The Committee met for its second virtual meeting on the Strategic Plan and Annual Performance Plans of the entities of the Department of Agriculture, Land Reform and Rural Development. These entities were the Office of the Valuer-General (OVG); the Agricultural Research Council (ARC); Onderstepoort Biological Products (OBP); the National Agricultural Marketing Council (NAMC) and the Perishable Products Export Control Board (PPECB). The Minister and Deputy Minister were in attendance.
The entities each indicated their 2020/21 budget allocation and Medium-Term Expenditure Estimates. They each concluded by explaining the impact of the COVID-19 pandemic on their operations and expenditure plans, and provided a brief synopsis of how they would be readjusting to the new reality after the lockdown..
With the OVG, Members were mainly concerned with the issue of vacancies and recruitment processes, especially with the filling of executive positions. They expressed interest in the OVG’s relationship with the Deeds Office and enquired on the entity’s progress with developing its own systems independent of the Deeds Office. Issues of capacity, budget cuts, the OVG’s valuation methods and its 125-day completion period were amongst some of the most frequently asked questions. The OVG should also explain its logic behind the change management; there was interest in the interventions currently put into place by the entity and on clarity about the issue of carrying capacity in the entity.
The Committee’s main focus with the ARC was on its strategy in repurposing itself as an entity. Members asked how the entity would be dealing with issues of optimisation of personnel costs, and to detail its success with the Kaonafatso ya Dikgomo (KyD) scheme. Members asked how the ARC would ensure the extension of technical training programs to rural women and youth. They also requested clarity on the process to ensure promotion of urban and vertical farming methods amongst women and youth in rural areas and townships. What is the ARC’s progress with food-and-mouth disease (FMD) project facilities and the role it is playing in assisting smallholder farmers with the recent outbreak of the African Swine Flu (ASF) in the Eastern Cape? Members also raised issues in accordance with the possible announcement of further budget cuts by the National Treasury and asked how this would potentially impact the entity moving forward.
The Committee expressed concern about the OBP’s steady decrease in sales revenue and loss market share value due to COVID-19. Members asked how the entity would recover this deficit. There was also a drop in vaccine production and constant product unavailability, which were identified as key concerns. Members were concerned about the OBP’s inability to meet industry-specific quality standards and requested clarity on that. They also requested the OBP report on the progress of dealing with poor management and disciplinary hearings.
The Committee’s main concern with NAMC was how it would ensure assisting farmers in dealing with COVID-19. Members also mentioned the situation with citrus farmers in Nkwaleni and required the entity to explain why it did not assist farmers in that area. Members also requested clarity on the NAMC’s role in Farmer Production Support Units (FPSUs).
Members asked the PPECB how the COVID-19 pandemic impacted its export market, specifically its perishables, and how the entity would mitigate these losses. The PPECB had highlighted the increased market access of avocados in the export market, specifically to China. Will the entity be collaborating with the NAMC and the rest of the Department entities to further reinforce these tools?
Due to time constraints, the Chairperson asked the entities to submit their responses to some of the questions, posed by Members, in writing by 15 May 2020.
Opening remarks by the Minister
The Minister of Agriculture, Land Reform and Rural Development, Ms Thoko Didiza, first announced the outbreak of the African swine fever in the Amathole District, Eastern Cape. The province alerted the Department of this challenge and had since worked with it to contain the spread of the disease beyond the affected villages. She hoped to receive assistance from Members in promoting the efforts to educate farmers on the importance of taking care of their pigs and ensuring that they understood how to protect themselves from the pigs that may have already fallen ill. The Department was collaborating with the municipalities in the affected villages to receive a designated site in order to dispose of the carcasses.
The Minister expressed appreciation on behalf of the Department for the opportunity to brief the Committee on the work of the respective entities. She explained that these entities played a critical role in the agricultural economy of the country. These entities act as a resource for the Department to ensure that it is able to execute its work. For instance, some of the entities carry out scientific work while others support the Department in gaining a greater understanding of what happens in the agricultural markets nationally and globally. The National Agricultural Marketing Council (NAMC) is an example of such an entity. The Department highlighted critical issues raised in the previous Portfolio Committee meeting about the governance of the entities, the capacity of human resource as well as the financial capabilities of these entities. There had been a successful engagement with the boards and councils of the respective entities to address a number of governance issues. The Department was currently working towards strengthening the boards of three entities but these efforts were disturbed due to the COVID-19 pandemic. Recruitment processes came to a halt, causing a delay in the filling of vacancies in the boards.
