Deliberation on 2022/23 annual reports of the Department of Agriculture and CASIDRA

Meeting report

The first part of the meeting dealing with the Auditor-General’s (AG’s) report was held in camera, but the deliberations were open.

Deliberations: 2022/23 annual reports of the Department of Agriculture and CASIDRA
Mr Ivan Meyer, Western Cape Minister of Agriculture, said the Department had a good audit outcome.

Dr Mogale Sebopetsa, Head of Department, said it was an important agricultural year regarding harvest, but there were challenges like load shedding. He said Mr Floris Huysamer, CFO, was retiring and Ms Lindy Govender would take over.

The Chairperson said questions should be confined to sections C, E, and F of the Department’s and the Cape Agency for Sustainable Integrated Development in Rural Areas (CASIDRA)’s reports.

Ms L Maseko (DA) said she was intrigued by some targets not being for one year, but for five years, so when could one assess how it performed over one year? She wanted details on the R4.7m in irregular expenditure. She congratulated the Department on a clean audit.

Ms N Nkondlo (ANC) asked about the attendance of MCO meetings, of which four were held. What was the reason for some attending only one meeting out of the four? Was the Department’s research informing planning on the risks around climate change and at what point did the Department become responsive?
What was the succession plan, because the Department had a workforce which was loaded at senior management level. There was an increase in poverty in households and she did not see this risk mentioned with respect to food security. How were the effects on household incomes being mitigated?
There were four instances relating to costs and payments of cancellation fees. Why could this not be avoided? Was there a challenge of control which was not tight enough? She asked about ensuring competitive bidding regarding urgent procurement and limited bids mentioned on p204/5 on Supply Chain Management (SCM).

Mr I Sileku (DA) asked if performance targets were not met 100%, whether that meant no or less service delivery happened. He said most of the factors affecting the Department were external. Was the Department satisfied with how it dealt with these risks that were identified? On staff turnover, he asked if the Department was worried by the Finance Minister’s pronouncement to cut staff and what was the next step to not let it have an impact on the Department? He said he saw a trend in fruitless and wasteful expenditure and wanted assurance that the SCM unit was highly qualified. He wanted to know what might lead to SCM mistakes and what the Department had done with National Treasury to avoid these mistakes. Were there negligence errors and how was it dealt with?

On the questions around climate change, Minister Meyer said climate should be permanently on the agenda. He was making it their core business and wanted an inter-ministerial committee to be set up.

He said global paradigm shifts were happening and were interested in Mediterranean agricultural regions.

He was happy poverty and the household issues were raised as he had mentioned food security in the Department’s Annual Report.

On global uncertainty, he said he had met with the Bureau for Food and Agricultural Policy (BFAP) to look at all of that. They had said these uncertainties, the Ukraine war; extreme weather conditions; the global economy; and inflation and food inflation, would remain.

On the clean audit, he said philosophically that your past success was your greatest enemy and the Department must not relax and must have innovation in SCM.

He said he was driving the issue of climate change and the Western Cape had had two major floods while government did not have unlimited funds. He said poverty and food insecurity was real and hunger was a matter of concern.

On whether research informed planning, Dr Sebopetsa said research did inform planning and the Department conducted 40 evaluations which informed their plans. The Department was working on ecological flood structures and river protection.

He said that the Department had responded to food insecurity by establishing 4 000 food garden programs and would do 800 per year. The Department was leading the ‘nourish to flourish’’ program.

On whether the Department was comfortable dealing with the macro risks, he said they believed they were. The Department was encouraging farmers to comply with the demands of the climate and was looking at arid and desert area farming. He said the bio-security or bio-risks were worsening and had launched veterinary services week.

On the budget cuts, he said the Department had 22 senior managers and four to five positions needed to be filled.

On the succession plan, he said all SCM members were brought along that day and the Department was doing all it could to develop them to take over positions.

On the irregular expenditure, Mr Floris Huysamer, CFO, said the Department had engaged with the AG on R4.3m relating to CASIDRA in 2022/23 which concerned the financial year of 2020/21. He said that fruitless and wasteful expenditure this year was exceptional because in the previous year, it stood at zero. He said the Department did have a policy and worked according to the framework. On consequence management, he said that the Department investigated cases for root causes and to strengthen controls. He said mostly people did not attend engagements and the costs would then be debited to their account and disciplinary action would be taken where necessary. Irregular expenditure was mostly picked up in SCM or direct payments, which arose from incorrect tariffs being applied. He said the Department was proud that it picked up the issue and showed that the internal controls were working.

