Sectional Titles A/B & Agricultural Produce Agents A/B: Department briefing; with Deputy Ministers

Agriculture, Land Reform and Rural Development

23 February 2021
Chairperson: Mr Z Mandela (ANC)
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Meeting Summary

Video: Portfolio Committee on Agriculture, Land Reform and Rural Development, 23 February 2021

In a virtual meeting, the Department of Agriculture, Land Reform and Rural Development briefed the Portfolio Committee on the amendments made to the Sectional Titles Amendment Bill and the Agricultural Produce Agents Amendment Bill. The Department presented a total of 12 amendments based on the comments and feedback received from the public participation process, and from the Sectional Titles Regulation Board.

Members raised concerns on the costs involved in cancelling sectional plans, as a court order is required to cancel the plans. They questioned cheaper alternatives. Members requested a public participation process; questioned the purpose and existence of the Sectional Titles Regulation Board and the effectiveness of the implementation of the amendments to the Bills.

Members were pleased overall with the decision to amend the previous legislation to fit the democratic era and to ensure necessary regulations are put in place. There were concerns raised regarding the high number of sections which had to be amended. Members questioned the purpose of the Fidelity Fund and the trust account for agents. The role of agents in the fresh produce market was also questioned based on concerns about unethical and corrupt activities. Members asked for clarity regarding the stipulation of being of sound mind to sit on the Board. The wide consultation during the public participation process was questioned, especially since consultations did not take place in all the nine provinces across the country. Members also questioned delays in tabling the Bills.

Meeting report

Opening Remarks

The Chairperson said the Department of Agriculture, Land Reform and Rural Development (DALRRD) would brief the Committee on the Sectional Titles Amendment Bill (STAB) and the Agricultural Produce Agents Amendment Bill (APAAB), separately. The Committee started the process of advertising the two Bills for public input, with assistance from the legal experts. In the past two weeks the impact of COVID-19 was discussed, and the Chairperson asked for health and safety protocols to be followed. A new context must be defined during the pandemic and a post COVID world which will rise above the challenges faced. 2021 marks 50 years since the introduction of the Sectional Titles Act, which introduced a new era for home ownership in South Africa. The Act was signed into effect on 19 June 1971, and was proclaimed two years later in March 1973, which allowed full ownership rights to building sections. By 1993, one formal brick house for every 43 Africans was built, compared to one for every three point five whites. The context was outlined in the White Paper on the New Housing Policy, and Strategy for South Africa, which highlighted the conditions affecting the poor despite the 7 million Reconstruction and Development (RDP) units built in urban centres. Land hunger and tenure security remain a challenge. Millions of South Africans still live in informal settlements and live in poor conditions. Government estimated that two to three million homes are required to meet the need of housing. The Chairperson welcomed the presentation by the Department on the Sectional Title Amendment Bill and the provisions on challenges the Bill aims to address. South Africa boasts the most advanced agricultural developments in Africa, if not the world, and the President referred to the potential of agricultural exports during the 2021 State of the Nation Address (SONA). The growth in export markets post-apartheid and the opening of global markets made new measures and legislative provisions for new issues, a necessity. The Agricultural Produce Agents Amendment Bill (APAAB) provides for these new developments, and there is hope the engagements in the meeting will be constructive and fruitful. The Chairperson opened the platform to the Deputy Ministers for opening remarks.

Deputy Minister of Rural Development and Land Reform, Mr Mcebisi Skwatsha, welcomed the opening remarks by the Chairperson and said it portrays the challenges and triumphs on the road to creating a democratic and non-sexist democratic country. The presentations on the two Bills are aimed at creating collaboration with South Africans to build an ideal country so many lost lives for. There were challenges along the way especially, when females were not allowed to have a particular house. The Deputy Minister introduced the Department’s representatives.