She emphasised the Department’s commitment to enhancing the capacity of the Office of the Valuer-General (OVG) and that more people would be appointed to carry out this effort. Though the Department did indicate that the OVG had been experiencing some challenges with its work, it was unclear as to whether the work of the OVG was advisory or definitive in determining the values of land – specifically for land reform purposes. A task team was set up by the Department, which included colleagues from the Department of Public Works and Infrastructure (DPWI). This was done in accordance with the principal Act that governed valuing as a profession – which was the responsibility of the DPWI. The Department consulted with experts and legal counsel to help explore ways to review the Act and consider whether or not its structure was able to accommodate the concerns raised, and to return to the Committee to report on the proposed way forward. During this process, various instruments such as the Restitution and Land Reform Unit were permitted to continue, to prevent potential delays by the OVG and its work. But the OVG would remain as overseer of the work that it would have initially farmed out to professional valuers for the valuation of land for restitution and land reform.
An important issue raised by the Auditor-General pointed to the viability of the Agricultural Research Council (ARC) in its liquidity. The Minister instructed the Department to repay the debt owed to the ARC in the 2020/21 financial year; the Department consulted the National Treasury (NT) on this matter. In her meeting with the Board, she indicated the need to relook at how the ARC would be repurposed. The Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) would expand on this matter, highlighting the effort towards repurposing the ARC as an institution – considering the various centers it had in the country – and whether these were still valuable and effective.
The Department made efforts to find ways to collaborate with universities and other science institutions. Due to the nature of its work, the ARC reported to both the Minister of Higher Education and the Minister of Agriculture, Land Reform and Rural Development. This highlighted the importance for an engagement between the two Ministers. There were additional efforts to consider how the Department would reposition the ARC and finance it appropriately.
The NAMC partnered with the Department and provided it with valuable work. The Department participated in a series of ongoing engagements with the council to relook at some of the existing problems and how best to address them moving forward. Addressing these issues would be a slow process; the Department would return to the Committee to present a progress report.
The Chairperson responded on behalf of the Committee by urging the Department to prioritise the debt it owed to the ARC. During the previous engagements it was agreed that the amount payable to the ARC, which exceeded R70 million, be prioritised and paid in full by 31 March 2020. The Department had still not done this. The Chairperson stressed the urgency of the agreement to ensure that the ARC continued to provide its crucial contribution to the agricultural sector.
OVG 2020-25 Strategic Plan and 2020/21 APP
The OVG presented on its outcomes and indicated its projected five-year target. These included just and equitable valuations, organisational excellence with a full staff complement, good quality data with centralised electronic database and data validation capabilities, and the promotion of ethical conduct with full implementation of corruption and fraud prevention mechanisms. The entity spoke on its contribution to government priorities as an enabler with its sub-programmes, namely, valuations and operations. It also indicated its alignment with the National Development Plan (NDP), the Medium-Term Strategic Framework (MTSF) and the 2020 State of the Nation (SONA) priorities.
The entity indicated its 2020/21 budget allocation and Medium-Term Expenditure Estimates (MTEF) of its sub-programmes, indicating an increased MTEF over a three-year period. For 2020/21, R144.531 million was projected for both sub-programmes. This consisted of R30.6 million for compensation of employees as well as R26.568 million for goods and services. The APP targets were tabulated in the presentation. The entity concluded by explaining the impact of COVID-19 on its valuation processes and expenditure plans, and provided a brief synopsis of how it would be readjusting to the new reality after the lockdown.
ARC Strategic Plan and 2020/21 APP
The ARC outlined its MTSF priorities over a five-year period, 2019-2024. It identified seven MTSF priorities, namely, a capable, ethical and developmental state; economic transformation and job creation, education skills and health, spatial integration, human settlements and local government, and a better Africa and work. The APP also highlighted the entity’s cross-cutting focus areas, focusing on women, youth and people with disabilities. It extensively detailed its six MTSF aligned outcomes and budgets for the 2019-2024 period. The entity’s total expenditure average for the next five years was projected to be R1.47 billion per annum. Personnel costs remained the dominating cost driver, at about 59%.
