DALRD, CRLR, OVG & PPECB 2022/23 Annual Reports; with Minister

Meeting report

In his introductory remarks, the Chairperson acknowledged the role South Africa had been playing in the global space, and said this meant that, as citizens, they had to continue to fly the SA flag high. He cited the role the legal minds of the country played in the International Court of Justice (ICJ) regarding the Palestinian and Israel matter; the mixed martial arts (MMA) world middleweight title belt won by Andricus du Plessis; the progress of South African soccer team, Bafana Bafana, in the Afcon tournament; and the Grammy Award won by Tyla.

Minister's opening remarks

Ms Thoko Didiza, Minister of Agriculture, Land Reform and Rural Development, said it was important to indicate that the Auditor-General of South Africa (AG) had had to allow escalation when it came to the process of auditing the statements of the entities, which had delayed the submission of their annual reports on time. Only the Department and Onderstepoort Biological Products (OBP) had asked to be given time to engage with the AG on some matters related to the audit findings. As a result, the audits had been finalised in December 2023. Unfortunately, some of these matters contributed to the delays in the appointment of new boards. Correspondence had been sent to the office of the Speaker and the National Council of Provinces (NCOP) to outline the causes of the delays in submitting annual reports. The AG had met her to discuss some of these matters, and had agreed there were further areas of engagement that should be discussed to meet each other halfway. The boards and management of the entities would be in a position to engage with the Committee to fix what might have gone wrong and address challenges faced by the agricultural sector. Some matters raised by the AG, such as consequence management, were related to reports that had come but were not conclusive, and these processes usually took a long time to be completed. However, the Department had already started working on these issues.

When entities were asked to cooperate with the investigations on fraud and corruption, they would put a disclaimer in their reports to say some of the documents could not be used and would not cooperate with law enforcement agencies. The Department had engaged with the Special Investigating Unit (SIU) on the Ilima/Letsema cases because they had been ongoing for a very long time. The AG was right to raise the issue of capacity within the employment units of the Department, because it was taking longer to complete work timeously. The issue of lack of capacity within the Department was being addressed to deal with all the challenges raised by the AG, and the DG would touch on the interventions that would be made.

She said there had been progress on agriculture, land development and reform matters. For the past 29 years, the agriculture industry has been stable, seen growth, and created many job opportunities. For the year under review, employment in the sector stood at 888 000. There had been growths in the export markets, and the opening of new ones, while on the other hand, there had been declines in other markets caused by foot and mouth disease (FMD). Some of those markets had closed, and others had opened. The Department continued to implement the bio-security task team reports.

She acknowledged the concerns raised by the Committee concerning the development of facilities by the Agricultural Research Council (ARC) and the OBP for the production of vaccines. Challenges in the development of the OBP facility had constrained the sector, and this had been discussed with the board of the entity regarding the continuous production of the vaccines. The board was advised to consider working with other companies to produce the vaccines, if that was possible. Other companies that produced some of the vaccines had been registered. The challenges caused by the bird influenza had been seen and felt, and the Department had engaged with the farmers in the sector to improve on their biosecurity.

Concerning the financial support in the sector, the Department continued to use and implement new instruments to uplift farmers and was making use of the Presidential Employment Stimulus Initiative (PESI) to support struggling farmers and businesses in the sector. In the early stages of the PESI, there were not as many challenges as the AG has raised now. The Department had communicated with the AG to address these problems, to ensure intended beneficiaries were gaining from the vouchers. She indicated progress had been seen in some of the programmes done between the Land Bank and the Industrial Development Corporation (IDC) through blended finance to ensure the commercialisation of black farmers in the sector. Even though the numbers had not been exciting, but this was an indication of a necessary intervention. There have also been interventions to assist farmers who have been affected by the energy crisis experienced in the country to continue with production.

In the area of land reform, there had been progress, but not in the way they would have liked it to happen. The Department continued working on the challenges of the Agricultural Land Holding Account (ALHA) in terms of recapitalisation in the current period, in consultation with the farmers on the leased land in all the provinces. It was becoming clear how farmers appreciated the resources they had been given. The state should give full tenure to those farmers on leased land so that they could grow and utilise these assets to grow the communities. She said the Department had noted the concerns raised concerning the selection and allocation policy of land to be used by women. A decision had been taken with Members of Executive Councils (MECs) in the provinces to reverse what had actually happened in the past.

Regarding the transfer of land to farm labourers and labour tenants, there had been a challenge that was being experienced, and there would be engagements with the land claims court judge and the Minister to address the concerns. She said rural development was an area they wanted to continue on. The integrated rural development strategy has been revised to revitalise the rural economy through the district development model (DDM).

The Department had invested more than R1.6 billion in infrastructure projects. These projects have contributed to improvements in agricultural production, agro-processing, and quality of life in rural areas. The Department was also ensuring that young people trained through the National Rural Youth Service Corps (NARYSEC) continued to partner with private companies to create economic opportunities for the youth. The feedback that had been received from these private companies was very positive, to the point that they had indicated they would take more of these graduates, and some of them have been integrated into the Defence Force.

Audit outcomes of the Department

Mr Thabo Ditodi, Business Executive: AGSA, presented the audit outcomes of the Department of Agriculture, Land Reform and Rural Development (DALRRD). On the overall reflections on implementing the 2021/22 audit recommendations, the Department had implemented an action plan and followed up on some of the PESI vouchers previously redeemed. It has been continuing to implement the action plan, and the executive authority and the Committee should track the progress made by the Department and ensure that all evidence was obtained to prove that all vouchers had been redeemed by qualifying beneficiaries.

