SONA impact on sector; Department of Agriculture and Entities' Q3 2024/25 Performance; with the Minister

Meeting report

Opening Remarks from Chairperson

The Chairperson greeted everyone and assured them that all was well, despite having been called the day before to help people facing eviction in Mpumalanga. She praised the Perishable Products Export Control Board (PPECB) for submitting their report on time.

She then informed the Minister of Agriculture, Mr John Steenhuisen, about the Committee’s recent oversight visit to the North West Province. The Committee is aware of the developments in the blended project there and is finalising its report. The report will highlight both positive aspects and challenges from the visit.

After this, she invited the Minister to give his opening remarks.

Opening Remarks from Minister of Agriculture

Mr John Steenhuisen, Minister of Agriculture, greeted the Committee and the House and thanked them for the opportunity to present the Department of Agriculture’s work. He acknowledged the importance of the Committee’s oversight work, as the Department cannot be everywhere at once.

He then explained that he would need to leave early because the Deputy President, Mr Paul Mashatile, was holding a briefing on his expectations for the Ministry of Agriculture ahead of their trip to Japan that weekend.

Department of Agriculture Q3 2024/25 Performance

Mr Doctor Phuthi, Acting Chief Director: Provincial & SOE's Performance Monitoring, Department of Agriculture, and Ms Mokete Mokono, Chief Financial Officer, Department of Agriculture, presented on the 2024/25 (quarter three) annual performance and financial statements of the Department of Agriculture.

 

Q2 Targets Not Achieved:

- Number of farms supported through the Land Development Support Programme: 14 instead of 16.

- Producers supported through blended finance: 28 against a target of 25.

 

Q3 Performance Scorecard

- Overall Achievement: 72% of targets achieved, 28% not achieved.

 

Programme-wise Performance:

- Administration: 0% achieved, 100% not achieved.

- APB&NRM: 100% achieved.

- FSAR: 100% achieved.

- LRTR: 0% achieved, 100% not achieved.

- Restitution: 0% achieved, 100% not achieved.

- Rural Development: 100% achieved.

- Economic Development, Trade & Marketing: 50% achieved, 50% not achieved.

- Deeds: 100% achieved.

- SPLUM: 100% achieved.

- NGMS: 100% achieved.

 

Year-on-Year Quarterly Performance

- Performance Decline: 4% decline in Q3 of 2024/25 compared to the same period in 2023/24.

 

Agriculture Q3 Programme Performance

- Programme Structure: Includes Inspection and Quarantine Services, Plant Production and Health, Animal Production and Health, Natural Resources and Disaster Management, Biosecurity, Agricultural Research Council (ARC), Onderstepoort Biological Products (OBP), and Perishable Products Export Control Board (PPECB).

- Outcomes: Increased production in the agricultural sector and enhanced biosecurity and effective disaster risk reduction.

 

Programme 2: Agricultural Production, Biosecurity, and Natural Resources Management

Performance Indicators:

- Protected Agricultural Areas: Target achieved for EC.

- Plant Pest Risk Surveillance: Target achieved for Exotic fruity fly, citrus greening survey, and BBTV.

- Animal Disease Risk Surveillance: Target achieved for CBPP, PPR, and FMD.

- Subsistence Producers Supported with Bioenergy Technology: Target achieved for NW.

 

Programme 3: Food Security, Land Reform, and Restitution

Performance Indicators:

- Farms Supported through Land Development Support Programme: Target achieved with 14 farms.

- Producers Supported through Blended Finance Scheme: Target exceeded with 77 producers supported.

 

Programme 5: Economic Development, Trade, and Marketing

Performance Indicators:

- Agricultural Cooperatives Trained: Target achieved with 45 cooperatives.

- FPSUs Supported to be Functional: Target not achieved with 7 out of 12.

- Enterprises Supported: Target not achieved with 20 out of 57.\

- Smallholder Farmers Capacitated in Agricultural Marketing: Target exceeded with 98 farmers.

 

Financial Progress as of 31 December 2024

- Expenditure: R10.828 billion (83% of drawings to date, underspent by 17% or R2.168 billion).

- Underspending: Mainly due to delays in ICT services procurement, implementation of PESI, land claims settlements, rural infrastructure projects, and Blended Finance transfer to Land Bank.

 

Economic Classification

- Adjusted Budget: R16.997 billion.

- Expenditure: R10.828 billion.

- Available Budget: R6.169 billion.

 

Main Challenges and Interventions

- ICT Services: Delay in approval by SITA.

- PESI Implementation: Change in delivery model.

- Blended Finance Projects: Multi-year implementation challenges.

 

Audit Improvement Plan

- Unqualified Audit Opinion: Findings addressed through an audit improvement plan.

- Progress: 50% of actions fully implemented, 47% partially implemented, and 3% not yet implemented.

 

(Further details can be found in the presentation attached)

PPECB Q3 2024/25 Performance

Mr Lucien Jansen, Chief Executive Officer, Perishable Products Export Control Board, and Mr Johan Schwiebus, Chief Financial Officer, Perishable Products Export Control Board, presented on the 2024/25 (quarter three) annual performance and financial statements of PPECB.

Organisational Performance Summary

1. Corporate Services

- Procurement Spent on B-BBEE Suppliers: 78% (target was 95%).

- General Reserve: 68% of the required reserve.

2. Operational Services

- Export Certificates Processed: 56,000 (target was 84,555).

- Container Inspections via TITAN 2.0®: 70% (actual was 99%).

3. Food Safety Services

- Tests Carried Out: 15,000 (actual was 16,797).

- Food Safety Audits Conducted: 700 (actual was 885).

4. Transformation & Development Services

- Graduated AETP Students: 50.

- Small Holder Farmers Trained: 450 (actual was 777).

- Small Holder Farmers Certified for Export: 45 (actual was 90).

- Graduate Placements: 6 (actual was 3).

5. Customer Satisfaction

- Customer Satisfaction Index: 80%.

