Department of Agriculture, Forestry & Fisheries response to BRRR recommendations, with Deputy Minister

Agriculture, Forestry and Fisheries

07 June 2018
Chairperson: Ms R Semenya (ANC)
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Meeting Summary

The Committee met with the Department of Agriculture, Forestry and Fisheries (DAFF), with the Deputy Minister, to be briefed on the response of the Department to the Committee’s Budgetary Review and Recommendations Report (BRRR) and other outstanding matters. In terms of the presentation on the BRRR, the Department informed the Committee of its response to filling vacant positions in Senior Management Service, integration of the fisheries management branch, legislation and policies. It also covered deregistration of Ncera, restructuring of the policy, planning, performance monitoring and evaluation unit, audit matrix and audit action plan, business cases presented to Treasury, service delivery performance, alignment and contribution of entities and funding arrangements for Operation Phakisa.

The Committee questioned the percentage spent on salaries in the Department and if this was within the norm or not, where the funds for paying the salaries of those in the monitoring directorate came from, plans accompanying funding requests from Treasury and what is done if irregularities are found under costs. There was a concern that the Department would not be able to afford to fill vacant critical positions. Members also requested the report on the Ncera disciplinary matter. Comments were also made on the Aquaculture Bill regarding its recognition of aquaculture as a right not farming along with licensing requirements which may exclude many people. The Committee stressed the need for the Department to assess its organogram in terms of critical positions and vacancies to adhere to the norm set by Treasury. Such assessment should also take into account the fact that agriculture was a concurrent function, performance and systems to prevent loopholes in terms of provinces reporting to national.

The Department then briefed the Committee on the monitoring and verification of projects relating to CASP, Ilima-Letsima, Land Care and MAFISA by DAFF in the provinces. The presentation covered the background to project verification, what occurred during the verification process, documents required for successful project verification and process for selecting projects for monitoring and verification. Members were also taken through the stratified sampling, processes leading to final reports with recommendations, registered CASP projects in the database, registered Ilima/Letsema, colleges of agriculture per province and registered Mafisa projects. This was followed b the number of projects visited, general challenges on CASP, recommendations made to provincial departments, general challenges on MAFISA and staffing at the unit.

The Committee questioned the veracity of information contained in the presentation given that even the Auditor-General could not verify numbers in supporting documents. There was a strong concern that the monitoring and evaluation unit was too small to carry out the large task of monitoring and actually checking projects on the ground. This was tied to the need for Department to ensure smallholder farmers were assisted. Members stressed the need for each project to have a project or contract manager from beginning to end. There was also a need for the Minister to institute a thorough audit of funds going to agencies. Together with this, the political will to pick up on corruption was required. The Committee also requested the MAFISA report. The Committee was not pleased that half of the R60 million allocated to the Department for monitoring and evaluation by Treasury was used for other needs – this would not assist the Department when it motivated Treasury for funds in the future. Members were concerned that it was the smaller items of expenditure conflating the spending on projects – it was said there were many projects costing millions were in fact not worth more than R200 000. This led to the important role of Treasury in standardising pricing across departments together with frameworks to deal with the costs of consultants and quantity surveyors. It was also connected to the need for conditional grants to be granted with conditions so that the money could be followed.

The Department then briefed the Committee on the Climate Smart Strategic Framework in terms of climate smart approaches in agriculture, forestry and fisheries, development of an initial framework and key outputs and objectives of the framework.

Members questioned cooperation between DAFF and other departments within the space of climate smart strategies, working plans or strategies in place on water, budgets available for climate strategy work and monitoring and evaluation of this work. The need for sufficient budgets was stressed to give practical consideration to plans on paper. Other questions focused on agro-forestry, recovery plans for the effects of climate change on agriculture, forestry and fisheries, impact of renewable energy on agriculture and the plan to do away with tractors. Members were concerned about the plans to manage the outcomes of climate change faced by farmers daily such as drought, flooding and outbreaks of diseases. Further discussion was on the budget for immediate assistance, access to international assistance for climate challenges affecting farmers in SA and the need for smallholder farmer insurance. The Committee stressed the importance of inter-ministerial communication on cross-cutting matters such as climate change such as at the level of Operation Phakisa. It was also important to ensure the Department reached all farmers to ensure they were informed and aware of the approaches discussed in the strategy. 

The Department then briefed the Committee on the commercialisation of black producers – the presentation addressed pronouncements made in the 2017 State of the Nation Address, the twofold approach to commercialise black producers, commercialisation through blended funding and an update on progress.

Members discussed the great expense of farming, the importance of a safety net for farmers who struggled, how the Department identified the farmers and the challenge of land. There were questions on the work the Department was doing with communities to ensure titles were given to farmers, the need for long term loans with low repayment rates for these farmers, the mandate of the Land Bank in this regard, the buy-in of banks and the need for Operation Phakisa to address these matters.

Meeting report

Apologies were noted from the Minister of Agriculture, Forestry and Fisheries, Mr Senzeni Zokwana, who was attending an inter-ministerial task team in the North West, Mr N Capa (ANC), who had a by-election in his ward, Mr P Maloyi (ANC) and Inkosi R Cebekhulu (IFP).

Today the Department of Agriculture, Forestry and Fisheries (DAFF) would be briefing the Committee on its response to the Committee’s Budgetary Review and Recommendations Report (BRRR). The Department would also deal with a number of outstanding issues.

The DG of the Department was not present as his mother was critically ill.

