Poultry Master Plan & Sugar Master Plan: dtic briefing; Agro-processing Master Plan: DoA briefing (with Deputy Minister)
Meeting Summary
Sugar Value Chain Master Plan 2030
The Portfolio Committee on Agriculture convened at the Castle of Good Hope to receive a briefing by the Department of Trade, Industry, and Competition (DTIC) on the Poultry and Sugar Master Plans and a presentation from the Department of Agriculture on the Agriculture and Agro-processing Master Plan (AAMP).
On the progress of implementing the Poultry Sector Master plan from 2020 to date, the DTIC said the poultry industry began to recover from the decline it faced in the pre-2019 period, as imports declined by 22% and chicken meat production increased by 3%. Broiler feed production increased by 10%. R1.29 billion has been approved to date through the IDC/DALRRD Agri-Industrial fund to support broiler/chicken value chain players’ increased infrastructure capacity, and this led to the creation of 859 new jobs, 11 black commercial contract farmers, one hatchery company, one breeder, and one abattoir integrated producer were supported. Phase 2 of the Poultry Master Plan will focus on Biosecurity & Quality Improvement, Cost of Living, Export Support, Investment Promotion, Empowerment, and Partnership with Retailers and Proudly SA.
The concentration levels and vertical integration in poultry production have limited the scope for new players to enter the market and compete with established producers. However, there has been good progress in expanding capacity, and more traction is needed for transformation. There are delays in exports, which are worsened by the avian flu outbreak and the spread of diseases, but there are possible solutions to manage such outbreaks in the short and medium term. The rising feed cost, among other input costs, reduces the poultry industry’s competitiveness.
On the challenges of the implementation of phase 1 of the Sugar Master Plan, the DTIC said implementation took place under difficult circumstances: the Covid-19 pandemic, July 2021 unrest, KZN floods, Russian-Ukrainian war, as well as voluntary business rescue processes for Tongaat Hulett and Gledhow Sugar. Organised labour did not sign the Sugar Industry Master Plan (SIMP) despite efforts to involve them and remained inactive throughout Phase 1. Certain government departments did not engage as extensively as anticipated. For example, TT7, responsible for the Product Tax Policy, was meant to involve representation from the National Treasury (NT) and the National Department of Health (NDoH), which did not occur as planned.
The NDoH did not participate as it was felt that it may contradict its role of promoting health awareness regarding sugar consumption. NT did not participate and advised that SIMP Task Teams lacked the legislative mandate to address tax policy issues. They emphasised that the authority to handle tax policy matters rests solely with National Treasury, the constitutionally mandated tax policy authority. Accessing data from downstream users to track and monitor the localisation of procurement has been a challenge despite assurances that the data will be handled in line with the Competition Commission guidelines. Some commitments required lengthy negotiations and consultations, which were not envisaged from the onset. The three years (3) of the 1st phase ended on the 31st of March 2023. The way forward is to move ahead with phase 2 of the Sugar Master Plan.
The AAMP is the product of a social compact between labour, government, civil society and industry. It promotes inclusive growth, competitiveness, transformation, employment and food security. The AAMP supports domestic economic growth and enables the social partners to address critical regulatory and financing challenges, overcome infrastructure constraints and increase the participation of black farmers across the value chain. Overall, the AAMP provides a strategic blueprint for fostering growth, sustainability, and inclusivity in South Africa's agricultural and agro-processing sectors, with a clear focus as its mid-term plans are on the establishment and strengthening of VCRTs, the implementation of Production Schemes, and collaboration with industry and provincial governments to ensure its successful implementation.
Members raised concerns about transformation in the farming industry, highlighting the lack of support for black emerging growers and farmers. They also wanted to know how the master plans sought to address those issues. Members also asked about the coordination between government departments and other stakeholders to ensure the success of the implementation of the master plans, stressing their disappointment with the Department of Health’s non-involvement in the health promotion method of the Sugar Master Plan.
Meeting report
Opening remarks
The Chairperson welcomed the members, the Deputy Minister of Agriculture, the Department of Trade, Industry, and Competition (DTIC), and the Department of Agriculture to the meeting.
Apologies were noted.
The Chairperson informed the presenters that the meeting would end at 13:00 p.m. because there would be a Parliamentary Sitting at 14:00 p.m. Members needed to be there on time, so she asked the presenters to shorten their presentations.