- Inspectors & Assessors Competence: 88% (actual was 95%).

 

Financial Performance Q3 Results

- Revenue: R463.31m (3% increase from F2024, but R71.95m below budget).

- Total Expenses: R484.87m (2% increase from F2024, but R65.92m below budget).

- Net Result: -R21.55m (improved from -R28.66m in F2024).

 

Financial Position & Cash Flow

- Receivables: R54.29m

- Cash: R125.28m

- Fixed Assets: R56.41m

- Liabilities: -R56.19m

- Reserves: -R180.04m

 

External Audit Outcomes

- Accounting Authority Oversight: Quarterly engagements with external, internal, and AG(SA) representatives.

- Internal Control & Audit Findings: Progress made to strengthen internal controls.

- Fraud Risk: No significant deficiencies identified.

- Irregular Expenditure: R679,380 (2023: R796k).

- Fruitless & Wasteful Expenditure: R139,475 (2023: R2.1m).

 

Addressing Audit Findings

- Financial Statement Errors: Review process to be amended.

- Trade Receivables Impairment: Provision raised due to late invoicing.

- Revenue Reconciliation: In progress with new ERP implementation.

- VAT and Depreciation Errors: Set-ups reviewed and corrected.

 

Irregular, Unauthorised, and Fruitless & Wasteful Expenses

- Irregular Expenses: R16,435 due to contract issues.

- Fruitless & Wasteful Expenses: R2,245,652, including SARS penalties and interest, damaged and stolen laptops, and employee payment errors.

(Further details can be found in the presentation attached)

 

Discussion with the Perishable Products Export Control Board (PPECB)

 

Mr W Aucamp (DA) noted that, based on the comments on page 11, PPECB’s challenges seemed to be financial rather than operational. He asked what PPECB was doing to resolve these accounting issues.

Ms N Ndalane (ANC) pointed out that PPECB had set a target to employ six graduates but only hired three. She asked why they failed to meet the target and why the number of graduates employed had decreased.

Mr Jansen explained that three of the six graduates originally employed had resigned after finding long-term jobs elsewhere. The Board is now working to recruit three more graduates before the end of the 2024/25 financial year. He also mentioned that PPECB has been implementing the Enterprise Resource Planning (ERP) system, which the CFO would explain in more detail.

Mr Schwiebus confirmed that the audit issues were mainly accounting-related and were caused by the ERP system. The system’s parameters were not correctly configured, leading to errors in depreciation calculations. However, this issue has now been fixed.

Mr M Montwedi (EFF) asked PPECB to provide a breakdown of the training for smallholder farmers, as the presentation showed that 90 farmers were trained instead of the target of 45. He noted that smallholder farmers are often unaware of such opportunities.

He also questioned whether it was worthwhile for PPECB to pursue its dispute with the South African Revenue Service (SARS), given that the late payment was their fault. He asked what consequence management had been put in place and whether PPECB would spend money challenging SARS or handle the issue internally to save costs.

Mr Jansen explained that training smallholder farmers is part of a Memorandum of Understanding (MoU) between PPECB and the Department. Under this agreement, PPECB works with provinces, which provide them with the names of farmers to be trained. However, he did not have a detailed breakdown with him and would provide it in writing.

Mr Schwiebus clarified that the issue with SARS arose because the payment amount exceeded PPECB's daily transfer limit. The Board had to request the bank to increase the limit, which caused a delay of three minutes, and the payment only reflected the next day. He assured the Committee that PPECB was not spending money on legal fees for the appeal. They simply wrote to SARS' appeal board, explaining the delay, as SARS has a clause stating that penalties may be waived if the late payment is beyond the company's control.

Mr Montwedi asked the CFO if they only realised on the day of payment that the amount exceeded the limit. He pointed out that the Board should understand that penalties are a way for SARS to make money, and by asking them to overlook this late payment, PPECB would essentially be asking SARS to forgo money they had already budgeted for. He argued that the issue with SARS stemmed from PPECB’s poor planning.

Mr Schwiebus agreed they could have caught the issue earlier, but the Board believed they could still make the payment, as the last day of the month fell on a Saturday. They thought as long as the money was with SARS by the end of the day, there would be no penalty. He assured the Committee that new controls are now in place to ensure payments are made at least a day in advance.

Mr Montwedi clarified that he was asking about the consequence management for this situation.

Mr Jansen responded that the Board would improve their planning and forecasting, especially regarding payment deadlines and the last day of the month. If things do not go as planned, the Board will hold the responsible employees accountable.

Discussion with the Department of Agriculture

 

Mr A Trollip (Action SA) asked for an explanation of the Department’s 17% under-expenditure. He also inquired about how the State Information Technology Agency (SITA) caused payment delays. Regarding financial matters, he requested an explanation for the 1,022% over-expenditure on interest rates and land and subsoil assets.

He pointed out that delays in payments to vendor finance scheme recipients were raised during their oversight trip and asked for clarification on that issue. Additionally, he asked for an explanation of the under-performance in two areas: 1) economic development, trade, and marketing, where only 20 out of 57 targets were met, and 2) the Farmer Production Support Unit (FPSU), where only 7 out of 12 targets were achieved.

Mr K Madlala (MK) expressed concern that the Department was not serious about addressing youth unemployment, citing their underspending in this area. He pointed out that the Department built FPSUs that are now non-functional, despite the high youth unemployment in the country. He asked why the Department was not using these FPSUs, as functional FPSUs generate their own income, which could be used to pay graduates.

Mr Aucamp pointed out that the Department mentioned delays with the Presidential Employment Stimulus (PES) package due to the change from a private service provider to the provinces. He asked why the change was made and what caused the delays once the provinces took over. He also wanted to know what steps would be taken to prevent such delays in the future.

Ms Ndalane asked about the timeframe for the Department's improvement plan. She also inquired how the Department planned to address the challenges with PES and asked for details on the monitoring mechanisms currently in place or being planned.