He said there had been minimal progress in addressing internal control deficiencies at entities of the Department. The ARC, the Ingonyama Trust (IT) and ALHA, remained qualified with findings. The OBP had regressed to a qualified audit opinion, and Ingonyama Trust Board (ITB) and Deeds were unqualified, with material non-compliance findings. This was indicative that preventative controls had not been adequately designed and implemented. Consequence management still remained a challenge within the portfolio. As a result, six auditees in this regard had material non-compliance findings.

The submission of financial statements by 31 July 2023 for the portfolio remained stagnant at 91%. The Ingonyama Trust submitted financial statements for the audit on 1 August 2023. R171m was transferred to restitution bank accounts to acquire equity shares for land beneficiaries. There was no action for more than 12 months in these funds. A backlog of 17 566 land claims were settled but had not yet been finalised. It was taking over five years from the date of settlement to the date of finalisation (payment) for some land claims. It was highly unlikely that the DALRRD and the Commission would make any meaningful impact on finalising the land restitution claims.

He said there was possible fiscal dumping identified at the ARC. The funds had been transferred two days before year-end, although, in terms of the service level agreement (SLA), these funds could not be linked to any services rendered prior to the transfer. This was indicative of possible fiscal dumping. This had been common practice, resulting in the entity having income received in advance relating to services yet to be rendered.

The DALRRD, the Office of the Valuer General (OVG), OBP and the National Agricultural Marketing Council (NAMC) had submitted performance reports with errors which were subsequently corrected. Therefore, no material findings were reported in the final annual performance reports. The AGSA commended the ARC, ITB and the Perishable Products Export Control Board (PPECB) for maintaining credible performance reporting, as no material errors were identified in the submitted annual performance reports. The performance indicators and targets of the portfolio were found to be useful, and the actual achievements reported in the annual performance report were reliably and accurately reported. This provided a proper basis to facilitate oversight and decision making for both the Department and government.

Mr Ditodi pointed out that the Department's beneficiary selection policy prioritised women, youth and people with disabilities. However, the policy had not been applied consistently across all the provinces. Some provinces did not use this policy during the evaluation and allocation of land. The funds to recruit extension personnel were made available late due to the need for budget reprioritisation. 266 farmers had been identified as needing Land Development Support (LDS) assistance, but the target had been set at 83 farmers. Although the Department was overachieving in the allocation of land, it usually took an average of 10 months from the date of purchase to allocate the land, and this resulted in illegal occupations and invasions. The Department had set the land claims target too low. Given the backlog, it would take at least over 30 years to settle and finalise the backlog in land claims.

The AGSA further observed that the ARC had been allocated funds to construct an FMD vaccine facility, but there had been no progress with the construction of the facility for over ten years. Currently, the country had been relying on other countries for vaccines. The OBP was unable to meet the demand concerning the number of vaccines produced and sold, as per their mandate.

Concerning infrastructure projects, the AG indicated there had been inadequate project and contract management on terminated, or longer than five years, infrastructure projects. Some had had minimal or no progress in the current year. Common reasons for termination were due to poor performance by the appointed service providers. It was understandable to terminate poor-performing contractors, but adequate alternative plans should be put in place timeously to ensure these projects were successfully completed.

On material irregularities, the AG found that officials did not implement responsibilities assigned to their role to adequately monitor the recapitalisation grants. The response of the accounting officer was due on 23 August 2023, and the accounting officer provided an action plan to address the irregularity on 25 August. The AG would closely monitor the implementation of actions committed to be taken by the accounting officer. Regarding the quality of financial reporting, inadequate financial management controls had resulted in financial statements that were not credible, and this had impacted the ability of the oversight structures to rely on them.

For the year under review, fruitless and wasteful expenditure was standing at R30.32m. The accounting officer had commissioned an investigation into allegations of misappropriation of funds. The investigation was completed, and the matter was reported to the South African Police Service (SAPS) for further investigation and prosecution. In the financial statements, a sum of R30.2m had been disclosed. R234m was under investigation for redeemed PESI vouchers. This matter implicated senior officials within the Department. The Department had reported this to the law enforcement agency regarding the Prevention and Combating of Corrupt Activities Act (PRECCA). Irregular expenditure was seen to be continuing to increase. For the Department, R15.37m was in relation to deviations not approved by National Treasury, and bids advertised for less than 21 days.

Finally, he recommended there should be an urgent need for the OBP and ARC to complete the FMD and Good Manufacturing Process (GMP) facilities, given the lack of sufficient vaccines in the country. The entities had not been able to meet the demand for vaccines. Viable alternative means of production should be put in place until the projects are finalised. The progress made by the accounting officer in responding to the material irregularity should be closely monitored. Recapitalisation reconciliations and related assessments should be finalised and supported by adequate consequence management processes.

See attached for full presentation

DALRRD Annual Performance Report 2022/23

Mr Mooketsa Ramasodi, Director-General, DALRRD, reported that the Department had achieved an unqualified audit opinion, and areas of improvement called for greater effort in addressing matters of audit emphasis. For the 2022/23 financial year, redeemed vouchers had been substantiated with delivery notes, and an unqualified audit opinion had been obtained. The audit for the remaining balance amounting to R234.5 million was reported as fruitless and wasteful under assessment. Corrections were made to the annual financial statements (AFS) concerning misstatements identified during the audit.

The Department had recorded a financial performance of 98%, and non-financial performance of 82%. The performance of the Department had improved by 22% in 2022/23 to 82% compared to the previous financial year's achievement of 60%. It was also 23% better than the 2020/21 achievement for the same period.