Updated Report on the Budgetary Review and Recommendations Report (BRRR)

Mr M J Kgobokoe, DAFF DDG: Policy, Planning and Monitoring and Evaluation, noted that the Committee requested the Department ensure that before the end of this financial year, vacant positions at Senior Management Service (SMS) level are filled and also ensure fast-tracking of disciplinary processes regarding the suspended Director General (DG) of the Department. In terms of response, National Treasury (NT) imposed ceilings for the first time in the 2016/17 Medium Term Expenditure Framework (MTEF) with significant cuts on the Compensation of Employees (COE) budget. For the 2016/17 financial year, the cut was R69.736 million for the 2017/18 financial year and R223.431 million for the 2018/19 financial year. The Minister of Agriculture, Forestry and Fisheries froze filling of vacant positions. Mr Z Xalisa was appointed as the Chief Executive Officer (CEO) of the National Agricultural Marketing Council (NAMC) on 1 December 2017. Interviews for the position of CEO of the Onderstepoort Biological Products (OBP) were held on 3 April 2018 and the OBP Board is to advise the Minister on the outcome of these interviews.

In terms of the integration of the fisheries management branch, in 2015 the Department initiated a project aimed at examining the current organisational structure of the Department and make proposals on how it could be re-configured into an integrated whole and define a service delivery model to ensure the mandate of the Department is met. The matter of integration was not yet finalised.  

Legislation has been dealt with at the level of the Committee and Members were fully appraised, even on Bills withdrawn.

The Policy on Comprehensive Producer Development Support has been developed and tabled at MINTECH, MINMEC and the Clusters and has been referred back for more consultation with National Departments and Stakeholders. The Integrated Funding Development Support Policy is now included in the above Policy for uniformity. The development of a National Policy on Mechanisation Support Policy has been drafted and included.

With deregistration of Ncera, the transfer of Ncera has been concluded. The final documents for the 2017/2018 audit are being prepared and the final annual report for 2017/2018 is being finalised. The CEO and Chief Financial Officer (CFO) of Ncera have been transferred to DAFF. The disciplinary matters emanating from the improper salary increase are being pursued.

Looking at restructuring of the policy, planning, performance monitoring and evaluation unit, a work study investigation was conducted by the Organisation Development Committee (ODC) of DAFF in terms of repositioning and capacitating the Department’s Policy, Planning and Monitoring and Evaluation Branch to ensure effective and efficient institutional monitoring and evaluation. The investigation report has been finalised with pertinent recommendations for consideration. The study was due for tabling at EXCO.

Turning to financial matters, with the audit matrix and audit action plan, DAFF prepared an audit matrix in order to keep track of all the audit findings. The audit matrix included action plans to be taken and monitoring implementation thereof. On a quarterly basis DAFF is presenting progress on the audit matrix to the Audit Committee of the Department. DAFF has also presented the progress on its audit matrix to the Committee on 30 January 2018. 

Mr Kgobokoe stated that with the business case presented to National Treasury, for the past three years, DAFF has been requesting additional funding but National Treasury consistently said there is no new money. Further motivations have been made.

Moving to service delivery performance, in terms of alignment and contribution to the specific MTSF targets, based on the advice of the Committee, DAFF has since 2017/18 been reporting on the performance of the Agriculture, Forestry and Fisheries sector against the MTSF targets. Such reporting has been part of all the quarterly reporting information reports submitted to the Committee and the Department of Performance Monitoring and Evaluation (DPME). The submitted 2017/18 quarterly performance reports may still be accessed by the Committee for reference in this regard.

With alignment and contribution to the specific MTSF targets, CEOs of all public entities are invited to DAFF’s premier sector planning session which takes place around June of each year. Over and above this, on an annual basis, the DAFF planning team gets invited to all respective strategic planning sessions of the public entities.

In terms of funding arrangements for Operation Phakisa for Agriculture, Land Reform and Rural Development, DAFF, along with the Department of Rural Development and Land Reform (DRDLR) and DPME, hosted a five-week planning process known as the Operation Phakisa Lab for Agriculture, Land Reform and Rural Development.

Discussion

The Chairperson noted that the Committee had several meetings on Operation Phakisa including joint meetings with the Portfolio Committee on Rural Development and Land Reform. Information in this regard also came to the Committee through the office of the Deputy President. There was no need to go over this today but the Committee would follow up on the details of Operation Phakisa. Most of the issues covered in the presentation were already dealt with.

Ms A Steyn (DA) questioned the percentage spent on salaries in the Department and if this was within the norm or not. The concern was that if the Department was above the norm it would not be able to fill vacancies. She requested the report of when the Ncera disciplinary hearing would be finalised so that the Committee can be informed. She noted an entire department dedicated to monitoring – where were funds for these salaries coming from? Is this a new directorate? How could there be staff when there was no real policy on how monitoring would be done?

Was there a plan accompanying the R2.73 billion requested from Treasury? If so, the Committee should see this plan. With the new monitoring and evaluation plan in place, what is done if irregularities are found under costs? She remembered the discussion on Vrede Dairy Farm where the Department gave R30 million but then had concerns and did not pay the rest of the money. This was where provinces and national come into play in terms of power. If grants were conditional, conditions must be put in place.

Mr Kgobokoe said the report on the Ncera disciplinary issues could be submitted to the Committee. The staff were not yet paid through the R60 million – this was discussed extensively on Tuesday. With irregularities identified, the Department was intensively looking at how provinces used CASP. The Minister has called for full scale auditing of CASP and that before the second tranche was transferred to provinces, such audit should be conducted. The Department was ready to present its framework on monitoring of CASP to the Committee – this would shed light on what happened when irregularities were found. The Minister was empowered, through the Act, to withhold funds of a particular province if problems were identified, for a certain period of time, until he was satisfied the matter was dealt with. 

