The Committee met virtually and was briefed by five entities of the Department of Agriculture, Land Reform and Rural Development (DALRRD) on their 2021/22 annual performance plans and 2020/24 strategic plans. After making their presentations, the entities responded to the questions raised by Members of the Committee.
The Office of the Valuer-General (OVG) was asked about the valuation backlogs and the impact of staff vacancies on its capacity to operate efficiently. Its presentation had referred to corruption and fraud mechanisms, and it was asked what these mechanisms were, what the extent of fraud was, and how it could happen in the OVG.
Members' main concerns with the Agricultural Research Council (ARC) were related to the protection of its intellectual property, the financial challenges, the recruitment of high profile scientists, and the role of the professional development programme (PDP)
Onderstepoort Biological Products (OBP) was asked about the state of its old infrastructure, the suspension and resignation of senior personnel, and how it was supporting emerging farmers.
The National Agricultural Marketing Council (NAMC) dealt with issues such as its role in assisting smallholder farmers to gain access to local and export markets, the criteria used to select farmers, and the form of assistance that was provided. The pressing issue was the exclusion by the United States of South Africa from the African Growth and Opportunity Act (AGOA), with Members expressing concern over its impact and wanting to know if there was a way to secure alternative export markets.
The Perishable Products Export Control Board's (PPECB's) report was welcomed by Members, who referred to it as detailed, sufficient and straightforward. They commended the entity on its good work and encouraged it to teach other entities as well. The main issues raised were the impact of staff working remotely, and the entity's plans to close some of its offices.
Chairperson's opening remarks
The Chairperson mentioned a predicted cold front approaching most parts of the Western Cape, and requested Members to exercise extreme caution against cold weather and to pray for the safety of vulnerable groups in informal settlements, farm workers and dwellers, and the homeless. He expressed hope that the predicted rain would restore the parched land and increase the capacity of dams and bring smiles to all. People should mitigate against the risks of Covid 19 infections and the devastating consequences it had caused. It had increased the mortality rate, negatively impacted on the economy, with a significant rise in unemployment which had caused poverty among the most vulnerable groups.
The Department of Agriculture, Land Reform and Rural Development (DALRRD) and its entities continued to play a significant role in contributing to the social development plan and its Wision 2030, expanding land redistribution and agricultural production, and transforming the industry to increase participation and optimise growth potential.
The previous day, the Committee had engaged with the presentation by the Department, as well as the Ingonyama Trust Board and the Land Rights Commission (LRC). The Office of the Valuer-General (OVG), the Agricultural Research Council (ARC) and the National Agricultural Marketing Council (NAMC) would present at this meeting. The three entities played a significant role in the Portfolio Committee's agrarian reform and agricultural expansion, in understanding and opening new markets. There were other entities under the DALRRD, such as the South African Veterinary Council and the Perishable Products Export Control Board. Each possessed significant mandates, opportunities and challenges, and these entities would present later in the day.
He emphasised that the Committee’s task of oversight required engagement with the annual performance plans (APPs) and strategic plans of the entities over the medium term expenditure framework (MTEF) period. The alignment of expenditure incurred and to be incurred, the performance management of the plan and whether there had been enhancement of the capacity and capability to deliver now and in future, had to be considered. Members should always remain aware that the mandate of the Department was located at the heart of complex challenges confronting the country. These include leveraging the mandate to meet the National Development Plan 2030 goals, the reality of poverty, hunger and suffering, the growing inequality and underdevelopment, the painful legacy of land dispossession, restitution and reform, and inadequate social and economic infrastructure in rural areas.
Members should remain cognisant that the sixth administration had introduced one of the most significant constitutional amendments aimed at “clarifying how our nation should forge ahead in ensuring equality in land relations in the country,” to quote the Minister of the Department, Ms Thoko Didiza. The amended s25 of the Constitution would be given effect by the institutions of state which had been created through statutes such as the Property Valuation Act 17 of 2014, which established the Office of the Valuer General. The OVG had the mandate to support the programme of land reform through providing independent and credible property valuation services. He commented that the APP of the OVG was not signed, and would need scrutiny before its engagement because this raised questions as to its credibility.
He asked Mr Ramasodi Mooketsa, Director-General (DG): DALRRD to inform the Committee on who would lead the presentation.
Mr Mooketsa greeted everyone and said he was attending the meeting from home because there had been a Covid-19 case in the Department. There would be a presentation from the OVG and the ARC. The acting head of the OVG and the Chairperson of the ARC would lead the presentations respectively.
Mr Thapelo Motsoeneng, Executive Manager: Operations, OVC, said the Acting Valuer General, Ms Motlatso Maloka was struggling to connect, but would join the meeting as soon as she got help. He said he would do the presentation on behalf of the OVG and addressed the issue of the unsigned document. He would check with the Ministry and the Parliamentary Liaison Officer, where the oversight had occurred. He was sure that the Minister had signed the document, as the OVG hadreceived correspondence from Parliament and he was in possession of the signed version.
The Chairperson asked the Secretary if she had received a signed copy, because it was not recommended to proceed with a presentation that had not been signed. She said the documents were not signed, but had been referred to the Committee. The Chairperson then gave Mr Motsoeneng the go-ahead to present because the documents had been referred to the Committee, even if they were not signed.
Office of the Valuer General 2021/22 APP
Mr Motsoeneng said the values in the APP were similar to the values in the strategic plan of the Department. The overview of the OVG process had been shared with the Committee before. There remained the depiction of the Office's business operating model. This included the engagement with clients, the processes to undertake the instructions given, and the turnaround time attached. He did not go through the annual targets 2021-2022 because they had already been shared.
He said that from inception until 2019, the OVG had been active with little standardisation, to a point where a digitally recognised organisation had improved from 2021 onwards. One of the most notable initiatives of 2021 was the implementation of the enterprise resource plan (ERP), which would allow the entity to be more digitally transformed.
[see presentation attached for further details]
The Chairperson asked for further input from the entity, and there was none.
Ms M Tlhape (ANC) asked for the purpose of the implementation of corruption and fraud prevention mechanisms in the current financial year, and the reasons why it was not previously achieved. She appreciated that the backlogs on valuations were completed in 2021, but the target was not achieved in 2019-2020. She asked about the measures in place to make sure that the target would be achieved in future. In 2020, the OVG indicated that the entity had backlogs and a process was being undertaken to determine the accurate figure. She asked for a current update in form of a report that could be furnished to the Committee to exercise oversight on the progress. She noticed that in programme three of the presentation, there was a new indicator with no examples. The OVG should provide examples of projects mentioned in the presentation and the milestones reached for the Committee to know exactly what to exercise oversight on.
Ms A Steyn (DA) asked for the total number of valuations the OVG conducts in a year, and expressed concern over the workload. She asked if the entity was still making use of private assistance and whether the OVG did valuations for the Department only, or for other departments -- for example, if the Department of Education buys a building, did the OVG evaluate it. She also asked about the impact of court cases on the Department.
Ms N Mahlo (ANC) had no questions, but welcomed the presentation.
Ms T Breedt (FF+) wanted to find out if the Chief Operating Officer (COO) and the Valuer General positions were still vacant, and what the time frame was. She was concerned about how the entity was planning on filling the positions because of poor capacity and backlogs. She said that if the two critical positions remained vacant, it would affect negatively on the backlog. She asked if the entity had been able to build up capacity in the office to address the backlogs. She also asked if the entity was still depending on the office of the Chief Registrar of Deeds and of the Department, and when the entity was going to stand alone instead of leaning on other offices.