Deputy Minister’s opening remarks
Ms Zoleka Capa, Deputy Minister of Agriculture, introduced the delegation from the former DALRRD and the presenters from the DTIC to the members. She said the Department of Agriculture appreciated being invited by the Portfolio Committee to discuss the Master Plans and to account to Parliament, as it is part of its mandate.
Department of Trade, Industry and Competition (DTIC) Presentation
The Poultry Sector Master Plan
Ms Ncumisa Mcata-Mhlauli, Chief Director: Agro-processing, DTIC, presented the Poultry Sector Master Plan to the Committee. She said the Poultry Sector Master Plan was formally signed off by all stakeholders (i.e. government, poultry industry, importers and exporters, and labour representatives) at the 2nd Investment Conference ceremony on 8th November 2020. The Master Plan was developed to address several serious challenges faced by the poultry industry in recent years, including high feed costs, export barriers to exports, and increasing imports, primarily from Brazil, the European Union, and the United States.
On the progress of implementing the Poultry Sector Master plan from 2020 to date, she said the poultry industry began to recover from the decline it faced in the pre-2019 period, as imports declined by 22% and chicken meat production increased by 3%. Broiler feed production increased by 10%. R1.29 billion has been approved to date through the IDC/DALRRD Agri-Industrial fund to support broiler/chicken value chain players’ increased infrastructure capacity, and this led to the creation of 859 new jobs, 11 black commercial contract farmers, one hatchery company, one breeder, and one abattoir integrated producer were supported. Phase 2 of the Poultry Master Plan will focus on Biosecurity & Quality Improvement, Cost of Living, Export Support, Investment Promotion, Empowerment, and Partnership with Retailers and Proudly SA.
In conclusion, she said the concentration levels and vertical integration in poultry production have limited the scope for new players to enter the market and compete with established producers. However, there is good progress on expanding capacity and more traction is needed on transformation. There are delays in exports, which are worsened by the avian flu outbreak and the spread of diseases, but there are possible solutions to manage such outbreaks in the short and medium term. The rising feed cost, among other input costs, reduces the poultry industry’s competitiveness.
The Sugar Sector Master Plan
Ms Mcata-Mhlauli said all stakeholders formally signed off the Sugar Value Chain Master Plan in a virtual ceremony on 16 November 2020. It was meant to be a 3-year program (April 2020 to March 2023), but work was undertaken over two years (Jan 2021 to March 2023) due to COVID-19. The Master Plan was developed to address several serious challenges faced by the sugar industry. Phase 1 is to stabilise the industry and ensure its long-term sustainability up to and beyond 2030.
The South African Government’s Re-imagined Industrial Strategy, announced as per President Ramaphosa’s State of the Nation Address of 20 June 2019, pronounced the development of Master Plans in key sectors. The strategy seeks to create conducive conditions for growth, improve industrial capacities and sophistication, drive export orientation, and reclaim domestic market space lost to imports. The Sugar Masterplan was developed to address the industry's several serious challenges and ensure its long-term sustainability. The Sugar Master Plan has adopted a phased approach in which Phase 1 is about restructuring and setting foundations for diversification. Phase 1 ran for three years and ended on 31 March 2023.
The focus of Phase 1 was to:
- Stabilise the industry.
- Restructure industry capacity and costs orderly to ensure alignment to current and future market size and establish the appropriate platform for a diversified sugarcane-based value chain by 2030 (“Vision 2030”).
- Protect and retain as many jobs as possible in the sugarcane value chain (including upstream and downstream) through the transition.
- Secure the foundational role of small-scale growers in the sugarcane value chain and ensure a balanced approach to supporting small-scale grower sustainability towards Vision 2030.
- Mitigate the impact of capacity reductions on workers and small-scale growers.
- Ensure that the transformation of ownership and participation is significantly advanced through the restructuring and the transition to Vision 2030.
R1 billion Sugar Industry Transformation fund was allocated to the industry over five years, with R200 million disbursed annually to farmers according to defined interventions. To date, over R1,244 billion of the Transformation Fund has been spent on Transformation Initiatives. For the current FY2023/24, R189,78 million of the budgeted R 232 million has been disbursed. An Impact Assessment of the Transformation Intervention Fund has recently been completed and will pave the way for discussions regarding an Industry Transformation Plan. MAFISA is a loan facility for smallholder farmers and entrepreneurs to improve their livelihoods and develop their businesses. It provides loans for a minimum amount of R50 000 per applicant without collateral/security and a maximum loan of R 500 000 per individual/entity. In the 2022/23 financial year, R8 864 207.44 was loaned to 188 farmers in both provinces.