Mr J Hlatshwayo, DAFF CFO, spoke to the proposals provided to Treasury – every year, each branch was asked to provide a breakdown of funding shortfalls. A decision was taken to concentrate on programme two, agricultural production, health and food safety, because if any outbreak or disease hit SA, it would have a big impact. This led to the request of R2.7 billion. Each item was motivated for. Programme two was also able to generate revenue for the Department but this revenue, in most cases, went to the National Revenue Fund. Treasury was engaged to open a trading account so that the revenue remained with DAFF to expand on programme two. The Department was only located R120 million out of the R2.7 billion and the Department was still negotiating with Treasury on the trading account. Programme two could present the motivating plans to the Committee.

Mr P Van Dalen (DA) noted the Department stated if critical vacancies were filled, it would run into financial trouble. One would assume vacancies are funded positions and that salaries are funded through Treasury with a different mechanism to running costs. He was not aware that if there were financial difficulties, salaries could be cut and the shortfall made up for as these posts were funded and had a specific use – was this understanding incorrect?

Having read through the Aquaculture Bill, this Bill should recognise aquaculture as farming and not as a right. The Bill makes it difficult to establish aquaculture farms. Rights and licensing requirements excludes most people from aquaculture. This would cause big trouble for people wanting to start farms due to legislative requirements. The Department must think about this before it is introduced to Parliament. The Bill was at quite an advanced staged and the Member would have a big fight around the issue – this was an early warning.

The Chairperson noted that the details around the Aquaculture Bill were not yet received by the Committee.

Mr Van Dalen responded that the Bill was mentioned in the presentation and he had read through the Bill. He wished to provide an early warning to the Department.

Mr Kgobokoe accepted the warning on the Bill.

Mr W Maphanga (ANC) noted the presentation said “submit and present to Parliament an Action Plan on how the Department is addressing challenges associated with the utilisation of conditional grants by provinces including timeous validation of performance information to ensure its reliability.  Submit to Parliament by the end of January 2018” – was the target acquired and were there any arising concerns?

The Chairperson noted the Department was still to present the monitoring and evaluation of projects which would include conditional grants. On the matter of vacancies, it was said the Minister and DG must do the overall investigation of the Department to assess the organogram and fulfilling of the mandate of the Department. Questions on vacancies would then be discussed at that time. This would include questions on why vacancies were not filled if someone died and statutory budgeting processes done by National Treasury. The Committee would need to know the norm set by Treasury and where the Department was in this regard. Why were critical posts not filled?

Mr S Ntombela, DAFF DDG: Corporate Services, responded that the normal vacancy rate, determined by the Department of Public Service and Administration (DPSA), was less than 10% but the Department was currently running at about 15%. Vacancies arising through resignation, promotion, retirement or death, were assessed as critical or not – this exercise has already been done to get a sense of vacancies which were critical for running of the Department. Funded vacant posts identified as critical were filled. Funding for non-critical vacancies went to other posts identified as critical.

The Chairperson asked what the expenditure norm on compensation of employees was as determined by Treasury.

Mr Hlatshwayo responded that Treasury provided a ceiling to the Department of R2.1 billon which should not be exceeded. Within this, there were ring fenced amounts such as R10 million for inspection services, funds for compulsory services and R30 million for CASP monitoring. Compensation of employees in DAFF stood at 23%. Treasury outlined 23% and the Department was at 23% of total budget spent on compensation of employees.

 The Chairperson said this showed it was still relevant for the Minister to rearrange the Department. The Committee supported the norm provided by Treasury. There would have to be a process of assessing critical and non-critical vacancies to adhere to the Treasury norm.

Deputy Minister of Agriculture, Forestry and Fisheries, Mr Sfiso Buthelezi, noted that while the points of the Chairperson were valid, there were constraints in simply shifting individuals to other posts because of skills. There were also costs related to retrenchments and other rearranging. Such changes would have to take costs constraints into relation.

The Chairperson emphasised the need for the Department to do the right thing within the norms and regulations established by DPSA.

Ms Steyn asked if all vacancies were filled what it would translate to in terms of percentage of budget. How much money would be needed to ensure there were no vacancies?

Mr Van Dalen asked if the 23% included funded posts. He assumed that funded vacant posts could simply be filled as the money was there and could not be used for something else. Is 23% the norm for all government departments?

Mr Hlatshwayo explained that if the Department were to fill even 20 vacant positions, it would exceed the ceiling Treasury set down of R2.1 billion. As it currently stood, the Department could not even fill one position. In April, there was a cost of R165 million. For the full year, this projection amounted to R1.986 billion – this was only for the salary. Treasury’s ceiling was R2.1 billion. This would mean a surplus of R212 million. There were other factors to take into account which formed part of compensation of employees such as salary increases. There was a salary increase of 7% which amounted to R139 million. There were also foreign allowances for employees in embassies overseas – these allowances currently stood at R31 million in terms of the overcast. Overtime currently stood at R41 million based on the previous year. If performance bonuses were paid, this would amount to R31 million. There were matters of leave gratuity of R14 million. This did not include retirement packages, pay packages or occupational special dispensation. 23% was the total compensation of employees in relation to the total budget of the Department. If positions were filled, this 23% would be exceeded.  