Ms T Mbabama (DA) said that the problems raised by Members had been raised before, and repeating them would make the entity address them efficiently. The presentation had mentioned that the turnaround time to complete a valuation was 50 to 60 days, which was a long time. The entity must clarify how it intended to achieve that, since it was understaffed. She asked if it was still depending on external valuers, or if staff were working overtime to solve the backlog. She would like to see a backlog breakdown per province, not per client. She would like to know what was happening in her province, the Eastern Cape. She also wanted to know about the approved structure, which would make it easier to assess the state of the vacancies .In the 2019/20 annual report, the target was to be an independent entity, but she would like to know if the entity still depended on the office of the Registrar of Deeds. Was the budget of R53 million enough for the current financial year -- if not, how was it going to deal with the deficiency? Was there a risk management plan? What were the main risks and how was the entity planning to mitigate? The presentation mentioned corruption and fraud mechanisms. What were these mechanisms, and what was the extent of fraud, and how did fraud happen in the Valuer General's Office? If valuations were received from provinces, what kind of policies did the entity address? Who were the stakeholders, and how would awareness mitigate the fraud?
The Chairperson asked everyone in attendance to switch on their videos when speaking, because the communications team was trying to stream the sessions to other channels and social media platforms.
Ms K Mahlatsi (ANC) apologised that her network was poor, so switching on the video would make it "glitch." She asked why the APP was not signed, and indicated that if the question had already been answered prior to her joining the meeting, she would appreciate a repeated response. The targets and indicators of the OVG were not specific. What was the process map for developing the APP? Was the entity working with the Department, because it was worrisome when the indicators were not specific and were too broad and not aligned to the outputs. The presentation indicated that there was no baseline, and developing an APP without a baseline was quiet problematic. There should be an indication why there was no baseline. She loved the optimism of the OVG, but it did not translate to what was in the APP, especially the human resource issues and capacity building. If they had not been able to fill the posts in the past two financial years with the financial constraints and limitations of capacity, how would they achieve these goals? The APP presentation might be attractive, but it must translate to the actual work.
Mr N Masipa (DA) said that he was struggling to enable his video, and asked the Chairperson if he could proceed with the video switched off. The Chairperson said that “we do not live by our rules,” and said that the communications team would surely have difficulties in sharing the file without videos, but allowed him to proceed. The video was then enabled.
Mr Masipa said that the mission of the Department was to support land reform by providing partial, efficient, just and equitable valuation services for all land reform related matters in the country. He emphasised what had been raised by other Members. The capacity to deliver its mission was an issue for the Department. The Department must take the Committee into its confidence and provide the agreements that were signed between it and the service providers to understand what the problems were that were preventing it from achieving. According to the presentation, 49% was done in 2019- 2020 and 54% in 2021, instead of the aimed for 100%. If the Service Level Agreement (SLA) was an issue, the OVG should take action against those service providers if there was any poor performance. Human resources were an issue, as manpower was needed to achieve the targets. How was that being addressed, as land reform could not afford to be slowed down because people were waiting on the results?
The Chairperson said that in February 2021, it was reported that the Ministerial Advisory Panel would complete its work in 2020/2021. The previous APP showed that the reviewed Property Valuation Act would be approved by the OVG in 2020. The APP 2021/22 showed that the work was still in progress. Last year, the OVG reported that the projected work of the Ministerial Advisory Panel was developed and by the end of the year, there still had been no meetings. He asked the Department to briefly address the Committee on the reasons of the delays. The DG had further submitted a comprehensive report, taking into consideration the terms of reference for the Ministerial Advisory Panel and the project plan. The APP elevated the commitment to address fraud and corruption, and this was welcome. What was the extent of the challenges of fraud and corruption in the OVG? In the situational analysis, the OVG stated that slower economic growth had resulted in pressure on the source of the funds to be appropriated to the OVG. In s12(1)b of the Property Valuation Act, the OVG was empowered to conduct valuations for acquisitions and disposal by the Department. It would be assumed that the provision created avenues for revenue generation, because one did not see any plans for awareness or promotion of that service to ensure that government departments used the OVG as envisaged in the Act. In the last financial year, the OVG reported that it would develop and implement the property data management tool, and a report on its implementation would be produced. This year it seeks to enhance data management capability. Could the OVG explain what it means by enhancing data management capability, and also submit reports on the implementation of the quarterly reports on the property data management.
Mr Mooketsa said he would respond on the Ministerial Advisory Panel, and Mr Motsoeneng would answer all the questions.
Mr Motoseneng said that combating corruption was in the mandate, and the entity wants to it to stay that way throughout the life of the OVG. Since inception, there had not been a single case of fraud or corruption. The risk had not manifested yet, but it was a precautionary measure aimed at OVG employees to avoid personal enrichment. There was always a risk of valuers -- both private and from the OVG -- colluding with property owners with the intention to influence prices, because OVG deals with billions of rands worth of valuations annually.
The interim audit by the AG showed that backlogs had been significantly reduced, and it was difficult to give an exact figure without the final audit, which would be released in the annual report. The annual performance report and financial statements were being done. There were measures to separate the backlog from the new instructions, and there was a project specifically focused on the backlogs and attached resources by way of valuers. There were a number of projects involving the OVG regarding valuations and support functions relating to information communication technology (ICT). Examples of these projects were the ERP, internet connectivity and deeds transition. The list could be shared with the Committee, as per the request.
Private valuers were part of the skill set recognised by the OVG in the country, and it would continue to have a relationship and intended to continue working with them. That would be addressed by the Ministerial Advisory Panel.
He said the OVG works with other departments, and mentioned that it had concluded an SLA which was sent to the Department of Water and Sanitation, and it had a number of instructions from that department. In terms of s12(1)(b) of the Property Valuation Act (PVA), any department could instruct the entity and by agreement could do valuations. There were options to finalise land claims. They could be done through court processes or through an administrative process. The OVG contributed lot to such matters, where agreements and claims were settled. From time to time, it appeared as an expert witness of the Minister in court, with the most recent happening last year. This did not impact negatively on the OVG except where there were court pronouncement and judgments that could be analysed and be found to negatively impact the work of the OVG. Legislation or regulations were considered from time to time if there were judgments that referred to the OVG or the Property Valuation Act.
He said that Mr Mooketsa would address the issue of vacant positions. The OVG had built up its capacity over the years. It had started with four valuers in 2016, and in 2021 there were 21 valuers. In 2019/2020, there were 20 members of staff. Approval from the Minister to increase capacity was received, and currently there were 41 members. In February 2020, the OVG received approval to proceed, but recruitment was slowed down by the lockdown. By the end of 2020, 10 valuers were added to the team from the technical department to payroll. The capacity was doubled.
One of the projects, the Deeds Transition Plan, involved an engagement with the deeds office. A steady transition would occur, and the OVG would be able to take over immediately in a month or two. The OVG and the office of the Deeds Registrar had briefed the DG and had formally signed the deeds transition plan and the memorandum of agreement (MOA). By the end of 2021, the OVG would be able to operate individually. One of the biggest decisions was the interpretation of the ERP, which was penned down to go live during the second quarter of the current financial year.
In the regulations, the OVG had a 30-day period that allowed landowners to comment on the draft valuations done. A provisional report and certificate got issued to the land owner, and if there were no comments in the 30 days, then the final report and certificate was issued to the client. If concerns were raised, the OVG would put them into consideration and then the valuation certificate was finalised. This had also been raised by the Ministerial Advisory Panel -- whether the timeframe was sufficient, as other people said it was not enough for a valuation. Other schools of thought said the time must be reduced, as it slowed down the land reform programme. That would be deliberated with the Minister. The other 20 days went towards the administrative processes and quality assurance done by valuers. Before the lockdown, staff worked overtime. The valuers were working from home, but they were really trying, as there was evidence that some were issuing valuation certificate outside of working hours.