The agriculture, land reform, and rural development sectors in SA have encountered significant challenges in the medium term, including COVID-19, adverse weather, pest and disease outbreaks, trade disputes, and geopolitical tensions. The Intergovernmental Panel on Climate Change (IPCC) 2022 report highlighted critical environmental concerns like heatwaves, droughts, and floods which exceeded the tolerance levels of many species, and complicated pest and disease management. These factors emphasised the need for robust, multi-variate models in development initiatives to ensure sector resilience and sustainability.

Gross capital formation in agriculture had increased from R20.6 billion to R24.5 billion, indicating a growth in sector investment. Agricultural exports had reached $12.8 billion, with fruit and wine being the top export crops. Imports amounted to $7 billion, mainly comprising rice, palm oil, wheat and poultry. The African Continental Free Trade Agreement (AfCFTA) accounted for 37% of agricultural exports, while Asia took 27%. Efforts were ongoing to expand market access globally, including to countries like China, India, Japan, South Korea, Saudi Arabia, Mexico, the Philippines and the USA.

A total of 355 land claims had been settled, 50 700 ha of strategically located land acquired, and 5 270 ha acquired for farm dwellers. The 2020 beneficiary selection and land allocation policy aimed to overcome gender biases in property rights. The integrated rural development sector strategy continued to enhance sectoral coordination, intergovernmental relations, rural infrastructure development and investment, rural governance, industrialisation and enterprise development, land and agrarian reform, the provision of basic services, and skills development.

Training programmes for Communal Property Associations (CPAs) had reached 3 064 members. Several bills aimed at sector regulation were in the national Parliament, and policy formulation was supported by research from the ARC and the NAMC.

Mr Ramasodi said the Department was working on organisational improvements in planning, monitoring, evaluation, financial, audit and risk management. There had been an ongoing effort to resolve operational inefficiencies and optimise resource management, with proposals for better structuring expected to enhance service delivery in the sector. The Ministers and Members of Executive Council (MINMEC) was working on departmental restructuring for improved service delivery.

On targets not achieved, he said that 97% of valid invoices were paid within 30 days. There had been notable improvements in this area, and the whole system had been tightened for improvement. Reasons for not effecting payment within 30 days were system challenges experienced, and delays in the verification of invoices. The Department is currently working on improving its system to ensure 100% of suppliers' invoices are paid within 30 days. 3 566 extension officers had been recruited against a target of 5 000. This programme was later discontinued due to lack of assurance in funding. Twelve Farmer Production Support Units (FPSUs), against a target of 43, had been supported towards functionality. Delays in approving projects in the interest of improving controls were caused by the approval committee. Unfortunately, this has led to delays in implementing some components to realise full functionality as planned. Two new non-agricultural enterprises had been supported against a target of 30. Delays in implementation had resulted in most being unable to be verified at the time of reporting.

Ms Meldah Mokono, Acting Chief Financial Officer (CFO), DALRRD, said the expenditure of the Department had increased from R16.760 billion in 2021/22, to R17.106 billion in 2022/23. This was mainly due to the control of foot and mouth disease, and increased support to industrial and enterprise development projects. The Department had spent R17.106 billion of the budget allocated for 2022/23, or 98% of the final appropriation of R17.534 billion, leaving unspent funds of R427.9 million. Unspent funds were mainly due to delays in the recruitment process, due to lack of capacity involved in the process; long turnaround times to receive quotations for procurement of information communication technology (ICT) services, and receipt of products from overseas and delivery did not materialise. Further delays were in finalising and submitting inspection reports for the construction of the new head office premises; the NARYSEC programme; and outstanding invoices regarding membership subscription fees to international organisations.

She said the AG had signed off the ALHA annual financial statements on 7 December 2023, and that was when the audit report was issued. The delay was due to a disagreement between the trading entity and AGSA concerning the accounting treatment of the recapitalisation and development programme's unaccounted funds, where management had to further request an accounting opinion from the State Attorney and National Treasury, including escalating the matter within AGSA structures. ALHA has received a qualified audit report on its Recapitalisation and Development Programme (RADP) since the 2019/20 financial year.

Ms Mokono said expenditure had amounted to R580.073 million for 2022/23, compared to R629.464 million in the 2021/22 financial year. The decrease was firstly due to low expenditure on rates and taxes. The majority of payments of rates and taxes had been made for previous years, which had reduced the rates and tax provision liability. Secondly, there was low expenditure on the grant expenses of farmers due to low spending of infrastructure grants from farmers' grant holding bank accounts due to a limited number of engineers.

Total assets had increased from R15.624 billion in 2021/22 to R15.911 billion in 2022/23 because of cash and cash equivalents in the form of grants received from the Department, an increase in the trade receivables, the slow spending of infrastructure grants from farmers' grant holding accounts, as well an increase in property, plant and equipment due to land acquired during the year. Net assets had increased from R14.840 billion in 2021/22, to R15.101 billion in 2022/23 due to a R260.118 million surplus for the year.

Lastly, she said that Deeds had received an unqualified audit opinion in the 2022/23 financial year due to being unable to provide sufficient appropriate evidence that disciplinary steps had been taken against officials who had incurred and/or permitted irregular, fruitless and wasteful expenditure in the prior years.

(Graphs and tables were shown to illustrate budget allocation and expenditure per programme – see attached)

Commission on the Restitution of Land Rights (CRLR) Annual Report 2022/23

Ms Nomfundo Ntloko, Chief Land Claims Commissioner, said the seventh report to the Land Claims Court was submitted on 24 January 2023. The court had confirmed the 2014 new order land claims were still interdicted, pending finalisation of the old order claims, or new amendment legislation had to be enacted. The Commission was also instructed to refer all claims the CRLR was unable to resolve to the Land Claims Court in terms of Section 14(1) of the Restitution Act.