Mr Montwedi pointed out that the last FPSU report the Committee received stated that most of the FPSUs were functional, which the Committee disputed, as they believed otherwise. He asked whether the Department thinks the FPSU project is still relevant, noting that the Department purchased implements for the FPSUs but lacked a plan to maintain them, expecting beneficiaries to take on the responsibility.

He also raised questions about land and development support, stating that 14 out of 16 farms received the support. He asked whether the Department provided this support through agencies or its own programmes and requested a report on all the farms that received support, as well as the current status of these farms. He mentioned knowing of farms that never received the support and had stopped producing as a result.

Regarding under-expenditure, he asked if the Department would be able to spend the remaining R2.2 billion before the end of the financial year. He also inquired if the Department was still implementing the AgriBEE project and who was managing it, as the last time the Committee met, it was being handled by the Land Bank of South Africa. He asked what programmes were being run under AgriBEE.

Finally, he expressed concern about the Land Bank’s claim of offering affordable financing, stating that while the Land Bank is a good investment programme, it is not always accessible for small producers due to high costs. He questioned why small producers aren’t better prepared for these costs, as the Department allows them to join blended finance programmes but does not help them transition smoothly to the high costs of the Land Bank. He pointed out that the Department of Small Business Development offers low-interest loans and suggested that small producers should be directed to them or to SITA instead of the Land Bank, as they often cannot afford the high interest rates. He also mentioned that the Land Bank sometimes pays small producers late, after the farming season has passed, but still expects them to pay interest as agreed.

The Chairperson told the Department that the Committee was raising concerns about farmer support based on issues identified during the oversight visit to the North West province. She acknowledged that the programmes there are good but need improvements in certain areas. She then asked the Director-General (DG) of the Department to comment on the issues raised during the 2025 State of the Nation Address (SONA) regarding farmer support and agricultural exports. The DG was also asked to address the rural value chain and explain how the Department is assisting it.

The Chairperson emphasised that the Department has programmes that, if implemented effectively, could greatly support smallholder and emerging farmers, and that implementation needs to be improved.

She also brought up the ongoing discussions on hemp and cannabis in SONA over the past few years. She asked how far the Department has come in developing policies to regulate the use of these products and provide opportunities for farmers. Lastly, she inquired about the Agricultural and Agroprocessing Master Plan, asking how far the Department is with its implementation and who is responsible for it.

Responses from Department of Agriculture

Minister Steenhuisen explained that the hemp and cannabis master plan involves two other departments, with the Department of Trade, Industry, and Competition (DTIC) being the main custodian. The departments submitted a report to Parliament at the end of 2024. What remains is aligning the master plan with other laws, especially criminal justice acts. Without these legislative changes, launching the plan while conflicting laws are in place will be difficult.

He highlighted that one of the main goals of the plan is to expand markets for South Africa’s agricultural products. It is those creating demand that help stimulate the local supply side. Minister Steenhuisen also noted concerns about the African Growth and Opportunity Act (AGOA) due to current geopolitical tensions.

He reassured that the Ministry and the Department’s intention is to first deepen and expand existing trade agreements with partner countries, exploring how to take full advantage of those agreements and potentially add more products or adjust tariff structures. Secondly, they are looking at new markets, which is part of the reason for the trip to Japan, followed by visits to Saudi Arabia, Kuwait, and the UAE, where there are significant opportunities for the red meat industry.

Ms Kwena Komape, Deputy Director-General: Economic Development, Trade, and Marketing (Department of Agriculture), addressed the FPSU issues. She explained that the FPSU programme has two main components: infrastructure, managed by the economic development, trade, and marketing branch, and other processes involving multiple structures at regional and national levels. The Department’s approval process can be slow, meaning some issues raised by the Committee still need to be corrected at the national level.

This programme is challenging, as it was initially managed by different structures before it came under the branch’s control. There were issues with coordination, and at times, applications had to be sent back for amendments. This contributed to the lower achievement rate of only 51% of the targets. The Department acknowledges further challenges, but it is ultimately the national level's responsibility to guide and support farmers.

The transfer of responsibility for supporting farmers to the provinces began under the previous administration, but progress has been slow due to various limitations. As a result, the Department is now focusing on transferring responsibilities to branches that deal directly with supporting farmers.

Regarding the status of the farms, Ms Komape said the current situation is similar to the previous report. Some farms have the necessary infrastructure, while others do not. Some farmers have received production inputs, but some are still struggling due to factors beyond their control.

On the AgriBEE fund, she clarified that it is still operational but faced delays due to contractual issues with the Land Bank, which remains the fund manager. The Department was unable to transfer funds this year due to these obligations. However, applications are still being assessed online, and once the contractual issues are resolved, projects in the pipeline will be reviewed and funded.

The Chairperson expressed that she was not satisfied with the responses from the DDG and allowed the Committee to ask follow-up questions.

Mr Montwedi agreed with the Chairperson’s concerns. He then asked where the project would be located, given the challenges raised by the DDG about the split. He also asked how long the AgriBEE fund had been inactive and whether the contractual dispute with the Land Bank had been resolved. If it hasn't, he questioned why the Department would launch a program without a proper contractual agreement in place. He felt that the Department often blames the Land Bank and contractual issues when it comes to accounting for Departmental funds. Finally, he asked why the Department continues to work with the Land Bank, especially when it claims the Land Bank causes delays with blended finance and now with this contractual issue.

Ms Komape explained that there was no legal dispute with the Land Bank, but rather a memorandum of agreement (MoU) that expired. Before it expired, the branch attempted to renew the MoU, but the Land Bank denied the request and advised the branch to explore other options. Reappointing the Land Bank as the fund manager took longer than expected. A review of the fund was conducted two to three years ago because the fund was not progressing due to strict conditions, such as requiring an own contribution. The funders requested this contribution because the Department was focusing on moving up the value chain, not just primary production, with the aim of making the business viable. As public servants, the government does not run businesses, but it is willing to invest in businesses that come forward. In summary, multiple institutions were identified to assist with the Land Bank, which was facing difficulties at the time.