Sectional Titles Amendment Bill (STAB)

Mr Mooketsa Ramasodi, Acting Director-General, DARDLR, said the first Bill presented is the Sectional Titles Amendment Bill which seeks to improve and enhance the application of the implementation of the Sectional Titles Act of 1986. There are 18 clauses the Department will inform the Committee on. Mr Ramasodi introduced the presenter of the Sectional Titles Amendment Bill, Ms Antoinette Reynolds, Deputy Registrar of Deeds. She outlined the objectives of the Bill.

She said Clause 1 deals with the amendment of Section 1 of the Act, and she provided the correct definitions for the section.

Clause 2 deals with the amendment of Section 4 of the Act on the approval of development schemes, and to have a lessee’s representative in case a lessee is absent from meetings.

Clause 4 deals with the amendment and cancellation of sectional plans where Section 14 needs to be amended to make exclusive use areas applicable, which may be affected by incorrect sectional plans, as well as cancellations of sectional plans by court order.

Clause 6 deals with the amendment of Section 17 of the Act, which provides a portion of communal property, may be alienated.

Clause 8 deals with the amendment of Section 21 of the Act, which deals with the approval of plans for subdivision by the Surveyor-General.

Clauses 9, 10, 11, and 13, deal with the amendment of Section 22. It deals with the registration of subdivisions of sections, as well as amendments to Sections 23, and 24 which provide for endorsements of deeds to be registered against title deeds.

Clause 12, deals with amendments to Section 25 of the Act, which deals with the replacements of plans if misplaced or lost.

Clause 16 deals with the amendment of Section 54 to allow for the appointment of the Registrar of Deeds and a conveyancer with practical knowledge, to matters of sectional titles registration.

Clause 18 deals with the amendment to Section 60 on the transitional provisions for registered Sectional Titles, to allow the transfer to owners by a notarial deed of cession.

[see presentation attached for further detail]

Agricultural Produce Agents Amendment Bill (APAAB)

Deputy Minister Skwatsha said the purpose of the Bill is to include those who were excluded from exporting produce and addressing gaps.

Mr Ramasodi said the Bill aims to remedy issues which surfaced in the industry. These issues are based on inspections, investigations, and disciplinary actions against export and livestock agents, who are involved in corrupt activities. These activities relate to trading produce, selling the received produce, and people not getting paid as well as the agents who are given fidelity insurance for the agricultural produce.

There is a broad issue of ensuring border regulations according to different sections of the Amendment Bill. Definitions need to be corrected on clear time frames and work must be done with appointing the Registrar, and related responsibilities. The Minister also has to be given the power to approve regulations, especially during the lockdown. The Bill is broad in trying to implement changes.

Mr Stanford Manthata, DARDLR, outlined the background of the Bill. The Agricultural Produce Agents Act of 1992 had defects which led to the amendments of the Bill. Defects include:

  • Not allowing for inspections, investigations, and disciplinary actions to be taken against export and livestock agents.
  • Fresh produce and export agents not compelled to take out fidelity insurance which protects producers against loses.
  • Export agents not compelled to keep producer accounts.
  • Fidelity Fund not insured, which results in a high risk of large claims.

The Amendment Bill was gazetted and public hearings were held between May and June 2015 in Gauteng, Western Cape, KwaZulu-Natal, and Limpopo. 25 organisations submitted comments and 33 participated in the public participation process. He outlined the objectives of the APAAB and the required amendments for the Bill which include:

Refining certain definitions

  • Providing for certain provisions
  • The appointment of the Registrar
  • Providing for the insurance fidelity fund
  • Providing for trust accounts for export agents

Providing for insurance by export agents and fresh produce agents

  • Allowing the provision for the Minister to approve regulations.

The amendments on specific and key sections of the Amendment Bill were outlined. It included amendments to Section 1 on the clarity of definitions, to ensure compliance by export and livestock agents:

-Section 3, on the Fidelity Fund and registration certificate being appointed to the APAC Council. -Section 7, on the terms and conditions for the appointment of the Council.

-Section 8, on the clarification of conditions of service and responsibilities of the Registrar.

-Section 10, on the mandate of the Council.

-Section 11, on the Minister approving the business plans of the Council, and Section 12A on the safeguarding of the Fidelity Fund against claims.