She said the Commission had spent 99.62% of the budget allocated during the period under review. Project Kuyasa had achieved 95% of its deliverables. Operational policies and standard operating procedures (SOPs) have been approved, and full implementation commenced on 1 October 2022. Currently, they are waiting for guidance on the outstanding deliverables.

Regarding the number of land claims settled, 355 against a target of 336 had been settled in the Eastern Cape, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, and the Western Cape. 429 land claims had been finalised against a target of 372. The over-performance was attributed to the non-compliant claims which were planned, but no targets had been set as the Commission would not be able to plan for when the final non-compliance letter would be signed.

Ms Ntloko said the staff establishment was in line with the approved structure dated 11 December 2020. The total number of personnel was 748, of which 678 positions had been filled. The 71 vacant positions constituted a vacancy rate of about 9%, which was slightly below the ideal vacancy rate of 10% prescribed by National Treasury. The reduction of human capital posed a serious risk to the Commission's performance. The budget cuts on the compensation of employees (CoE) had necessitated prioritising positions in line with the available budget. The Deputy Chief Land Claims Commissioner had been appointed on 1 June 2023.

During the year under review, the audit committee had three standard audit committee meetings, where matters pertaining to the interim financial statements, annual financial statements, and the audit report of AGSA were deliberated upon. The audit committee acknowledged that the system of internal controls governing financial reporting at the CRLR was adequate and effective, and appreciated that the CRLR reporting submissions were done timeously and appropriately. It also acknowledged and commended the clean audit outcome for the CRLR.

Concerning governance issues and risks, the entity had resolved that offers would be negotiated and linked to the recommendations of the Valuer-General, and annual submissions to National Treasury would indicate the funds required in the adjustment and medium-term expenditure framework (MTEF) cycle. Monthly expenditure monitoring and cash flow revisions would be done; a detailed business process that was elaborated into standard operating procedures and time frames would be developed; and statutory Commission meetings would be held, with formal and widespread communication aims, including media and quarterly statistics releases.

(Graphs and tables were shown to illustrate budget allocations and expenditure – see attached)

Office of the Valuer General (OVG) Annual Report 2022/23

Mr Thapelo Motsoeneng, Acting Chief Operating Officer (COO), informed the Committee that the entity had achieved an unqualified audit opinion and registered 100% on its targets. Corruption and fraud prevention mechanisms had been implemented in the administration programme. On the number of average working days taken to issue a valuation certificate, the 50-day target had been met 100% in the valuation sub-programme. 100% had been recorded for completing valuation requests submitted by clients within the specified times.

He said the OVG had initiated an organisation design and development project that analysed the current operating model, the organisation structure, and the valuations capacity. This project would advise the VG and the Minister on the optimal operating model and required valuations capacity in the OVG to ensure it was able to meet its performance targets. The OVG had also initiated a process for reviewing Property Valuation Act (PVA) regulations, which would address some issues that negatively impacted the speed at which valuations had been completed.

The DALRRD Executive Committee (EXCO) had mandated the OVG to analyse the extent and reasons for offer and compensation rejections and to advise it on the findings of the analysis, including recommendations that could be implemented to mitigate the extent of the rejections. Against a target of ten, the average number of working days taken to resolve queries after issuing the final valuation certificate had been 110. Only two valuations had been received for this indicator, but both took longer to resolve as they required the OVG to amend the values determined in the final valuation certificate. The OVG had to request a legal opinion on the amendment of the values determined in a final valuations certificate. The initial legal opinion advised that the OVG could not amend the values once a final certificate had been issued. Eventually, the matter was resolved by another legal opinion, which suggested the OVG might amend the values determined in a final valuation certificate only where there were reasonable grounds to do so. The valuers reviewed the valuation certificates and submitted feedback and the final certificates to the client. This matter had been concluded.

Mr Motsoeneng reported that no targets were achieved on the enhanced data management capability indicator because the achievement of this indicator was primarily dependent on the appointment of a suitable service provider to assist with the design project of the enterprise architecture plan. On the indicator for the PVA MAP work supported by the OVG, no targets had been achieved. The Minister has not yet approved the PVA report recommendations due to unforeseen delays in finalising and submitting the report to her for consideration and approval. Upon approval of the report, an implementation plan would be drafted and submitted for approval.

In addition, the OVG had initiated an organisation design and development project which was analysing the current operating model, organisation structure and valuations capacity. This project would advise the VG and Minister on the optimal operating model and required valuations capacity in the OVG to ensure it was able to meet its performance targets.

Lastly, he informed the Members the OVG had realised a total revenue of R107.2 million in the current year. The allocation had decreased from R131.8 million in the 2021/22 financial year. The decrease was attributable to the reprioritisation of budgets by the Department. Expenditure amounted to R82.9 million in the 2022/23 financial year, which reflected a 21% increase from R68.4 million in the 2021/22 financial year.

(Graphs and tables were shown to illustrate budget allocations and expenditure – see attached)

Perishable Products Export Control Board (PPECB) Annual Report 2022/23

Mr Cyril Julius, Chief Operations Officer (COO), PPECB, said the entity had achieved an unqualified audit opinion, with findings on administration and financial matters. He took the Committee through the export volumes of their products. 170 million cartons of citrus fruit had been exported, but this had been a decrease of 1% compared to the previous year. 59 million cartons of table grapes had been exported, but this was a decrease of 14.5% compared to the previous year due to heavy rains and heatwaves.

63.9 million cartons of pome fruit were exported, which was an increase of 4.8% compared to the previous year. The stone fruit saw a decrease of 8.6% compared to the previous year, while 21 million cartons were exported. Regarding avocados and grain, the year under review saw 17% export growth on avocados compared to the previous year, with 16 million cartons exported. Four million tonnes of grain products were exported. 3.4m tonnes of maize were exported to Asia (52%), while 25% went to Africa.