Mr Nasele Mehlomakulu, Deputy Director-General: Food Security and Agrarian Reform, Department of Agriculture, addressed the questions about land development support, PES, and the Land Bank.

Regarding land development support, the Department continues to implement the programme through commodity groups. This approach was chosen to bring in expert development partners, so the model remains unchanged. However, resources are shrinking, which means some farms have not received the support. He mentioned Mr David's farm in the North West province, which requires R39 million to operate. This year, the fund had R313 million to be shared among 40 properties, and the land reform division is acquiring more properties for the portfolio.

On the issue of the Land Bank's affordability, Mr Mehlomakulu explained that until the funding model is revisited, the bank will continue to struggle to offer lower-interest loans.

Regarding the PES, the Department initially used an e-voucher system through Vodacom but faced many challenges. Some beneficiaries were unable to save their vouchers properly, leading to complications. As a result, the Department switched back to the conventional method of acquiring and delivering inputs. Delays occurred because the Department asked provinces to bulk-buy the inputs, which slowed down the delivery process. To address this, the Department allowed service providers to deliver in bulk, while also delivering directly to farmers, speeding up the payment process.

Finally, on the Land Bank delays, Mr Mehlomakulu explained that funds transferred to the Land Bank are not counted as expenditure until they are distributed to the farmers. The money must be in the Land Bank's account to go through the entire value chain, but it doesn't mean every cent will be distributed in the current financial year. This is an accounting issue, as National Treasury requires the money to be classified as a transfer, not expenditure, until it reaches its final destination, similar to how conditional grants are treated.

Mr Montwedi asked the Department to explain the programmes they are running, aside from paying salaries, suggesting that it seems like the Department is only focused on paying salaries. He pointed out that if the Department had the internal capacity to manage some of these programmes themselves, they could avoid the costs of outsourcing projects like Land Bank and AgriBEE. He questioned why the Department hasn't built this internal capacity, as it would reduce the need to pay others to implement programmes on their behalf.

Regarding Land Bank’s financing, which he felt was not affordable, he asked what alternatives the Department is exploring to ensure farmers can access affordable finance. He also raised concern about farms that have been with the Department for over 10 years but still haven't received support, while newer farms are being supported. He requested the Department to provide, in writing, a list of farms they have acquired, and the specific support these farms have received. This would help the Committee advocate for more funding for the Department from National Treasury.

Mr Mehlomakulu promised to send the report to the Committee at a later time. He explained that the blended finance scheme was designed to address the concern raised by Mr Montwedi. Ignoring the interest rates from the Land Bank, if a farmer takes out a loan of R10 million, they are effectively only borrowing R4 million, making it a more affordable option by adding the grant into the system. Discussions about interest rates with the Land Bank will continue.

The Chairperson then asked the CFO to comment on the findings of the Auditor-General (AG) and the implementation of the audit action plan, especially since the end of the current financial year is just two weeks away. In 2024, the AG also raised concerns about the litigation cases against the Department, totalling R1.9 billion. The Committee had requested a report on these cases and updates on progress every quarter. The Chairperson asked the CFO to provide a summary of the findings, and the consequence management actions the Department has taken.

Mr Dipepeneneng Serage, Acting Deputy Director-General: Agriculture Production, Health, and Food Safety (Department of Agriculture), explained that his branch was allocated R2.2 billion. Of this, R1.2 billion belongs to the Department, while R1.1 billion goes to the Agricultural Research Council (ARC). By the end of quarter three, the branch had spent 75% of its budget, so it is not among the branches that underspent.

Regarding exports, over 90% of agricultural exports come from rural areas. The Department supports the Minister’s efforts to ensure that import requirements from other countries are met. The PPECB, which works closely with the Department, has two main mandates: cold chain management and agricultural product quality assurance. The Department is committed to ensuring that all farmers eligible for export are ready when markets open. They will send the Committee a list of all the products waiting to be exported.

Ms Mokono explained the underspending on land claim restitutions. This was caused by changes in the payment model for financial compensation to beneficiaries. In previous years, the Department transferred money to Absa to distribute to beneficiaries, but the process took too long. After discussing this with National Treasury and Absa, both advised against using this model. Instead, the Department decided to handle payments directly using a bio-transfer system. However, building this system internally took longer than expected, which caused delays in payments, as each one had to be processed individually, with bank details verified for each beneficiary.

Ms Mokono also addressed the question of whether the Department would be able to spend its full budget. She stated that approximately R1.3 billion was allocated for restitution payments, but the process of paying individual beneficiaries is taking time, and it is being closely monitored. Regarding over-expenditure on land subsoil, she explained that the Department's budgeting model was based on previous years' trends, where most beneficiaries chose financial compensation rather than land. This year, especially in the North West province, many beneficiaries are choosing land, which has led to over-expenditure.

Regarding interest and rates on land, the Department does not encourage budgeting for interest, as late payment interest is not expected. The Department is also concerned about the Land Bank's disbursement model, which means some funds from the previous financial year may not be spent in the current year. The Department will request National Treasury's approval for a roll-over of these funds to avoid losing them. Another concern is the Western Cape Disaster Fund, as there was a delay with the business plan. The Department is currently monitoring nearly R1.8 billion in the food security and agrarian reform and land restitution areas. The Department also faces under-spending in the Presidential Employment Stimulus Initiative (PESI). They are working with the relevant branch to improve the distribution model. Ms Mokono noted that this programme does not cover management fees, and the administrative costs are high. As a result, not all of the R350 million will be spent. The Department has already advanced about R330 million, and the remaining funds will only be transferred once the issues with the previous advance have been resolved.

Regarding the audit improvement plan, Ms Mokono explained that the 3% of actions not fully implemented or partially implemented are linked to year-end processes, which will be addressed during the audit. She also highlighted concerns about the Department's litigation cases, with a reported R1.9 billion in liabilities, possibly rising to R3.8 billion. Many of these cases relate to restitution (over R1 billion) and human resources processes, particularly OSD issues. The Department is taking longer than expected to resolve these issues of consequence management.