The Chairperson said the Minister would have to come back to the Committee on this issue in terms of the assessment of critical posts and how the Department would ensure it stayed within the norm while ensuring critical posts were filled.  Agriculture is a concurrent function so it could be found some individuals were not supposed to be at national level. Government nowadays wants to replace non-performance with many warm bodies but this would not help because there was no system to ensure there were no loopholes between provinces reporting to national regarding the reporting of CASP. Fieldworkers in the provinces were supposed to be the base for national departments because of the concurrent mandate. Critical posts must be targeted. Departments are expected to budget for negotiated salary increases – this is statutory and could not be compromised. Treasury could augment the Department if the agreement was above the ceiling set.  

Monitoring and verification of projects (CASP, Ilima-Letsima, Land Care and MAFISA) by DAFF in the provinces

Ms B Bopape, DAFF Chief Director: Policy Development and Planning, noted that project verification is an activity of conducting project site visits to verify the project progress reported on is actually as it is on the ground. During the verification process, projects are assessed to verify if they have delivered expected results, including how well they have performed against performance measures.

Monitoring and Evaluation (M&E) and Programme Development Support (PDS) Units within the branch Policy Development and Planning are the custodians of monitoring and verification of projects. PDS however does not conduct project verification alone. Project verification teams have been formed to include lead directorates in the field where projects are implemented. These teams include but are not limited to:

-smallholder development

-subsistence farming

-animal production

-plant production

-organisational performance

-strategic planning

-sectoral colleges

-sector education and training

Business plan (for each project before verification visit takes place to see what has been planned and budgeted for), project progress report (monthly or quarterly M&E reports) and expenditure reports (monthly or quarterly M&E reports) are documents key to a successful project verification process.

Project verification is conducted once a quarter on a carefully selected sample of projects that are registered with PDS. The team takes with it the project progress report template and does face to face interviews with beneficiaries. What was reported on is verified against what is on the ground. The team verifies if the set business plan targets were achieved to establish value for money. The project business plans and financial reports are examined to verify if spending correlates with work being done.

In terms of the process for selecting projects for monitoring and verification, a carefully selected sample of projects is registered in the database with PDS. In selected projects to be verified, stratified sampling is used and this can be defined as the process of dividing members of the population into homogenous subgroups before sampling i.e. commodities and amount invested on a project. Multi-year projects and those with huge investment amounts are preferred when sampling.

Members were then taken through the stratified sampling, processes leading to final reports with recommendations, registered CASP projects in the database, registered Ilima/Letsema, colleges of agriculture per province and registered Mafisa projects.

Ms Bopape said there are about 10 agricultural colleges and they are spread across six provinces. They get CASP allocation every year for infrastructure needs, are visited quarterly to ascertain if they implement approved plans and PDS assists colleges during planning stages.

A total of 599 projects were visited for the purpose of conducting verification since 2014 to date. Total number of projects verified translates to:

-2014/15, a total number of six Food and Agricultural Organization (FAO) projects in Mpumalanga and KZN

-2015/16, total of 232 CASP visited

-2016/17, total of 361 CASP projects visited for verification purposes

General challenges on CASP included:

-delays in supply chain management processes

-poor workmanship by strategic partners i.e. incompetent contractors

-inadequate technical support e.g. engineering services

-incompetent implementing agents who subcontract other service providers

-poor planning of projects e.g. poultry farmer buying chicks without feed

-request for changing project scope often delayed or not sent to DAFF

Recommendations made to provincial departments include:

-all provincial departments should have detailed project plans per project to ensure all activities planned have a timeframe attached to them

-discourage use of implementing agents

-provincial departments are encouraged to conduct proper feasibility studies before projects are approved and implemented, especially infrastructure projects

-involvement of DAFF in project planning at provincial department level

-concentrated investment is extremely important in stimulating growth and creating jobs

-provincial departments are encouraged to invest more on training of beneficiaries especially the business side of farming to enable farmers to turn their farms to profit making businesses

-intermediaries should provide project plans and expenditure reports for effective and efficient verification process

-provincial departments should find ways to deal with supply chain management challenges in their respective provinces

-provincial departments should ensure that beneficiaries are kept informed on progress made against planned activities on their farms.

General challenges on Mafisa included:

-provincial departments and intermediaries not working together

-no link between Mafisa loan funding and CASP grant funding

- during the visit no project plans were provided for projects which made the verification process difficult

-in some provinces the intermediaries were not around verification

-beneficiaries were not exposed to adequate training after receiving the loan

Staffing at Programme Development Support (PDS) included:

-Director

-Two Deputy Directors

-Three Assistant Directors

-Administration Clerk

-Personal Assistant

Discussion

The Chairperson said it would be difficult to discuss the process without the framework.

Mr Van Dalen noted that many errors were found in the audit findings of the Auditor-General of SA (AGSA) – how sure was the Department that its numbers were correct? The AGSA could not verify numbers in supporting documents, listings and Annual Performance Plan.

Mr A Madella (ANC) wanted to understand how such a small unit could do the work outlined in the presentation. He wanted to get a sense of the ideal staff complement in comparison to what there was currently. This might be the reason for media reports, particularly in the Daily Dispatch, that farms allocated in the past 23 years, to previously disadvantaged people, black people in particular, had gone to waste. He was concerning by the lack of strategic link between Mafisa and CASP. The Member was currently supporting a black farmer in Villiersdorp and the farmer was applying for funding. Having received funding but no other additional support from the Department, how would such a person be able to succeed?  This was setting people up to fail.