There was an increase of 2.7% in export certification compared to the previous year in the processing of certificates. From the 186 468 certificates that were processed, 9 637 had been incorrect, while 7 212 were cancelled. There was an increase of 5.8% in cancelled certificates, compared to the previous year. In terms of equipment certification, 421 174 containers were inspected, of which 34 596 were rejected (8.2%) -- an increase of 60% compared to previous years.

Mr Julius said 1 036 food safety audits, mainly South African Good Agricultural Practices (SAGAP), were carried out. 19 575 samples were conducted in the laboratory. An Organisation for Economic Cooperration and Development (OECD) climate change study has been done. Titan 2.0 had recorded a 92% performance, which represented a 12% growth compared to previous years. 315 million cartons were exported. Further, 105 smallholder farmers were certified as export-ready, and 721 smallholder farmers were trained. The entity's corporate social investment (CSI) programme had 3 968 beneficiaries, and 95% of expenditure was directed towards broad-based black economic empowerment (BBBEE).

(Graphs and tables were shown to illustrate budget allocation and expenditure – see attached)

National Agricultural Marketing Council (NAMC) Annual Report 2022/23

 Dr Simphiwe Ngqangweni, Chief Executive Officer (CEO), NAMC, reported the entity had registered an unqualified audit opinion, with findings on financials and a clean report on predetermined objectives. 100% of the targets had been met on the business excellence programme. All the targets for the enabling agricultural agricultural marketing policy and statutory environment programme had been met. The Agricultural Industry Trusts unit had been established to manage and coordinate communication between the DALRRD and various agricultural industry trusts. Through its Agricultural Industry Trusts unit, the NAMC annually publishes a status report on the trusts, which covers work pertaining to the coordination between the Minister of the DALRRD and the various agricultural industry trusts.

The industry's commitment to transformation had been evident in its continuous support of black role-players, in line with government initiatives such as the AgriBEE sector codes, as outlined in the transformation guidelines. Public-private partnerships (PPPs) were very significant in implementing transformation, as they created a much-needed impact and avoided uncoordinated development support. At present, agricultural trusts and commodity industries employ 257 individuals. The proportion of Africans, coloureds, Indians and whites was approximately 32.7%, 17.1%, 1.2% and 49.0%, respectively. This presented a worrying picture of employment equity, as transformation aimed not only to enhance the competitiveness of black producers and agri-preneurs, but also to close the gap between workers and service providers.

Regarding agro-food chains research, he said the report had analysed the avocado value chain's performance over ten years. The main value chain actors include producers/packhouses, fresh produce markets, export markets, processors, traders (wholesalers and retailers) and consumers. The avocado industry in South Africa was export-oriented. According to the 2021 data, 45% of the fruit was exported, while 16%     was sold through the national fresh produce markets (NFPMs). 15% was sold directly to retailers, while the equivalent was marketed informally. The study recommended there was a need to diversify export markets for South African avocados. Identified potential markets included the United States of America (USA), Japan, China and South Korea, among others. The research team took cognisance of the likelihood of oversupply of avocados in the USA and the European Union in the near future, given that the peak season in Peru coincided with the season in South Africa. The poor infrastructure of the local municipal markets required the management and maintenance regimes of these markets to be reconsidered.

The targets for enhanced market access for the agricultural sector participants programme had been exceeded. 190 smallholder farmers against a target of 80 were linked with market opportunities. Two production schemes had been designed for citrus and red meat. The design was guided by the production scheme framework, which had to be implemented through a private-public partnership. One smallholder market access tracker (SMAT) report had been submitted to the Minister. The 2022/23 edition focused on smallholder cotton farmers, based on a survey of farmers in KZN, Limpopo and Mpumalanga.

The smallholder market access research recommended:

• Farmers must strive to keep records of their business transactions and activities in order to ascertain profits and losses, and also to determine the effect of sharing, hiring and renting equipment, as this affects the timing of production activities and the yield thereof;
• The sharing of equipment in a cooperative setting must be properly planned, to service many farmers as optimally as possible;
• There needed to be collaboration between Cotton SA and the government for the benefit of smallholder cotton producers; and
• There should be youth involvement and extension service officers to improve the means of communication with the farmers.

Pertaining to human resources, he said the NAMC was 100% African, with 44 staff members. Further, it had received approval for R391 250 for bursaries and R620 100 for the placement of 13 graduates in the 2023/24 financial year.

(Graphs and tables were shown to illustrate budget allocation and expenditure – see attached)

Discussion

AGSA

Mr N Capa (ANC) wanted to know why there had been a misunderstanding concerning the PESI vouchers; asked if the lack of capacity within the Department was caused by the poor performance of officials; and asked if the Ingonyama Trust would become an entity of the Department.

Ms Michelle Magerman, Deputy Business Executive, AGSA, replied that they were closely monitoring the matter of PESI vouchers.

Mr Ditodi added the misunderstanding concerning the PESI vouchers had been resolved. The AG had evidence of R101m being involved, but not R200m. He said the lack of capacity meant things were not being done timeously, and work took too long to be completed.

Mr N Masipa (DA) asked for clarity on the R1.5 billion claim against the Department; wanted to know what the accrued payments/impairments were about; asked for more details on the irregular expenditure of R30m; wanted to know if there had been any investigations carried out concerning terminated contracts; asked what the position of the AG was concerning failure by the leadership to implement adequate controls, because the AG had indicated officials would be held liable; wanted to know why material irregularities (MIs) could not be made a finding during the year under review; and asked if this was not the right time to get a proper report on the outcome of the Special Investigating Unit (SIU) investigations.

