDAs) was addressed. The National Policy on Comprehensive Producer Development Support has been tabled at MINTECH and was recommended for tabling at MINMEC.

Programme 4

59% of its budget has been spent due to the foreign offices it has across the globe. This programme has supported 35 cooperatives with training and established 4 commodity-based cooperatives. It has submitted reports on the implementation and negotiation of trade agreements; coordination of bilateral and multilateral cooperation engagement; and coordination of strategic engagement of partners within Africa and African agencies. It has produced a report on compliance to AU and SADC obligations. It did not achieve on consulting the public on AgriBEE Enforcement Regulations.

The Department has resolved to implement the State Law Advisor recommendation. The recommendation given was for DAFF to develop Guidelines instead of Enforcement Regulations.

Programme 5

Its expenditure is at 15%. It has consulted stakeholders on the Agro Forestry Concept document. 100 hectares of state indigenous forests have been rehabilitated. Three provincial stakeholder workshops were conducted to solicit and consolidate inputs and comments. The programme did not register any success in the mid-term performance monitoring report on agricultural land rehabilitation interventions. The report was finalised during Quarter 3.

Programme 6

34% of its budget has been spent mainly on Operation Phakisa dealing with Aquaculture. The programme has finalised reports to update status of fish stocks and recommend catch limits to achieve recovery targets, and has submitted a progress report on integrated production methods within production systems. 69 investigations were conducted on Operation Phakisa initiatives (Ocean Economy). The programme did not submit the Aquaculture Development Bill to Cabinet, and allocate rights in the abalone and West Coast rock lobster sector.

Plans of action are around reserving the rights of allocation for abalone for the next financial year based on Ministerial decision. Measures to fast-track validated evidence were adopted with regard to research reports to update status of fish stocks and recommend catch limits to achieve recovery targets. The Aquaculture Bill has been recommended for presentation to Cabinet by the DG Cluster.

The Acting DG also spoke about the current status of the Avian flu (HPAI H5N8). South Africa has never experienced an outbreak of HPAI in chickens or any domestic birds other than ostriches, which makes this current outbreak a very significant and serious one in South Africa’s animal health history. The industry commissioned a study to determine the exact economic impact of the current outbreak. Expected date of release of the study is early March 2018. The total number of outbreaks detected and reported to date (23 January 2018):

  • 126 locations tested positive for HPAI H5N8
  • 8 outbreaks in backyard chickens
  • 30 outbreaks on commercial chicken farms
  • 19 outbreaks in birds kept as a hobby and Zoos
  • 40 outbreaks on commercial ostrich farms
  • 29 outbreaks in wild birds

The Western Cape has the highest outbreak due to ostrich farming. The Minister has set up a team to guide the Department on the vaccination process which is still controversial at the moment. The decision on vaccination has been done through broad consultation and by taking all the available scientific information into account. Vaccination against HPAI does not prevent infection. It merely reduces the clinical signs of the disease and shedding of the virus.  Due to the high possibility that vaccination would mask infection with HPAI, most trade partners would not accept poultry, poultry meat or products from a country that vaccinates against HPAI. Consultation between DAFF and Industry continues to formulate a position on vaccination.

The Ministers’ Committee on the Budget (MINCOMBUD) approved R40 million for paying compensation. The Minister approved guidelines for compensation for the culling of uninfected birds. The work continues between DAFF and industry to process claims.

Concerning transformation in the sector, the Acting DG stated that during FRAP2015/16, transformation of each sector was measured against the percentage of the Total Allowable Catch (TAC) and/or Total Applied Effort (TAE) that is “owned” by the Historical Disadvantaged Individuals. For TAE fisheries such as Large Pelagics, Seaweed, KZN Beach Seine and Netfish the Historically Disadvantaged Individuals (HDI) percentage was calculated as an average.