There were risk registers, and these could be shared with the Committee. Stakeholders being referred to in the APP were internal stakeholders -- the valuers and the rest of the staff within the OVG. These were being targeted as far as fraud and corruption mechanisms were concerned. He was in possession of the signed version of the APP, and he was sure that the Ministry was in the process of transferring it to the secretariat.
The OVG undertook processes of strategic planning supported by National School of Governance led by the OVG's senior manager for strategy. It was scrutinized under the process of verification and assessment by the office of the AG, and one of the tests done was to determine the smartness of the objectives and taking counsel from the Committee.
He said that 'baseline' implied the outcome of the previous period, and where there was no baseline the implication was that such outcome would not have been available in the previous strategic period. The OVG would then report on the current one. It was based on the previous experience. Service providers had delayed the processes and contributed to the backlog.
The entity indicated that a relationship with purchase orders was ended, and action had been taken against the other party. There were instances where problems would have arisen from the OVG or clients, but the entity had worked to resolve them. He emphasised that the matter was receiving serious attention.
S12(1)(b) of the Property Valuation Act provided an avenue for the OVG to make revenue streams. That had already been started by the Department of Water and Sanitation, and it was in the process of signing a Master of Service Agreement. The intention was to grow the potential of the revenue stream. The OVG had deliberately decided to focus mainly on land reform, because its objective was land reform. Other avenues of revenue creation were not given attention, as they affected meeting targets as far as land reform was concerned.
The entity would submit reports quarterly, as per the request. In the ERP, there were valuation management systems which included data, but it was recognised that there was space for enhancement. That was the reason it was in the APP for the current year. It would be built up on top of the what was being implemented in the new financial year.
A Ministerial Advisory Committee was set up by the Minister to look at the review of the PVA and its regulations subsequent to the criticism that had been leveled. It would examine the role and mandate of the OVG and advise the Minister according to the analysis of the review. It was a 16-member team that had four streams. One would look at the PVA regulations, one at the mandate of the OVG, one at the legal framework, and the other at the economic work streams. All these work streams were functional, and the OVG was still working with the economic work stream, because it strongly believes that the issues around land reform were crucial to achieving the required results. There had been a few challenges as far as the consultation processes were concerned, especially responses from stakeholders to make their submissions and how to engage with the departments that were involved. The OVG was ready with the first report to present to the Minister, but was still busy with consultations. As soon as that was done, the entity would get indications from the Minister in terms of discussing the report with the Committee.
As indicated the previous day, the OVG was working on filling the executive positions, but the focus was on ensuring that there was stable leadership . The current employees had stability at the top.
Ms Mbabama said that Mr Motsoeneng had not answered her questions well, and it was not in the presentation either. She would like to know what the approved structure was. 41 positions were filled, but it indicate out of how many. She also asked about the process of an application after submission to the OVG. For example, if a valuation of Land Affairs from the Eastern Cape was sent to the OVG, was there a way of tracking the application for a status update?
Mr Masipa said his question was not answered, and would appreciate it if the OVG had copies of the SLA to furnish the Committee, because it was crucial when exercising oversight.
The Chairperson said that on 11 May 2020, during the Committee meeting, the question about the exact number of backlogs had been raised, and the OVG had said it would come back later with the report. Today it had said, after the audit. He asked for the audited figure of the backlog.
Mr Motsoeneng said that when the OVG was started, the Department had created a structure which was going to be followed. The Valuer General was appointed and she ran a process of developing a business operating model for the OVG that had 109 vacant positions. After receiving the approval of the Minister in February 2020, some positions were filled. The approval prioritised 21 positions, pending the outcome of the review process of the PVA. Therefore, the OVG managed to fill an additional 21 posts, but before that there were 20other positions that were filled before the approval. After the approval of the interim structure, 41 out of 45 positions had been filled. The OVG had informed the Minister that it needed some of the positions that were not yet approved, and asked for an opportunity to fill them on a contractual basis, depending on the requirement. The Minister had agreed and given approval, and the OVG had already started with the process. The target was to fill 67 posts in 2021. The difference between the 67 and 45 would be the contractual positions. There were a few officials who were offered a contract and had accepted and already started.
To answer Ms Mbabama, he showed a slide of what happened in the application process when a request was submitted to the OVG, and explained the processes that led to 50 days. There was a tracker that was being digitised in the ERP and was run in the Excel platform currently, and was being improved within the OVG. In the next few months, it would be a far more digitised platform. It was possible to check on the status of a valuation application.
About valuations, the requirements were put as a reference so that when the entity responded to the supply chain management procurement process, it would respond in line with the reference with an expectation of the turnaround time. He had asked a colleague to confirm the exact figure of the backlog, and said 682 out of 916 valuations had been completed, which was 75% unaudited valuations, but the AG would confirm this.
Agricultural Research Council 2021/22 APP
Ms Joyene Isaacs, Chairperson of the Agricultural Research Council (ARC), said the agricultural economy had been doing well because the sector had assumed an essential service role during the lockdown, and it had confirms the agricultural economy could and must make a contribution to both food security and unemployment, which was a critical focus area for 2021/22.
The terminology for climate change had been internationally changed to reflect its urgency, and it was now called "climate emergency." When the CEO makes the presentation, it would be seen that there was quite a lot of work that the ARC had done in responding to climate change challenges faced by the sector and the country.
In the area of technology, cybersecurity remained one of the risks for the ARC. The more platforms created to engage with shareholders and stakeholders, the more vulnerable it was. Skills development had to continue in the agricultural sector, both preparing people to go into agriculture and farming and to maintain the status of markets and trade.
The APP raises all of these risks and showed where the risks had been turned into opportunities. She emphasised what the Minister had said the previous day, that the ARC was making improvements in the governance of how it should be managed and its projects should be implemented, working towards an unqualified audit. She thanked the Acting Director General for the assistance from the Department with the payment of outstanding debts to the ARC. It was working with a private sector, and she was the first to say the entity could improve. There had been success stories, and the staff had a good set of skills available to the organisation and the agricultural sector.
Mr Shadrack Moephuli, CEO of the ARC, said as he would like the Committee to bear in mind that this was a year when the global community was busy with aspects around re-examining food systems, and how these needed to respond to the global needs of the population, including biosecurity, as learnt through the outbreak of Covid-19. A virus had emanated from wildlife, and had jumped from animals to humans, which was a bit unusual. Some of these viruses normally tended to jump from wildlife to livestock and cause diseases among livestock, which would impact on agriculture and food security, and would evolve to become diseases that affect human beings. The ARC had been involved in trying to understand this dynamic because it had the understanding and expertise of viruses in wild animals, but also the mandate and responsibility to deal with those diseases and viruses that affect both animals and humans.
These were called zoonotic diseases. The ARC had been working with the National Health Laboratory Service to help them understand how to manage this type of disease, including availing some facilities, equipment and expertise to expand their capability in delivering testing services in the period of the lockdown. The entity had been busy not only with the mandate, but in assisting the country in the time of the pandemic.
He introduced the new senior manager of Human Resources, and said that everyone else in the team was familiar with the Committee.
He did not go through all the slides of the presentation, as the Chairperson of the ARC had already indicated the keys issues. These were climate change, women, youth and people with disabilities in the agricultural sector, including the work done by the ARC. The first few slides showed the five-year strategic plan that was approved by the Minister and Parliament, which showed that the ARC was in alignment with the Department's strategic priorities. He read the first five slides, and emphasised that the values were not developed by executive management, but through a fairly intensive consultation with the employees of the ARC who had made suggestions on how to change and improve the previous values, and also how to articulate them. The same values were used not only internally, but with service providers and clients.