Ms Magerman said the AG usually did an interim audit, which served as an early warning, gave recommendations, and issued a report. Then, an audit would be done, and the findings would be assessed. If there was a financial loss, that was identified as an MI. The DG and Department were then given time to act on the findings. The AG monitored the timeframes. If the DG has done nothing, then the certificate of debt gets issued. Concerning the investigations, she said they were getting progress reports from the SIU, but it follows its own processes, and the AGSA had a memorandum of understanding (MOU) regarding getting reports.

Mr Ditodi explained that the majority of the claims against the Department had to do with land claims. Regarding terminated contracts, he indicated that many of them were cancelled. Visits were made to the projects, and it was found that some did not require consequence management. He said the matter of MIs was not a finding, because a response was not received at the time of publishing the report, and they had to allow the DG to meet the timelines. It was just a matter of procedural fairness.

Ms N Mahlo (ANC) enquired what the challenges were in assisting the Department to address consequence management and lack of capacity within the Department, and wanted to find out the steps that would be taken concerning the implementation of audit plans that were not taken seriously by the Department and how this was going to be addressed to enhance its performance.

Mr Ditodi said the AG first had to get firsthand information and suggest interventions regarding consequence management. After the audit, they visited the DG to review the action plans for quality assurance.

Mr S Matiase (EFF) enquired what the AG had done between 2018 and now to ensure its revised mandate regarding MIs was in place, because its mandate was to enforce compliance, hold the authority to account, and make use of certificate of debt.

The Chairperson enquired what the underlying factors were that had caused the DALRRD not to implement the AG's recommendations, and what interventions were in place to assist the Department; asked if failure to monitor action plans was caused by defiant officials; asked what had been the observation of the AG regarding the achievements on paper and actual service delivery on the ground, because the performance indicators on paper were satisfactory but the oversight visit had shown a disconnection between reported achievements and what had been delivered on the ground.

He wanted to find out how realistic the Department's targets were, because they seemed to be recurring. He sought an explanation for the R171m transferred to beneficiaries to acquire equity shares, and if this was meant to buy shares in other companies; sought clarity on the ITB1 forms; wanted to know why the ITB had difficulties in submitting financial statements; asked about the establishment of the ITB Board and how it could account for the ITB allocation, and to indicate how other monarchs could benefit from this allowance given to the ITB.

He said no section in the presentation talked about the empowerment of women within the ITB land; sought clarity on the R234m under investigation for the PESI vouchers and an explanation of where the money had gone; wanted to know who had been held accountable for the fruitless and wasteful expenditure that had been on the increase, because during 2019/2020 it had dropped; and wanted to know if the AG had come across cases since 2019 to 2023 regarding this R234m, and what the recourse was in terms of recovering the money.

Mr Ditodi explained the R171m had been transferred during 2021/22, but the beneficiaries had indicated during 2023 that they no longer wanted the money to buy shares from a particular company, but just wanted cash. Regarding the PESI vouchers, he said there had been farmers and suppliers who were supposed to be intermediaries who had abused the PESI, but the Department had discontinued using these intermediaries.

Mr Khabiso Madlala, Deputy Business Executive, AGSA, responded on not obtaining ITB financial statements, and said that in the previous two years, the AG had received only bank statements, and the board had not made the financial statements available. The AG had been exploring the issue of MIs in this whole process, because it could not keep asking for documents that were not forthcoming. He said the ITB1 forms were for land occupation, and said the AG usually audited the entire entity, including all the allocations and funding it was getting. On the appointment of the new board, he said communication channels with the previous board had been difficult, and there was no transparency. The new board had made guarantees regarding transparency to avoid getting a qualification and findings. The AG had shared insights about how this MI process had impacted the entity. The accounting officers were now complying, because once the AG indicates there would be an MI, the accounting officers would do the right thing.

Ms Magerman said the AGSA had an accountability ecosystem. Before the AG got to the MI process, the accounting authorities had to do their jobs and be proactive. Internal audit committees were there daily, and should give auditing assurance on how to abide by controls. This was a culture that should be embedded in the system. The Portfolio Committee had a right to follow up on the MIs. She said some cases had been reported to the police and progress on investigations was being reported to the Department. Interventions included getting feedback on the action plans and assurance on what was reported in the action plans.

Mr Matiase said the AG was empowered by legislation to do what the Portfolio Committee was empowered to do, by making follow-ups. The AG should not shift the responsibility to the Portfolio Committee.

Ms Magerman said the MI was the responsibility of the AG and it would follow all the processes involved and update the portfolio Committee in terms of PFMA.

Discussion with Department of Agriculture, Land Reform and Rural Development

Mr Capa sought an explanation on the reduction in human resources; asked what was being done to address poor performance that had been pointed out by the AG, instead of a lack of capacity within the Department; and commented that repeated problems were an indication something should be done -- the Department should do an introspection because over the past ten years there had been no significant improvements in the personnel.

Mr Ramasodi explained the Department had presented the status of the work it had been doing, and said it was endowed with resourceful people. It just needed to refocus itself on what needed to be delivered.

Mr R Cebekhulu (IFP) enquired what was stopping the Department from following the ITB funds. Was the Department doing a follow-up on officials who had a tendency to flee to other departments when their hands had been found on the cookie jar? He also suggested the Committee should tread carefully on the leases regarding the ITB.

Mr Ramasodi said more state land would be released and the Department would receive funding for support if the land was in line with what the government planned to do.