-Section 13, on the matters relating to payments made from the Fidelity Fund.

-Section 14, on the claims against the Fund to be done in writing and settlement amounts.

-Section 16, on the circumstances preventing an individual from acting as an agent.

-Section 17, on the application to export agents.

-Section 17A on the necessity for insurance by export agents.

-Section 19, on the matter relating to trust accounts.

-Section 19A, on the opening of trust accounts by agents.

-Section 21, on the unclaimed monies to be used by the Council after three years.

-Section 22, on the provision of allowing the Minister to approve and publish regulations.

-Sections 23, 24,25,26,29, and 30, on the application extension for export and livestock agents. -Section 25, on the provision of one member of the Tribunal to have practices as an advocate, magistrate, or attorney.

-Schedule 1C on the substitution of the definitions of ‘fruit’ and ‘vegetables’ which have a derogatory word.

He provided the current status of the Bill.

[see presentation attached for further detail]


Sectional Titles Amendment Bill (STAB)

Ms M Tlhape (ANC) welcomed the presentation on the STAB because it is a necessary piece of legislation, especially when it comes to the work which still needs to be done by government to provide housing to people in townships and rural areas. She said, when there are disputes, women suffer the most. This is why the STAB legislation is important. It will protect the interests of women.

She said her question on the process followed to publish the two Bills was clarified in the opening remarks. She asked if the Bill will have another public participation process.

On the Clause 1 amendments of the definitions, she asked if it was necessary to refine the definitions, and if the current situation necessitated the amendment.

On the Clause 4, Section 1 amendments for cancellations of sectional plans by court orders, she asked about the process which must be followed to cancel a sectional plan, and asked if there are less costly alternatives to cancelling a sectional plan.

Ms T Mbabama (DA) asked if there are, or were, any problems with implementing the Act, because there are usually problems during amendments. If so, she asked what the problems were, or are, and asked if the Committee must view the Department’s public participation report, because she was unsure if the list of stakeholders was outlined in the Board’s memo. She said a consolidated public participation report from the Department should be submitted for the Committee to review if the stakeholders were consulted. Spatial Planning and Land Use Management Act of 2013 (SPLUMA) was enacted in 2013, but the Department is only making amendments now, considering the contravention of land use schemes is a criminal offence. She asked why the Department waited seven years after SPLUMA was enacted to make amendments.

She asked for clarity regarding the need for lessee, and developers meetings, asked what the main purpose of the Sectional Titles Regulations Board is, and why it did not exist in the past, because it seems as though it is not necessary to have a Board. This is especially so because sectional titles existed for a long time without a Board present.

Mr N Capa (ANC) welcomed the presentation and asked if the amendment process has scenarios where there is a land owner and a lessee, because a situation like this happened in the Transkei. He asked how the issue would be addressed in the process. He also asked if conflicting interests created the possibility of challenges by specific interest groups and parties in the amendment process.

Ms T Breedt (FF+) asked for further clarity on the Sectional Titles Regulation Board, how big the Board is, how the Board will be established, if the Board is permanent or temporary, how the Board will be governed, and if there will be additional regulations and amendments to ensure the Board’s work is done fairly. She also asked if the Department had challenges with the amendment process in public participation, and if there are any challenges foreseen by the Department in implementing the Bill.

Mr M Montwedi (EFF) wanted to know which Department will be responsible for implementing the STAB after the amendment process, because it appears the Human Settlements Department would be responsible. He asked how the Department will ensure Human Settlements receives the same presentation, so when the time for implementation comes there are no misunderstandings. He also asked if the presentation will be forwarded to those who would approach the courts on the amendments.

He said as a new parliamentary Member, when there are amendments it means there is a problem the amendments will address. He asked what the Department identified as the problem statements.

He asked if the Department conducted the socio-economic impact assessment, and if the Department can share the information. Some of the points he raised were initially raised by interest parties during the previous amendment public participation process.

On public participation, he said the presentation did not outline anything on the public participation process during the amendment, and he asked if the presentation can share insight on the public participation process, and if a report can be submitted.