Mr Mooketsi Ramasodi, Director-General, Department of Agriculture, explained how the Department functions. In previous discussions, the Department was responsible for two key functions at the national level: market access for animal and plant health and inspections for agricultural production, health, and food safety. The national government also intervenes in land-use management. At a higher level, national government sets policies and ensures standards are met. Most other functions are carried out at the provincial level.

Over time, the responsibility for rural development and land reform started to overlap with agriculture, which caused confusion about who should implement certain functions. This situation led to frustration, as some functions were being funded by rural development and land reform, while others were funded by agriculture. To address these gaps, the two departments were merged during the 6th administration. Now, the Department focuses on national-level legislative duties and international engagements, such as plant and animal health and other regulatory matters. The Department funds the provinces to implement these functions and monitors their progress.

Regarding financing, the Department provides funding for micro-financing schemes like the Micro-Agricultural Financial Institutions of South Africa (MAFISA). However, the use of subsidiaries to execute MAFISA has led to challenges with accountability, as only the South African Farmers Development Association (SAFDA) is fully accountable for the funds. Parliament has requested a report on MAFISA, which will be shared when ready. There is also a policy provision to address MAFISA, as highlighted by the Likoko Commission, which recommended alternative methods for agricultural credit after the 1990s.

Mr Ramasodi responded to questions about the Land Bank, explaining that AgriBEE has two components: grants from government and a required contribution from farmers. Since the Department is not a financial transactor, the Land Bank is used as a facilitator, as it handles the financial transactions. This is also the case with blended finance. The Land Bank is not used due to lack of capacity in the Department; rather, it is used to process the transactions, and the Department has people in place to ensure the qualifications of the beneficiaries.

Regarding consequence management, Mr Ramasodi stated that when he took office three years ago, many unresolved cases needed to be dealt with according to the Public Finance Management Act (PFMA). The Department follows a strategy to address these cases progressively through disciplinary actions.

He also responded to Mr Madlala's concerns about committed funds, explaining that all available money has already been allocated. However, the Department is exploring ways to address some of the issues raised during the adjustment budget. He asked that questions regarding FPSUs be answered in writing. The Department continues to face challenges with new standards set by National Treasury. Agriculture is unique, and there needs to be predictability in how National Treasury allocates funding, or the Department risks facing negative consequences.

In the past financial year, the Department was responsible for 924,000 jobs and brought in $20.7 billion in imports. The Department also expanded its reach into other geoprocessing areas, adding 20,000 more jobs. The Department is concerned about how spending will be reflected, and discussions with National Treasury are ongoing to address these issues.

Regarding assistant agricultural practitioners and financing, Mr Ramasodi mentioned that there have been discussions with National Treasury over allocation letters, which are important for coordinating efforts with provincial departments. The execution of these tasks is delayed because Parliament has not yet approved the budget.

The Chairperson promised the Department that she would speak to the Chairperson of the Appropriations Committee to see if they could assist both the Committee and the Department after the budget is presented, to ensure that funds are allocated to the AMP project. She then requested that all presentations be completed before starting the discussions. 

Onderstepoort Biological Products (OBP) Q3 performance 2024/25

 

Dr Jacob Modumo, Chief Executive Officer, Onderstepoort Biological Products, and Mr Jacques Botha, Interim Chief Financial Officer, Onderstepoort Biological Products, presented on the Q3 of 2024/25 performance report and financial statements for the Onderstepoort Biological Products (OBP).

Programme 1: Financial Sustainability

- Increased Sales Revenue: Target was R100m; actual was R23.49m, resulting in a variance of -R76.51m.

- Product Dossiers: Target of 2 dossiers submitted to international markets was achieved.

- Vaccine Doses Sold: Target was a 3% increase; actual was a -69% decrease, resulting in a variance of -66%.

 

Programme 2: Continuous Improvement of Business Processes

- Production Efficiency: Target was 83%; actual was 100.13%, exceeding the target by +17.13%.

- Enterprise Architecture Plan: No progress made; variance of -66%.

- GMP Certification: Principal Agent appointment not finalised.

- Output of Top 20 Products: Target was 81%; actual was 51.65%, resulting in a variance of -29.35%.

- Sell Through Rate: Target was 40-80%; actual was 54%.

- Capital Expenditure Plan: Target of 40% was achieved with a slight over-achievement of +0.4%.

 

Programme 3: Customer Service

- Customer Complaints Resolved: Target of 80% was exceeded with 100% resolution.

- Top 20 Customers Retained: Target was 80%; actual was 70%, resulting in a variance of -10%.

- New Distribution Channels: Target of 3 was exceeded with 4 new channels established.

- Farmers Trained: Target of 625 was exceeded with 681 farmers trained.

- Media Publications: Target of 6 was achieved.

 

Programme 4: Governance and Leadership

- Employee Engagement Plan: Developed and approved by EXCO.

- Staff Training: Target of 60% attendance was achieved with 52%.

- Governance and Ethics Framework: Continuous reporting to the Board not achieved.

 

Financials

- Total Revenue: Budget was R101.49m; actual was R23.70m, resulting in a variance of -R77.79m.

- EBIT: Budget was R15.58m; actual was -R30.67m, resulting in a variance of -R46.25m.

- Net Profit/(Loss) After Tax: Budget was R19.78m; actual was -R17.39m, resulting in a variance of -R37.18m.

 

Update on GMP Project

- Engagements: Regular reporting to the Shareholder.

- Specialist Advisor: To review existing GMP facility and provide costing estimates.

- Principal Agent: To develop detailed project plan and costing.

 

Update on Product Availability

- Stock in Distribution: Various products listed with quantities available.

 

Update on Equipment: Freeze-Drier Installation

- Installation: Expected to start on 3 February 2025 and end on 13 March 2025.