Mr Ramasodi said government has lots of levers to be utilised in terms of BEE, but they have not been utilised. There has been a major challenge to determine the Broad Based Black Economic Empowerment (BBBEE) Status level of the Agricultural Sector. As an intervention, DAFF embarked on the process to develop the Draft AgriBEE Enforcement Guidelines in terms of Section 10 of the BBBEE Act No. 53 of 2003 (called principal Act), as amended. These services are for issuing licenses; permits; authorisations; grants; incentives; procurement contracts to agricultural enterprises allowing them to conduct business operations in the sector.

Section 10 of the BBBEE Act outlines the Government’s leverage for the implementation of BBBEE in the economy. Enterprises which make use of these levers should contribute to Government’s Programmes to address inequality in the economy. The levers are going to be inevitable to speed-up implementation of the radical socio-economic transformation in the agricultural sector as they could be used to enforce compliance to the AgriBEE Sector Code.

Advice from the State Law Adviser has been obtained. DAFF has prioritised a workshop to be held in this last quarter for further deliberation with the relevant regulators. State and public entities would play a facilitation role towards implementation of BBBEE Codes of Good Practice in the various sectors. The approved guidelines would be shared with the AgriBEE Sector Council. The sector has maintained a level four B-BBEE status. There is an increase in terms of submission from MLE. EMEs have maintained a level 4 B-BBEE status. Indication shows most EMEs are non-women owned. There is non-compliance with industry Codes of Good Conduct.

The Acting DG took the Committee through the guiding framework for the implementation and monitoring of CASP funded projects and the use of R60 million. The R60 million received from National Treasury was ring-fenced to strengthen CASP management, oversight and monitoring. The Deputy Director-General for Food Security and Agrarian Reform ensured that the programme management and oversight role of CASP office is strengthened and identified key positions to be filled. This meant that the structure although falling within the DAFF Compensation of Employees (CoE) budget must be approved and positions advertised or reorganisation to happen internally. As such the R10 million was never spent at the end of 2016/17 for this purpose due to HR related delays in concluding the work study.

A monitoring schedule was developed and different teams were sent out to provinces to monitor and verify implementation of the projects. These included CASP offices, programme development support, smallholder, crop and animal production, extension, Sector Training and capacity building, and internal audit. At the end of September 2017, 314 of the 468 planned projects were initiated (67%) with 39 CASP projects completed. The 3rd quarter reports are due on 31 January 2018. DAFF has conducted monitoring visits to all nine provinces as at end December 2017. It visited 96 projects.

Quarter one and two performance review meetings were held in November 2017 in Limpopo. Three implemented projects were visited during the visit by all delegates to share lessons and provide constructive criticism to improve performance. 

With regard to disciplinary actions, the Minister is addressing the issue of the suspension of the DG. The suspended DG (Mr Mlengana) brought a case against the Department in order to be allowed to resume his duties. The Minister opposed it. The matter would be heard in court in March 2018. Regarding the Harris and Nupen case, the matter was referred to the Hawks for investigation and they are still looking into the matter. An investigation on the awarding of a tender for the sale of abalone is currently underway. The matter is handled by an independent team. Concerning the Ncera and DAFF officials’ case, the investigation has been completed and recommendations were submitted for consideration. The report is still to be discussed with the principals of the Department and their decision would be reported to the Committee.

Updating the Committee about the Ncera Farm transfer progress, the Acting DG stated that consultative meetings were necessary and urgent between ARC, DAFF and Ncera employees. The meeting of 17 November 2016 was coordinated by the Directorate for Employee Relations to conduct consultative meetings with the Ncera Centre Management and the Ncera Centre general workers in relation to the process of transferring the Centre to the ARC. During the first meeting with the Ncera Management, the rationale behind the gathering was explained by the Director for Employee Relations. The management was afforded an opportunity to ask questions and its concern was mostly on job security, accommodation as well transportation arrangement of the Ncera workers. The Director for Employee Relations responded by explaining how the process of transferring the Ncera Centre would unfold. She also gave assurance that no employees would lose jobs because of the transfer and that all the information regarding the Ncera Centre workers arrangements (accommodation and transport) would be communicated to the ARC.  This matter would be finalised with National Treasury based on the signed MoU.