He went through the presentation until slide 30, and requested the CFO, Ms Maureen Manyama, to take over. Ms Manyama continued to slide 43, after which the CEO concluded that with the increase in unemployment, the ARC was experiencing vandalism, theft and land invasion on some of its properties, and this was forcing it to reconsider its ability to deliver on some of the projects at its facilities. It was a risk, and would likely impact negatively on its ability to fulfil its mandate and the needs of the country.
[see presentation attached for further details]
Ms Tlhape welcomed the presentation, and said it indicated how the entity was going to turn itself around. She had a feeling that it was now on the right path, and she was confident that if the entity stuck to the plan, its mandate would be achieved. The Committee would like to pledge its support like previously, but only if the ARC maintains and achieves this plan.
The ARC had indicated a R1.4 million allocation for capital expenditure, but according to the National Treasury estimates, there was no such allocation -- could there be clarification? What was its current liquidity status? With the current status, would it be possible to achieve the planned strategies -- for example, the amalgamation of campuses and all the other targets?
With the Kaonafatso yaDikgomo (KyD) livestock development programme last year, there had been an issue that they were not paid over R55 million by the Department, and it was stated that the programme would be transferred to the ARC -- had it been transferred? What kind of measures were in place to make sure that there would not be any challenges? Had the SLA been signed? The entity had an issue about the protection of intellectual rights and the registration of patents. What was the current status, because this had an impact on its financial sustainability, and to what an extent had the entity improved?
Ms Steyn said that the ARC was very important to the country and agricultural sector, and she was glad to hear that there were plans in place. She wanted clarification on what she had heard -- that the ARC was getting rid of some specimens that should be kept in order to test diseases and outbreaks. If this was true, how could the Committee assist, because it was not wise to let go of them.
Ms Mahlo welcomed the report, as the turnaround strategy sounded good. She said the entity was giving the Committee hope, and they would work together to implement the APP. There were no monitoring evaluation inputs in the presentation. Was there any policy in place to protect intellectual property?
Ms Breedt said that she was glad that the money that was outstanding to the ARC had been paid.
Ms Mbabama said that she was pleased with the comprehensive report. She wanted more information on the OR Tambo soya bean production, since it was in her province. Under outcome 4 of the presentation , agricultural skills through school gardens, which was said to be rolled out to other provinces during 2021/22, was there a plan to exercise oversight to see these school gardens on the ground, besides the ones in Gauteng? It was worrisome, because it said funders had expressed an interest. This was different from actual funding. Was the ARC expecting the funders to commit, or had they committed? This was an important initiative, especially in the rural school settings. She asked for more information on the AgriSETA-accredited vegetable production training. Parliamentary grant funding remained the major revenue source for the ARC, yet under the assumptions there was a reduction of 4% year on year. Could the ARC clarify why there was a reduction if it was a major source of revenue? What was the percentage ratio of the personnel costs to total expenditure?
Mr Masipa welcomed the presentation, and thanked Mr Moephuli for hosting the Committee. He said that Mr Moephuli served on the World Health Animal Forum, so he was an important and huge asset for the organisation, and worked with the Foot and Mouth Disease (FMD) facility development.
One of the focus areas was genetic improvement of crops and livestock. There was a need and demand for quality genetics in the US and China, and South Africa was not able to have arrangements with those countries. He had heard there had been inefficiency from the Department in dealing with those countries, or their farmers who made enquiries. Both New Zealand and Australian farmers, who were using the same breed with the same genetics as SA, were selling to China and the US. How was IP protected in an organisation facing financial challenges?
Strategically, the organisation was in serious trouble with regard to funds. Like other Members, he welcomed the involvement of the Minister to ensure that the ARC received enhanced oversight to enhance its self-sustainability. Could the ARC share the sustainability plan, or was it too early? The Committee could make a follow up and analyse the plan to exercise oversight.
The ARC had indicated that the entity was promoting ecosystem sustainability and anticipating and mitigating agricultural risks. There had been a big problem of drought in the Karoo for eight years. Had there been plans to research on crop species that were drought resistant?
Cable theft was a problem. If the FMD facility was built, were there plans to ensure a reduction of theft? A facility with vaccines which had no power would be a disaster. What was the mitigation strategy to ensure that the ARC, as well as Onderstepoort Biological Products (OBP), were not negatively affected? The budget allocation needed to give this issue the amount of attention that was required, and he would appeal that the Minister should look at the budget for the protection of IP and income that was generated by the organisation.
The Chairperson said that the sustainability turnaround plan had to address the ARC's challenges and provide mitigation to ensure its sustainability, which was acknowledged and commended. The ARC board should intensify its accounting responsibilities and continuously engage with the executive management to ensure successful implementation of the plan. The ARC had reported a shortage of high profile scientists with the ability to do the leading research work that attracts funding and external support. Could the ARC expand on this shortage, as they prided themselves in having specialist scientists that were able to publicise their work in high profile publications, and often reported on the number of Masters and PhD graduates that it produces annually through the Professional Development Programme (PDP). What was the role of the PDP in ensuring that young post graduates and scientists within the entity were mentored and effectively supported to assume roles by retiring specialist scientists? The ARC must address the ongoing financial challenges in the plan to reduce personnel costs to 60% of the Parliamentary grant in the MTEF period. How would the ARC be able to recruit high profile scientists? It would also need to indicate the specific field where there was a shortage of scientists and how many they needed to recruit. Given the financial challenges, it needed to explain how it planned to establish the commercial entity which would require additional resources and personnel.
Last year, the ARC had plans to consolidate some of its campuses and satellite offices in order to address its financial challenges and streamline activities. How far were these plans? What were its plans for the facilities and personnel in the Eastern Cape, which had been an entity of the Department that had been since been deregistered and its facilities transferred to the ARC?
Mr Moephuli referred to the turnaround strategy, and said stock was taken at every quarterly meeting, and that could be shared with the Committee -- both the plan and the progress, and the plans and matters that needed attention.
He said the ARC received an allocation from the National Treasury as part and parcel of the Parliamentary grant. This was reflected in the presentation, and the amount would be provided this year. The turnaround plan was reported on a regular basis, and a copy of the financial sustainability turnaround plan of the ARC which had been approved by Council and presented to the Department for implementation, could be shared with the Committee.
Challenges had been experienced in the past with the Kaonafatso ya Dikgomo scheme, with the Department not paying. As promised, the Department had engaged the provinces to pay because the work was done largely in the provinces. SLAs had been entered into with each of the provinces in the country, and they had provided a budget allocation as per their contractual arrangements. It had taken up considerable time during the 2020/21 financial year. With the signed SLAs, he hoped that the entity would be able to implement its targets speedily and reach more farmers. There had been discussion between the Department and the ARC about transferring the national Read Meat Development Programme to the ARC, including the nature of the SLAs, and whether the transfer needed to be done through a procurement process. There had been requests in terms of the indemnities that needed to be included in the agreement. In order to get those indemnities, the Department had to obtain authorisation from National Treasury. It had been obtained, and they had since been waiting for further authorisation between the Department and the ARC. It must always be remembered that the ARC was an entity of the Department, as opposed to be on a tender. That was the current status of the project, and what was delaying was the final signing of the SLA . Teams from both the ARC and the Department, as well as the National Agricultural Marketing Council (NAMC) and OBP, had engaged one another around the design and development of the agreement, because it would involve all these entities.