On the challenges of the implementation of phase 1 of the Sugar Master Plan, she said implementation took place under difficult circumstances: the Covid-19 pandemic, July 2021 unrest, KZN floods, Russian-Ukrainian war, as well as voluntary business rescue processes for Tongaat Hulett and Gledhow Sugar. Organised labour did not sign the SIMP despite efforts to involve them and remained inactive throughout Phase 1. Certain government departments did not engage as extensively as anticipated. For example, TT7, responsible for the Product Tax Policy, was meant to involve representation from the National Treasury (NT) and the National Department of Health (NDoH), which did not occur as planned.
NDoH did not participate as it was felt that it may contradict its role of promoting health awareness regarding sugar consumption. NT did not participate and advised that SIMP Task Teams lacked the legislative mandate to address tax policy issues. They emphasised that the authority to handle tax policy matters rests solely with NT, which is the constitutionally mandated tax policy authority. Accessing data from downstream users to track and monitor the localisation of procurement has been a challenge despite assurances that the data will be handled in line with the Competition Commission guidelines. Some commitments required lengthy negotiations and consultations, which were not envisaged from the onset.
The first phase ended on March 31, 2023. The way forward is to move ahead with phase 2 of the Sugar Master Plan.
Department of Agriculture Presentation
Ms Nomthandazo Moyo, Acting DG, Department of Agriculture, introduced the key stakeholders from the agriculture, poultry and sugar sectors who were present in the meeting and said the Department requested the National Agriculture Marketing Council (NAMC) to be the project manager for the rollout of the Agriculture and Agro-processing Master Plan (AAMP). The presentation would reveal the alignment with the two subsectors of sugar and poultry. In terms of process, the AAMP should have been presented first so that all the other master plans that fall under this one could follow.
The Agro-processing Master Plan
Dr Simphiwe Ngqangweni, CEO, NAMC, said the AAMP is a sectoral economic framework designed to coordinate efforts, bring efficiency and transparency in the implementation, and provide the common goal and indicators of success in contributing to the National Development Plan, in particular Chapter 6 and the Economic Reconstruction and Recovery Plan post the Covid-19 pandemic. It was signed on the 12th of May 2022 by agriculture social partners (i.e., policymakers and industry captains) as the template for inclusive growth, investments, sustainable jobs, transformation, and market development for the 6th government administration.
Its vision and approach are to build competitive, transformed, and inclusive agriculture and food value chains leveraging the government and private sector's skills, resources and knowledge. It recognises the importance of the co-existence of small and large farmers, and agribusiness means tailor-made support packages for different farmers and areas of production (commercial vs non-commercial) through two models in commodity corridors:
- Well-functioning represented and funded Commodity Value Chain Round Tables (i.e., Five VCRTs are operational: Fruits, Wool, Grains, Wine & Livestock)
- Well-functioning represented and funded Transformation Schemes linked to specific Commodity Value Chains
The scope and targets of each Value Chain Round Table and Production Scheme are guided by the 6 Pillars of the Master Plan. However, social partners in the two delivery models will finalise the specific deliverables and timelines. The AAMP’s vision is to create globally competitive agricultural and agro-processing sectors driving market-oriented and inclusive production to develop rural economies, ensure food security, and create employment and entrepreneurship.
The AAMP is the product of a social compact between labour, government, civil society and industry. It promotes inclusive growth, competitiveness, transformation, employment and food security. The AAMP supports domestic economic growth and enables the social partners to address critical regulatory and financing challenges, overcome infrastructure constraints and increase the participation of black farmers across the value chain.
Overall, the AAMP provides a strategic blueprint for fostering growth, sustainability, and inclusivity in South Africa's agricultural and agro-processing sectors, with a clear focus as its mid-term plans are on the establishment and strengthening of VCRTs, the implementation of Production Schemes, and collaboration with industry and provincial governments to ensure its successful implementation.
There are still ongoing negotiations with labour to resolve the following issues:
- Interventions for increasing employment in the agriculture and agro-processing sectors.
- Measures to improve working conditions and provide benefits and support to workers.
- Ethical trade principles and social protection of farm workers.
- Need to expand government capacity to enhance compliance with labour laws.
- Financing of worker programmes and attaching conditionalities to finance instruments.
- Introduction of worker ownership schemes in the agricultural sector.