Pertaining to legislation issues, the review of the Marine Living Resources Act (MLRA) has not yet started. The Minister has established the Fishing Transformation Council that would look into reviewing of the MLRA. With regard to the PDALB (Preservation and Development of Agricultural Land Bill), on 21 September 2017 DAFF received an opinion from the Office of the Chief State Law Adviser (OCSLA). The OCSLA raised concerns, amongst others, on the concurrent mandate to be shared between the three spheres of Government and the need to clearly define the roles and responsibilities of each sphere without infringing on the powers of the other. It is the opinion of the OCSLA that the Bill is not constitutionally sound. DAFF shall be appointing a Technical Task Team and legal expert to re-consider and redraft the Bill. In light of the above, it is unlikely that PDALB would be submitted to Parliament on or before 31 March 2018 as envisaged.

Draft 5 of the Policy on Comprehensive Producer Development Support has been developed and tabled at MINTECH, which has recommended that the Policy should be tabled at MINMEC and routed to Cabinet for approval. The Policy on Comprehensive Producer Development Support would be tabled at the Social Protection, Community and Health Development and Economic Sector, Employment and Infrastructure Development Clusters in 2018. The Policy has been approved by MINTECH and would be introduced to the DGs Cluster in 2018.

The Acting DG further presented the way forward to improve the management of the audit matrix for the audit findings raised in the 2017/18 financial year. The action plan is to be completed immediately when the audit finding is raised. The action plan is to be implemented within two months from raising the audit finding. The audit finding would be incorporated in the Audit Matrix immediately when the management comments are signed off by the relevant Deputy Director-General, as to waiting for the Final Audit Management report only issued on 31 July 2018. A guideline would accompany all audit findings to ensure that the correct internal control deficiency/root cause is identified; and that the management comments include adequate responses to timeously address the audit findings.

Internal audit performed follow-up audits on the implementation of corrective action by the Department for the 2016/17 financial year audit matrix. Internal audit is currently busy with a follow-up audit on the implementation of corrective action for the AGSA’s 2016/17 management report issued during July 2017 as documented on the audit matrix for 2017/18 financial year. The internal audit did a gap analysis on the audit matrix. The internal audit presented their findings and recommendations to management, EXCO and the Audit Committee. The Department is in the process of implementing corrective measures as recommended by internal audit.

The Acting DG took the Committee through the story of the controversial Vrede Dairy project. The National Assessment Panel (NAP) for the 2013/14 financial year (30-31 January 2013) approved a CASP allocation of R53 million towards the implementation of the Vrede Dairy Project and the total budget identified by the Free State Department of Agriculture and Rural Development (FSDARD) to complete the project was R525 million.

In July 2013 the Department of Agriculture, Forestry and Fisheries (DAFF) received a letter from National Treasury raising procedural concerns on the partnership entered into. According to National Treasury, the nature of the arrangement for this project was that of a Public Private Partnership (PPP) and was subject to the provisions of National Treasury Regulation 16.3.1 which states that as soon as an institution identifies a project that may be concluded as a PPP, the accounting officer or accounting authority must in writing:

  • Register the PPP with the relevant treasury
  • Inform the relevant treasury of the expertise within that institution to proceed with a PPP.

According to National Treasury, this regulation was violated by FSDARD and DAFF needed to act to ensure CASP is not used unlawfully. On 23 July 2013 DAFF sent a letter to the Head of the Department (HOD) of FSDARD informing him of its intention to implement section 17 (1) (a) of the Division of Revenue Act (DORA) of 2013 and withhold the quarter two CASP allocation. A letter of representation was received from the HOD dated 2 August 2013 stating reasons why the funds should not be withheld from the province. However, this representation did not adequately respond to the concerns by National Treasury and DAFF withheld the second CASP transfer to the province for a period not exceeding 30 days and arranged a site visit with the province to garner more information.