On salary overpayments, he said that it did happen because it was a process. If, for example, someone passed away two days before the payday the pay run could not be stopped. In some instances, the state attorneys sometimes would indicate that it was not economical to pursue the recovery of monies further and these cases were written off. He said all cases were treated individually on merit. He said the Department would prefer that it owed someone rather than that they owed the Department because it was a long process to recover money.

On whether there were qualified SCM officials, he said they did have highly qualified SCM officials. He said SCM was a minefield of rules, regulations and law.

On the different types of emergency procurement, he said procurement had to be fair, cost-effective, and competitive according to section 217, which was the general rule to follow. All other types of procurement had to be motivated additionally and went through the bid committee. If there was only one supplier of a product, the Department had to give evidence to prove that.

Ms Nkondlo asked if this would be regarded as a deviation.

Mr Huysamer said it would have to be submitted to the AG.

On climate change, Dr Ilse Trautmann, Chief Director: Research and Technology Development Services
Said agriculture had three pillars; soil, water, and climate. The Department has been conducting research over many years. The increase in adverse events deepened the focus on climate change so now an inter-ministerial committee and a transversal committee were formed. The Department released its smart agri-plan as a road map for resilience in the agricultural sector in 2016. An evaluation of the plan was done in 2021 and the plan was found to have an extraordinary impact on the Western Cape and in 2022, a climate data update was done. She confirmed that the Department did do deep research. 20 out of the 91 research items had climate change as a direct focus. The portfolio of climate change included disaster management and public awareness. An agreement was signed with California in 2022 out of which evolved the development of a Mediterranean partnership, which would be signed at COP 28 in December. In November, an agreement would be signed with the University of Stellenbosch on a school for climate studies to fast-track research on climate change.

On the training of people, she said government officials engaged in training and it now had a climate change focus and has rolled out awareness campaigns. The Department wanted to engage with them to develop tailor-made courses, masterclasses and events for government officials. There would be a climate change summit for the Western Cape in February. The Department was proud of its work in the area of conservation agriculture and it had won the bid to host the 9th world conference on conservation agriculture in Cape Town in 2024.

Ms Ashia Petersen, Director: Sustainable Resource Use and Management, said the ecological infrastructure project and, in particular, river protection entailing the construction of groynes and weirs in rivers prevented erosion by reducing velocity of the water during floods and stabilised river banks and prevented the decrease in water quality and quantity and the washing away of orchards and infrastructure.

Ms Maseko asked what the reason was for the rivers to have deviated from the normal flow. Was it because of alien vegetation and dumping in the river? The rivers needed to be monitored for the sake of food security. How was the deviation in flow possible if there was monitoring of rivers? She said floods happened in California before it happened in the Western Cape. Given that it had the same climate, surely there should have been an anticipation that it would happen in the Western Cape. What did the Department do, knowing that the floods were a possibility?

On the work that they were doing, Ms Petersen said that specifically on alien invasive plants, it worked closely with the Water Users Associations (WUA) to eradicate invasive alien plants and this included follow-ups. A challenge had been encroachment of the river’s flood lines which had been breached. Farmers took that risk but it had an impact on the river system. This led to agricultural loss which was carried by the agricultural sector and downstream water users. R134m was invested over the past four years and R18,5m was invested in river protection work such as soil erosion structures. High risk areas were targeted with funding from previous floods. There was also legislation that allowed authorisation for all users within the river system.

Ms Maseko said that the R134 m investment needed to be looked at to ensure stakeholders were doing what they were supposed to do as she was from the Citrusdal area and had seen the alien vegetation in the river affecting its flow.

The Chairperson asked if there was no environmental impact assessment done to warn farmers not to encroach on the flood line.

Dr Sebopetsa said the Department needed to invest in ecological infrastructure work like alien clearing and river protection. In the last two floods, the Department had seen that there was no soil removal damage or to orchards where water was directed. Climate change was taking root, meaning there had to be more investment in ecological infrastructure work. The Department budget for the past four years of R134m was not enough. More was needed, given what the science was telling them.