- There was further disagreement on the best mechanism to monitor the implementation of labour interventions and Industry Forum.
- The International Labour Organisation (ILO) was appointed to facilitate the engagements on outstanding labour issues.
Discussion
Mr M Montwedi (EFF) said he was happy that there is a collaboration between the DTIC and the Department of Agriculture on the Sugar Master Plan but was disappointed about the National Department of Health and National Treasury distancing themselves from it. Why was Treasury not involved in the first place to avoid the pointing of fingers between parties? In the last administration of Parliament, the Committee went on an oversight visit to one of the sugar cane farms and raised an issue about transportation. This pointed to the need for another stakeholder to be involved, which is the Department of Transport. How involved are they in the provision of transport to farmers? What is the role of the DTIC in supporting the sugar industry?
In the poultry sector, he said the Department mentioned that it supported 20 growers instead of their targeted 50 growers and asked them why they could not support the 50 growers. He also asked for details of the 20 growers that received support from the Department and the 42 projects supported by the Department. The poultry sector is an R72 billion industry, but the outbreaks affect every farmer financially. How does the Department intend to financially compensate the farmers in the sector regardless of their race because jobs are lost?
It was mentioned that general feed is very costly and that feed production constitutes about 70% of the production cost. The World Grooming Forum released the top ten technologies, seven of which were relevant to agriculture. How will the department take advantage of such technologies, especially in terms of developing feed? How does the Department intend to increase the assistance of black farmers in the sector? What programmes are in place to deal with transformation in the sector, and how is ownership in the sector looking?
On the AAMP, he said he does not agree that public-private partnerships have been used to drive transformation because, according to his experience from oversight visits, the private partners and implementing agents benefit more than farmers. What systems are in place to deal with that problem? It was also mentioned that the Department of Labour did not sign, but other commercial farmers did not. What implications has that had on the implementation of the AAMP? When the AAMP was launched, it was mentioned that certain parts of it were not concluded, including the public-private partnerships and labour relations issues. Have those issues been addressed?
There have been many plans since the Department started. Were any reviews done on the plans previously implemented by the Department to ensure that the AAMP can address all the issues found on the past plans? There is also an issue of data credibility and the non-adoption of the farmer register, and the AAMP should seek to address those. Lastly, he asked for a description of what the Agri-BEE initiative has solved because, according to his understanding, since the 6th Parliament, the Agri-BEE has not assisted any farm. The Department takes a long time to finalise transactions, leading to its failure, so it must address the turnaround time for the finalisation of transactions.
Mr C Beyers-Smit (ANC) said he did not see any mention of venison meat, which is the healthiest kind of meat, and there is a great opportunity for export and the local market. Are there no plans around venison meat in the Poultry Master Plan because there is a big market for it, and South Africa is well-known for its wildlife? He felt the master plans were overly focused on the local market and less on the export market. There will be a reduction in sugar consumption because of health issues, but there is a market worldwide that must be capitalised on. The Brazil issue with the outbreak of the chicken disease presents an opportunity for South Africa to tap into the market.
Regarding transformation in the industry, he said it could be approached in two ways: first, the current base of the market can be shifted around to improve participation, and second, the market can be expanded to create space for newcomers and small and subsistence farmers. Small farmers are not being assisted, encouraged and directed towards creating agricultural societies where they can produce as a group instead of individually; they must be able to produce for markets that understand the agricultural market.
Small farmers also need to understand that they must have a market before they put something on the soil because their farms are not succeeding. They start producing before they establish whether they have a market. Small farmers cannot afford access to specialised services and equipment; if they work as a group or a society, they could be viable and self-sustainable. If the government keeps throwing money at them and hoping it will move them from their positions, it will not work.
Nkosi R Cebekhulu (IFP) asked whether there are attempts to assist small and emerging farmers negatively affected by drought. Some of the failures of the farmers have to do with the lack of interest in assistance from strategic partners, and the Department continues to work with those strategic partners. The Department must make some kind of commitment to remove such strategic partners and work with new ones so that the small-scale farmers can be assisted because the laziness or lack of commitment from farmers is often spoken about without having looked at the role played by the strategic partners in the failure of these small farms. What role can all government departments play in assisting or looking closely into the challenges small-scale growers face in delivering their products?