The DAFF undertook a technical visit to the Free State Vrede integrated dairy project on the 13 August 2013. The DAFF technical team requested certain documentation of which the province only provided the feasibility study and a copy of the MOU with Estina. The province was presented with a letter indicating DAFF’s intention to implement Section 17 (1) (a) of the Division of Revenue Act 2012 and withhold the second quarter allocation of both CASP and Ilima/Letsema for 2013/14 to DARD for a period longer than 30 days but not exceeding 120 days. The province was given 7 days to submit a representation stating why funds should not be withheld from the province.

A follow up technical meeting was held with the province on 22 October 2013 in an attempt to offer technical support. Then DAFF confirmed its non-participation in funding the project and this was communicated to the Head of the Provincial Treasury. The National Treasury also commissioned a forensic audit on this project.

(Tables and graphs were shown to illustrate expenditure, Avian flu outbreaks, and status of transformation)

ARC Presentation

Dr Shadrack Moephuli, Chief Executive Officer: ARC, briefed the Committee on the implementation plan progress on audit outcomes for 2016/17 financial year. He noted that the irregular expenditure is not a result of non-compliance in supply chain process, but is a result of an expenditure that exceeded the approved budget, and previously it was not identified as irregular expenditure. The ARC did not seek approval to exceed the approved budget expenditure from the executive authority.

The Audit Improvement Plan (AIP) has specific timelines and responsibilities and was compiled and submitted to the Audit and Risk Committee and Council. It is aimed at eliminating root causes and findings, and encourages regular reporting to the Council and call for the retraining of staff. The AIP comprises a total of 332 treatment actions directly aligned to the total of 152 findings raised by the AGSA. The treatment actions were developed in order to deal with and close out the root causes of all the findings raised.

Of the 332 treatment actions, 162 actions are directly linked to the areas of qualification – property plant and equipment, receivables from exchange transactions and payables from exchange transactions – as was identified by the AGSA. With respect to the qualification areas, the nature of the treatment actions was to ensure, amongst others, for the correction of all prior financial year errors, the undertaking of a 100% asset verification across all 11 campuses of ARC, and the introduction of more stringent measures pertaining to the management of debtors.

Progress updates on the status of the treatment actions were done on a weekly basis, starting from October 2017 to December 2017. During this period, the ARC Internal Audit independently reviewed and verified all weekly status updates. The status update reports were compiled and communicated to the ARC CEO, CFO, Council Audit & Risk Committee, ARC Council, and AGSA.

The process has not been without constraints and challenges. There have been delays in the appointment of a suitable service provider, identified as being key in enhancing the functionality requirements of the current ERP system. There is a shortage of skilled people while the ARC staff is still required to do their normal work activities including the completion of treatment actions. There have been extended engagements with key external government departments and agencies. The entity also experienced the resignation of key personnel like CFO and Group Financial Manager.

In his conclusion, he stated the ARC is confident it could turn around the situation by focusing on reviewing the overall resource requirements necessary to close out outstanding findings by increasing temporary employment capacity until 31 May 2018. It would prioritise and fast-track the closing out of findings that are within the ARC direct control and management, and streamline treatment action areas to be done by service providers. It would continue to grow and maintain relations with key external government departments and agencies, and close out all qualification area findings by 31 March 2018, with the remaining findings to be closed out by 30 April 2018.

Discussion
DAFF Presentation

Ms A Steyn (DA) asked how far the Department is regarding investigations on the suspended DG. She also wanted to know the impact of the budget constraints on the capping of staff salaries. She remarked that the Vrede Dairy project is on the news because it is linked with the Guptas. There are many projects similar to the Vrede Dairy where money is pumped but nothing is happening. In the Eastern Cape there is a poultry project which is heavily funded yet there is not a single chicken on sight.