The Chairperson noted that CASP was initially introduced to serve as a conditional grant to assist those given land previously. When the mandate of the Department changed and land was taken to DRDLR, recap funds were established to support those allocated land. The joint meeting with Rural Development was to address these precise matters. Recap had not done its job and CASP had to support everyone who was interested in agriculture. Operation Phakisa was to consolidate all funding for agriculture so this is where answers must be found. To her knowledge, each project should have a project manager from beginning to end. Unfortunately these things were not done and Operation Phakisa should address these matters. The question was if monitoring would assist in achieving things not done such as project management, reporting of reliable data etc. The Minister should conduct a thorough audit of funds going to agencies such as AgriDelight in North West. The Committee must receive the requested Mafisa report from the Department. The R60 million was allocated because of the Committee’s intervention due to lack of monitoring and evaluation of projects. The current structure of monitoring and evaluation would not assist in responding to matters raised. Was the report of the Department of Performance Monitoring and Evaluation (DPME) on the monitoring of CASP used for reference?

Ms Steyn could not see how the current structure of monitoring and evaluation would ensure people were on the ground to conduct actual monitoring – this was concerning. She was also concerned that it seemed as if there were “too many chiefs and not enough Indians” to do the work – many of the staff seemed office-bound. There should be one or two people in the office while the rest were on the ground. The political will to pick up on corruption was required. Was there a list of all items funded on a project? The problem lied in the smaller items of expenditure. Members saw during oversight that there were projects costing millions but Members knew the project could not have cost more than R200 000. How would this staff structure be fixed to ensure there were more people on the ground checking the work? What happened when red flags were picked up? The Member was sure every project was overpriced.

The Chairperson noted the matter of pricing was in both the private and public sector. Government must introduce mechanisms to standardise prices – this was the role of Treasury. If Treasury did not do this, other departments were affected. The Chief Procurement Officer brought no joy. These issues were not limited to DAFF. There should be a framework to deal with the pricing of consultants and quantity surveyors. She emphasised the need for systems on the ground to work. Bureaucracy is prioritised at the expense of accountability, consequence management and performance.  People must sign on how they would use funding received and, if this was not done, they should be dealt with in line with the law. The former DAFF Deputy Minister, Bheki Cele, informed the Committee that the Department had tried to engage Treasury on changing the schedule on conditional grants to ensure national was more hands on. Treasury refused but this should be followed up. The Department should assess itself. There were well known problems of people still receiving salaries from government even though they had resigned a long time ago. This was a result of a lack of check and balances. There was a need to look at the leaks such as ensuring there were project or contract managers. This would ensure the money could be followed. Currently the money was being followed too casually at the mercy of the receivers and whether they did the right thing or not. Each project must have a project or contract manager. This must be improved on. It is important to understand the framework and system to ensure there was accountability and response to issues. Monitoring and evaluation had not begun. The framework was outstanding.

Ms M Chueu (ANC) asked how much staff was needed to improve monitoring and evaluation. There was also the problem of the Treasury ceiling placed on expenditure on compensation of employees. What exactly was presented to Treasury vis-a-vis what was agreed? Leakages in all programmes should have been presented. This was needed to ensure Treasury could assist the Department.

The Chairperson noted that the Department was given R60 million out of CASP to establish monitoring and evaluation of projects implemented. On Tuesday, Members were informed the R60 million was used for other needs according to a study done. The Committee was disappointed with this. Funds could not be requested and then used for other needs. The Department must assess itself based on its mandate, what it had, what was lacking and what was needed to move forward. Treasury responded by providing the funding for the programme but the Department then did not respond accordingly – this was a problem. Based on this, Treasury was not likely to respond positively to funding requests. The system was needed to ensure everything was connected on the ground and ensure there was feedback. It was expected the R60 million would assist in this and ensure there was impact on the ground. There must also be participation of those on the ground in projects. Provinces must implement the framework and ensure money was used accordingly. Intermediary agencies were supposed to be linked with the CFO, even if it was the provincial CFO. How were these intermediaries managed to ensure they were doing the correct things on the ground? These systems must work. There must be regulation and frameworks to ensure service delivery reached intended beneficiaries. Monitoring and evaluation must be improved. What was the R60 million used on?

Mr Hlatshwayo clarified the R60 million was broken down into R10 million for the first year, R20 million for the second year and R30 million in the current year. Money for the current financial year was ring fenced while in the previous two years it was not. When programme three was found not be using the funds, there was a virement to use it for other projects. The funding was not used for a study.

The Chairperson said the point was that the R60 million was not used for planning and monitoring as intended. It was the Department who informed the Committee that a study was done, at the meeting on Tuesday.

Mr Hlatshwayo explained the money was under goods and services for monitoring and evaluation of CASP projects. When there was no movement from the unit supposed to be performing this duty, to prevent under spending, the money was used for other items within goods and services. Details can be provided on this shifting of funds.

The Chairperson said the problem was that the Department said Treasury had given it R60 million from CASP funds meant to support smallholder farmers. This money was supposed to be prioritised to monitor those projects.

Deputy Minister Buthelezi said the Chairperson was correct in her understanding although, according to the CFO, there was communication with Treasury in applying for the virement and that a portion of the money would not be used for CASP. R30 million of the R60 million (50%) was still there and would be used for CASP monitoring. It was obvious things were not happening in the Department hence the use of R30 million for other purposes.

Mr Van Dalen, touching on the comments of the Chairperson of resigned employees still receiving salaries, said that when he came to Parliament eight years ago, there was a guy in the parking lot constantly in his car. After two years, the Member asked the man what he was doing and he informed the Member he was a messenger. He was last called to deliver a message two weeks ago but eight years later in remained in his car waiting for a call to deliver a message. He came to work every day and would probably enjoy working. When there was a strike, he was right in front for a salary increase.