On the Clause 16 amendments on the Sectional Titles Regulation Board, he asked what the rationale was for increasing Board Members from seven to nine, because if the problem statement was done it would show increasing members would help address the issues identified.

He also asked who is responsible for appointing the Board, because the legislation allows for the Human Settlements Department to hold this responsibility. He wanted to know if there will be a joint ministerial appointment of members.

Ms B Tshwete (ANC) said the Bill seeks to address the injustices of the past. Since the Department is not directly involved in implementing the Sectional Titles Act, she asked if there is a departmental process in place involving all the relevant stakeholders, to finalise the amendment, because it is long-overdue. She asked for the Department’s report on public participation done previously, because the report will assist the Committee to evaluate if the issues raised on public participation were integrated in the Bill. She raised concerns on the amendments to Clause 4 of the Bill, and asked if there are cheaper and faster alternative ways to address the cancellation of disputes, other than the court order way.

Agricultural Produce Agents Amendment Bill (APA)

Ms Tlhape welcomed the presentation and noted the importance of the legislation given the current situation farmers and producers find themselves in. She questioned the situation, if the current APA of 1992 has so many sections which need to be amended. She appreciated the regulation and provisions outlined in the presentation. Section 19 made provision for trust accounts to be opened by agents, and she asked why the trust account is necessary in addition to a normal business account.

On the objective of insurance for export and fresh produce agents, she asked if the agents are involved in exporting fresh produce and livestock. If so, she asked what the difference would be between the agents and the Perishable Products Export Board.

On the regulation for the current agents, she said there are sections which indicate the circumstances for practice and what happens when there is a breach. She asked what the Department is doing to ensure and regulate the agents, to not allow exploiting producers on commission, and price fixing.

Ms T Mbabama (DA) said the APA Amendment Bill needs a lot of thought because the amendment Bill states it seeks to protect the rights of producers from unregulated aspects of the fresh produce agents. She noted shock in the level of price fixing and dishonesty which happens in the industry. She said a lot of work needs to be done to ensure regulations are put in place and decrease the level of unethical practices by agents. It is difficult to work on a Bill or an Act when the work on the ground is unknown of, especially during COVID-19. It would have been effective to visit one of the fresh produce markets and ask questions directly to the agents, so there is a better understanding of the issues at hand. She asked what the purpose of the Fidelity Fund is considering there is a trust fund, and asked who the Fidelity Fund certificates are given to, what it means for an agent to be handed a certificate, the person responsible for appointing the agents, and what is the need for an agent in a fresh market produce.

She also asked for the difference between a fresh produce agent and an export agent, because in the original Act, there are certain policies and rules which apply to a fresh produce agent and not to an export agent. She asked if an agent can be both a fresh produce agent and an export agent, and how the difference in rules and policies affects the regulation. She wanted to know about the role of the National Agricultural Marketing Council in the fresh produce markets, and asked who the members of the Agricultural Produce Agent Council are, if it is the agents, and if so, how the agents regulate themselves.

Ms Breedt said Section 1 on the definitions of the APAC Board states someone with an unsound mind cannot sit on the Board. She asked what this statement means.

On Section 10 on the expansion of the APAC mandate, she asked how ready the APAC is to deal with the expanded mandate, and the financial implications considering APAC is already struggling.

On the Fidelity Fund, she asked if the Department buys into the Fund, if the Department is a member of the Fund, are there contributions, and how strong the Fund is, because the Fund may not be strong enough to handle the number of claims.

On Section 14, regarding the claims against the Fund and how it will be handled, she said it is good claims must be done in writing. She asked how the APAC will manage the claims, if there will be databases or prototypes already made. She raised concerns about claims being lost, and there may not be a proper way of dealing with it to avoid recurring claims being submitted on the same issue.

She said Mr Ramasodi mentioned the current issues experienced a year ago regarding livestock and auctions, and provision must be made for the Minister to be able to approve regulations. She asked how the amended Bill will address the livestock and auction issues, and applauded the Department on the work done so far with the amendment of the Bill.