It concluded by outlining the impact of COVID-19 on its 2020/21 organisational performance. ARC listed four operational areas that were affected by the pandemic, namely, international collaboration projects, implementation of commercialisation projects, farmer training interventions, planting of winter trials and harvesting of summer trials. The challenge was met with mitigation measures that were outlined in the presentation.
Ms M Tlhape (ANC) asked how long the OVG’s CEO position had been vacant and what progress had been made in the appointment of a substantive Valuer-General. In the previous year’s APP, the Acting CEO mentioned the entity would be developing its own systems, processes and governance structures. She reckoned that this could have been completed by the end of 2017. Is the OVG still being supported by the Office of the Chief Registrar of Deeds? She wanted clarity on when the process of becoming independent would be completed. The final question to the OVG concerned the training of Valuer-Generals, taking into account the expected expropriation of land without compensation. She noted the demand for valuers of properties and asked for an indication of when the OVG would start with valuer training.
She highlighted the importance for the ARC to indicate its new turnaround task team put in place. She asked how the ARC would be dealing with optimising personnel costs, considering its personnel budget accounted for 55.4% over the medium term.
Due to a faulty connection, Ms Tlhape was interrupted in her question about the ARC. When she resumed, she enquired about the current progress on the Foot-and-Mouth Disease (FMD) Project facilities which started in 2010.
Ms N Mahlo (ANC) highlighted the importance of improving agricultural productivity in growing the agricultural economy in South Africa (SA). She wanted to know the success rate of the Kaonafatso ya Dikgomo (KyD) scheme and how the ARC would ensure the extension of technical training programs to rural women and youth. How will the ARC ensure the promotion of urban and vertical farming methods amongst women and youth in rural areas and townships?
She stated that the OVG had had serious capacity issues, as shown in its 2020/21 APP. What kinds of measures has the Office put in place to ensure that it meets its targets? How will the OVG ensure that the valuation of property would happen?
Ms A Steyn (DA) posed a question to both OVG and ARC about their budgets. The Finance Minister announced drastic budget cuts going forward, in order to deal with the effects of COVID-19. She wanted to know from both entities whether they had factored the possibility of further budget cuts and how this would affect them. She asked if the OVG and ARC would draft proposals for the Committee, highlighting any potential shifts due to this.
She asked the OVG to provide clarity on the filling of vacancies and to detail the plans in place to conduct valuations during this period. Has the OVG already started a process in dealing with that?
She asked if the ARC had considered selling some facilities and noted the importance of ARC spaces, emphasising that much space was left unused in these facilities. The ARC should look at smaller areas to alleviate the unnecessary use of excessive spaces. She also asked if the ARC received its Audit Improvement Plan.
Mr M Montwedi (EFF) commented on the input made by the Minister at the start of the meeting. He asked if the Department would consider merging some of the entities since both the Department of Agriculture and the Department of Land Reform and Rural Development had merged into a single unit. Even though the PPECB and NAMC had not presented at this stage, the respective roles of the boards of these two entities seemed to overlap. He suggested that ARC and OBP may be merged, since one entity dealt with research and development (R&D) and the other worked with the development of vaccines.
He said that the Department needed to bring in much needed capacity into the OVG, emphasising that it was unacceptable for OVG to be raising the matter every year. The entity was given the responsibility to ensure that it brought such capacity but this never happened. Why is this?
The second issue raised was that of issuing valuation certificates in 125 days as opposed to having to issue them in 50 days. He expressed that this was as a serious concern as it resulted in government missing the opportunity to access good farms on the market, causing it to buy farms that were dilapidated. The government would end up investing a significant amount of money in ensuring these farms underwent infrastructure development when this could have been avoided had the valuation certificates been issued earlier than the 125 days stipulated. Why does the process of issuing valuation certificates take so long?
He noted that the ARC had received a conditional grant from National Treasury. He reckoned that the ARC spent money without adhering to the conditions attached to the money.
He asked the ARC for a status update on the FMD facilities. How much money has the ARC spent on the FMD vaccine during the pandemic?
Ms T Breedt (FF+) asked whether the OVG had addressed issues surrounding its mandate – if these issues had been cleared out and taken into consideration.
She spoke about specific valuations, referring to slide 16 of its presentation. The OVG had indicated that it had completed 49% of valuations in the 2019/20 financial year and indicated a 100% target in the completion of valuations in the next consecutive MTEF period. She enquired about the current backlog the OVG has on valuations.