The Chairperson said it was a norm for Departments, after three or five years, to verify salaries and employees. These systems must be checked frequently.

She noted the letter from the Minister on the report on AgriDelight was circulated.

Ms Steyn asked if the proposal for the forensic audit would happen. If not, this must be requested by the Committee.

The Chairperson suggested the Committee wait for the Minister as under section 100 of the Constitution, national would be in charge of the work of the province.

Climate Smart Strategic Framework

DAFF Chief Director: Climate Change, took Members through the presentation. Climate smart approaches included agriculture, forestry and fisheries. Production must adapt to the impact of climate change along with mitigation to ensure approaches used reduced gases. Impacts of climate change were already felt in agriculture, food security, water resources, ecosystems, public health and infrastructure. Adaptation, through climate smart agriculture, would reduce impacts on production and the economy.

The initial framework was developed in 2015 as a new concept in the field of agriculture. Consultations were conducted throughout the country and workshops were held with departments, sectors in agriculture, forestry and fisheries, research and academic institutions, organised labour and NGOs. Objectives of the framework included:

- create socially inclusive and a sustainable agriculture, forestry and fisheries environment underpinned by increased productivity

-guide actions of the agriculture, forestry and fisheries sector at all levels of government

-access international funding

-enhance responses to climatic changes in the social, economic and environmental aspect of agriculture, forestry and fisheries, production and food sustainability

-contribute to low-carbon development

-strengthen government and system coordination for the effective implementation of the smart-agriculture programme at national, provincial and local level.

One of the key outputs of the framework was to enable a policy environment for implementation throughout structures at national, provincial and local level. Another output was a strong agriculture, forestry and fisheries sector informed by partnerships, increased investment in research and an expanded knowledge base, resource-efficient and resilient technological innovation in the sector, communication and awareness building that enhances understanding and builds consensus on matters, diverse funding base to build climatic resilience and strong stakeholder commitment.

This framework required a strong M&E component to ensure effective implementation. Consistent information was required for all streams to ensure there was success. It was critical to involve all stakeholders in the M&E system and agreement on the reporting system to be applied by all stakeholders. Progress must be reporting to the Department of Environmental Affairs as the leader of climate smart approaches. It is important to learn from others and form partnerships at various levels including regional and international. In this regard, there was participation in the Africa Group on climate-smart agriculture and other international forums. Strong partnership between government and the private sector must be encouraged to address some matters and to assist with implementation. A national steering committee would have to be established for policy guidance and inter-sectoral coordination with a technical group providing advice i.e. academic and research institutions. Provincial and local committees were also required for matters of implementation.

Climate change is a cross-cutting issue and affects everyone. The responsibility is on everyone to ensure climate change was tackled through adopting climate-smart practices and approaches that would promote sustainable agriculture. Development of the climate smart approach framework would assist in achieving this objective. Climate smart approaches were critical to change behaviours and perceptions.

Discussion

Ms Steyn asked what the cooperation was with the Departments of Environmental Affairs and Water and Sanitation. Water was one of the biggest challenges, as seen with the current drought, in terms of use by agriculture. However it was seen that if agriculture was not given water there, would be a massive drop in GDP, as seen with the Western Cape drought. Which other departments was DAFF working with? Was there some kind of working plan or strategy in place regarding water? What sort of budget was available to do this work? It was known that budgets were challenging but this was needed for the practical consideration of plans on paper. Where would monitoring and evaluation of this work lie? Budget was also needed to help when there was drought and other disasters such as flooding and hail.

The Chief Director said that regarding collaboration with the Department of Environmental Affairs (DEA), climate-smart agriculture was an internationally-developed concept where mitigation was emphasised as opposed to adaptation. During the 17th Conference of the Parties (COP17), DEA emphasised adaptation in terms of climate-smart agriculture. DEA and the Department of Water and Sanitation were working on the concept and consultation. Funding was received through DEA. International funding could also be tapped into. Monitoring and evaluation was required for all projects to ensure funding was monitored.  

The Chairperson noted that agriculture was affected by various challenges such as drought, El Nino and disease outbreaks which were all informed by climate change. Outbreaks could not be predicted. These affects were also faced by forestry – one of the ways to deal with climate change was through agro-forestry but this was not mentioned in the presentation. It also affected fisheries as seen with depleted species because of the increased temperatures of water currents – what was the recovery plan? These matters were not mentioned in the strategy. What impact would renewable energy have on agriculture? What was the plan to do away with tractors affecting the climate? What was in place to manage outcomes of the climate change challenges faced daily? Diseases broke out daily, there was drought, flooding, El Nino. Legislation stated 1% of the Department’s budget must be available for immediate intervention – the biggest problem is that after the assessment was done, someone could have lost livestock or crops or disease could have killed the livestock. It was found that municipalities and provinces required billions to assist after assessments were done.  What proposal should be put on the table to access resources available internationally to assist SA in dealing with challenges affecting farmers? Smallholder farmers spoke to the need for insurance when there was drought, flood or disease – these groups were most affected because there was no recourse. The work done with FAO was also not included in the presentation – this showed the strategy was still scattered. It was important that presentations made are the same as what was handed out to Members.