Ms B Tshwete (ANC) appreciated the improvements registered in programme 1, but expressed concern on the inconsistency of not paying suppliers at the same time within the 30-day timeframe; asked what the progress was concerning the Cannabis Master Plan, because it would boost economic activity in rural areas; commended the Department for its performance, but expressed dissatisfaction over the recruitment of fewer extension officers, and for discontinuing the service of extension officers; asked for a detailed report on the skills acquired and if there were placement arrangements, because the National Rural Youth Service Corps (NARYSEC) had exceeded its youth targets; asked if the Committee could be given a report on the Land Support Development Programme; wanted to know if the approval committee that had delayed the meeting of the targets of the FPSUs was not from within the Department, because during the oversight visit the Portfolio Committee had been informed of a strategic partner, and asked if there had been no alignment between the strategic partners and Department; asked what the financial consequences on contracts to be finalised during the 2023/24 financial year would be; enquired what the status of the unresolved 234 cases was and if the Committee could be furnished with a written response, because only 14 cases had been finalised.

Mr Ramasodi said the Cannabis Master Plan was being coordinated in the Presidency, adding that there had been misinterpretation internally of how they wanted to deal with it. They had had engagements with the Development Bank, strategic partners and some other DDGs internally. When the report was ready, it would be presented to the Committee.

Mr Masipa asked what the challenge was in allocating the R13m following the 2022 floods in KZN that had cost farmers R1 billion. He suggested the Department should try to access the concessional loans the Land Bank got from the IDC to support farmers, and said that in some areas like North West and KZN, there were disasters that were not declared; enquired about the 15% vacancy rate at the senior management level, and when the vacancies would be filled; asked if land transferred to communities was released with title deeds; sought clarity on the number of hectares acquired; enquired about the provinces and the measures used to come to the conclusion of an increased volume in productive land; remarked that some Agri hubs were only partially operational, and equipment was being taken back in some communities because it was not suitable for the needs communities in the Western Cape; sought clarity on the MOU the Department had signed with the NAMC for transformation of the sector.

He also wanted to know what the difference was between the Land and Development Support (LDS) and FPSU, because the LDS had been provided with R389m to support 377 infrastructure projects, but nothing for the FPSU. He asked what was being done to address the country's porous borders to avoid the resurgence of foot and mouth diseases, especially in areas like Mpumalanga and KZN; enquired why there was a 50% jump in the budget for provincial operation; wanted to know about the plant varieties and their benefits to small farmers so that they could access them; and asked for an update on agricultural colleges and transfers, and what was being done to some of the structures that had been falling apart.

Mr Ramasodi explained that any assistance provided for disasters was based on the Disaster Management Act. The funding of the R13m would be made available. He said that there were only two vacant posts at the executive level, and the process to fill them had been unfolding. On concessional loans, he said that was homework for the Department. He stated the work done on the Transformation of Certain Rural Areas Act (TRANCRAA) had been reported in the presentation. Regarding the porous borders, the Department, together with the Border Management Agency (BMA) and the SA National Defence Force (SANDF), had been embarking on engagements. The BMA had officials from the Department within it who have been continuing to do the same work they had been doing whilst they were with the Department.

The matter of agriculture colleges had been taken to the Department of Higher Education, but steps were missed by the Department. Funding was given to universities offering agriculture to support students. He also indicated the Department could do better on the LDS, because there was a methodical way of dealing with it.

Ms N Mahlo (ANC) commended the Department for achieving eight out of nine targets on the distribution of land and the promotion of food security programme. She suggested the Department should pay attention to the matter of extension officers, because targets had not been achieved in that area. She asked why it seemed so neglected, because more extension officers should be recruited, especially new agriculture graduates. The Department should focus on cooperatives development for women, youth and disabled people who were in the communities for the promotion of food security, with the help of extension officers.

Mr Matiase commented that a policy statement should be implemented and monitored, because there was no point in having a State of the Nation Address (SONA) if there was no implementation and monitoring. He pointed out that NARYSEC was training young people who were not being absorbed into the system. He said extension officers should be recruited and sent to the rural areas where they were needed the most.

Mr Ramasodi said the Department would utilise its savings for the extension officers. The contracts of the officers were for nine months, and the Department had spoken to the Finance Minister because it understood their role in the sector.

The Chairperson remarked that the DG had painted a bright picture of improvements, even though the Committee had been complaining to the Department about late payments to suppliers. The Committee had been promised a fit-for-purpose structure for the merger of the two departments, and it had been informed this would be finalised during the 2023/24 period. He asked to be given the cost structure and consultants employed; for the Committee to be furnished with a report on all cases under investigation and completed; for the reason for the absence of the chief financial officer (CFO) in the meeting; requested that the ILIMA/Comprehensive Agricultural Support Programme (CASP) investigations by the SIU be furnished to the Committee; asked about the percentage of farmers struggling to pay for their leases, and what the Department was planning to do about them; and asked for an update on the development of the Land and Agrarian Reform Agency (LARA) which was supposed to be finalised by the end of 2022/23.

Mr Ramasodi explained that the organisational structure had been externalised. When the merger happened, there had been two departments. It had been externalised to protect against people who were seen to be protecting their own interests. There were engagements with the service provider who had unfortunately pulled out because of the few issues highlighted by the Department. No money had been lost in the process, and the Department now had to do it internally.

Regarding the SIU reports and investigations, he said there were 1 098 cases in the Department. A compromised unit had looked at these cases internally, so external help had been solicited. Any malfeasance of over R100 000 had been reported. Regarding invoices, the Department had put systems in place, and that was why the process had been improving. When it comes to cases, he said the matter was very sensitive and had been reported to law enforcement agencies. It was better to report that the matters were receiving attention instead of compromising the cases, as these were internal matters. The CASP/ILIMA was in the process of securing funds for farmers, and was reporting directly to the Presidency. The Minister would make a pronouncement soon on the LARA -- the matter was not off the table, and it would also take pressure off the Commission. Lastly, he said the CFO had resigned, so there was an acting CFO.