She referred to slides 12 and 18, mentioning that both spoke to compensation of employees and specific valuations. She noticed that there would be a decrease going forward into the next term and wanted clarity on the reasons for that, with specific focus on the fact that the OVG would need to be capacitated.
She referred to slide 20, where the OVG indicated a number of change management conducted. She asked the OVG to clearly explain what these change management sessions were. She referred to slide 21 of the presentation detailing the number of posts filled in line with the approved interim structure and also pointed out that its annual target was equal to the target of the third and fourth quarter. What caused this?
She referred to slide 30 of the ARC’s presentation. The ARC indicated that it was considering decreasing its facilities from eight to three and had also mentioned in previous presentations that it was encouraging early retirement of certain employees in an attempt to optimise its staff component. The ARC had also mentioned the brain drain that it was experiencing and the challenges associated with that. How is the ARC attempting to counter the optimisation of its structure with the prevention of a brain drain?
Inkosi R Cebekhulu (IFP) was mainly concerned with the OVG. The entity mentioned that it had a challenge of shortage of staff. He asked if it would provide the Committee with a report on the number of staff members required. How long will it take for the OVG to fill up vacancies so that it could deliver more effectively?
Ms T Mbabama (DA) referred to slide 16 of OVG’s presentation. The percentage of valuations completed in the specified time for 2019/20 was listed as 49% and in the 2020/21 financial year a 100% target was set. She asked what kinds of interventions the OVG had put in place to ensure that it reached the 100% mark. What would the OVG have done differently from the previous year?
She asked about the 125 day valuation period and indicated that the OVG is projecting a 50 day period going forward. Why did the valuation take 125 days to be completed? Did the OVG not target people with the number of days and turnaround times? The 125-day period seemed quite excessive.
Mr N Masipa (DA) commented that the OVG seemed to be disregarding the carrying capacity of farms. He asked which valuation methods were applied during its valuation processes.
His main concern with the ARC was that while it was important to save costs, this could lead to a brain drain. He asked how the ARC would ensure that it remained relevant and fulfill its mandate. The connection kept cutting off the sound, making it difficult to hear his other questions to the ARC. He did eventually manage to ask one more question to the ARC about the progress that had been made by the entity on the FMD facility.
The Chairperson announced Mr Montwedi’s question which he sent in writing before his connection was cut off. His question was to the ARC, recounting that in the previous meeting the ARC spoke of looking into insurance schemes for farmers and also venturing into making fertilisers. He asked how much progress had been made.
The Chairperson allocated 10 minutes to each entity to respond to the questions posed by Members.
Mr Thapelo Motsoeneng, Acting Chief Operations Officer (COO), responded on behalf of the OVG.
In the last interaction with the Committee, the OVG announced that it received concurrence from the Minister about the organogram of the entity. It had 21 additional posts that were concurred to by the Minister, which increased the capacity of the OVG to 45%.The 21 positions would have been vacant from the time the OVG received the concurrence in February 2020. The OVG had already advertised 15 of the 25 vacancies before the lockdown. Shortlisting and interview processes were set to proceed before the lockdown was in effect. The OVG planned to resume with these aspects of the recruitment process after the lockdown.
OVG systems and support from the Deeds Office
The OVG acquired an Enterprise Resource Planning (ERP) system towards the end of 2019 and finalised the contract. The implementation of the system began in 2020 and the entity was currently in the process of customising it, collaborating with the company contracted for that task.
To address the issue of support from the Deeds Office, the OVG produced a Transition Document Plan between the entity and the Deeds Office with an agreement to phase out the support by the end of September 2020. The OVG was currently in the process of customisation with various workshops working to integrate processes into the ERP. There were also plans to train staff members within the OVG to prepare them for 01 October 2020 – when the entity started to work independently.
After the lockdown, once the OVG returned to its full operations, the entity would consider the impact of the time lost during the lockdown and whether this would impact its plans to start working independently by the end of September or at the beginning of October 2020.
The OVG experienced difficulty with its lack of systems such as the ERP. The ERP was now serving as a measure put in place by the entity to improve its overall performance.
The issue of capacity had been a major problem in the OVG. The entity adopted a structure that was approved by the Minister and was in the process of capacitating that structure. This was one of the major measures that were put in place.