- Commissioning: Expected to start on 14 March 2025 and end on 10 April 2025.

- Qualification: Expected to start on 10 April 2025 and end on 1 May 2025.

- Recipe Optimisation: Expected to start on 1 May 2025 and end on 30 September 2025.

(Further details can be found in the presentation attached)

 

Agricultural Research Council (ARC) Q3 performance 2024/25

Dr Litha Magingxa, Chief Executive Officer, Agricultural Research Council, and Mr Abdul Carim, Chief Financial Officer, Agricultural Research Council, presented on the Q3 of 2024/25 performance report and financial statements for the Agricultural Research Council (ARC).

Overview

Overall Performance:

- 28 out of 39 targets met (72%), a slight decline from 78% in Q3 2023/24.

- Performance affected by extreme weather, supply chain delays, and funding constraints.

 

Key Performance Areas & Challenges

Under-performance:

- Research & Technical Reports: Several reports fell short due to delayed trials and weather impacts.

- Technology Transfer: Only 4 out of 30 technologies were transferred under license.

- Vaccine & Laboratory Services: Shortfalls in blood vaccine production and food/feed tests.

- Climate Resilience: Severe under-performance in climate-related field trials (22 completed vs. 114 planned).

 

Exceeded Targets:

Training & Skills Development:

- 1 732 people trained (target: 770).

- 1 362 farmers trained (target: 880).

Knowledge Dissemination:

- 155 popular publications (target: 80).

- 184 public awareness events (target: 124).

Laboratory Services:

- 16 855 animal health test reports (target: 16 145).

Farmer Support:

- 213 farmers supported (target: 94).

 

Research & Development Highlights

FMD Vaccine Facility:

- Project progressing, but funding gaps remain.

- Temporary mid-scale production system ordered.

- Full shipment expected by June 2025.

Rainwater Harvesting Project:

- 20 sets of implements distributed in Free State & Limpopo.

- Training provided, but heatwave impacted implementation.

Rice Production Feasibility Study:

- Trials across six provinces with 250+ rice accessions.

- Aim: Reduce SA's dependence on imported rice.

Nadorcott (ARCCIT9) Plant Variety:

- Registered in the USA, generating R12–R20 million annually.

- Funds reinvested into R&D.

 

Financial Performance

Revenue:

- R447m achieved YTD (vs. R707m budgeted).

- Full-year forecast: R817m (vs. R914m budgeted).

Expenditure:

- R1.29bn spent, slightly over budget by 2%.

- Personnel costs exceeded budget by R115m (due to SLA contract posts).

 

Audit Improvement Plan & Compliance

- Interim audit started in November 2024.

- Asset re-tagging project 87% complete.

- No new irregular or fruitless expenditure identified for 2025.

 

International Collaboration & Engagements

Potato Research with Algeria:

- Signed MoU to exchange potato germplasm and improve seed affordability.

Science Forum South Africa 2024:

- ARC showcased research technologies for agriculture.

 

Conclusion

- ARC performed well in skills development, farmer support, and research dissemination.

- Challenges: Weather impacts, supply chain delays, and funding constraints.

- Next Steps: Address financial gaps, continue vaccine facility development, and expand research projects.

(Further details can be found in the presentation attached)

 

National Agricultural Marketing Council (NAMC) Q3 performance 2024/25

Dr Simphiwe Ngqangweni, Chief Executive Officer, National Agricultural Marketing Council, and Ms Lebogang Dire, Chief Financial Officer, National Agricultural Marketing Council, presented on the Q3 of 2024/25 performance report and financial statements for the National Agricultural Marketing Council (NAMC).

Key Programmes & Achievements

Programme 1: NAMC's Core Functions

- Performance: 98% of targets achieved.

- Areas covered: human capital, ICT, statutory measures.

Programme 2: Agricultural Sector Efficiency & Earnings

- Performance: 100% target achievement in market intelligence, food price monitoring, and statutory measures.

- Key reports: Trade Probe, Market Intelligence, Grain Supply & Demand.

Programme 3: Market Access for Farmers

- Performance: 400% of smallholder farmers linked to markets (exceeding targets).

- However, challenges in logistics and financial constraints impact future initiatives.

 

Financial Performance

- Overall spending within budget, but capital expenditure underspending (92%).

- Salaries and administrative costs accounted for major expenses.

Audit Recovery Plan & Challenges

Strengthened financial systems and compliance with SCM requirements.

Digital records management being implemented.

Challenges:

- Financial constraints due to reduced government funding.

- Staff attrition impacting service delivery.

- Resource mobilisation efforts underway to secure additional funding.

 

Conclusion

- NAMC is largely achieving its performance targets but faces funding and operational challenges.

- Seeking partnerships and alternative funding to sustain operations and market access projects.

(Further details can be found in the presentation attached)

Department of Agriculture’s response to matters pronounced in 2025 SONA

Ms Mimi Molotsi, Director: Strategic Planning, Department of Agriculture, presented on the Department of Agriculture's response to matters pronounced in the 2025 State of the Nation.

Outcomes Alignment to SONA

Inclusive Growth and Job Creation:

- Increased agricultural production.

- Food and nutrition security.

- Increased production share of black producers.

- Enhanced market access.

- Improved biosecurity and disaster risk reduction.

Reducing Poverty and Tackling High Cost of Living:

- Food and nutrition security.

Building a Capable, Ethical, and Developmental State:

- Improved governance and modernised service delivery.

 

Responses to SONA

- Medium Term Development Plan: Aligning departmental plans to advance strategic priorities.

- Public Procurement Act: Ensuring equitable opportunities for businesses owned by women, youth, and persons with disabilities.

- Protected Agricultural Areas (PAAs): Delineating high-potential cultivation and grazing land.

- Landcare Programme: Rehabilitating degraded land and creating job opportunities.

- Professionalisation of Public Service: Implementing an integrated Human Resources Strategy.

- Technology Adoption: Enhancing government services through various technological initiatives.