Mr Z Mthethwa (MK) said the biggest flaw he noticed was that the Sugar Act was as bad as it was in 1978. The law created an enabling environment in that sector to grow and transform, but in 1978, the industry's demographics never included the previously disadvantaged. Looking at the current master plan, it is easy to tell that the ‘emerging’ farmers that are referred to are black people, and the ‘established’ farmers are white people. Regarding the economic demographic circulation, 90% of blacks are outside the economic power bracket and land ownership, which explains the inability to grow emerging farmers. Emerging farmers cannot be expected to grow rapidly because they do not even own their farming land.
He said he drove past Mpumalanga in the past weekend and saw ring-fenced land pockets, and he was certain that those lands did not belong to the emerging farmers but to the established. In those lands, they rotate crops and other farming activities without monitoring during the in-season and out-season. Another contradictory practice in agriculture and rural development and traditional leadership is that along the N2 in KZN, Tongaat Huletts ring-fenced land at Chief Hlomendlini kaNgcobo’s land where there are grapes from Hlomendlini. Tongaat Hulett established an estate on that land, so how is transformation expected in a sector where the players are eating off each other’s spaces and disrespecting cultural practices? Tongaat Hulett is using a heritage site and turning it into their own estate, which Chief Hlomendlini is complaining about. What is the Department’s plan to harmonise the situation? The relationship between the traditional leaders and stakeholders should be harmonised to benefit people.
The Plans should be turned upside down to ensure that the majority should dominate and to show that there is an intentional plan to get the majority participation in agriculture to the point of ring-fencing the procurement share in agriculture. The government must be better at implementing its policies because how do you police a lawmaker regulating a space for the private sector, yet the outcomes of the private sector are profit-driven, and yours is the national agenda? That is a contradiction. It is a known fact that there are no funding pockets to support blacks to go into the structure, and when applying for help from the IDC, they ask them to fork out a certain percentage contribution for owner’s equity, meaning if that percentage is not available, they forfeit the support that they were applying for. How can they emerge from being disadvantaged if the same places meant to make them emerge put them at a further disadvantage?
The Chairperson asked whether Mr Mthethwa was referring to all the Master Plans or one specific plan when he spoke of the upside-down approach.
Mr Mthethwa said he was referring to all the plans.
Mr K Madlala (MK) asked if there is an alignment between the various government departments, especially the National Treasury, the Department of Agriculture and the DTIC, regarding the Sugar Master Plan because the health promotion levy is causing harm to the people. What will happen in Phase 2 of the Sugar Master Plan? How has the sugar tax affected the sugar industry, and how is the impact being managed? What is the future of the small-scale farmers' helium price payment? What government support is needed to progress diversification?
On the AAMP, he said we are almost halfway through the financial year, but no jobs have been created. Are the pillars of the AAMP aligned with the five-year plan and annual plan that the Department presented to the Committee for the approval of the budget, and what are the targets of the AAMP? On the slide about the implementation pillars, how are the highlights aligned with pillar 1 and pillar 2? On pillar 3 and 4, what is the breakdown of the number of black farmers assisted through the levies and assets blended finance, especially the number of black women and youth and persons living with disabilities? On pillar 5, how many black farmers export their produce provided the breakdown per commodity of the black share of $13.2 billion in exports? How far is the Department with the construction of production support units across the country? What is the progress and expenditure to date?
Mr A Trollip (Action SA) was pleased to see that the difference between the current AAMP and its predecessor is that it includes a public-private partnership approach to ensure that implementation happens and that he heard of the term ‘co-implementation’ for the first time. In the value chain sectors that were highlighted in the plan, the presentation presupposes that there is adequate infrastructure support for agriculture. However, the port performance in the country is very bad. Whoever is exporting perishable products between black and white farmers, their efforts are being compromised by the productivity of the ports. What is being done about that?
He noted that in the value chain structures, grains, fruits, wine livestock, wool, mohair, and other fibres such as hemp and bamboo, some of those sectors are doing well in terms of transformation; citrus, for example, has a high rate of transformation and is exporting fruit. However, some of them are performing badly, for example, macadamia, where there has been massive investment from public-private partnerships, they are failing like many other project investments.
He said the presenter mentioned that wool, mohair and red meat seem to be leading in the transformation aspect, and he believed that the growth is because of the relationship between the National Woolgrowers Association, the red meat organisations and the farmers themselves through genetic improvement programmes, but they stop and start. Genetics needs attention every year; you cannot stop and start with genetics, and while genetic improvement is fine, it must go hand-in-hand with farmer practices. When there is no proper fencing to isolate stock from being infiltrated by inferior bloodlines or the land is not conserved properly, it ends up being a big problem, compounded as well by the fact that even when the Land Bank loans and grants are paid to emerging farmers, they are almost always late. Money comes after planting and harvesting seasons because it takes forever to get a decision by the Department through legislation to be implemented.