Impact of budget cuts
The OVG had not looked into the impact of budget cuts that were announced by the Finance Minister. The entity was waiting on executive leadership to determine how budgets would be reprioritised and allocated to all entities and departments. The OVG would only respond once the NT announced the plan going forward. In the previous year, there was a reduction on the MTEF allocations of about R7.5 million and so the entity had experienced budget cuts but would only respond once the proposed budget was announced.
Mr Motsoeneng explained that the Valuer-General formed part of a network of professionals in valuations that had created an advisory panel where ideas were shared amongst valuers. Professionals from both the private and public sector had started brainstorming ideas on how to respond to the new reality after the COVID-19. These discussions were still ongoing in the industry and in the profession. Certain ideas such as the physical inspections were currently discussed, especially since these were no longer conducted due to the inability of valuers to travel to destinations. There was currently no clear direction as to how valuation methods could be modified but discussions were ongoing and the OVG took a keen interest in receiving recommendations from the profession on possible adjusted methods to suit the new reality of COVID-19.
The 125-day completion period
The 125-day completion period was a direct result of the OVG’s lack of capacity. The entity was aiming towards placing itself within the 50-day target which would be an attractable timeline. The OVG aimed to leave the completion period in FY2019/20 and start aligning itself with the new target in FY2020/21.
He recounted that the Minister, in her opening remarks, had mentioned the advisory panel which was appointed to oversee the mandate of the OVG. The entity was in the process of contributing to that by having an indicator in its APP, supporting recommendations of the advisory panel.
The backlog was one of the indicators that were shown in the APP. The OVG was unable to provide exact numbers at this time. This would be addressed properly after the lockdown.
Compensation of employees
Mr Motsoeneng provided clarity on slide 18 of the presentation, explaining that the compensation of employees would not be decreasing. He quoted the annual compensation of employees as R30.6 million in 2020/21, R32.1 million in 2021/22 and R34 million in 2022/23; indicating a steady increase in compensation over the next three years.
The change management was a direct response to the issues of capacity and delays in certain processes experienced by the OVG. The entity had agreed with the restitution entity and the land redistribution branch of the Department to continue to commission valuations based on a panel of valuers determined by the OVG, and the terms of reference established similarly. These entities would then submit the commissioned valuations to the OVG for finalisation of quality assurance and review work. The change implemented by the entity was required to be managed by the OVG. The change management sessions as stipulated in the APP referred to the changes that were agreed upon.
The OVG was in the process of working on service-level agreements with the restitution entity in particular. The entity was able to finalise the service-level agreements during the lockdown. The entity had 4-5 meetings with restitution discussing the details of how these two entities would relate to one another, particularly with the new dispensation where Restitution would be commissioning valuations on the OVG’s behalf. The two entities had agreed that Restitution would provide the OVG an indication on a quarterly basis of the numbers that it required from the OVG, and the OVG would respond by indicating its capability in dealing with those numbers.
Mr Motsoeneng handed over to Ms Motlatso Maloka, Acting Valuer-General of the OVG, to respond to the remaining questions.
In determining the value, the carrying capacity could not be ignored because it was linked to both the financials and productivity of the farm. Carrying capacity was always considered as it acted as one of the basis of comparison in valuations. The OVG was unclear as to what informed the impression that carrying capacity was overlooked. The OVG was open to considering such complaints for further investigation.
Training of valuers
Ms Maloka indicated that the training of valuers was ongoing and was included in OVG’s operational plan; it might have not been included in the APP but it was ongoing. This training was to ensure that the OVG fulfilled its mandate to ensure it provided the best standard for land reform.
She mentioned that the OVG was a member of the International Valuation Standard (IVS). The OVG were guided by the standard and entities working with and/or providing valuations for the OVG were obliged to adhere to these standards.
The Chairperson reiterated the issue of the CEO vacancy and expressed that it was not answered quite sufficiently. He asked how long this position had been vacant and how far along the process the OVG was in appointing a new Valuer-General (VG).
Mr Motsoeneng responded that the CEO post had been vacant since the establishment of the OVG in 2015/16. The position of VG had been vacant since the end of February 2019. The OVG had taken it upon itself to raise this matter with the Deputy Minister (DM) and the Minister so as to report back to the Committee on when the recruitment processes would be undertaken for these two positions.
The Chairperson announced that the Committee would have to conclude the session with the OVG since it had spent too much time than was allocated. The Committee would appreciate the prioritisation of these two positions as the efficiency of the OVG rested on the leadership of the two positions. The Committee moved on to hear the ARC responses.