Mr Capa welcomed the presentation and raised concerns about the relation of the Act with the existing legislation which establish the National Agricultural Marketing Council (NAMC), and the Perishable Products Export Board (PPEB). He asked how the Act will relate to the existing NAMC and PPEB as councils directly affected by the marketing agents.

Ms Tshwete asked what the meaning of an unsound mind is, and said the country is embarking on manufacturing cannabis which had requirements such as having a licence for manufacturing, and distributing and producing cannabis.

On the establishment of the APAC, she asked for the current staffing profile and the financial implications.

Ms Mbabama said she read somewhere there is a slow pace of transformation in the National Fresh Produce Markets, and there are 106 agents currently, and only 12 are black, which is 11%. She asked if there were deliberations within the Department on the matter, and if the Amendment Bill will enforce change in the transformation.

The Chairperson said in the memorandum of the Agriculture Produce Agents Amendment Bill 2020, the Department reported in preparation for the publication of the Bill, the former Department of Agriculture, Forestry and Fisheries consulted widely and received input from representatives of agents, industry stakeholders, and industry organisations. The Chairperson asked the Department to indicate if the wide consultations also included smallholders, developing farmers, as well as organisations such as the African Farmers Association of South Africa (AFASA), the National African Farmers Union (NAFU), and the National Emergent Red Meat Producers Organization (NERMPRO), which all raised the challenges in accessing domestic markets and export markets.

He pointed out, none of the organisations are listed in the list of stakeholders which submitted written comments or participated in the Department’s public hearings, which only took place in four provinces: Gauteng, Western Cape, KwaZulu-Natal, and Limpopo. The Chairperson asked on the nature of the whole consultation process, including the public hearings held in 2015, and asked for the reasons why the public hearings were not held in the other provinces, especially since the objectives of the Bill seek to apply to livestock and export market agents. The Chairperson noted consultations on the Bill happened in 2015, which is five years before its introduction to Parliament, and asked for the reasons for the delay in tabling the Bill, and if the submissions are still applicable and relevant.


Sectional Titles Amendment Bill (STAB)

On the publication of the Bill and public participation, Ms Reynolds said the Bill was published for public comment and comments were received from the Law Society of South Africa, the Banking Association, and from various conveyancers. She said the Sectional Titles Regulations Board was also consulted and support for the Bill was given including from South African Local Government Association (SALGA), Estate Agency of South Africa, National Council of Architectural Profession and Council of Technical Surveyors, who are represented in the Board. The Department of Human Settlements was consulted on the Sectional Titles Schemes Management Act. On the necessity of the amendments of Clause 1 definitions, she said the recommendations were referred to the Board for an amendment on disputes about parking at large buildings by tenants and lessees. It was not just the property owners.

On the cancellation of sectional plans by court order, she said it is a costly process but there are other provisions such as Section 14, 17, 8, and 9, which provide for cancellation of plans without a court order. When a sectional title scheme is destroyed, the owners can apply to the Surveyor General or the Registrar of Deeds for a cancellation.

On the challenges resulting in the amendment, she said the Sectional Titles Regulation Board, which was established according to Section 54 of the Act, sits annually and looks at the proposals for amendments. The recommended amendments were drafted at board meetings from 2012 till 2016, and address the issues of registration and surveying which are dealt with by the Act.

On SPLUMA, she said there is an amendment to Section 7 dealing with SPLUMA. Plans to go before Parliament were not always successful because the Bill was not regarded a priority, this is why the amendments are proposed now.

On the purpose of the Board and why it did not exist in the past, she said the Board always existed, but the only amendment is the addition of two new members. The purpose of the Board is to make recommendations to the Minister on the applications and implementation of the Act, to streamline the provisions of the Act, and to regularly review the Act as stated in Section 54. Section 54 also provides for the Chief Registrar of Deeds to chair the Board, the Chief Surveyor General to be a member, and a conveyancer nomination by the IPC. The proposal requests another conveyancer be added to the Board for registration matters. Section 54 also provides an architect be nominated by the relevant legal Council, inclusion of members of the banks, and two people with knowledge on sectional title development schemes.