The Minister of Agriculture, Forestry & Fisheries, Mr Senzeni Zokwana, on the suspended DG, stated charges were laid against the DG. Then the DG took DAFF to court so that he could go back to work. The court stated there is no urgency on the matter. So, the case would be heard in March 2018. Internal processes are taking place and the President has been informed of the matter.

The Deputy Minister, Mr Bheki Cele, regarding budget constraints, said this was a generic problem. The problem is worse this year than last year. The budget cuts are curbing the activities of the Department, not salaries. The Department has to manage with what it has. This problem is also affecting the Department of Health because he has heard of ambulances that could not be fixed due to budget constraints.

Mr R Cebekhulu (IFP) commented that DAFF is not alone on the issue of land rehabilitation because there are other departments that are involved like the Department of Environmental Affairs, but how much has been done remains very low. He said land is lying fallow on farms bought by DAFF for emerging farmers. Communal land is also lying fallow and communities have not been assisted. Tractors were provided and disappeared without any trace. Many rural folks are beginning to leave the rural areas for urban areas with the hope of getting employment. This would lead to an increase in squalor conditions. He further wanted to know when local commercial farmers are going to be subsidised like in other countries because local farmers are struggling to produce to supply local markets. They only focus on exports.

The Minister agreed with Mr Cebekhulu on land degradation. He indicated that DAFF works with the Department of Environmental Affairs (DEA) and that some funding comes from it. DAFF only needs to improve its participation on the improvement of land degradation with the DEA in order to do things better. Iit is true some people have moved to communities closer to towns because they could not produce because of land degradation. The acting DG and government are working on a plan to sort out land degradation and water problems.

The Acting DG stated Mr Cebekhulu is correct on the matters he raised. What needs to be done is the coordination of the work regarding land rehabilitation between the DEA and DAFF. Concerning the fallow land, the Department is trying to find ways of assisting farmers in terms of the policy space.

The Minister said it is in the interests of local commercial farmers to sell local or outside. It is understandable when they prefer to go for Euros. Subsidy to farmers could be done with the dti as it does with other industries. The after allocation of land to farmers who have land is done by the Department of Rural Development and Land Reform (DRDLR). This then means there should be an engagement between the DAFF, DRDLR and dti.

The Acting DG added that SA is competing in an environment where the situation is not balanced. Recently, the Minister of Trade and Industry together with DAFF officials attended the World Economic Forum. The view was that DAFF needs to identify areas that need to be subsidised.

Mr N Paulsen (EFF) indicated it would have been better for the Department to provide figures instead of percentages to show if there has been transformation in the fishing sector and also to provide a date for the review of the Marine Living Resources Act. He pointed out that the Department should provide the Committee about other projects like Vrede Dairy that are funded but not productive. The Committee needs a list, sizes, and mandates of these projects so that the Committee could do an oversight on them.

The Minister said the Department would provide the Committee with all the documentation about the projects and asked Ms Steyn to provide him with details of the unproductive poultry project in the Eastern Cape.

The Chairperson then indicated the Department must not only provide the list, but also business plans and budget allocations for these projects.

Mr P Maloyi (ANC) wanted to know why the Department has been struggling to finalise the Ncera project and its heavily paid CEO because since 2016 there have been many extended dates. He also asked if the Department had received an opinion from the State Law Advisor before it indicated the Prevention and Development of Agricultural Land Bill (PDALB) is not constitutionally sound.

The Minister, concerning Ncera, explained that the work has been given to an advocate for an opinion. The opinion was received in December 2017. The issues have been clarified between DAFF’s team and ARC. The centre and its millions of Rands would be transferred to the ARC once the opinion of the advocate has been thoroughly studied.

The Acting DG added there are legal issues the Department needs to untangle, but it is hoped that mid-February everything would be finalised. The CEO’s increased salary comes from a self-appraisal report of the work done by the CEO. This has been found to be illegal and the Department has to deal with the people who approved the increase. With regard to the Bill, he said the Department would get a second opinion because it has been working on the Bill for a long time and has, in the process, consulted other state lawyers before.