Mr Shadrack Moephuli, Chief Executive Officer (CEO) of ARC, was to respond on behalf of the entity.
Due to poor reception the ARC responses could not be heard. The Chairperson then requested entities to send their responses to the Committee Secretariat in writing by Friday, at the end of business day. The responses would then be circulated to all Members and they could raise follow-up questions.
He called on the three remaining entities to present; allocating 15 min per presentation.
OBP Corporate Plan 2020/21-2022/23 and APP for 2020-2021
The OBP briefly presented its MTSF and challenges. It set out five strategic priorities, including: to align for the future, financial sustainable growth, performance excellence, attracting and retaining the right people, and absolute accountability. Some of its current challenges included a steady decrease in sales revenue with loss of market share value largely due to COVID-19, and a drop in vaccine production and constant product unavailability. Also, there were no new market adapted products and adequate product pipeline. The entity was not up-to-date with industry-specific quality standards (GMP and GXP); it indicated an inability to access new markets, poor management, organisational efficiency; issues with work ethic, low staff morale and a dwindling high-performance culture. The entity’s revised, estimated total equity and liabilities amounted to about R773.453 million for FY19/20.
The NAMC Strategic Plan 2020/2025 & Annual Performance Plan
The NAMC briefly outlined some of its outcomes in its 2020/2025 Strategic Plan. These included an enabling agricultural marketing policy and statutory environment that it delivers on its mandate and core functions and that the agricultural sector was viable, inclusive and competitive as a key economic sector.
In its APP, the NAMC set out three programmes. The presentation did not provide extensive detail on the programmes but it indicated that they ensured effective budget expenditure, achievement of preferential procurement targets; unqualified audit reports and achievement of corporate support services targets in operational plans of each financial year during the medium term. The entity spoke on risk management and briefly outlined its top 10 risks and mitigation strategies, its human resources and operational programmes. It touched on the impact of COVID-19, compelling it to make certain adjustments to its business plan and budget. It mentioned that it would be placing more effort over the medium and long term towards digitisation of systems and to service stakeholders, especially farmers, who did not have information and communication technology on ways to deal with challenges brought on by COVID-19. The entity would be seeking more innovative solutions in this regard. It also briefly touched on its role in FPSUs.
PPECB Annual Performance Plan and Budget 2020/2021
The PPECB briefly spoke on observations of the international market; these included increased competitiveness, safe and premium food quality, global trade wards, non-tariff barriers, business disruptions and policy changes. Its response to this was to shift from regulator to enabler. The PPECB had a number of strategic projects in place, namely, the ERP and BI, AETP, Inspection Model, TITAN 2.0, Leadership Development and Innovation.
The entity briefly touched on its programme targets for 2020/21, farmer production support for the year 2019/2020 as well as its vacancy rate and recruitment processes. Its response to COVID-19 entailed establishing a crisis committee, introducing remote working and screening at all offices. The entity also outlined its MTEF up to 2025 and emphasised that the pandemic had slowed down its exports. The presentation listed the measures that would be put in place to limit the impact of the national lockdown.
The Chairperson requested Members to submit questions in writing to the Committee Secretary due to time constraints.
Ms N Mahlo (ANC) wanted clarity on the success of the PPECB in supporting smallholder farmers. She raised the issue of the 55 experts covered in the PPECB’s presentation and asked for the number of smallholder farmers who were rural-based and whether the entity had any urban-rural linkages in its systems.
Her second question was directed to the OBP and was based on the negative impact of the outbreak of animal diseases on the agricultural economy. She asked whether the entity was taking the necessary measures to address this and if the vaccines would be made available to emerging small-scale farmers.
Inkosi Cebekhulu mentioned that the OBP expressed difficulty brought by the competition of private sector companies selling the vaccines. Another challenge faced by the OBP was that the Department did not support buying from the entity. He asked whether the OBP engaged the Department on this to ensure the entity had the capacity to supply commercial farmers, specifically those who were selling vaccines for livestock.
He noted the significant decrease in the production of citrus in Nkwaleni and spoke on the shift from citrus production to other deciduous fruits. He asked the NAMC why it had abandoned citrus producers in Nkwaleni. Various farms were now under the ownership of the Trust and the people of Nkwaleni were not assisted. He asked the NAMC to explain why it had not offered its assistance to the people of Nkwaleni. The people working at the cleaning and packaging facility no longer had work due to this shift in production.