On whether farmers were warned, he said farmers were warned all the time. There was no avian flu in the Western Cape but by the past weekend, one case was detected in the garden route region because some farmers went against advice not to purchase chicks from affected provinces. Farmers were advised but made their own decisions.

On the question of meeting attendance, he said the figures on the quoted page 147 were not members of MCO but attended on invitation. The members attendance was on p146.

Ms Nkondlo said climate change had to become central to what government was doing. She said CASIDRA’s programmes on the management of government funds and on the farmers' support and development programmes which achieved 25% of its targets. What was the impact of this performance on service delivery? She said part of the reason given for deviation was community consultation processes which were taking longer than expected. What were the problems here? On investigations, she asked what the latest state of the matter was as the service provider was placed under business rescue and its implications. When would the case regarding contingent liabilities on clearing alien vegetation be finalised?

The Chairperson asked how far the claim case for damages progressed as it was noted as a liability and a risk. On the AG’s report on CASIDRA which mentioned two cases, He asked what the progress on the turnaround was on managing government funds.

On the R4.7m irregular expenditure, Mr Huysamer said that in 2017, CASIDRA advertised and awarded a tender to a contractor to do work in a river. The contractor was doing sub-standard work and was asked to vacate the site. In 2018 the job was advertised again. The original contractor was not satisfied with awarding the second advertised tender and lodged an appeal. He lost the appeal and an external audit came to the same conclusion. The Public Protector looked into the matter and was satisfied also and the AG had raised no findings. In 2021, the SIU were concerned that three bidders changed the VAT to 15% as VAT had changed from 14% to 15% in that year. The successful tenderer had submitted his tender at 14% VAT. CASIDRA then changed the VAT to 15% and this was the concern of the SIU that the tenderer had not changed the VAT. In 2022, the SIU report stated that it was irregular expenditure. The audit and risk committee was satisfied and that condonation of the matter could be applied for. The board was also satisfied and the documentation was sent to the provincial treasury.

On the 25% achievement of targets, Dr Keith du Plessis, CEO of CASIDRA, said that CASIDRA had looked at its targets and the targets that were set were dependent on other bodies like the depart of agriculture.

On whether the results impacted service delivery, he said the amount of work done on food security, community gardens, the delivery of disaster relief and river clearing and stabilisation projects made them believe they reached a significant amount of households and communities.

On the contingent liability claim, Mr Freek van Zyl, CFO of CASIDRA, said CASIDRA was the fifth respondent. CASIDRA had appointed its lawyers and the matter was a back-and-forth between the parties.

On the p55-58 matter, he said it was regarding CASIDRA’s mussel farm where payment was made for mussel farming equipment. A deposit was made, but after a while CASIDRA received complaints that some of the equipment was second-hand. The company was asked to correct some matters, but not all of the things requested were corrected. Then, the company informed CASIDRA that they were filing for business rescue. CASIDRA put in a claim for the value for which it did not receive value. To date, they have not reimbursed CASIDRA in cash or kind.

Dr Sebopetsa said that a number of turnaround strategies were concluded, but the challenge now was how to fund the turnaround strategies. He said farms given to large groups of people through land reform had collapsed because of conflict within the groups therefore government moved to the Proactive Land Use Strategy (PLUS) for families or legal entities. This would be a process as it would have to wait for these groups to determine what form ownership would take where the land could, for example, be leased. There was an IGR process taking place so that government would not be seen to impose a solution.

Ms Maseko asked if it was normal practice to make up-front payments and who absorbed the risks for such payments. Who was doing monitoring the implementation processes of contractors?

Mr van Zyl said there were a number of upfront payments as they did not open accounts with co-operatives. CASIDRA asked for pro forma invoices and did a number of checks. Checking was done on a regular basis and not at six months.

Ms Maseko said the mussel farm incident was worrisome as checks were done yet after six months, the company went into business rescue. It appeared no red flags were raised. CASIDRA needs to check whether its operational procedures are really working.

Mr van Zyl said he was satisfied with the standard procedures and policies that were in place. He said in this particular matter, certain items needed to be imported.

Ms Maseko thanked the Department’s CFO, who was retiring, for his services to the community.

The meeting was adjourned.