Mr P Van Dalen (DA) asked for clarity on the Norwegian vessel that is doing research about SA on our waters and the costs involved, and why a local vessel is not doing the research. He also wanted to know if confiscated abalone is sold in an open or closed tender and how that money is used. Lastly, he asked if the Department has a plan for Day Zero in affected provinces and how farms and surrounding communities are going to be helped.

The Minister explained that the Norwegian vessel is training the bulk of our researchers. It is doing a study based on the quality of oxygen that is causing washouts. The Department is spending no money on this research which covers the Atlantic and Indian Ocean area. SA’s scientists are participating in this research and there is also an SA PhD candidate there. They are also paying for the programme undertaken by the NMMU on oceans like fish farming, ocean patrols, etc.

The Acting DG further indicated SA is participating in this research to make sure the country does not rely on research done by other countries about South Africa.

Mr Belemane Semoli, Acting Deputy Director-General for Fisheries: DAFF, regarding abalone sales, stated it is sold through a policy that is being reviewed because it is outdated. In the meantime, it has been sold through a closed session to those who have permits. To date, 10 tons have been sold to the value of R2m.

The Minister then informed the Committee that the processes for the tender of selling abalone were not followed legally. The tender was opposed. There was a court case and the Department won the case. Internally, the Department is dealing with the individuals implicated in the illegal process of selling the abalone. The Department is waiting for the decision of the court and is aware of the uncertainties that are causing problems within it.
With regard to Day Zero, the Department is aware of the challenges facing the Northern, Eastern and Western Cape provinces. Funding is sought to transport water and feed from other provinces. There are interventions taking place, but nothing is concrete at this stage.

The Acting DG added there is an Inter-Ministerial meeting taking place in Gauteng which involves the Department of Water and Sanitation and it is expected to come up with clear plans to mitigate Day Zero. The Committee should wait for the outcome of the meeting.

The Chairperson asked for clarity on the issue of the preliminary report the Department was presenting to the Committee instead of a final report. She wanted to establish how far the Department is in its report regarding the commercialisation of black farmers. She further remarked the Department should finalise its mitigation and adaptation strategy regarding the management of plant and animal diseases because the Avian flu appears to be going nowhere. The Department has to move with speed in implementing its strategy with other stakeholders like Grain SA. She also noted that the report of the Hawks on Vrede dairy should be welcomed though they (Hawks) take time to do things. She indicated the Department’s oversight efforts are worrying because it decided in 2013 not to fund the dairy project, but Treasury continued to pump money into it. This indicates coordination is a problem because DAFF should have communicated with Treasury to discontinue funding the project it withdrew from.

Mr Joe Kgobokoe, Deputy Director-General for Policy, Planning & Monitoring & Evaluation: DAFF, explained that a preliminary report is produced after 30 days when the quarter has ended. After 90 days it is a validated report because it has gathered evidence from the provinces. So, when they bring reports to parliament, whether it is a preliminary or validated, it first has to go through internal processes and DPME. The validated report is ready to be presented to the Committee.

The Acting DG said good progress is reported from provinces regarding the commercialisation of black farmers. There is a clear programme DAFF would like to implement and make use of funding that would be administered by the Land Bank.

Mr Maloyi wanted to find out if DAFF has monitoring and verification offices in all provinces to ensure things are happening because out of the 400 CASP projects it visited only 96, and asked who verifies things or information.

The Acting DG explained that provincial offices are being tasked to look at CASP and they have been told their monitoring of CASP should start at extension level, not at national level. The issue has been given consideration. He indicated all the reports, whether for desk-top or in-depth verification, are submitted to the DPME for verification and some information comes from Stats SA.

The Chairperson asked how far the country is in meeting the targets of 2063 Agenda. She further remarked that the extension officers in provinces should be capacitated to do the monitoring and report directly to the national Department so that there is no need for the Department to wait for validations and evidence from provinces. Part of CASP should be used to capacitate extension officers.

