DAFF Quarter 2 performance; MRLF & ARC audit; Ncera matters; with Minister & Deputy Minister

Agriculture, Forestry and Fisheries

26 February 2019
Chairperson: Ms M Semenya (ANC)
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Meeting Summary

The Portfolio Committee was briefed by the Department of Agriculture, Forestry and Fisheries (DAFF) on their second quarter performance, and learnt that over 800 000 jobs had been created, and there had been a reduction in unemployment in rural areas. One million hectares of land were targeted to be used, but a total of over two million had been utilised. 245 000 smallholder farmers were currently being supported. Where forests had been affected by fire, such as in Knysna, replanting of trees had taken place. There had also been a reduction in the number of households vulnerable to hunger. The Department needed to work on developing a strong monitoring and evaluation programme, and would soon pay back R80 million that it owed to the Agriculture Research Council (ARC).

The ARC said an internal audit was currently still being done to assess if the issues that had been raised by theAuditor General (AG) had been addressed. An asset management policy had been developed and approved by the Council. They were still busy with the asset verification process and were appointing a service provider. Some of the other policies that had been approved pertained to irregular expenditure, the credit management policy and petty cash. Of key importance, the Council was working on changing its accounting practices and also ensuring that training of its finance team took place to ensure that there was quality work.

The DAFF failed to present on the status of the fisheries sector. A report had been developed on issues of concern, but the Department had not taken ownership in addressing the authorship of the report. The Committee learnt that some top officials were being implicated the theft of abalone, and an investigation was set to take place. The Minister said that nine tons of abalone had recently been discovered as stolen, and a forensic audit was set to take place to find out what had transpired.

The Committee was advised that there was still room for the Fishing Rights Allocation Process (FRAP) 2020 to take place, despite various claims that it might not take place. The Chairperson informed the meeting that the Aquaculture Bill was still with Parliament, as it had been received late. The South African poultry industry was said to be under massive threat from imports from other countries. Measures had been put into place to ensure that the local industry was protected from imports. Some imports had been detrimental, as cases of salmonella had been identified in poultry from Brazil, and an investigation was currently taking place.

Regarding bluefin tuna, the tuna that was found in South African waters was not of high enough quality to be sold for profit. There was a need to build capacity to expand the South African exclusive economic zone (EEZ). Big vessels were needed to capture high-quality tuna, and South Africa needed such a fleet. They were currently trying to get foreign vessels to come within South African waters to capture the tuna, but the local merchants were not happy with this as it was seen as limiting their capacity. South Africa did not have enough skilled skippers who could capture tuna, and people involved in the process needed to be properly trained.

Meeting report

The Chairperson welcomed Mr Senzeni Zokwana, Minister of the Department of Agriculture, Forestry and Fisheries (DAFF), Members and guests to the meeting.

Mr Mike Mlengana, Director-General (DG) of the Department, started by apologising for the structure of the presentation. He said that there were gaps that needed to be filled, specifically when it came to fisheries. There were a lot of issues that needed to be addressed, some pertaining to filling positions in the fisheries sector. He asked for the presentation to be withdrawn.

The Chairperson said that the presentation sent to the Committee did not include some of the issues that the Committee wanted answers to from a previous meeting, and they thus wanted the Department to include the issues in their presentation. The Chairperson put it to the Members to decide on whether the DAFF should withdraw the structure pertaining to the issue of fisheries. She said that this was the second time that the Department was withdrawing its structure, and it was not a good reflection on it.

Mr P van Dalen (DA) wanted clarity on what exactly needed to be withdrawn. The Committee Secretary assisted him with clarity. The Chairperson asked the DG to go ahead with his presentation.

DAFF 2nd Quarter performance report

Mr Mlengana said that 300 000 jobs were supposed to have been created, but over 800 000 jobs had been created, and there had been a reduction in unemployment in rural areas. One million hectares of land were targeted to be used, but a total of over two million had been utilised. 245 000 smallholder farmers were currently being supported. Where forests had been affected by fire, such as in Knysna, replanting of trees had taken place. 1.6 million households had been targeted to benefit from food security initiatives, and this target had been exceeded. There had been a reduction in the number of households vulnerable to hunger.