Regarding live export markets, what is the Department doing to address the constant opposition that live exporters face from organisations like the SPCA? In the Poultry Master Plan, targets were set to increase maize and soy production. Then, the cost of feed is 70% of the cost driver for poultry producers, and those costs are influenced directly by electricity, labour, water, fertiliser, fuel, CPI, inflation, etc., so what is being done to drive that cost downwards? How many of the small-scale producers are sustainable, and how many of them have failed?
Mr Trollip was pleased that the One Nation Declaration issue was sorted out but asked what is being done about the fifth quarter of the chicken being dumped in the country, the head, the feet, the gizzards and other parts. It is being dumped in South Africa because developed countries do not use those parts of the chicken. The other thing dumped in South African communities that is also a health hazard is marketed disingenuously as broiler hen (umleqwa). It is fat and gross, and it is marketed to poor consumers under this representation, so what is being done to deal with that? He also asked for the DTIC project management office.
Lastly, on the Sugar Master Plan, he asked why Tongaat Hullet still plays an important role in the pillars mentioned in the presentation and if the company is using questionable accounting practices. Sugar has a bad reputation regarding health issues, and it is surprising that the Health Department is not participating in the Master Plan because it could help fix that reputation. After all, sugar is not all bad as it gives people energy. The Department of Health should be educating people that energy from sugar is an important aspect of health, especially when children are dying of malnutrition, so it is disappointing that they excluded themselves. What is the Department doing about the non-participation of National Treasury?
Mr W Aucamp (DA) said he was covered in most of his questions regarding the public-private partnership and felt it was important that the Committee realises the importance of those partnerships in growing the industry. Regarding assistance to farmers, a lot was said about transformation. It must happen because just availing land and opportunities to farm and then walking away does not solve the problems for emerging farmers. The focus must be on providing all the necessary support to emerging farmers so that they can commercialise. The government should not create a big sector of upcoming farmers. However, it must create a sector of upcoming farmers on their way to becoming commercial farmers, but that will only happen if the government supports them through the journey.
Regarding imports, he said local farmers compete with farmers whose countries export their products to South Africa at a lower rate than local producers. This is a huge problem because South Africa is not subsidising its own farmers. He asked for the details of the agreement between the Department and the poultry industry regarding the Highly Pathogenic Avian Influenza outbreaks. He asked if the Department knew of any alternative vaccines that were in the process of being registered.
Ms S Lucas (ANC) asked the Department if it encountered any challenges when developing the master plans. She said infrastructure, food security, and biosecurity are important, and food security has a high prevalence in plans when the high cost of living is a big challenge in the country. How do the master plans plan to address the problem of high cost of living while also dealing with food security and biosecurity issues? In terms of infrastructure development, she said one of the biggest challenges for emerging farmers is primary road infrastructure, so how is there a plan to provide basic infrastructure to emerging farmers before dealing with high-level infrastructure? How are academic institutions being included in the master plans?
The Chairperson asked about the relationship between the Department of Agriculture and the Department of Forestry, Fisheries and Environment regarding the master plans. She also asked about the progress of the master plans and what has been achieved thus far, including the social partners involved. She was concerned that the current administration of Parliament will end in 2030, which is the end year of the current National Development Plan. She wanted assurance that the transformation that would be achieved by then would be achieved. During the presentation of the Sugar Master Plan, the sugar sector was described as a child in distress and was in the intensive care unit because of the challenges that it was facing. What interventions were prioritised to ensure that the sector moves from that state, and what more interventions are needed to ensure that the sector thrives?
She asked the Department to respond to some of the issues in writing because of time constraints.
Ms Mcata Mhlauli said the Department of Finance imposed the health promotion levy (HPL). It has been a burning issue within the master plan planning structures for two years. Still, there is a relief that was provided by the Minister of Finance, who said there will not be an increase to the HPL for the next two years until 2025, but that is subject to the diversification that the industry must undertake. The Department requested the industry to speed up the diversification process, and a diversification plan is currently in place. However, the catch is that there must be costs that are managed to take up certain infrastructure that would be required if the industry decides to move into sustainable evolution. ICD and the South African Sugar Association (SASA) have provided funding to look at diversification options in the industry.