- Agriculture and Agro-processing Master Plan (AAMP): Enabling inclusive growth and sustainable job creation.

- Blended Finance Scheme: Creating jobs and contributing to inclusive growth.

- Collaboration with Traditional Authorities: Implementing land planning programmes.

- Post Settlement Support: Providing training and mentorship to farmers.

- Farmer Safety: Collaborating with SAPS and the Department of Justice.

- Food Security: Implementing Ilima/Letsema conditional grant and developing a national food and nutrition security plan.

- Climate Change: Developing GHG emission reduction plans and conducting awareness campaigns.

- Export Markets: Expanding market access for agricultural products.

- Support for SMMEs: Providing financial support and capacity development interventions.

- Hemp and Cannabis Production: Developing regulations and supporting cultivation.

- International Cooperation: Participating in AU, SADC, and BRICS activities.

- AfCFTA Implementation: Ensuring effective implementation of the agreement.

- Foreign Policy: Promoting human rights, peace, and fair trade.

- Infrastructure Investment: Providing on-farm infrastructure to previously disadvantaged black farmers.

- Youth Employment: Scaling up workplace experience opportunities.

- Bursary Scheme: Providing financial assistance to students from disadvantaged backgrounds.

(Further details can be found in the presentation attached)

Discussions

The Chairperson raised the issue that students who had been accepted for funding by the Department had not yet received their bursaries and asked the DG to comment on this.

Mr Trollip questioned the ARC about their presentation showing a 60% decrease in revenue. He also criticised OBP for the drop in vaccine production, except for a significant increase in January. He pointed out that they were claiming decreased awareness of products and services, but if that issue was fixed, demand for vaccines would increase, yet OBP wouldn’t be able to meet that demand.

Regarding GMP, he mentioned that the installation of the freezer dryer would be completed by the first week of May, making it the largest in Africa. He asked if OBP had the capacity to produce the 110,000 vials they were talking about.

Mr Trollip also questioned OBP's approach, noting that they were doing a manual costing exercise as if it were a new business, despite the fact that OBP used to be a world-class operation. He found it illogical to rely on a manual costing system. He expressed frustration with OBP's performance, citing a 66% shortfall in sales targets, which was unacceptable. He argued that the increase in January sales was simply due to the backlog and the busy season for farmers. He criticised OBP's lack of progress in implementing the Board-approved Enterprise Architecture plan, which should inform their ICT strategy, and deemed it shameful to present such a report to Parliament.

He further criticised OBP for not deploying the principal agent for GMP, losing 10% of their top 10 customers, and for the decline in revenue and export sales. OBP had blamed diluent quality for compromising exports, but Mr Trollip felt that OBP was using the diluent issue as an excuse for their failure to meet export targets. He also rejected the argument that the shelf life of vaccines was to blame, as OBP was not producing vaccines at all. He did not believe that the business was turning around as OBP claimed.

Mr C Smit (DA) suggested to the Committee that future programmes should be less packed to allow enough time for questions. He also addressed OBP, criticising their claim that they were busy installing the GMP, comparing it to a friend saying they're on their way when they haven't even left the house. He asked OBP when they received the freezer-dryer, where it was stored, whether it is being implemented now, or if it is still to be installed. If it had already been installed, he asked when the installation had started.

Mr Montwedi expressed concern that there might be a deliberate effort to collapse OBP. He asked the OBP team to be honest about why they had not appointed the principal agent, especially when it had already been agreed upon as a priority. He suspected that people were trying to tamper with OBP's intellectual property and that the team was not protecting it, possibly allowing the organisation to be corrupted from the inside. He questioned OBP about the cause of the R63 million gross profit loss, what led to the rise in January sales, and whether the company could sustain this increase.

He also addressed the ARC regarding the smallholder farmer support for KYD, asking what programmes were being implemented in that area. Mr Montwedi expressed concerns about the current Minister of Agriculture, stating that while he did not always agree with the former Minister, he did agree with how she approached the sector. He was worried that many positive changes made by the former Minister were now being reversed by the current Minister.

He noted that there was once an interdepartmental team dealing with FMD, but in August 2024, the new Minister replaced it with a rapid response team that included people who had not been involved from the beginning. He asked what prompted this change. Mr Montwedi also mentioned that some black professionals in the Department were reportedly not wanted by the current Minister, and he emphasised that the Committee would do everything to protect the competent people in the Department.

Lastly, he raised concerns from a farmers' group he was part of regarding FMD issues affecting KZN farmers, which could spread to other provinces due to the current Minister’s incompetence. He mentioned that R73 million had been allocated to buy vaccines for FMD and asked the DG how many vaccines had been procured and how the Department had used the funding to assist farmers affected by FMD. He also asked the ARC how they planned to address the funding gap identified for the FMD male facility.

Inkosi R Cebekhulu (IFP) asked OBP about their practice of disposing of expired vaccines. He wanted to know if they produce and supply vaccines just to clear the shelves or if they do so with the intention of selling them. He mentioned that three districts in KZN deal with FMD, and as OBP is part of the Department, it is expected that they would produce and supply vaccines to the Department to help smallholder farmers treat their livestock.

He pointed out that the Department had previously mentioned issues with supporting smallholder and emerging farmers. He added that the Department is tackling the foreign challenge of ensuring food production. However, subsistence farmers in rural areas receive little to no support. He highlighted that under the former Bantu Stans government, mechanisation was available in these areas, allowing people to access tractors for land clearing. He questioned why the Department is not considering supporting subsistence farmers in rural areas today. He noted that in rural areas, people are often seen selling vegetables along the road, but the Department is not looking into ways to support these farmers.

To the ARC, Inkosi Cebekhulu mentioned that during a previous oversight, the Committee had been informed about the role of the ARC in addressing foreign vegetation. He explained that the overgrowth of this vegetation is taking up grazing land for livestock, and some plants can be poisonous when overgrazed, causing livestock to lose weight or even die.