Internal auditing took place within the DAFF, and was supported by a strong external auditing team that sought to clarify everything that was done by the Department. It also had a business continuity plan. The DAFF was working to ensure that it put itself on the map in terms of people knowing what the Department did. In terms of the Kaonafatso ya Dikgomo (KYD) scheme to facilitate access of small-holder farmers to the mainstream agricultural economy of the country, the Department was working closely with the Agricultural Research Council (ARC). A payment of R80 million owed to ARC was set to be paid in May 2019, as advised by the National Treasury, and they were committed to ensuring that the ARC was supported. The Department was doing surveillance work and was reporting on it and documenting everything.

He said that Saudi Arabia wanted one million goats per year, and the DAFF was working hard to ensure that it met this demand. It was fully supporting the black commercialisation programme, and the black farmers involved had been identified. The farmers were being added on the blended funding programme. 9 000 small scale holder producers needed to be supported, and to date about 400 had been supported in Limpopo, and 43 in Mpumalanga. Uneducated youths were being employed to assist with work such as fixing tractors. 61 000 households were supposed to be supported through the agricultural food initiative, and slightly over 1 000 households had been supported to date.

The Department needed to work on its monitoring and evaluation processes. An official had been appointed to ensure that there was monitoring that took place.

ARC on issues raised by the Auditor-General (AG)

Ms Mauireen Manyama, Chief Financial Officer (CFO): Agricultural Research Council, said that in terms of audit improvement and intervention when it came to reviewing the job profiles of people in finance, this was still an ongoing process, as it was currently decentralised. Job profiles were being redefined. They had produced an interim financial statement, ending 30 September 2018, and an internal audit was currently still being done to assess if the issues that had been raised by theAuditor General (AG) had been addressed.

An asset management policy had been developed and approved by the Council. They were still busy with the asset verification process and were appointing a service provider. Some of the other policies that had been approved pertained to irregular expenditure, the credit management policy and petty cash. The AG had raised a concern on how the Council deals with the credit management policy, as there was a provision for bad debts which was not in line with accounting practices, and the Council was working on resolving this. For receivables, standard operating procedures had been put in place. The R80 million owed to ARC by the DAFF was expected to be received soon. This was also in addition to old accounts which still neededsto be paid to the ARC.

Regarding the supply chain, a contract register needed to be established. Fruitless and irregular expenditure dating back to 2016 was being addressed. Some of the irregular expenditure had involved people who had already left the ARC. Training of executive members was currently taking place, but the training of the financial team had been postponed to the next financial period due to the audit process being done. Findings relating to human resources on overtime issues were still being investigated.

There had been an audit on the late submission of the procurement plan, and the ARC was set to submit this on time by the end of March. Another finding had been that of the non-submission of deviations of more than R1 million to the National Treasury, and this had been resolved. A review of the accounting policies was also still being done. There had been an audit finding in in connection with committee members’ salaries, and this was still being investigated.

Fisheries report

Mr Mlengana said that he could not present on fisheries although the information was available, as the AG had advised that the report should not be presented to the Committee yet.

Minister Zokwana apologised to the Committee and said that the report was there, but compliance was necessary to ensure that what was said should be done by a certain time, would be done.

The Chairperson asked who had developed the report.

Ms Siphokazi Ndudane, Deputy DG, DAFF, said that she differed with what had been said by the Minister and the DG. The report had been concluded when she was on suspension, and this was also the same time that the chief executive officer (CEO) of the MRF was also on suspension. She said that the report was not accurate, as it contained some things that were not true. She said that the Fisheries Department was in a meltdown state.

Mr A Madella (ANC) said that the report still needed to go through the Department. Any “dirty linen” should not be presented in front of the Committee. He supported the proposal that the report be presented at a later stage.

Mr Van Dalen said that the fisheries sector was in big trouble, and the report needed to be dealt with. People needed to take ownership of the report. The issues were blurry and had to be addressed as soon as possible.

The Chairperson said that it would not be helpful to deal with the report if no one was taking ownership of writing it. The Department had to come back in a week to present the report. The DDG needed to be aware that even if she was on leave, if anything had been stated that was not clear, one should be able to clarify the issues.