The Minister wrote to the Minister of Trade, Industry and Competition to say the health promotion method is not within the mandate of the Master Plan structure and the DTIC, so the DTIC needs the support of the Committee to get the Department of Health involved in the HPL. The Department of Health was supposed to do the Total Dietary Study (TDS). However, they have not formalised that work and the National Treasury was supposed to do a socio-economic impact assessment of the HPL since its implementation in 2018. The DTIC currently does not know where the HPL issue is going and has no control over it. The 800 000 tons of surplus sugar could be used to assist the poor. However, the issue is if the Department of Health and National Treasury continue implementing the health promotion levy, there will be no choice but to look at diversification. The sugar being exported started at a loss, but now that it has stabilised, it is hard to tell if the demand for sugar will remain if the HPL is implemented.
Regarding transport, she said one of the issues that small-scale farmers raised was inequality in the industry because there are 10% of small-scale growers and 90% of commercialised growers, so there are challenges for small-scale growers regarding quality and the economies of scale and transportation. The industry introduced a premium price agreement for small-scale farmers to address the transport costs they incur when supplying sugar. This intervention does not mean that the Department of Transport must not be involved because there are issues pertaining to fuel costs, which are also a big challenge, so the Department of Transport and Transnet will be engaged by the DTIC, especially for export purposes.
A representative from the South African Sugar Association provided details on the R50 million investment made by SASA in recovering the sugar sector. (Poor audio)
Mr Ayabonga Cawe, Chief Commissioner, International Trade Administration Commission, said that in the first six months of this year, Brazil exported 15 million pounds of sugar, and South Africa exported 2 million pounds. South Africa has a small but open market. It must protect its entire value chain by using restrictive measures such as protective import and domestic consumption taxes. In terms of poultry, since the master plan came into effect, across all the tariffs where there has been significant import competition, tariffs went from about 37% to around 62%, so there has been support.
He said the agricultural societies are an interesting point considering the block exemption from competition regulations that came out at the end of May. This allows SOEs to combine their production and some of their selling into value chains to improve economic organisations. The department should consider this, especially in the feed space, where there are players integrated into feed production.
Department of Agriculture’s response
Dr Ngqangweni said that besides the labour constituency, some constituencies from the commercial sector did not sign, and they mentioned their dissatisfaction with the processes. The DG said there will be processes to ensure that there are follow-up consultations to ensure that everyone is included. The difference is perhaps in the definition of transformation, and there is a need to sit in a roundtable discussion to identify commonalities. From the meeting of the current stakeholders that have signed, the understanding is that the implementation should not stop because the majority of the stakeholders supported the plan. There is sufficient consensus amongst them that a lot must be done to transform the sector.
The labour constituency wanted to make sure that the issues of water conditions within farms are sorted out and that issues pertaining to the government’s capacity that needs to be strengthened to make sure that there is compliance with labour laws are ironed out, as well as the issues financing of worker programmes and worker ownerships within the sector. To deal with those issues, there is an effort to bring in a facilitator, which is the International Labour Organisation (ILO), to ensure that the issues are sorted out in a roundtable discussion.
In terms of the transformation approach for the AAMP, he said the approach mentioned by Mr Beyers-Smit around the expansion of the market is the approach that was agreed upon to ensure that the opportunities that were missing in previously disadvantaged areas are increased. The approach is to have real transformation instead of numbers, and support is provided to emerging farmers to become commercialised. Agriculture has consistently performed well in job creation over the past few years, but there are some seasons and some quarters where the numbers dropped, but it has been good overall.
Regarding ports infrastructure, he said the Department is working with Agbiz, which is a contractor from the private sector, and there are collaborative efforts in place at the two ports in Cape Town and Durban where there are challenges; there are committees that were set up to make sure that issues about blockages are sorted out. There are a few challenges in Durban, and the National Logistics Crisis Committee is on board to ensure they are addressed in collaboration with Transnet. There has been a slow start in terms of the continental free trade area, but South Africa has been among the first countries to trade officially under the auspices of the agreement.
Mr Nasele Mehlomakhulu, DDG: Food Security and Agrarian Reform, Department of Agriculture, said the Department would present to the Committee on the blended finance system next Tuesday, and that presentation will include details that Mr Montwedi asked for regarding the farmers that were supported. He acknowledged the point about the Land Bank in processing transactions. He said that the Department introduced a pre-disbursement support approach that provides financial instruments to the Land Bank to provide expertise to expedite due diligence, ensure that the assessments are done speedily, and review their current strategy.