The Chairperson noted that, since the programme was running out of time, OBP should respond to the questions in the following week when the Department returns to Parliament. She felt that a written response would not be sufficient.

Mr A Mngxitama (MK) asked NAMC about the report stating that maise would need to be imported while our farmers are still exporting it. He questioned whether there are any policies or regulations in place to balance this, as it doesn't make sense to export when there are shortfalls in national consumption, especially in a country where 20% of people are food insecure.

Mr Mngxitama raised concerns about Target 13, saying that planning without considering the reality would lead to unrealistic goals. He questioned how the target of helping 20 farmers access markets could be set, given that there are over 2 million black small-scale farmers. He said that even if the target was achieved at 60%, it would still be a small fraction of the actual need, given the magnitude of the challenge. He asked what the baseline for these targets is.

Mr Mngxitama also asked the chairperson of OBP to comment on the R500 million issue mentioned in the OBP report and its current status. He then addressed revenue generation, pointing out that 67% of the revenue comes from exports, 29% from local markets, and 27% from the government. He noted that government support mostly benefits small-scale farmers, as the government is not directly involved in agricultural production. He questioned whether the 57% from exports primarily comes from white commercial agriculture, suggesting that large-scale agriculture might be benefiting more.

Lastly, Mr Mngxitama asked the ARC about the quality differences between animals in rural areas and those in white commercial agriculture. He wanted to know how commercial and small-scale agriculture are differentiated in terms of animal quality.

Ms S Davids (ANC) asked the Department about the issues related to markets, especially with the USA, and what actions the Department is taking to address them. She also asked PPECB why the target is set at just six graduates instead of a higher number.

The Chairperson replied that the Minister had already addressed the market issues. She then gave Mr Montwedi another opportunity to raise his questions to the Minister, as he had left for another meeting when they were previously discussed. The Chairperson requested that the Department prepare responses to today's questions when they return next week.

Mr Montwedi commented that it was clear that, as a Committee, their role was to hold Ministers and Members of the Executive accountable. He urged Committee Members to set aside party affiliations when carrying out their duties as Members of Parliament in Committees. He then addressed the Minister, stating that many farmers were uncomfortable engaging with the Department through Democratic Alliance (DA) affiliated emails. He suggested that communication should be done through government email accounts instead.

Mr Montwedi emphasised that there was an interdepartmental committee dealing with FMD issues, made up of departments affected by it. This committee, set up by the former Minister, played a key role in addressing the issue. He questioned why such a multidisciplinary team had been dissolved and replaced with a rapid response team that didn't include other relevant departments. He saw this as a failure by the government to strengthen biosecurity.

Another concern raised was the R73 million allocated for buying FMD vaccines. He asked where the process stood, especially since FMD was causing serious problems in KZN and surrounding areas. He expressed concern that there had been no intervention despite the allocated funds.

Lastly, Mr Montwedi pointed out that OBP had been repeatedly advised to appoint a principal agent, but this had not been done. He viewed the delay as part of a strategy to privatise OBP, and he expressed concerns that OBP's intellectual property was not being protected. He stressed that without the principal agent, OBP would not know how much was needed to finalise the project.

Minister Steenhuisen responded that when he joined the Department, he was informed of an SIU investigation into the R73 million allocation. However, after meeting with the SIU, he found that no such investigation existed. The Minister then met with OBP to share this information. OBP informed him that they had submitted an interim report on the GMP, with the final report due in January 2025. A presidential proclamation is required for the SIU to investigate, and all those involved will be held accountable.

The Minister rejected the claim that the Department does not take biosecurity seriously. He emphasised that it is one of the top seven priorities. He assured that when the newly configured Department is launched in April, there will be clear evidence from both a budgeting and staffing perspective of an enhanced focus on biosecurity. Without addressing biosecurity, the country will continue to lose market share in the red meat sector to Namibia and Botswana and face ongoing issues with the EU on citrus and other matters. The Minister promised to provide a formal written response regarding the R73 million.

The Minister also met with OBP on 28 January to discuss the appointment of a principal agent. He clarified that the delay was not due to the Ministry and expressed his own interest in understanding why the appointment had not been made. He rejected claims that there were efforts to privatise OBP, stressing that OBP deals with national security matters, including vaccines and live cultures, making privatisation impossible. The Minister asked, if his goal was to collapse OBP, why he personally approached ASPEN to continue donating a freezer-dryer to OBP to help meet production demands. The primary objective is to restore OBP to its rightful place as an international leader in its sector. According to the shareholders' agreement, if OBP cannot meet its vaccine production needs, it can seek additional capacity from other licensed laboratories.

The Chairperson mentioned that OBP had informed them they would request CSIR's help, as they have a team of experts to handle certification issues and more. However, OBP is now raising concerns about appointing a group of experts before selecting a principal agent. She asked the chairperson of OBP to address this at the next meeting, along with the timelines for the GMP action plan. She also inquired if NAMC could serve as the implementing agent for certain Department programmes to help raise funds.

Mr Montwedi requested that the Minister explain the reasoning behind the decision to disband the committee dealing with FMD and replace it with a rapid response team that doesn't include all the relevant departments needed to address the issue.

Minister Steenhuisen explained that a rapid response team was created to address the crisis that arose during the FMD outbreak. Initially, the disease was in the Eastern Cape, and the team was kept in place as the situation continued to evolve. Now, the outbreak has spread to KZN. The Minister has met with the provincial department in KZN and relevant stakeholders to help manage cattle movement and carry out vaccinations. The response will now also extend to the New Castle area. The FMD team and the Department have already received a letter from the Minister outlining the changes he would like to make to the committee to strengthen it. The Minister added that when Mr Montwedi becomes Minister, he can form his own task team to meet his requirements.

The Chairperson reminded the Committee that, as MPs, their role is to oversee the Minister and the executive. It is not the responsibility of any Committee Member to protect the Minister when it's time for accountability. If the Minister needs protection, the Chairperson will ensure it.

The meeting was adjourned.