Ms Mbabama had two questions for the OBP. In FY2019/20, there were audit findings of irregular expenditure of R42.3 million as well as fruitless and wasteful expenditure R835 million. What will the entity do to prevent a recurrence of this in future? She also asked when the OBP would be the preferred government supplier of vaccines and related products to provinces. What needs to be done to achieve this?
Mr Montwedi highlighted the steady decrease in OBP revenue in the 2020/21 APP from FY2018/19. He asked how this decrease affected the OBP in the previous financial year and how it would affect the entity in the upcoming financial year. The OBP were not up-to-date with the Agricultural Quality Standards (AQS) and the Good Manufacturing Practice (GMP). Why is the OBP unable to ensure GMP in place? Was this not the reason the entity had a steady decline in its revenue?
He commented on the three projects implemented by the NAMC in the North West custom feeding programme. He asked the NAMC to update the Committee on this and if model implemented in these programmes was sustainable.
Mr Montwedi’s question to the PPECB was not audible due to the frequent cuts in his connection. The Chairperson asked the Committee to proceed with further questions from other Members and requested for Mr Montwedi to submit his question in writing no later than Friday, 15 May 2020.
Ms K Mahlatsi (ANC) mentioned that PPECB’s CEO indicated that the entity had reserves. She wanted the PPECB to disclose how much it had in these reserves and how it was reinvesting in the economy, especially in the rural communities.
She asked the OBP to explain its new strategy since it had performed relatively well in the 2019/2020 financial year. She asked what informed this vigorous strategy in this financial year and how the current budget would accommodate the strategy holistically, considering the operations vacancy rate. What provisions will the entity make to adjust its APP in line with the COVID-19 pandemic?
She urged the Department to start assisting entities with APP presentations as there seemed to be confusion between the APP and the Annual Performance Reports (APRs). She could not understand the NAMC’s presentation as it seemed to only speak on programmes implemented in the past. There was no clarity about its current standing. She referenced the NAMC’s APP and highlighted that the number of programmes decreased from five programmes in the previous financial year to three programmes in the current financial year. What informed this?
Ms Breedt asked the OBP to indicate its role in combating the recent outbreak of the African Swine Flu (ASF) in the Eastern Cape. The OBP had set quite a large number of annual targets; she asked how the COVID-19 pandemic would impact its ability to reach these targets. There was a decline in the production of vaccines and a rise in batch failure brought to the Committee’s attention. How would this impact the entity’s effectiveness in FMD and ASF? Does the OBP have a strategy to combat these diseases, specifically from livestock? She mentioned that COVID-19 had decreased the export market value by R25 million and asked whether the OBP had a plan in place to regain those markets or make up for that deficit.
She asked when the NAMC would share its Agro-processing Master Plan with the Committee and mentioned its AGSA reports. There was a regression in the previous financial year. How will the entity improve its audit outcomes? The entity also indicated that it was working with FPSUs. She asked how it identified these 27 FPSUs that it was working with.
She asked the PPECB how the COVID-19 pandemic impacted its export market, specifically its perishables, and how the entity would mitigate these losses. The PPECB had highlighted the increased market access of avocados in the export market, specifically to China. Will the entity be collaborating with the NAMC and the rest of the Department entities to further reinforce these tools?
Ms Tshwete asked if the Department had any plans in place over the MTEF period to increase the OBP’s global market competitiveness. In one of the audit findings of the Auditor-General (AG) in the last APR of the entity, the OBP was found to have taken ineffective and unsuitable steps to prevent irregular expenditure amounting to about R42 million. The OBP was also found to have had wasteful expenditure amounting of more than R800 000. She asked what measures the entity would take to prevent wasteful expenditures in future. She also asked the OBP to detail its role in combating the outbreak of the ASF in the Eastern Cape. She asked whether the entity engaged the Department to request assistance in dealing with the current outbreak.
Ms Steyn raised a concern about the OBP’s product development and enquired about progress on the development of the African Horse Sickness (AHS) vaccine. There was a discussion on this in 2019 but the Committee had not witnessed any progress. She requested an update on the issue of assistance on FMD vaccine development. The OBP had mentioned the management of the GMP facility project in its presentation. There was an ongoing discussion on poor management of this facility with a number of disciplinary hearings taking place. She requested the OBP for an update on these hearings as this could potentially have a detrimental effect on the OBP’s respectability as an entity.
