The Committee was briefed by the Department of Agriculture, Land Reform and Rural Development (DALRRD) on the Africa Continental Free Trade Agreement, and received a status report on the implementation of the Covid-19 Agricultural Disaster Support Fund.
The African Continental Free Trade Agreement, signed in March 2018, aimed to bring together all 55 African states within the African Union to create a single continental market for goods and services; the free movement of people, goods, services and capital, as well as to accelerate the establishment of a customs union. It builds on the progress made in the trade liberalisation and integration programmes of the regional economic communities.
The implications for the South African agricultural sector were significant. The Agreement sought to achieve the creation of a single larger preferential regional market for African products through negotiation on a myriad of points, such as the progressive elimination of tariffs, the elimination of non-tariff barriers, as well as the harmonisation of product standards. Possible risks included non-compliance by some member states with their tariff phase-down commitments, the lack of respect for the trade rules, problems of transhipment, the importation of sub-standard products and insufficient capacity to enforce trade rules.
To mitigate these risks, South Africa had ensured the involvement of the South African Revenue Service (SARS) and the relevant sanitary and phytosanitary units within the Department that would strengthen the country’s implementation capacity. The Department would ensure the enforcement of the agreed trade rules and the implementation of a dispute settlement mechanism. To facilitate the participation of smallholder farmers in the Agreement, it would ensure their market readiness on issues such as consistent production, quality and the observation of agricultural standards.
Members were generally supportive of the Agreement, but expressed their reservations about the continent’s ability to implement it, given its infrastructure challenges. The Department needed to ensure that no sub-standard products flooded South Africa, and that South African goods should be protected from protectionist measures.
A R1.3 billion Agricultural Disaster Support Fund had been made available to assist smallholder farmers to combat the economic consequences of the Covid-19 pandemic. One of the mechanisms to disburse the funds had been via a farmer register, and this process was on-going. The Department had used radio, TV, print and community radio stations to raise awareness about the fund, and over 30 0000 applications had been printed and distributed to rural and communal areas. It had also deployed 46 extension officers to assist with the applications.
The Department had approved only 15 036 applications out of almost 50 000, and about R585 million had been disbursed. It explained that challenges had been experienced, such as incomplete information on forms, a lack of supporting documentation in order to process the applications, the collection of forms from farmers and travelling distances, and the imposed lockdown.
Members expressed their dissatisfaction at the low rate of approvals, stressing that it was unacceptable that so many applications had been turned down. Some also decried the fact that very few applications from women had been approved.
African Continental Free Trade Agreement (AfCTA)
Ms Kwena Komape, Acting Deputy Director General (DDG): Department of Rural Development and Land Reform (DLRARD), briefed the Committee on the African Continental Free Trade Agreement.
The African Continental Free Trade Agreement was signed on 21 March 2018 in Kigali, Rwanda. The Agreement aimed to bring together all 55 African states within the African Union (AU) to create a single continental market for goods and services; the free movement of people, goods, services and capital, as well as to accelerate the establishment of a customs union.
The Agreement legally entered into force on 30 May 2019, and 54 out of 55 countries had signed the consolidated text, and 29 had ratified the Agreement. The operational phase was launched in July 2019.
It builds on and improves upon the progress made in the trade liberalisation and integration programmes of the regional economic communities. South Africa participated in the negotiations as part of the Southern African Customs Union (SACU).
The implications for the South African agricultural sector were significant. The Agreement sought to achieve the creation of a single larger preferential regional market for African products through negotiation on a myriad of points such as the progressive elimination of tariffs, the elimination of non-tariff barriers, as well as the harmonisation of product standards.
Possible risks included the non-compliance by some member states with their tariff phase-down commitments, the lack of respect for the trade rules, problems of transhipment, importation of sub-standard products, and insufficient capacity to enforce trade rules.
To mitigate these risks, South Africa had ensured the involvement of the South African Revenue Service (SARS) and the relevant sanitary and phytosanitary units within the Department that would strengthen the country’s implementation capacity.
Additionally, the Department would ensure the enforcement of the agreed trade rules and the implementation of a dispute settlement mechanism.
To facilitate the participation of smallholder farmers in the Agreement, the Department will ensure market readiness by farmers on issues such as consistent production, quality and the observation of agricultural standards.