The Acting DG stated Agenda 2063 is there to envision the kind of Africa we want. Through agriculture, it could be achieved through Comprehensive Africa Agriculture Development Programme (CAADP). There needs to be a convergence on sustainable development goals and CAADP. This could be achieved if this is seen as a single project. For instance, Outcome 10 is about land distribution. This involves other departments like DEA and DRDLR.

The Deputy Minister then added there is a parallelism of departments like DEA, dti and DRDLR. The DEA is parallel with things it is not supposed to do. It agrees it gets money from international organisations and it gives that money to DAFF. The DRDLR parallelism is on land preservation, fire issues are another parallelism.  Legislatively, fire falls under agriculture, but practically under DEA because funding comes from the DEA. Fire mainly affects agriculture. So, what is important is the coordination that needs to be strengthened. This means political principals have to deal with the coordination of this parallelism. The major problem agriculture is facing with dti lies in incentives. Most incentives go to mining companies and car manufacturers. Agriculture gets the least of incentives whereas it is the biggest creator of jobs.

Mr S Mncwabe (NFP) voiced concern about the duplication of resources in government. Three departments cannot be responsible for aquaculture because nothing would happen. This would cripple service delivery in the long run.

The Chairperson pointed out she has been trying to engage with the Chair of Chairpersons to create an ad hoc committee to look into matters where, for example, all departments involved in aquaculture (DEA, DAFF, and DRDLR) report to this ad hoc committee. But if that does not happen, no department is going to know what the other department is doing. The issue of encouraging government departments to act in unity when it comes to implementing programmes that are inter-departmental or affecting concerned departments is very important.

Mr H Kruger (DA) suggested the Committee should get an update on how far the country is on Recapitalisation Development because, at this stage, it is not clear whether Recap belongs to DRDLR or DAFF.

The Chairperson stated Recap is still with the DRDLR. There was an engagement that Recap should be taken to DAFF, but until now that move has not been agreed to.

ARC Presentation

Ms Steyn wanted to establish if there is a need for a forensic audit into the financials of the ARC; and she asked if there is an opportunity for selling some assets to make the ARC viable again.

Dr Moephuli stated they have explored this matter with the Board and Risk Unit because they do lots of work for the DRDLR. DRDLR pays one lump sum for many projects carried out and does not itemise the invoices so that the ARC could reconcile them. Also, there were some instances where some officials were not doing their work or reconciling invoices. That is why during the audit, it was found there were no missing funds. On the issue of assets, he said the ARC hat an asset management plan which supports the kind of work it is doing. Everything is done with the approval of the Board and Minister. The Minister is, in some cases, called upon especially when the assets like buildings have to be sold. Sometimes it is better to lease some assets like land and buildings because it is not right to sell them for they are very expensive when you have to buy them back.

Mr Mncwabe asked if it is not better to employ an individual at a negotiable salary to provide the same service of the consultant because consultants are very expensive.

Dr Moephuli replied it is sometimes not necessary to employ a person permanently because what you only need is expert advice to help you identify gaps in the business.

Mr Paulsen asked if the ARC, seeing that it is talking of a shortage of skills, has considered funding university students to work at the ARC during holidays so that they get an opportunity to be employed by the ARC when they complete their studies. He further asked if it has a relationship with the Department of Science and Technology (DST).

Dr Moephuli informed the Committee there are 360 students within the ARC. They are doing masters and doctoral studies and are being supervised by ARC. They are not only training them for ARC, but for other research institutions as well. Relations with the DST are very good because it helps them to achieve their national objectives.

Adoption of Minutes

Committee minutes for 27 June, 1 August, 16 August, 22 August, 5 September, 6 September, 10 October, 11 October, 17 October, 19 October, 24 October, 7 November, 14 November and 28 November 2017 were adopted with no amendments.

The meeting was adjourned.

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