The Chief Director apologised for the discrepancy between the documents presented. All matters raised by the Chairperson were contained in the climate change plan including animal health and agro-forestry. This plan was presented to the Committee. The plan included forestry and fisheries in the broader framework. With the tractors, this exercise was expensive. Conservation and awareness must be emphasised. The matter of carbon tax was still a challenge. The Department was engaged with Treasury, along with farming organisations and unions, on the difficulty such tax posed for farming communities and how it could be addressed. Carbon tax forced farmers to use climate-smart approaches. The Disaster Act has requested that 1% of the Department’s budget be available for immediate intervention – it might not be enough but there were other funds for immediate response requiring broader assessment. The matter of insurance was dealt with a while ago –Treasury was looking at a document to ensure all farmers benefitted. The premium contribution would need to be discussed as this could be a challenge for small scale farmers.

Ms Steyn was concerned discussions on serious plans were taking place when there was no budget. Treasury would not provide DAFF with additional funds if it was treated as the funds allocated for monitoring and evaluation was. There were no proper plans. 

The Chairperson heard funds were being tapped from international sources. The strategy must be seen which would allow for access to resources. There were challenges when mandates overlapped between departments. There should be inter-ministerial communication on these matters to be taken up at Operation Phakisa on agriculture, land and rural development.

Deputy Minister Buthelezi said some matters were discussed, and others not, at inter-ministerial level in cluster committee meetings. Crosscutting matters were discussed.

The Chairperson said the Deputy Minister should submit that these matters be discussed at that level and at Operation Phakisa – this overlap of mandate led to the creation of Operation Phakisa.

Mr Madella said it was important that the Department apply its mind to the areas accessible to international funding. The sense was that this unit functioned outside of DAFF on the mandate of another department – this could not continue. This programme must reach all farmers – this entailed workshops to ensure everyone on the ground understood. Beautiful plans must be matched with guidance on agricultural practices on the ground. Roll-out and awareness was required urgently.

Commercialisation of Black Producers

On 9 February 2017, former President Zuma pronounced in his State of the Nation Address (SONA) that “government will implement a commercialisation support programme for 450 black smallholder farmers”. “Commercialisation of agriculture is a phenomenon where agriculture is governed by commercial consideration i.e. certain specialised crops are grown not for consumption in villages but for sale in national and even in the international market”.

The approach to commercialise black producers is twofold. The development phase for potential producers to operate at commercial level entails:

-farm and farmer needs assessments of 50 farmers per province

-skills and capacity building including record keeping

-farm planning i.e. primary and secondary commodities

-assistance with business plan development

-SA GAP certification

-infrastructural and input support to enable achievement of turnover per annum of R500 00

Commercialisation, through blended funding, as outlined through Operation Phakisa, of re-engineering of Agriculture Development Finance will happen through blended funding (loan and grant). The grant will be accessed through a central grant funding facility in partnership with the Land Bank. The partners in the programme include the Banking Association of SA (ABSA, FNB, Standard Bank and Nedbank), AgBiz, Jobs Fund Development Funding institutions, the Department of Trade and Industry (DTI) and the Industrial Development Corporation (IDC). The target is 450 black producers commercialised over five year period. The programme to develop black producers was developed in partnership with the DTI, Land Bank, IDC and National Empowerment Fund (NEF) and approved.

In terms of the progress update, 450 commercial producers have been identified from all provinces. DAFF has received R370 million over the MTEF 2017/18 to 2019/20 to transfer to the Land Bank for the blended funding model. Additional resources have been secured through CASP to augment blended funding over the 2018/19 to 2020/21 period. However, for the programme to have significant impact in transforming the sectors and ensure a critical mass of commercial black producers owning and controlling the value chains, a minimum of R1 billion is required in the grant funding facility at the Land Bank. The Memorandum of Agreement (MOA) between the Land Bank and DAFF has been concluded and signed by both parties. DAFF has consulted with the Banking Association of SA and Agbiz and agreed to sign a standard MOA for partnering in commercialising black producers over a ten year period. Consultations with stakeholders took place during the Phakisa process as well as separate consultations with provincial departments of agriculture through MinTech meetings. The Joint MinMec of DAFF and DRDLR were briefed on progress in March 2018.

Discussion

Ms Steyn was pleased to see reality had kicked in on this matter in terms of aims and budget. Many did not understand how expensive it was to farm – the input cost was massive. It was important to have a safety net for people who did not make it – one could have three or four months of adverse weather. Turnover was not an indication of how much money one made at the end of the day. She was concerned the Department was not using what it already had – how did the Department identify these farmers? She accompanied many commodity groups, sugar and grain, where there were already 6 000 farmers where many were ready to become commercial farmers or were already commercial farmers in their own right – the biggest challenge here was land. What work was the Department doing with community organisations to ensure titles were given to farmers? These farmers could not access loans themselves but had to wait on the Department as they were bound by policy decisions. These matters must be seriously discussed. Farmers needed long term loans with a low repayment rate so that they can become commercial farmers with a bit of assistance from the Department. The Land Bank informed the Committee the challenge was that farmers did not have access to collateral. There should be some fund that could operate as a bond if farmers were struggling. She knew more money would be required but funds were again being taken away from CASP as is done each year when there was a crisis. What would happen to farmers not falling in this category? They also require help. The Committee must sit down with the Department to realistically look at this matter. There were many farmers simply requiring security on the land matter – this must be solved.

Ms Chueu said there was no evaluation on whether the Land Bank could deliver on its mandate – this has not been done so far taking into account presentations the Committee received recently. From 1994 to date, how many commercial farmers had the Land Bank produced and assisted? Were they successful? Would the Department be recommending farmers that had already started or those simply requiring a push? How were the farmers evaluated? She was suspicious of the Land Bank and thought there should be another institution to assist with funding – the Land Bank was not doing what it was supposed to. 