The DG said that some of the Ncera employees had been moved to the ARC, and the CEO and CFO had been integrated into the DAFF. R6 million had been transferred to the ARC. Deregistration of Ncera was in process.

The Minister said that due to regular fires, it was difficult to still call the Knysna forest, a forest. Most of the trees could not be revived.

The Chairperson asked the chairperson of the audit committee if he had something to say.

The chairperson said the audit committee was active and functional. It had met recently to finalise the third quarter report. Some of the issues that they were working on with the Department pertained to the value of money. A performance review of grants had been undertaken, and it had been found that some of the applicants were not in a position to sustain the finances. Risk management and litigation were key for the Department, and they engaged with them on such issues. The Department did not have enough capacity to manage funding and the reprioritisation of projects, but it was doing the best they could.

Discussion

Mr Van Dalen thanked the Minister for clarifying the Knysna forest situation. He asked about progress on the draft Aquaculture Bill since it was sent to Parliament, as no feedback had been given yet. He spoke about the progress of the Fishing Rights Allocation Process (FRAP) 2020, which was valued at R10 billion, and wanted to know if this was still going to go ahead. He said that the disciplinary process of the Department needed to be addressed, and that he was not aware of what really happened with the firing and suspension of workers. He said that the fisheries sector was in trouble, and made reference to the 155 cases of theft, with three tons of dry abalone being stolen which was valued at R7 billion.

Mr Madella said that the inability of the Department to meet the target of 9 891 smallholder producers was worrisome. The DG needed to give a spreadsheet of exactly where those who had been supported were located.

Mr N Capa (ANC) said that in respect of fisheries management, he wanted to know if anything was being done to improve the sector. Some form of sustainability needed to be put into place in regard tof goat management. On the smallholder farmers that were being supported, he asked why only Limpopo and Mpumalanga had been mentioned.

The Chairperson said that the Aquaculture Bill had been put to the Speaker to be prioritised. The Bill had come very late to the House and could not be processed immediately. Regarding the Ncera issue, and the progress in terms of dealing with officials involved and other issues, she was worried about the disciplinary process that was supposed to take place. The Department needed to interact with the Department of Rural Development and Land Reform (DRDLR) to ensure that farmers around Ncera made use of the land productively.

She said that some of the ARC deadlines were from last year, and that it was February 2019 she wanted to know why progress had not yet taken place. She had received a letter from an ARC employee which contained serious claims which she would take up with the Minister so that they could be dealt with.

She asked the Department to update the Committee on the status of the poultry industry. It needed to provide a report on the conditional grants issue raised by the chairperson of the audit committee, and progress on the Land Care Programme had to be reported on by the Department. It was supposed to be a Presidential project, but it was not yet completed.

DAFF’s response

The Minister said that there were two types of forests in Knysna, the NTO and the natural forest, and what had been burnt was the NTO forest. The natural forest was still intact. It was difficult to tell if the FRAP 2020 programme would go ahead. He had received a letter saying that land reform in the Western Cape was taking time to take place.

A DAFF official said that Foot and Mouth Disease (FMD) vaccinations were taking place in various areas. The Minister had set up three committees to work on FMD issues. The first committee worked at a national level on technical details. The second committee looked at markets that were blocked, such as China, in respect of beef and skins and hides. The third committee dealt with communication to ensure that people were well informed about FMD. In the poultry industry, issues had stabilised on both the production and trade sides. There were issues with imports, but measures had been taken to ensure that the South African industry was protected. Brazilian imports were causing problems because of issues of salmonella, and this was being investigated. He said that imports played an import role, as they supplemented local production.

The DG said that DAFF was restoring disciplinary action and ensuring that performance was up to speed. In cases of legal matters, the Department could not intervene, but let the law take its course. The report on conditional grants would be presented to the Committee in a week.

The Chairperson interjected that in this regard, the Department needed to formulate how it would respond to the report that it got from the audit committee and provide clarity on how it would deal with the management of the grants.

The DG said that the Deputy President had set up a committee which dealt with farmer support, and a presentation could be made to the Portfolio Committee on this.