The ARC had an intellectual property policy that was duly approved by the council and the board of the ARC. The policy gives effect to the compliance and implementation required by the ARC for effective management of intellectual property as required for IP protection by the Publicly Financed Research Act. It was an act of government that required the protection and dissemination of intellectual property from research that had been funded by government, and the ARC complied with it and regularly reported to the Intellectual Property management office, and they provide incentives on how to effectively manage some of the intellectual property. The ARC had received some revenue arising from the licensing of intellectual property, and this was indicated in the preliminary financial reports. The royalty income for the previous year was just under R40 million. The products were ClemenGold mandarin, which had been very popular, and Joybells seedless grapes sold in Woolworths. When consumers were buying and farmers were producing these products, the ARC gets royalties. The entity aimed to increase the produce, and this could be done by increasing the investment in research. The ARC also gets royalties from wheat cultivars that were being sold as seed by the seed companies.
The ARC's expertise was not property management. It was important for management and the council of the board of the ARC to examine its capabilities on property management, especially that it was now becoming a fairly complex area that required certain skills. It was not necessarily within the mandate or core business to explore how best to manage properties that were under the care of the ARC in a manner that fulfilled its mandate as the custodian of such properties. The ARC analysed properties that were needed currently, and the ones not needed in the near future. Those would not be disposed of, but leased on market-related terms. Authorisation had been sought to dispose of properties that would not be used again, like schools on the properties of the ARC that had been constructed in the apartheid era simply to cater for ARC employees. A school in the ARC's jurisdiction would be transferred through authorisation of the Minister and National Treasury to the Free State Department of Education. There had been discussions with the Department of Environment, Forestry and Fisheries about a property that was in the Eastern Cape, on how to transfer it back to the government and manage it under the National Indigenous Forestry. The property in the Eastern Cape was close to the airport. and it might need aviation security. It had become a target of land invasion, as it was costing the ARC a lot of money to protect this particular property. The discussion to dispose was under way, and once the aim of the Department of Environment was understood, a proposal would be sent to the board and the Minister to transfer that property to it.
There was a unit within the organisation that did planning, reporting and monitoring of the performance of the organisation. The ARC enhances its performance through the internal audit that does monitoring and evaluation.
He asked the Chairperson to request the group executive for crop sciences, Dr Nthabiseng Motete, to address the questions raised about soya bean production, gardening in schools and the orange sweet potato production.
Dr Motete said the OR Tambo soya bean project would be implemented by the ARC as part of the agriculture and agro-processing master plan, which was a programme of the Department. The ARC had already produced a very comprehensive proposal and implementation plan for this project, and had presented it to the Department. The ARC researchers and officials had agreed to the site. It was a joint programme on behalf of the Department.
The ARC approaches different funders when they have great ideas for a project. The school gardens project was sponsored by an external funder. The ARC had been approached as well to submit an expanded programme that was based on the success of the pilot that was undertaken in Mamelodi. The project would be reported in subsequent quarters to the Committee, to indicate the progress that had been made. Skills that would be provided to farmers by the ARC would be accredited by the AgriSETA, and the schools were recognised.
The ARC continued to deal with drought tolerance in the country. It was a top priority, and information on suitable cultivars could be provided to the Committee.
Mr Moephuli said the Karoo was a very dry area that required special attention, and developing crop cultivars that were drought tolerant was a work in progress at the ARC. He requested the CFO to answer the question of budget assumptions.
Ms Manyama the ARC received a Parliamentary grant allocation which included funding for capex and FMD. The FMD allocation ran through the METF and the financial year allocation for that was 2022. R106 million had been set aside for capital expenditure for the 2022 financial period.
The required liquidity status in the ARC turnaround plan would be achieved. It had been included in the budget, but Members would not be able to see it in the APP. Funds had been set aside internally from the operational and capital expenditure point of view to be able to implement the aimed initiatives of the turnaround plan. The year opened with a high cash balance, which included the FMD funds, and the current assets of the organisation exceed the current liabilities. This showed that the organisation was liquid and should be able to meet its obligations.
Most of the entities within the public sector that were receiving funds from the government had experienced a year on year reduction in their Parliamentary grants. This reduction was implemented at beginning of the 2021 financial period, and would continue until 2023. The grant was the major source of revenue for the ARC; it would need to reduce its reliance on the grant.
The 2020/21 total expenditure would be R1.2billion, of which personnel costs amounted to R785 million -- a ratio of 66%. A salary increase had not been budgeted for, but funds had been set aside to accommodate prioritised vacancies. Not all the vacancies would be filled, only those that were prioritised and catered for in the budget. The funds had been made available, and the ARC would be able to report to the Committee accordingly.
Mr Moephuli requested Dr Magadlela to answer the question on access to genetic material in breeding programmes and the implications. The ARC had been working on a programme to protect some of its physical assets, especially those on the Onderstepoort Veterinary Research campus. It had been working with the Department as well as the SAPS to curb theft, and had now received approval and authorisation for the campus to be declared a national key point which required more security and attention.
Dr Andrew Magadlela, Group Executive: Animal Sciences, ARC, said there were regulatory processes to be adhered to when genetic material left the country. Unfortunately, it gets stolen and leaves the country without the ARC's knowledge. It was kept it under lock and key, but the entity was not in a position to protect every single item. Certain breeds of animals -- Boer goat, Australian and Texas red hair -- belonged to the ARC and had been released without consent.
Mr Moephuli said for the ARC to become a leading organisation recognized globally, it required high profile scientists who were able to influence the direction of science and greater revenue effectively. Research proposals would be successful much more quickly. Most of the ARC campuses were in small towns, such as Bethlehem and Rustenburg. It was very difficult to recruit into a small town, because when recruiting an individual with a spouse who could be a professional, the ARC would need to explore employment opportunities for the spouse as well, or find the employment elsewhere in the same town. It was a challenge that had been made worse by the Department of Home Affairs, which does not issue residence permits to the spouses of some scientists. The man Mr Masipa had met, who serves as a member of the World Advisory Committee on Animal Health, was given a residence permit because he was Zambian, but his wife was denied one. The ARC could not afford to lose him, and he had patiently stayed with the ARC. Sometimes he visits his wife, as he stays with his children because of the reasons provided by Home Affairs. This negatively impacted on the performance and sustainability of the ARC.
The Rustenburg campus was originally established to conduct research on industrial crops, and the ARC had wanted to bring in a whole range of experts to provide industrial research and experience in that particular area. However, there was no university in Rustenburg, and if the spouse was also a scientist, that spouse would not come, and that had been a challenge leading to the inability to recruit high profile scientists. The ARC was still working on a variety of ways to overcome this. Programmes had been put together to collaborate with a number of institutions that were both in South Africa and outside on big projects. It was the leading institution on behalf of African Union. African institutions, as well as European Union institutions, were collaborating to conduct soil analysis and to digitize and map these soils. The programme was called Soils for Africa. This was better than recruiting for the ARC.
The Professional Development Programme (PDP) was an important tool for building capacity internally and recruiting young graduates, and for bringing new skills. Students get an opportunity to get their drivers’ licences, communication skills with the communities to increase agricultural production, and were mentored by a senior scientist who was close to retirement. 60% of senior black scientists come from the PDP and have been recognised as professors in recognised universities, as well as the ARC.
The ARC was putting together the strategies that would be required for the establishment of the commercialising entity that it was proposing. It was getting external help to conceptualise the nature of the entity, and would report back as soon as the strategy had gone through the governance structures, including the council.
He emphasised that the ARC was not getting rid of genetic materials.
Mr Masipa asked if the genetics would be part of geographical indicators, and if there was a way to protect indigenous genetics.