Regarding the agricultural societies, he said the question of aggregation comes in that space. Behind the scenes, the Department is working with the black role players because they must play a significant role in these societies. The current situation is that the black role players are scattered, and there are too many, which means they contribute to neutralising their own voices. The Department is not trying to force them to come together if they do not wish to do so, but it will be much better for them if they have a unified voice to raise the challenges they face and how they want their issues to be resolved. He acknowledged Mr Mthethwa’s remarks about the country's structural economic challenges at a macroeconomic level, noting that the Competition Commission report confirmed the concentration by a few role players in the sector and that if the plans do not address that, they will collapse the system.
The Chairperson asked the Department to submit the written responses to the Committee by Monday next week so that the Committee could review them by Tuesday morning.
Mr Beyers-Smit asked the responses to be submitted at least 24 hours before the meeting on Tuesday.
The Chairperson said they must be submitted by Friday, 6 September.
Deputy Minister’s concluding remarks
Deputy Minister Capa said the Department had a whole term to implement the AAMP and noted it is in a new term, which is said to be one year less than the previous term. However, she was sure that a lot had been done in the last term and that the things that had not been done would be done in the current term. The Department must find ways to address the outstanding issues within the master plans to ensure full implementation. Where there is confusion and no clarity on the way forward, it must be remembered that the issues presented were learnt and carried out during the last term, but now they are part of the new approach of the new arrangement of government and the Department.
The Department also needs to understand that it has a communication problem because when it divulges information, it must understand that some people cannot read or write and might not have access to these types of information or the means to receive it. As it represents the people in this new administration, the Department and Parliament must also consider how to include everyone and reach the people in the most remote areas with the least education.
Mr Montwedi said he would have wanted to raise the issue about cadre deployment in the presence of the Minister because the Minister deployed people in his office who should be at school finishing their Matric. The Democratic Alliance (DA) continuously speaks of the state’s inability to eliminate state capture because of cadre deployment. Yet, its leader, the Minister, is doing the same thing in the Department. The Minister must take his office seriously and deploy competent people for positions because there are many capable people in society, and many qualified young people do not have jobs.
Mr Trollip said he received correspondence from the assistant agricultural practitioners who wanted to know what was happening with their status. The DG referred them to look at the Appropriations Act. He asked that the Committee receive an update on that situation in its next meeting.
Ms Lucas said the fact that the meeting could not be recorded in the venue should be raised in Parliament.
The Chairperson said communication protocols must be resolved within the Committee because an issue about the OBP Grants, wherein the Minister said forensic investigations would commence, created a problem. The OBP had provided information to the Committee on what was happening and promised to provide more information to the Committee. The information that came recently was believed to have come from the former Minister to the current Minister, and the Committee did not know how to respond to it; it turned out that the information did not come from the Ministers, but it came from a member of the Committee, Mr Aucamp, and it turned out that none of the information was correct.
The Chairperson did not know where the information came from but later found out it came from Mr Aucamp, who had issued a statement. Incorrect information was shared, and the OBP and the DA were implicated. She apologised to the Deputy Minister and the Department and assured them that the matter would be dealt with within the Committee because it caused confusion, even to the public.
Deputy Minister Capa said the protocol is that the agencies report directly to the Minister without the department's involvement because the Minister oversees the activities of the board members alone.
The meeting was adjourned.
Audio
- Poultry Master Plan & Sugar Master Plan: dtic briefing; Agro-processing Master Plan: DoA briefing (with Deputy Minister) (Part 1)
- Poultry Master Plan & Sugar Master Plan: dtic briefing; Agro-processing Master Plan: DoA briefing (with Deputy Minister) (Part 2)
- Poultry Master Plan & Sugar Master Plan: dtic briefing; Agro-processing Master Plan: DoA briefing (with Deputy Minister) (Part 3)
Documents
Present
-
Pule, Ms DD
Chairperson
ANC
-
Aucamp, Mr W
DA
-
Capa, Ms RN
ANC
-
Cebekhulu, Inkosi RN
IFP
-
Davids, Ms S
ANC
-
Lucas, Ms SE
ANC
-
Madlala, Mr KB
MK
-
Montwedi, Mr Mk
EFF
-
Mthethwa, Mr ZE
MK
-
Smit, Mr CF
DA
-
Trollip, Mr A
Action SA
Download as PDF
You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.
See detailed instructions for your browser here.