The Department will also assist with capacity building in various aspects that include the marketing of agricultural products and the functioning of various value chains and product standards.
The Department was of the view that the Agreement presented a huge market opportunity for South Africa and the continent.
Mr N Capa (ANC) said he did not hear anything about how the Agreement related to existing regional economic communities (RECs), and what the role of the National Agricultural Marketing Council (NAMC) had been in the drafting process. He also wanted to ascertain whether there had been a divide between sub-Saharan Africa and North Africa about the Agreement.
Mr N Masipa (DA) said he took cognisance of government’s plans to assist small holder farmers to export to African markets, yet he was also mindful of the lack of infrastructure on the African continent. Inter-African trade had become a costly and laborious affair and he did not think that Africa was ready for a continental free trade zone. He described the state of the continent’s harbours as ill prepared, and questioned whether some African states would be able to extend credit guarantees. He cited Angola as a prime example of Africa’s legacy of bureaucratic red tape that may result in a cumbersome and expensive process. He also wanted to know how the Agreement impacted on the cost of doing business.
Ms K Mahlatsi (ANC) wanted to ascertain whether there was a plan in place that dealt with how the Agreement ought to be implemented. The Department had placed a lot of emphasis on market expansion for South African agricultural produce under the Agreement. She wanted to know how the Agreement would facilitate the free movement of goods. She also requested information on South Africa’s role in the drafting of the Agreement.
She recalled that during the presentation, DDG Komape had mentioned that the Agreement discouraged “Big Brother” behaviour, and that countries could only trade as a block. She wanted to know what would happen if there was no consensus in a trading block.
Ms T Mbabama (DA) asked Ms Komape to explain what she meant by “free movement”. She wanted to know why the whole of the Southern African Development Community (SADC) was not on board. The Agreement was supposed to have come into effect in July 2019, yet this had not transpired. She wanted to know when South Africa would be ready to enforce the Agreement.
She commented that the Department’s plans were rather ambitious since it did not have a sterling record when it came to assisting farmers. What plans were in place to assist smallholder farmers to access the benefits under the Agreement?
Ms T Breedt (FF+) asked what measures had been put in place to enforce the Agreement, and whether Covid-19 had an impact on the Agreement being enforced. She wanted to know when the new date for enforcement was, and whether there had been any contingencies in place should this date also not materialise.
Ms Breedt commented that some African countries were already experiencing severe food shortages, so she wanted the Department to explain how it would ensure that South Africa’s food security was not compromised. The Department was also asked what the personnel and financial implications would be, and whether it had budgeted for these costs. What would happen to the Agreement if a country experienced civil strife or any other crises?
Mr M Montwedi (EFF) said his party was in support of the Agreement, as it also called for the free movement of Africans on the African continent. He recalled that the Agreement called for countries to become signatories as a block, and wanted to know whether all SADC countries had signed it. In order for the Agreement to become successful, infrastructure on the African continent had to be improved. He wanted to ascertain whether the Department had been involved in any infrastructure projects that supported the implementation of the Agreement. He also wanted to know what the role of the Department of Trade and Industry (Dti) had been, and what measures had been put in place to support smallholder farmers, especially since the Landbank had collapsed as well.
Ms A Steyn (DA) asked how the Tripartite Free Trade Agreement and the African Continental Free Trade Agreement would co-exist, and which one would be enforced. Would there be any delays with the implementation, and were South African custom officials ready to enforce the Agreement? She also wanted to be briefed on whether acceptable provisions had been made that ensured bio security, and how the Agreement addressed protectionism.
Ms M Thlape (ANC) recalled that slide five of the presentation had focused a lot on Africa in general, and not on South Africa in particular. She would have welcomed a more focused approach on South Africa.
Ms N Mahlo (ANC) asked how the Agreement would affect South Africa’s trade relations with SADC and SACU, and whether plans had been put in place to raise awareness about the Agreement in rural areas.
Ms Komape replied that as a country, South Africa had several trade agreements with other countries. When South Africa signed trade agreements with other countries, it should be within the confines of SADC protocols.
She mentioned the example of Morocco and Egypt, who were not members of any regional communities.