A DAFF official said that there was a lot of work technical work taking place around the Ncera farm situation. There were ten farms under the scheme. Some were owned by the Department of Public Works (DPW), and some by the DRDLR. They were part of the financial assistance land, and the DPW had given the farms to DAFF for preservation. A feasibility study had been done to investigate the productivity of the farms, as most of them struggled to get a reliable source of water.

The Chairperson asked the Minister to clarify why a forensic audit was being set to be done. She added that it would be helpful for the Committee to go through previous reports of forensic audits that had been done by the Department.

Mr Van Dalen said that a forensic audit that needed to be done on the abalone that was stolen from DAFF storage, and a report provided to the Committee.

The Chairperson said it was the first time she was hearing about a forensic audit pertaining to the stealing of abalone. If a forensic audit was to be done on the abalone project, there must be a clear picture of what must take place. She asked for clarity over who would pay for the forensic audit. People found guilty must be tried through the courts. The Department did not have enough resources to engage with poachers in the sea, she added.

The Minister said that last year, a whistleblower report had been received by the Department in relation to poachers stealing dry abalone. However, the source had been questionable. In an unrelated matter, the Department recently found out nine tons of dry abalone valued at R500 million in a storage facility without proper paperwork. He said that no one was allowed to transport abalone by law, and it was illegal to keep such an amount of undocumented abalone. The Department was not in the business of selling abalone. There was a need for the DAFF to coordinate with the Department of Police and the Department of Defence to protect abalone.

Mr Madella supported the Minister, and said that an in-depth investigation needed to take place to find out what had happened with the abalone. Anyone who was found to have been engaging in misconduct had to be brought to book. The DAFF was seen as a corrupt department in the Western Cape, and clarity on these issues was needed.

Mr Van Dalen said that he agreed with Mr Madella. He wanted to know what exactly was going to happen to FRAP 2020. He asked about the status of the southern bluefin tuna.

Ms Ndudane said that she would like to address the issue of the abalone case but was afraid to do so, as she might expose some people who were at the meeting.

The Chairperson told the DDG that her statement was out of order, and that she needed to retract it.

The DDG said that the prosecution that was being done seemed to be a decoy to shift the focus from the actual people who needed to be addressed in regard to the issue.

The Chairperson said that the DAFF needed to deal with its issues at a departmental level. She also said that the Minister himself might be implicated in the abalone matter. She asked the DDG to drop the abalone issue, as it would be dealt with as advised earlier by the Department.

The DDG clarified for Mr Van Dalen that there was still room for FRAP 2020 to take place, as it was not set to happen at the beginning of the year, but was set to run throughout the year.

Regarding the bluefin tuna, the sector was struggling because of high costs, such as fuel. The tuna that was found in South African waters was not of high enough quality to be sold for profit. She said there was a need to build capacity to expand the South African exclusive economic zone (EEZ). Big vessels were needed to capture high-quality tuna, and South Africa needed such a fleet. They were currently trying to get foreign vessels to come within South African waters to capture the tuna, but the local merchants were not happy with this as it was seen as limiting their capacity. She said that South Africa did not have enough skilled skippers who could capture tuna, and people involved in the process needed to be properly trained.

Mr Sfiso Buthelezi, Deputy Minister of DAFF, said that the issue of fisheries was very sensitive and much needed to be done in the governance of the sector. Anyone who knew of any criminality happening within the Department needed to go and report this to the law enforcement agents.

The Minister said that the abalone would be removed from the Department’s storage facilities. He said that the Department received funds to assist with the protection of the oceans, and the funds would be put to use immediately.

Mr Capa said that the Minister and the Deputy Minister needed to manage their processes. When they came to the Committee they should come as a Department, and not as separate entities saying contradictory things.

Mr Van Dalen said that the Committee should have the power to set up commissions of inquiry when it came to certain issues, and asked the Chairperson to assist with this.

The Chairperson said that as Parliament, the power to set up an inquiry was there. The Department had not yet failed to handle their issues, and it was therefore important to give them time to settle their issues before moving towards setting up an inquiry.

Mr Madella said that was important for other government departments to be involved in assisting with building capacity in fisheries.

The Chairperson asked the Minister to go back to his Department and sort out issues that had to be dealt with. She added that the DDG should contain her emotions in the future -- she might have a case, but showing emotion might cloud her case.

The meeting was adjourned.

 

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