The Chairperson agreed – at one engagement, farmers complained the Lank Bank employed intermediaries, which were the big corps, and these corps increased the percentage to be paid to them. Government must ensure the Land Bank did away with these intermediaries or if government wanted to use them, the cost should be absorbed by government and not the farmer. Scepticism around the Land Bank was correct as it was not very promising when before the Committee.

Land matters were best dealt with under Operation Phakisa. Some farmers could not get title deeds while others struggled with leases. The problem was with implementation. A farmer who was a former Mayor in the 1990s could now not get a lease. Bottlenecks constrained service delivery. Systems must be tested to ensure they were working. The Department must be proactive in Operation Phakisa. There were certain matters, such as agric-parks, that the Committee must dealt with when there were joint meetings with Rural Development so that there were concrete answers.

How did the Department identify famers to assist? Turnover did not translate into profit. Farmers must be able to match the minimum wage. Such matters must be taken into consideration. The matter of the Land Bank was a problem and must be resolved. The Committee should look into visiting the Land Bank to understand its challenges. Immediate problems and impediments to smallholder farmers must be addressed. Many small farmers lost their farms because they owed the Land Bank regarding title deeds. Government must manage this process. If leases were managed properly there would not be an outcry over title deeds. This must be dealt with in Operation Phakisa. Banks will need to buy into the agenda. As part of social responsibility, banks must be questioned on what they did to support smallholder farmers. The money required to win this battle was with the banks so there was a need for cooperation on the basis of solid plans.

The Chairperson was angry about the officials who submitted incorrect information for pronouncement by the President. Government must have ways of dealing with such people. The President could not pronounce on unrealistic goals – this was humiliating the President. What had the Department done about this?  This led to SONA not being implemented. Former President Zuma spoke about sanitary towels in 2010 but this was still not implemented as policies were still under discussion – this could not be. What the President announced represented everyone and should be implemented – the Committee did not tolerate anything else.

The Department would appear with the provinces to brief the Committee on readiness for planting. The Committee wanted to know how the Department was assisting provinces, including farmers in the Eastern Cape who were expected to pay for mechanisation. Last year, there were people who received seeds after planting season. These details must be checked to ensure such problems did not occur. Mechanisation must also be ready. Unfortunately planting season came when the Committee was dealing with BRRRs. The Committee would be communicating with provincial committees on agriculture to follow these matters up – seeds could not be delivered after planting season. Vaalharts would be dealt with with the provinces.

Ms Steyn said all the Committee got on Vaalharts was copies of receipts and money spent.

The Chairperson agreed the Committee needed a report on what happened. A report was also required on the Ncera matter which covered how it was dealt with and resolved. The Committee was not the AGSA and so did not need receipts.

Mr Madella raised an incident on behalf of his constituency. Around 27 or 28 May 2018, in Gaansbaai, an official of DAFF gave chase to suspected poachers, actually ran them over with a boat, alleged turned around and ran them over again whilst they struggled in the water. One person was killed and another admitted to hospital. The community was up in arms about this and the police had to intervene to bring some calm to allow the correct institutions to take necessary action. Apparently the DAFF official did the same thing in 2013. Allegedly a police officer accompanied the official when he committed this alleged crime.  Stamping out poaching was fine but a life of someone could not be taken in this manner – this was taking the law into one’s own hands. The Member was informed a congregation of small-scale fishers in Hawston would be marching to the office of the Member to present a memorandum – the Member was prepared to face these consequences. The Member had sent the Department senior officials emails raising various matters but there was no response.

The Chairperson said the matter was raised in the Committee’s meeting on Tuesday and Members were informed nobody has passed on. The Deputy Minister must follow up on this matter. The biggest challenge in the Western Cape was fighting amongst the fishers. The issue should be handled and finalised so as not to bring uproar. Poaching is illegal but if someone was killed, the Department must look into and attend to it. When Parliament returns, the Committee would have to look into law enforcement protecting marine resources in SA including deep sea and offshore. There were questions about what exactly entailed poaching e.g. someone catching a fish to eat. Such issue would have to be engaged. DEA could possibly be invited with the relevant law enforcement agencies.

Deputy Minister Buthelezi noted there were two elements to the incident raised by Mr Madella assuming someone died – there was the Department disciplinary procedure and a criminal process for the police to deal with. Even if someone did not die, the Department would still need to look into the alleged deliberate running over of someone and report on it. There were bigger problems at play of funding development institutions of government e.g. IDC and the Land Bank. These institutions have dual mandates straddling development and commercialisation. In most cases these agencies are measured by how much profit is made. This principle must be dealt with in terms of how this development mandate is measured. This mandate is be undermined as the focus is only on profits. These are matters to deal with at a political level. Many issues were raised by the Committee today which required the attention of the Department.

Ms Chueu agreed that the Land Bank was not a commercial bank but asked why it behaved as a private bank. The Department should assist the Land Bank in doing what is it supposed to i.e. help farmers, particularly poor farmers. Conscious decisions must be taken.

The Chairperson noted that the Land Bank had its own problems as a result of politicians. It must now be resuscitated. Farmers must be supported, for example as Europe did. Operation Phakisa was also looking at this. Farmers remained in production and did not get any benefit from the value chain – this was a problem of the system. These challenges must be addressed. If the Land Bank was development it must behave differently. There might be a need to look at the model used in other countries. These were important matters raised.

The meeting was adjourned.

 

 

 

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