She took note of the questions around Africa’s readiness to enforce the Agreement, and commented that there had to be harmonisation in the way Africans conducted business. This included the ease of doing business and capacitating customs officials.
Her “Big Brother” reference pertained to countries being allowed to trade only as a block, without being dictated to by external forces.
The Agreement also called for the thorough vetting of products, so no sub-standard products would be allowed into the country and rules on the origin of products would be strictly enforced. Enforcement measures would take the form of immediate inspections by African member states should any country violate the rules on origin.
The DRDLR Director-General addressed the question on infrastructure. He explained that infrastructure development did not reside with his Department per se. All infrastructure related issues resided with the Department of Transport (DoT) as the lead entity.
There were also continental efforts under the guise of the African Union to facilitate infrastructure development, with the sole aim of stimulating inter-African trade and investment.
He pointed out that smallholder farmers still faced a number of barriers that prevented them from participating in the food value chain. These barriers included a lack of access to government services and the urgent need for water reform. As it stood now, commercial farmers had access to the lion’s share of water rights for farmers. Smallholder farmers also did not have access to affordable credit. These were all issues that had to be addressed.
Of South Africa’s 40 000 farmers, only 3 000 produced the food that South Africans ate. They also contributed to about 50% of all jobs in the agricultural sector.
The Minister of Agriculture had recently appointed an Agricultural Marketing Council that would assist smallholder farmers as well. In addition, the Department was currently busy with the Agricultural Master Plan through a nationwide consultative process. It would like all policies to be aligned. The Agricultural Research Centre (ARC) was also involved in the process.
He explained that black South African farmers had sizable livestock holdings, and these were susceptible to animal diseases. Closer collaboration between the Department and Onderstepoort Biological Products (OBP) could be beneficial to smallholder farmers, as the Department would like to procure vaccines directly from the OBP. This plan was being refined for implementation.
Mr Mooketsa Ramasodi, DDG: Agricultural Production, Health and Food Safety, DLRARD, said South Africa had played a pertinent role in the crafting of the Agreement and its annexures. It had been an influential voice in ensuring that rules of origin protections, technical barriers to trade and sanitary conditions were provided for in the Agreement.
He promised the Members that the Department would send the Agreement to Parliament. The man at the helm of the Agreement’s Secretariat was a South African, and South Africans ought to feel very proud of this achievement.
He added that trade statistics had shown that the export of apples and pears to fellow African states had increased. There was ample opportunity for South African produce on the African continent, and it was time for South African producers to diversify their markets.
Covid-19 Agricultural Disaster Support Fund: Status report
Mr Mokutule Kgobokoe and Mr Terries Ndove, Deputy-Directors General at the DALRRD, briefed the Committee on the implementation of the Covid-19 Agricultural Disaster Support Fund.
The Department of Agriculture had rolled out an Agricultural Disaster Support Fund to the tune of R1.3 billion to assist smallholder farmers to combat the economic consequences of the Covid-19 pandemic. It had engaged in stakeholder mobilisation with provincial and local governments, as well as traditional authorities. The Minister of Agriculture had led consultations with industry leaders and organised agricultural formations.
One of the mechanisms used by the Department to disburse these funds was via a farmer register. This process was on-going.
The Department had used various communication platforms such as radio, TV, print and community radio stations to raise awareness about the Covid-19 Disaster Fund. Over 30 0000 application forms were printed and distributed to rural and communal areas. It had been supported by provincial governments, non-governmental organisations (NGOs) and civil society as well. To further assist smallholder farmers, it had deployed 46 extension officers to assist with the applications.
The Department had approved only 15 036 applications out of almost 50 000 applications. Of those approved, 9 542 had been from males and 5 494 from females. About R585 million had been disbursed. The North West and Kwazulu-Natal provinces had the most approvals.
Challenges had been experienced, such as incomplete information on forms, a lack of supporting documentation in order to process the applications, the collection of forms from farmers and travelling distances, and the imposed lockdown.
The Department had recognised that there was a need to fast-track the registration of farmers on the farmer register, and to simplify the language on the application forms.
The Department also provided an update on the procurement and distribution of personal protective equipment (PPE). About 400 000 face masks had been procured and distributed to farm workers nationally. 400 000 bars of soap had also been distributed, and an additional 200 000 cloth masks had been ordered and awaited delivery.