She asked whether the NAMC considered increasing prices of imported goods during this time and to disclose this to the Committee so as to ensure this be properly monitored and appropriate measures be put into place if required. The price of rice and wheat imports were among the two largely questioned, so clarity on the role of the NAMC’s role with this is crucial and whether or not the entity has the capacity to manage this. She asked if there were any challenges with export markets and requested that this be submitted in writing to the Committee. Has the NAMC assisted smallholder farmers with issues such as food security and hunger?
She thanked the PPECB for its feedback on the challenges experienced with putting a plan in place for people testing positive for COVID-19. Are all three entities sufficiently assisting farmers with guidelines and ways to deal with issues of COVID-19? She had a question for the ARC but the Chairperson interjected and said that the ARC had already left the virtual meeting. He suggested Ms Steyn submit her question to the entity in writing.
Mr Masipa highlighted that the OBP’s Strategic Plans were crucial in demonstrating the approach it adopted in readdressing some of the existing problems in the upcoming financial year. There was a steady decline in the current term of the OBP’s sales revenue; this was a cause for concern. The overall revenue was declining despite the entity making a profit and there was a decrease in vaccine production and constant product unavailability in the market. He added that the lack of any new market adapted products was a serious problem and that there was a loss of a key European market. He pointed out that there were numerous challenges faced by the entity such as issues of poor management, failing work ethics in the workplace, low staff morale and the deteriorating performance culture.
Mr Masipa had a question for the NAMC but his connection kept breaking. The entity would receive a written submission of his question no later than Friday, 15 May 2020.
Ms Tlhape mentioned that the OBP spoke on two new targeted distributions. She asked the OBP to detail the amount of distributions it had and whether it knew which provinces it would be targeting, and whether it had any footprints for its distributions. She referred to slide 28 of the OBP’s presentation and pointed out that the entity had set out its tasks without any timeframes.
She asked the NAMC whether it was still the coordinating agency as none of the Department infrastructure projects for the medium term had been listed. The NAMC indicated that statutory levies for the poultry industry had lapsed in 2013. She requested the NAMC indicate the current status of this and detail the implications of the new poultry master plan.
She asked if the PPECB and NAMC would collaborate on securing the new export markets based on the current COVID-19 situation.
The Chairperson thanked Members for questions and remarks. He requested the entities to summarise the responses and submit a detailed written response to the Secretary no later than Friday, 15 May 2020.
Mr Baty Dungu, CEO of the OBP, responded on behalf of the entity.
The challenges outlined by MPs form part of the challenges recognised by the entity on slide five of the presentation.
Product availability and turnaround process
Mr Dungu referred to slide six of the presentation, announcing that distributors no longer reported product unavailability. The OBP started with a turnaround process with retired experts returning as consultants.
Mr Dungu concluded by stating that the OBP did not produce FMD and/or ASF vaccines.
Ms Sarah Netili, Acting CEO of the NAMC, responded on behalf of the entity.
She concurred with the Chairperson’s request to submit a written response to the Secretary.
Alignment of strategies and APP
Ms Netili indicated that the NAMC implemented five operational programmes aimed at implementing strategy.
Alignment of strategies to MAP Act
She indicated that the NAMC would align its strategy with the MAP Act.
She concluded that the NAMC had put measures in place to ensure improvement of procurement processes.
Mr Lucien Jansen, CEO of the PPECB, responded on behalf of the entity.
Due to the COVID-19 outbreak, Mr Jansen announced a decrease in the rate of exports but the situation had gradually improved since March 2020 due to the slow turnaround of containers globally.
PPECB collaboration with the Department
Mr Jansen confirmed that the PPECB was collaborating with the Department. The entity was playing a supportive role in providing confidence in South African export systems and processes.
Mr Jansen concluded by stating the entity would provide a more comprehensive account on Friday, 15 May 2020.
Closing Remarks by the Chairperson
The Chairperson thanked all entities for their presentations. He requested that all Members and entities submit questions and responses in writing so as to ensure the Secretariat circulated answers to all Members and conduct follow-up questions thereafter. He thanked the Ministry, Department officials and entities who joined the virtual meeting.
The meeting was adjourned.
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