On how situations of lessees and property owners are addressed, she said the registered title deed needs to be reviewed. It will reflect the ownership of the property. Long term leases will be registered and endorsed against the title deed, but short-term leases will not be registered in the deeds office so land owners will be in possession of the lease agreement. The registration information will provide the details of the registered owner. If the owner is deceased or divorced, the deed needs to be updated to indicate if the estate was handed down to a trustee.

On the challenges of interested groups, she said the Board is well-represented by various entities, and proposals by the public are received and put before the Board for discussion.

On the expected challenges of implementing the Bill, she said once the Bill is enforced, a circular is distributed by the Chief Registrar on the amendments made through the Act, and the circulars are published and made available to interested parties.

On the consultations with departments and if departments are affected, she said the Department consulted with the Department of Human Settlements, and the Sectional Titles Act in the past provided regulations for dispute resolution mechanisms on sectional type schemes. Arbitration processes were also provided for by the past Act where owners of Sectional Titles could resolve disputes. It was found in the past, the arbitration processes were lengthy and costly. In 2010, the Sectional Titles Schemes Management Act was enforced to deal with all dispute resolutions and provided for the appointment of a Chief Ombud. All the consumer related matters were taken out of the Act. She said the Sectional Title Schemes Management Act of 2011 and the Chief Ombud’s Service Act 9 of 2011 are being administered by the Human Settlements Department. The Community Service Act provides for a community board to be appointed, which deals with matters on dispute resolution mechanisms. The Sectional Titles Regulation Board overlooks matters on registration and surveying.

On public participation, she said a report on the process can be submitted to the committee.

On the involvement of the Department in the Sectional Titles Act and how it will be administered, she said the Department is very involved in the Act and is responsible for the administration of the Act. The Office of the Chief Registrar is responsible for drafting the Sectional Titles Amendment Bill, and the Office of the Chief Registrar of Deeds is responsible for calling members to sit on the Board. She explained the Act is technical in nature, and provides registration and surveying issues only. She confirmed the public participation process took place.

On the socio- economic impact assessment, Ms Tshepo Mahlaela, Legal, DALRRD, said when the Department approached the Department of Planning, Monitoring and Evaluation (DPME) with the Bill, it was reviewed. This was especially because the Bill is of a technical nature and it does not introduce any new policy changes. An exemption letter was given to the Department.

On public participation, she said the Department’s processes include publishing for public comments. Comments were received and processed. Comments which are relevant are factored into the legislation Draft Bill, and the Sectional Titles Regulation Board is involved. The Board members are appointed by the Minister of Agriculture, Land Reform and Rural Development, because the Minister is responsible for the legislation. Once recommendations are received from the Board, it is reviewed by the Minister and implemented accordingly.

Agricultural Produce Agents Amendment Bill (APA)

On the issue of price fixing, Mr Manthata confirmed there were issues on how the prices are set in the market, and the practices currently seen. The Department took note of all the matters relating to pricing. Competition was supposed to be addressed by the Competition Commission. When the Department approached the Competition Commission, there were issues around pricing of produce reservation and there were allegations some agents were reserving produce for preferred buyers. There were also late sales after the market closed. The matters were forwarded to the Competition Commission and an investigation was launched on the pricing matters. The feedback report is expected.

On the Fidelity Fund, he said the Fund legally allows producers of fresh produce to contribute towards the Fund from every produce it sells. The money is invested in a low risk investment so it generates more money. The Fund was created to allow farmers of fresh produce to claim from the Fund if the actions of the agents resulted in losses for the farmers. The farmers must lodge a complaint with the APAC and an investigation will be conducted. Funds will be paid accordingly. On the exports and local market, he said at a later stage the Department could forward the market profile to the Committee to show how the markets are structured and how it operates. The people who supply the fresh produce markets pay up to 12% of the fee, markets are paid five percent, and the agencies are paid up to seven percent. The agent is responsible for negotiating with the farmer regarding the percentage to be charged. It ranges from five to seven percent.