Ms Mahlo asked why the ARC was not conducting research into modern technology that could be used to prevent the theft of genetic materials -- for example, tracking. To say that nothing could be done to deal with theft was not sufficient.
Mr Moephuli said there were two issues regarding theft of genetic material. The indigenous genetic material originally from the country and the breeding material that was developed by the ARC and was in the hands of farmers, gets sold or moved between countries . That was beyond the ARC's control, and that what Dr Magadlela was referring to. The ARC had been able to trace most of the indigenous genetic material that were transferred to Australia. He had flown to Australia with scientists and taken samples to prove by DNA analysis that it belonged to the ARC. Fortunately, the other party had been cooperative. Authorisation from the ARC had not been done properly, and was something that had happened around 1994-5. DNA fingerprints could be used to trace the material.
Geographic indicators would be a political arrangement between countries. The ARC would be able to demonstrate a particular plant species that was indigenous to a geographical area of South Africa and claim the names of the particular species as a geographical indicator. Rooibos was an example. It was doable, but at the end of the day, it would not belong to the ARC. What was important to note was that the ARC was able to generate the necessary data to prove and demonstrate that a species was unique.
The Chairperson thanked all the ARC officials for answering the questions raised.
Onderstepoort Biological Products 2021/22 APP
Ms Rene Kenosi, Chairperson of Onderstepoort Biological Products (OBP), presented the first five slides, and left the rest to Ms Elspeth Govender, CFO, and Dr Jacob Modumo, Head of Sales and Marketing.
Mr Modumo presented slides 6 to19, and said the OBP did not receive any funding from the government. Ms Govender presented on the financials, and referred back to Mr Modumo, who had connecting issues.
While waiting for Mr Modumo to get back on the platform, Ms Kenosi informed the Committee that the CEO of OBP had been placed on precautionary suspension on 30 April. In the line with the concerns raised about strategic risks involving fraud and corruption, the Board had been faced with numerous past reports, as well as allegations, and had embarked on a process which aimed to put the allegations to bed and deal with the recommendations of the past investigations so it could move on with the business of the OBP.
Mr Modumo continued to have technical challenges, so the meeting was adjourned for a lunch break.
When the meeting resumed, the Chairperson invited Members to raise questions on the OBP presentation.
Mr Masipa wanted clarity on the OBP's outdated infrastructure. The entity would need to look at reinvesting and improve on the outdated infrastructure before it got worse. The organisation was in a good financial state, so funding was not an issue. Were there plans in place to improve the infrastructure? That could be started slowly. Previously, the OBP had experienced challenges with its personnel. Some had been suspended and some had resigned. He wanted to know what had happened to those who had been suspended -- whether they were formally charged and if charges had been finalised. He also asked the entity to shed more light on the CEO's suspension.
He referred to the OBP's good manufacturing process (GMP) facility, and said that the presentation indicated that the entity was expecting an increase in revenue of 12%. What informed the 12%, because emerging farmers were still far from getting support on vaccines from OBP? Were there programmes that supported emerging farmers, because about 30 to 40% of the livestock was owned by people in the rural areas? He did not think emerging farmers were getting the services they were supposed to get from the government's veterinary services. There was an outbreak of Avian flu which had been confirmed by the private sector -- people in the poultry industry. Was the entity helping the poultry business, and if there had been a discussion about not allowing the vaccines, what were the reasons?
The Chairperson said the outdated infrastructure of the OBP was negatively affecting production and leading to an international market loss, compromising its skills capacity as well as its technological advances. The significantly high vacancy rate of 25% and inadequate ICT system were concerns. Could the OBP develop a plan to fill all vacancies, and also indicate which area of operations was affected by the vacant positions?
The OBP should indicate if it had other legal instruments to strengthen the protection of its intellectual property and prevent the loss of its expertise to competitors. In the last annual report, OBP reported an investigation into expenditure which amounted to R17.4million, which was mostly for inventory paid for but not received. He asked for an update on the investigation and if it had been finalised, what the outcome was.
The OBP had indicated a number of new products had been submitted this year for regulatory registration. Did that include vaccines from the ARC, and if not, what were they? On optimised business processes, there had been an output indicator for the top 20 products, with a target of 90%, and their comment had been this was to ensure product availability and profitability. Why not 100%? Was this not putting themselves at reputational risk, considering that the entity wanted to expand the market? What were other two extra products in market? What was stopping the OBP from having a production target of 100%? What was the current situation on staff, since some were suspended because of misconduct and some had resigned last year, and now the CEO was suspended? How was that possible, when one of the outcomes was to retain staff? When it came to strategic risks, there was no plan to deal with fraud and corruption, or non-compliance with supply chain management protocols, among other factors. The presentation indicated that the risk mitigation was to investigate and report to the authorities and investigations would be conducted. Why was the entity not proactive instead of being reactive, and how prevalent was the fraud and corruption?
Ms Mbabama said she understood that the OBP had signed a licensing agreement with a Scottish company, Moredun Research Institute, to acquire technology needed in the production of a vaccine. She asked for the current developments. In the newspapers, some farms belonging to Onderstepoort north of Pretoria had been attacked. Were the attacks still happening, and what were the effects? On institutional performance, the presentation indicated that planning was for only 150 farmers to be trained in the current and the next financial year. What influenced the number of farmers to be trained?
Ms Kenosi responded on the outdated infrastructure, and said OBP had the capital expenditure in place and had identified the infrastructure to be maintained and refurbished, and what needed to be procured. The internal control processes were a challenge for OBP. For example, with procurement, the Board had requested that management look at a strategic sourcing process that could be embarked upon to expedite supply chain management processes, whilst staying within the law, because OBP had to comply with the Public Finance Management Act (PFMA) and the Companies Act.
With regard to personnel, the Board had embarked on a skills audit process, and found that only 52% of the staff were competent in their roles, and 48% did not meet the minimum requirements. The Board had asked management to review the organisational structure in line with the organisational strategy, and to provide the Board with an HR strategy. That was being currently worked on. There were a number of employees suspended, and charges had been levelled against the individuals implicated. Disciplinary processes were under way.
Referring to the CEO's suspension, she said the OBP and the Department had received allegations ranging from procurement allegations to recruitment or employment contracts, and these matters were being investigated. Because of reports that had been seen from December till now, the Board had requested that internal controls be strengthened and recommendations implemented where individuals were found to be guilty of wrongdoing. Those who were innocent were recommended to be reinstated. That covered the question of the 25%vacancy rate, and currently the entity was prioritising the vacancies that needed to be filled. The revised organisation structure, coupled with the results from the internal skills audit, would inform the actual staff complement required. The OBP was losing staff at a senior level, and the CEO and senior management had made an attempt to recruit the best skills the entity could utilise. However, it had lost the Chief Operating Officer (COO), and the Quality Assurance (QA) Manager would leave soon. The entity was currently putting in processes to mitigate the impact.
About five to six years ago, OBP had a capex plan to identify certain equipment at high risk, and not only the process of procurement, but also the maintenance plan was submitted and approved. The GMP roadmap project was initiated two to three years ago when the design was approved, and the plan commenced around 2018 and they were now in the middle of the project. Projections on the buildings would be finalised in the next two years. The accreditation of the certification of the GMP was a key focus, as was making sure there was a structure in accordance with international standards. A system would be put in place to meet the standards and were accredited with international recognition.
The increase in revenue by 12% was based on export and domestic market analysis. OBP had realised that the potential to grow by double digits was in the export business. In the domestic environment, the increase was 6% because of the market they had identified and the contracts they were about to commit to. OBP would be able to dominate the market in some of the regions in East and North Africa.