Ms Breedt recalled that the Department had mentioned that about R20 million had been spent on the procurement of PPE and hygienic soaps. She wanted to ascertain how much it had spent on the 400 000 single-use masks, and why a decision had been taken to procure single-use masks. She deemed it a waste of money, and asked whether there had been any coordination between government departments to secure PPE.
She hoped the Department had been pro-active in preparing for the summer crops. She also wanted to know if it intended to assist black economic empowerment (BEE) and commercial farmers, as well as smallholder farmers. She emphasised the important role that commercial farmers played in the South African economy.
Ms Mahlatsi expressed her concern with the financial figures mentioned by the Department. She questioned how it had been possible for it to fork out R1.3 billion for relief when initial indications were that only R100 million would be made available for relief purposes. She questioned the criteria that had been used for relief assistance, as it was evident that the smallholder farmers did not understand the language. It was worrying that only 300 applications from the Free State had been approved. She wanted to know what would happen now. She recalled that the Department had indicated that it wanted to reach about 40% of youth, yet only 2 000 applications from the youth had been approved, so she suggested it should reconsider the criteria. She also wanted to know how many farmers had been registered pre-Covid-19.
Mr Montwedi questioned the process of approval, and wanted know how many applications were still to be approved. He also took issue with the low rate of approvals for the North West, commenting that there was a huge demand for government assistance. He also wanted to know whether there would be a new window for applications, and how the Department had obtained the R1.3 billion.
Ms Mbata said the government had to ensure that farmers were assisted. The Department should review the application process so that more smallholder farmers could qualify. She wanted to know whether it had conducted training exercises on how to use the protective gear, and how to dispose of it afterwards. She decried the fact that so few women and people with disabilities had been assisted. She also wanted to know whether the government had a concise database of everyone that had received assistance.
Ms S Mbatha (ANC) said the government was always dispensing grants and other sources of funding, yet Parliament never received feedback on how this money was spent.
Ms Mhalo also expressed her displeasure at the low rate of approvals in her home province of Limpopo, as well as the financial allocations. Limpopo was known as a livestock province. She suggested to the department that close collaboration with the Dti and DSB should be at the order day in support of smallholder farmers. She also wanted to know what the Department was going to do about those applicants that had not been successful.
Ms Mbabama said she was extremely worried, as the majority of applications for relief funding had been rejected. She lamented the national 28% approval rate, and asked why so few applications had been approved. She also lamented the 15% approval rate for the Eastern Cape, and wanted the Department to explain the reason for this. She had not seen any of the 30 000 printed application forms that the Department spoke of, and there was often a disjuncture between what was happening on the ground and what was reported to Parliament.
Ms Capa asked where the savings were coming from that the Department was using to assist smallholder farmers.
Mr Masipa said that maybe the fault was with the extension officers that did not do their jobs properly.
Mr Ndove conceded that maybe the Department’s communication about the relief funding had been inadequate.
Mr Ramasodi said that the Department had taken various variables into account, but it simply did not have enough resources to allocate funding to all applicants. It had devised a methodology to allocate funds, so the process was scientifically driven.
Mr Kgobokoe said that a lot of focus should be given to the up-skilling of smallholder farmers. The Sector Education and Training Authorities (SETAs) and agricultural colleges should all be used for this purpose.
He said that over 80 000 farmers had been registered pre-Covid19.
He also referred to the criteria for applications, stating that it was not necessarily just about who received funding and who did not. The criteria for successful applications were quite stringent.
The Department had been given the green light by National Treasury (NT) to use the R1.3 billion after it had been informed by the NT that the R100 million from the Land Bank could not be utilised as a relief fund for the agricultural sector.
The Department had engaged the Minister of Agriculture on the need to explore avenues to assist those who did not qualify for funding.
The meeting was also informed that the Department was already planning for the summer harvest season.
Mr Kgobokoe referred to the question about the PPE, and said that about 43 000 masks had been distributed per province, and that the Department of Health (DoH) was the lead department on all things health related, so the DALRRD therefore could not take responsibility for DoH functions.
The Acting Chairperson asked the Department to provide written responses to the unanswered questions.
The meeting was adjourned.
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