On the objectives of the Bill for agent trust accounts, Mr Elvis Nakana, DALRRD, said the current practice is export agents only operate business accounts to handle the money belonging to the produce producers. The purpose of the trust account relating to the fresh produce agents is two-fold.

Money should be coming in from the sale of the produce belonging to the producers, and there should be money going out as payment to the producers for the produce which was sold by the agents.

Payments can be made into the agent’s business account, but the trust account is mainly for audits and management purposes, as well as to ensure there is added protection for the producers, especially on the produce going to the export markets. In most cases, 60% of fruit is exported annually and the value of exporting is higher than the sales which would be made in the local markets.

On the necessity of the insurance taken out by export agents, he said the insurance is necessary because the quantities of the produce handled by export agents, is significant. Measures must be put in place to protect the interests of producers, for instance if the produce is damaged en route to a market then the loss affects the producer.

On the work of the Department in ensuring there is no exploitation of producers, especially small holders and black producers, he said there are collaborations with the Competition Commission. The matter is concerning, especially when it comes to small holders and black producers, because these persons are behind in understanding how the markets operate, and how prices are determined within the markets.

On the regulation of agents, he said the Act exists to ensure the regulations governing the operations of the agents on fresh produce or livestock promotes fairness, and the producer receives what is due. The Department has an active programme ensuring the operations of the fresh produce markets are streamlined and are efficient.

On the purpose of the Fidelity Fund, he said the Fund exists to compensate producers for losses which result from the activities of agents. On the Fidelity Fund certificates, he said the current set up of the APA Act 12 has two sets of certificates which can be issued by the APAC. One is the Fidelity Fund Certificate, and the other is the registration certificate. The Fidelity Fund Certificate is issued to the fresh produce agents who operate in the market because it is the only category contributing to the Fidelity Fund. The registration certificate is issued to either the export agents or livestock agents, because these agents have no fidelity fund.

On the question of who appoints the middleman, he said the principals/superiors of the agents are the farmers, and the produce belongs to the farmer until the produce is sold. This is why there is the risk of profit and loss on the farmer, so the farmers ultimately appoint the agents. This is why the APAC in previous years tried to put mechanisms in place to ensure there are service level agreements (SLA) entered into between farmers and agents. It was done so farmers can expect specific service from the agents as stated in the SLA to limit the risk of exploitation.

On the difference between the fresh produce agents and export agents, he said the fresh produce agents operate at fresh produce markets, and some do operate in what is known as off market agents. Export agents deal with the same kind of produce, but the purpose is to sell in the export markets. In the local sphere sales within the fresh produce markets the agent concerned needs to register with the APAC and receive a Fidelity Fund certificate, while the export agents receive a registration certificate. One agent can have one portion of the agency dealing with fresh produce in the local sphere, also operate as a fresh produce agent, and have another portion dealing with export agents, as long as the agency complies with the regulations governing export agents and livestock agents.

On the members of the APAC and who appoints members, he said the APAC members are appointed by the Minister of Agriculture, Land Reform and Rural Development, and are appointed from various categories, which include Producers of Fresh Produce, Producers of Livestock Products, Fresh Produce Agents, Export Agents, and a category where the ministers can appoint two people who are representatives of the Minister. There are also two consumers represented in the Council, and on the Board, and one person who represents the Department. There is a fair balance on the composition of the Board.

On the clarification of an individual with an unsound mind, he said a correction needs to be made by the legal experts of the Department.