The challenge in the training of emerging farmers was accessing the OBP products, and most important was the knowledge of disease prevalence and how to prevent it. OBP would work to increase its foothold in the rural areas because farmers had minimal logistical means, and this would not only make the products were accessible, but would also assist with employment creation. The entity would identify models that were successful in the past years and try to use the same models that had been successful in other provinces. OBP did not partner only with small distributors and entreprenuers, but made sure the infrastructure was available for rural and emerging farmers to have access.
OBP worked with other stakeholders on joint farmer training, focusing on emerging farmers, and had participated in programmes that the ARC had initiated, and worked with provincial departments of veterinary services. The potential for growth was among the emerging farmers, because they had 40% of the livestock, and that was why it was important to grow that market. The domestic commercial markets were stable.
Regarding the outbreak of avian flu, OBP was currently producing a lot of vaccines and intended to keep producing over the next ten to 20 years. A separate containment area to handle the antigen was needed when it came to flu vaccines, but OBP did not have the capacity and infrastructure to develop such a vaccine.
The vacancy rate was not as bad as it looked. Resignations had been experienced and the recruitment processes to fill those vacancies had already begun. Within the next two to three months, the vacancies should be filled. The vacancy rate of 5-10% was the industry standard, and was normal.
Regarding the protection of intellectual property (IP), OBP could not do this alone, and to improve the product basket, there was a need for an improvement in modern technology. Some of the key initiatives were research and development. There was an internal IP policy. In any form of partnership, OBP always made sure the contracts were watertight to protect its property. There were attempts by other partners who wanted IP from OBP, but its control measures protected the IP and OBP had become comfortable with the policy.
OBP had experienced a loss of expertise, but in the last six years there had been improvement in the quality of recruited personnel. It had since emerged stronger when it came to biotechnology, and had moved away from second generation vaccines and were coming up with a new model. That had started about eight to ten years back. In the next five years, the entity would be able to come up with third generation vaccines, if not fourth, and had recruited PhD specialists in that field. People who worked with OBP for a long time had been lost, but that had also opened up opportunities for young vaccinologists who were introducing new streams of vaccinology, and OBP was excited about it.
There had been an investigation report that had been shared with the Board, and there were personnel who were currently undergoing disciplinary action which should be concluded within a month or two.
To come up with new products, OBP would do internal research and development, but would collaborate and have partnerships with the ARC. The president of the ARC mentioned that heartwater vaccine technology had been transferred, and there was a scientific level engagement. It had now been taken to the commercial level, and OBP would lead the registration process. There was still a lot of commercial data to be gathered before registration, and that might take time. About the two products that were going to submit dossiers, he said that was an internal effort and an investment had been made five to ten years ago.
OBP had about 50 products, and the products differed when it came to their profit contribution. A product for anthrax could be produced in high volumes, but the revenue contribution was minimal. A product for red fever had high profit margins, but OBP could not produce it in high volumes. Looking at the income streams, it was noted that the contribution of revenue was mostly on products with high profit margins. That did not mean that the entity would stop focusing on anthrax. The focus area was the top 20 products for financial sustainability.
It was true that a contract had been signed with a Scottish research institute. An MOU had been signed with regard to technology transfer and distribution rights, and this would move to business contractual negotiations for the next ten years.
The number of farmers to be trained had been affected by the Covid -19 restrictions. 50-80 farmers were usually trained. The overall quarterly target was a focus, but the entity looked at end of year targets. Last year, the target had been achieved. There was a technological manager in the entity who went to train farmers. He thanked the other stakeholders that the entity had collaborated with in order to surpass the target.
He concluded by saying OBP had not been affected by the farm attacks.
National Agricultural Marketing Council 2021/22 APP
Mr Harry Prinsloo, Chairperson, National Agricultural Marketing Council (NAMC), thanked the Chairperson for the opportunity to engage with the Committee, and said that Dr Simphiwe Ngqangweni, CEO, Ms Sarah Netili, CFO, were in attendance
Dr Ngqangweni led the Committee through the first 29 slides, and then invited Ms Netili to go through the budget. The CFO went through the budget and then invited Ms Nolwazi Simelane, Human Capital Executive, to explain the slides on human resources.
[please see presentation attached for details]
Ms Tlape said that it was a detailed presentation and if the plans were followed, the institution would progress in the current and coming financial years in terms of the expectations and the legislative mandate. She appreciated the concluding remarks of the CEO on the entity's agricultural and agro-processing master plan. Referring to linking farmers to markets, she said she attended a programme that the Minister had held on horticulture empowerment in Gauteng, and had heard the acting DG said that markets were not one of the challenges Gauteng farmers were experiencing. She asked which commodities the NAMC was targeting, and what criteria were used to attract the famers to consider different dynamics in the provinces.
Ms Steyn asked what the role of the NAMC was in assisting the Department in export markets. She discovered in the lockdown that when it comes to internal marketing strategies, the challenge could be that the product was produced in certain areas, but was not getting to the right market, especially for new farmers who were not linked to specific markets. Instead of doing research on providing assistance, could the entity discover possible new produce that could be produced in the country for which there was a worldwide shortage? What was the role of the NAMC, with an organisation like the ARC, in developing quality produce? She said that usually when one struggled with markets, it had to do with the quality of the processing. When the sixth Parliament started, there had been discussions on combining entities for quality processing. When entities worked individually, there was no linkage.
Ms Mahlo asked if the NAMC was helping small scale rural farmers to register with the South African Bureau of Standards (SABS). How did it help them to maintain high quality standards on products? Did it help them to come up with internal quality management systems to fit it for the global and national markets? Did it have written policies that farmers followed, because small scale farmers did not have the means to market themselves globally?
Ms Breedt asked what criteria were used to select farmers to link to markets. Was it possible for the Committee to get a breakdown per province, because farmers in some provinces did not necessarily need assistance -- for example, Gauteng and KZN?
Ms Mbabama said she was proud of the CEO, because he was from the Eastern Cape. The NAMC had indicated that their main function was to provide advisory services to the Minister. She found this surprising, and she needed to read the Act in more detail. Smallholder farmers had a 3% share of the agricultural market. What form of assistance was given to them, seeing they had such a small percentage? Was there any connection between NAMC and the fresh produce market across the country, because most of the small-scale farmers work through that market?
One of the objectives of the Agricultural Marketing Act was to increase market access to all market participants, and would like to know the NAMC's role in that regard, and their role in export markets. She had read about the US government removing SA from preferential access to the African Growth and Opportunity Act (AGOA), and asked for an explanation. Why would SA be removed whilst it was US law to allow eligible African countries to export their products to the US duty free?
Mr Masipa said the APP stated that small-scale farmers contributed 3% to the agriculture market. In the previous meeting with the Department, it was understood that both subsistence and small-scale farmers contributed 12% to the national output. He asked for the definition of a smallholder, and whether it included the subsistence farmer. The NAMC played an important role in marketing products both nationally and abroad. What was the estimated impact that was envisaged from the AGOA situation, and what actions were being taken by the NAMC to find alternative markets and to mitigate the adverse impact? It was important for farmers to earn foreign exchange revenue -- without it, it was not possible to make it in the current circumstances, as there was no Land Bank to provide preferential support to the farmers. Forex would enable sustainability. The NAMC had indicated that they monitor transformation around the different agricultural trusts -- what were the current monitoring processes, especially as far as land reform farms were concerned? If the country got at least 50-60% of land reform working, getting markets access and solving all other issues, that should help to reduce unemployment that was at 30%. What was the NAMC's contribution to providing solutions?