Discussion with Commission on Restitution of Land Rights (CRLR)

Mr Capa asked what could realistically be done in the Western Cape and wanted to know if the problem had to do with capacity.

Ms Ntloko said there were 248 outstanding cases in the Western Cape, and they were all within Cape Town.

Mr Cebekhulu enquired if the Commission had spent any funds on the release of state lands to the beneficiaries or communities.

Ms Ntloko said it was difficult to transfer state land because of the processes involved, but it was easy to transfer private land.

Ms Tshwete wanted to know if any structure had been developed to apply for more funds for the expansion of the entity, seeing there was no capacity to finalise land claims in terms of personnel.

Ms Ntloko indicated organisational changes concerning Kuyasa had been proposed, and would be re-aligned with the Department. The proposal had been developed, but because of the fiscus, no implementation had taken place.

Mr Matiase asked who was responsible for post-settlement when the Commission had done its work, and why that person was not followed so that the Commission could remain within its allocated budget. He remarked that the old order claims would be finalised after 100 years if the delays were in government's policy, and this would prove the affirmation of the PAC was true.

The Chairperson asked how the Commission was reconciling its reports with those of the Department, and wanted to know why the submission of reports was late.

Ms Ntloko explained the submission of the report was supposed to have been done in June 2023, but that could not happen because the entity had to wait for the AG to finalise the audit process. Letters had been written to Parliament to indicate the submissions would be late. In the current annual report, everything done has been reported.

Discussion with Office of the Valuer General (OVG)

Mr Capa remarked that an increase in the properties to be evaluated had been seen as an underperformance, although it was positive, and the entity should design a way of mitigating that. The efforts to get money from outside was a positive step, and he suggested the Department should make a plan.

Ms Tshwete wanted to know how the entity was aligning its performance with the National Development Plan (NDP) and the 2024 strategic framework when it said it had achieved only 14% of its evaluations. She asked what the cause was for the delays in issuing valuation certificates, because the entity took 100 days instead of 34 days; and enquired what plans were in place to fill the vacant positions of the VG and CEO, because the CEO position had been vacant since February 2019.

Mr Masipa sought an explanation as to why the entity was generating a third of its profits from the work it was doing, yet the overheads were too high and its activities very low. He said the entity was supposed to generate money from valuations, instead of relying on the grant.

Ms Mahlo sought clarity on why targets were not achieved on issuing certificates within 34 days; wanted to know reasons for the under-expenditure of R26m; and asked the Committee to be given progress on the investigations into theft by employees.

Mr Matiase asked the entity to commit to the timeframes for the appointment of the Valuer-General, because stability was needed in that office to guide disputes.

The Chairperson asked if there were any mechanisms in place to address the challenges of not meeting the targets on valuations; enquired if the analysis on the operating and performance model had been completed; wanted to know what the percentage rate was for the rejection of offers; sought an explanation on why a suitable service provider had not been appointed for data management capability; and wanted to know what had contributed to the under-expenditure of R26m for the 2022/23 period.

Discussion with Perishable Products Exports Control Board (PPECB)

Mr Capa wanted to know what the comparison was between organic and inorganic products when exporting; asked if the exports of products to Israel had been stopped; wanted to know the rate of intake for internships; enquired how food safety was being managed; wanted to find out how the entity was relating to the Agricultural Research Council (ARC) in terms of research; and asked if the government was helping the entity with European Union regulations.

Mr Cebekhulu remarked that the report painted a positive picture that smallholder farmers were being supported so that more could enter the farming business, because there had been a huge outcry from smallholder farmers in the past.

Ms Tshwete asked for a provincial breakdown on the 105 smallholder farmers certified as exporters; commented that information communication technology (ICT) took 11% of the budget of the entity and that most of the functionalities were digitalised, so load-shedding was affecting some of the targets not achieved. She then wanted to know how this was going to be balanced, and if there were any plans to incorporate those farmers in rural areas so that they could have access to the board's services.

Mr Masipa remarked that Cape Town and Gauteng would be experiencing food security challenges, and he wondered if the matter of the food wastage level at farms should be addressed in another way so that food could reach distressed communities.

Ms Mahlo requested the entity send forms to the secretariat so that students in rural areas could apply to participate in the activities of the organisation because many of them had internet access challenges. Members could take the forms to their constituencies.

Mr Matiase enquired what the entity was envisioning beyond regulation and inspection in terms of assisting rural areas to supply fresh produce markets.

The Chairperson asked how much business was done with Israel, seeing that SA had laid a charge of genocide against it. What had been the impact of the ICJ ruling on the entity's exports?

Discussion with National Agricultural Marketing Council (NAMC)

Mr Capa asked if the entity was playing any role in training small farmers.

Ms Tshwete wanted to know how the entity was planning to address the absence, or no reflection, of the entire African equity strategy, because it was complying with employment equity regarding gender. She enquired what constituted the R2.1m in fruitless and wasteful expenditure.

Mr Masipa sought an explanation in writing on the irregular expenditure of R154m. She asked if there were any working relationships with a commodity group, because nothing was stated in the presentation. Could the entity could advise if it was one of the trusts helping farmers in KZN?

Ms Mahlo enquired what would happen to the R12m that would not be utilised for sponsorship.

The Chairperson sought an explanation for the exclusion of other races in the staffing of the entity, because it was comprised 100% of African employees; and sought clarity on the irregular expenditure, because the Public Finance Management Act (PFMA) seemed to be a serious challenge for the NAMC; and asked the Committee to be given a full report on the contract signed for the Agro Processing Master Plan without following the delegation of authority.

Due to time constraints, the Chairperson requested the Department and its entities to respond to all questions in writing by no later than Friday, 16 February.

The meeting was adjourned.