On the readiness of APAC on the expanded mandate, he said the amendment of Section 10 on the functions of the Council is not a major expansion, and interactions with the Registrar of the Council were held on the human resources capabilities in the Council. According to the current funding mechanism, the agents contribute annually and the investments from the Council and Fidelity Fund are contributed. The issue of funding is always relevant in ensuring the implementation of the Council’s mandate according to the existing provisions of the Act. The percentage contributions can be increased or money which was not claimed could be diverted from various market agencies into the Guardian Fund. Risk mitigating strategies need to be put in place to ensure the Council and Fidelity Fund is not exposed. Savings from investigations are used for the activities of the Council, so there is effective implementation of the provisions of the Act. The Fidelity Fund is not financially strong, which is why there is a proposal in the Amendment Bill allowing for the Fidelity Fund to have some kind of reinsurance. The Fund protects itself from big losses and risks, as well as to protect the interests of the producers, and to provide recourse on the risk associated with the losses.

On how the written claims are dealt with by the APAC, he said Council established mechanisms to deal with claims such as legislative mechanisms. There is clarity on how things must be done. The Amendment Bill also proposes a reduction on the time limits for claims to be made, and the time limits the Fidelity Fund needs to deal with, and the claims to ensure speedy resolution to avoid producers from being disadvantaged. He said the Amendment Bill also aims to enable the Minister to enact regulations, so the approval can be made and issues are addressed speedily. The Minister would also be able enforce regulations on any other issues relating to the objectives and functions of the Council. On the requests for the staffing profile of the APAC, he said the profile will be provided.

On the issue of transformation moving at a slow pace, he said the issue was identified by the Department, and the matter affects the entire agriculture value chain.

On the delays in tabling the Bill, Mr Stanford said one of the issues in the initial Draft Bill is the Department wanted to structure the APAC to have two functions, a regulatory function, and a developmental function where transformation and other issues will be considered. The issue from the then Office of the State Law Advisor was once the Department enters the space of development, it will render the whole Bill unconstitutional because it would be a local government mandate. So in order to proceed, the Department had to ensure the Bill is restricted to regulatory functions, so the whole Bill has to be redrafted.

On the relation of the NAMC and PPEB, Mr Ramasodi said the Department has a regulatory system, seeking to establish an entity to set up institutional mechanisms, to guide the conduct of the entity, and direct the kind of activities it would be responsible for. On the current Act under review, he said it is mainly to look at three critical areas as outlined in the presentation, including fresh produce, export and livestock agents, and the work done at a fresh produce area. When a product comes to the fresh produce agent or market, there are local laws applicable on how a product should look and be graded. In this case, the focus is on the Agricultural Product Standards Act, which is applicable because it looks at local standards and it provides the guiding terms of what the export standards should be. The Act also refers to the quality of a product and the type of grading of the product. The fresh produce market needs to comply with the provisions of the Agricultural Product Standards Act. In a case where a product has to be exported, a registered export agent would be required according to APAC, to export from a particular venue. The agent should also comply with the provisions of the APS Act as it relates to exports and international standards. In most instances the activity is carried out by the PPEB Control Board, which looks at all exports of perishable products from the country and are responsible for the certification of quality in terms of the APS Act.

On the NAMC, he said the Council is set up according to the Marketing of Agricultural Products Act (MAPA) to look at four critical areas to increase market access for all participants. These include small holder farmers, to promote the efficiency of the marketing of agricultural products, to optimise the exports of the agricultural sector, and to enhance the viability of the agricultural sector. The Council also oversees the APAC and its biggest function is to look at the issues of the export regimes and statutory matters to ensure it is correctly implemented. On the impact, he said there would not be any overlaps, but the work would be complimentary. Overlaps will be eliminated to ensure the whole regulatory system within the Department is wholesome and looks at the institutional mechanisms up to the regulation relating to a product.

On the issue related to the Competition Commission, he said it is important to see part of the areas addressed are a result of the Department identifying and referring some of the issues happening in the agencies. A report from 2017 had 14 of the agents responding to the Commission. The Department is looking into the conduct so it is well regulated.

Ms Mbabama requested a follow up by the Committee Secretariat on the workings of the market as mentioned by the officials of the Department.

The Chairperson thanked the Deputy Ministers for attending the meeting, the Acting Director-General, all the officials of the Department for the presentations, and all guests who attended the meeting. The Chairperson encouraged all health and social distancing protocols to be followed as well as all Level Three regulations.

The meeting was adjourned.

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