The Chairperson said the NAMC had been commended for linking farmers to markets. Market access for smallholder farmers remained a challenge for most provinces, as mentioned by Ms Tlhape, and it was an area where the Department had failed. The Department had a number of farmer support programmes in the form of land development support, among others, but the Committee's oversight -- particularly in KZN -- had found that most of the farmers who were reportedly supported through these programmes had limited access to markets. Could the NAMC indicate whether there was coordination between themselves and the Department in identifying farmers that needed market access support? Could it provide an indication as to when the master plan would be finalised and its implementation rolled out. The ARC had planned and reported on the soya bean project in the OR Tambo district that would be implemented under the master plan . What was the status of the livestock development programme, and were infrastructure developments planned under therural development programme?
The NAMC said s9 of the Act limited it to providing advisory services to the Minister, and specifically to issues of statutory measures, including levies. Its role was monitoring all the administrative processes and making sure that money was spent according to the annual business plans for the industries that collect levies. It had a limited role in the actual practical implementation of programmes on the ground, and it was done with a very limited resource base. For example, with the National Red Meat Development Programme, additional resources came from the Department itself, and the NAMC was appointed as the implementing agent. With poor funding, it would have been impossible to implement a programme of that nature, and the Minister had said the NAMC should limit its role and let it be coordinated elsewhere because elements of the programme had a lot to do with the building of feeding yards. The Minister was uncomfortable with the role, because the focus should be on the identification of the markets for red meat farmers.
An example of helping rural small-scale farmers was the red meat programme, which was aimed at communal areas where livestock was not a commercial enterprise. Over the past five to seven years, farmers had been commercialising livestock in rural areas. The entity had been active in the North West, KZN, as well as the Eastern Cape. There were a few programmes that had been implemented by various stakeholders in the cotton, gold and sugar sectors. The NAMC analyses what works the best. As soon as the master plan was signed, the idea was that the focus would be on implemented ideas. The NAMC worked on partnerships because of the lack of all the resources that link farmers to markets. In the initial phase of the identification of the markets, the entity links up buyers and farmers in various provinces. That depends on the database received from the provincial departments. The entity also relies on queries that get submitted on a regular basis by either buyers or farmers. The entity then provides the specifications that are required for the market and makes sure they are adhered to. It was a much broader process, that requires provincial departments to assist in the production practices. It was an intensive process in collaboration with the provincial departments, which have the budget to assist farmers who meet those specifications. The Perishable Products Export Control Board (PPECB) was more involved, largely with issues of registration of farmers and making sure that the quality requirements were met, and it had programmes that support this.
The NAMC's role in assisting farmers in export market was limited to an analysis of opportunities in the export sector. The entity worked closely with commodity organisations. A recent example was the work done with the Citrus Growers Association. There was a database of citrus farmers, and the entity made sure farmers were identified and met the requirements of the Chines citrus market.
The AGOA agreement allows the US to reserve the right to include or exclude any eligible country. There were other opportunities in the Middle East. The Department, specifically the DG, was actively helping in opening alternative markets. The NAMC would like to be actively involved practically in negotiation the process, but its resources were limited.
There was a list of stakeholders with which the NAMC works closely that have connections with natural fresh produce markets. What was important was to look at where the demand was, and make sure farmers can meet the requirements of these markets. The entity has currently established a relationship with the Agricultural Produce Agents Council, because it plays the role of middleman in terms of supply in the national fresh produce market.
There has always been confusion in defining emerging, smallholder and subsistence farmers. The definitions were very clear in the farmers' support policy of the Department. Subsistence farmers produce for their own consumption and supply excess produce to the markets. The focus of market access starts with smallholders who, by subsistence means, supply excess produce to the market.
The NAMC would make an effort to make sure that the quality of data for smallholder farmers was improved so that the support that reaches them would be better targeted, and that the monitoring and evaluation of that support was also improved.
Perishable Products Export Control Board 2021/22 APP
Mr Clive Garrett, Chairperson, Perishable Products Export Control Board (PPECB), introduced the team in attendance -- Dr Charlotte Nkunam, the Deputy Vice Chairperson, Mr Lucien Jansen, the CEO, and Mr Johan Schwiebus, the CFO.
Mr Garrett said the main focus for 2021/22 was to continue with the digitisation and roll-out of TITAN 2.0, its mobile technology project. It would like to become more customer centric than it was at the moment, and to continue with its transformation programme. He handed over to Mr Jansen, who led the presentation, and Mr Schwiebus presented on the budget.
[please see presentation attached for details]
Ms Tlape said it was always refreshing to listen to the presentation of the PPECB, and she welcomed the plan to increase its Black Economic Empowerment (BEE) stake. This was wise, based on the current situation in the country. The entity aimed to reduce the number of offices across the provinces -- which offices would be closed, and how would this affect its performance if the work was done remotely? What would happen to the amount of citrus fruit exported, since most of this was done through physical inspection?
Ms Steyn said it always good to listen to a well-run structure and organisation. The PPECB had a good plan, and now that the Committee had had a discussion with the NAMC on export market, what did the entity think about helping the Department to strategise on other sectors of the market?
Ms Mahlo said the presentation had been of a high standard, and this was an entity to be proud of. What was its role in improving the quality of the products of smallholder farmers? Was it possible to share information with other entities that were linked to the Department to help them to get into the global market? Did the PPECB have offices in all of the provinces, and what would be the impact on the provinces with offices that would be closed?
Ms Mbabama congratulated the entity on its great work. She said the presentation for an entity that worked under the government was efficient and effective for a change. What would be the impact on jobs if offices were closing, and would that happen to the offices? Was the entity getting rid of paying exorbitant rentals?
The Chairperson did not have questions but complimented the entity for its good work, despite the Covid- 19 implications. The entity always instilled confidence in the Committee, considering that it did not get financial assistance from the government.
Mr Jansen welcomed the positive feedback from the Committee. The entity had challenges, but it focused on ways to overcome them. The offices were not entirely closing, but office space would be reduced to cut down on rental expenses, as operational people worked remotely. He apologised if his explanation was not initially clear. The entity was more than willing to combine its efforts with other entities in the Department.
There was a programme specifically dedicated to assisting smallholder farmers to increase the quality of their produce. For the past three years, the entity had trained 540 smallholder farmers on good agricultural practices, food safety and the responsible use of pesticides, which had given them a platform for quality produce. 240 had been certified as export traders. Although the Committee believed the PPECB had much to teach other entities, there was always room for improvement, and that could be learnt from other entities. At the next forum meeting, there would be discussions about collaboration, or ways of improving it.
The PPECB had 32 offices countrywide, with one province that did not have a regional office. The focus was on the production areas, where inspections were carried out or they attended to complaints.
The Chairperson asked for the province which did not have an office, and the reason behind that.
Mr Jansen said there was no regional office in the Free State. There was only a sub-regional office led by three people. This was because there was less production of fresh fruit in the area.
Ms Mahlo said that if Members had small-scale farmers that needed to be trained in their respective areas, how did one get hold of the PPECB? She acknowledged that officials could leave their details, but wanted to know if it was possible to get hold of the entity. That would be an advantage for remote provinces like Limpopo. She also asked if the entity would be able to address smallholder farmers if invited.
Mr Jansen said that the entity had signed a service level agreement (SLA) with the Department, and had also signed individual SLAs with all the provinces. The names of farmers were provided by the provinces, but the entity often got requests to deal with farmers directly. The PPECB helped those farmers to become part of the programme. It was more than willing to address farmers, and would leave the contact details with the secretariat.
The Chairperson thanked all the entities that presented, the media who participated in covering the proceedings and the Secretariat. The Committee would continue to exercise oversight and hold the Department accountable.
The meeting was adjourned.
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