Ncera Farms and Primary Agriculture Education and Training Authority (now AgriSETA) Annual Reports

Meeting report

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
19 October 2005
NCERA FARMS; PRIMARY AGRICULTURE EDUCATION AND TRAINING AUTHORITY (NOW AGRISETA) ANNUAL REPORTS

Chairperson: Ms D Hlengethwa (ANC)

Documents handed out:
Presentation to the Portfolio Committee on Agriculture and Land Affairs (Ncera Farms (Pty) Ltd)
Primary Agriculture Educational and Training Authority (now AgriSETA) [please email [email protected] for document]

SUMMARY
Ncera Farms (Pty) Ltd presented their annual report to the Committee. They had received approval to establish a service centre on the land that would provide various support services to the community. Ncera Farms’ total available funds amounted to R3, 2 million, and their actual spending amounted to R2, 8 million. Ncera Farms’ External Audit Report was unqualified and without any matters of emphasis. They had done short listings for the allocation of farms. In September they allocated portions of 2 200 hectares to 14 beneficiaries.

The Committee discussed various issues, including the identification of beneficiaries, management fees, and the racial composition of the management; how the project would affect farm workers, security and the viability of the project.

The Primary Agriculture Educational and Training Authority (PAETA) briefed the Committee on their Annual Report. Their full levy income amounted to R59 million, making them one of the smallest SETAs. PAETA had achieved 90% of their performance indicator goals. PAETA’s total revenue was R93 million and their expenses R90 million. Their annual financial statements and Audit Report did not yield any qualifications. PAETA believed the challenge of land reform could be met through an integrated approach.

The Committee discussed, among other things, the future of agricultural colleges, budgetary constraints, and the nature of training programmes.

MINUTES
Ncera Farms (Pty) Ltd
Mr Tommie Marais, Chairperson of Ncera Farms’ Board, said Ncera Farms had been transferred from the Eastern Cape Province’s auspices to the national Department of Agriculture, as the Eastern Cape did not have enough money for Ncera Farms.

Approval was granted for the establishment of a service centre during October 2004. The following services would be rendered: extension services land preparation, layout and contract ploughing, training and advice, preparation of business plans, cost effective repairs, postal services, legal services, land valuation, and animal husbandry and improvement services. Progress had been made on the drilling of boreholes, erection of irrigation dams and security fences, cleaning of land and the finalisation of building plans.

Ncera Farms’ total available funds amounted to R3, 2 million, and their actual spending amounted to R2, 8 million. A surplus of R 425 000 had remained. The surplus funds were the effect of certain planned capital projects that were not finalised by the end of 2004 / 2005 and were thus rolled over to 2005 / 2006. Their biggest expenses had been personnel expenditure (19, 9%) and management fees (36%).

Ncera Farms’ External Audit Report was unqualified and without any matters of emphasis. The Internal Audit Report and the financial statements had been reviewed but did not reveal any problems regarding internal controls or non-compliance.

Mr Sam Malatji (Ncera Farms (Pty) Ltd) said they had done short listings for the allocation of farms. In September they allocated 10 portions amounting to 2 200 hectares to 14 beneficiaries. The submission was on its way to the Minister for approval.

Discussion
Mr S Holomisa (ANC) said he was pleased that their Audit Report was unqualified.

Mr Holomisa had believed that Ncera Farms were given to land under an inkosi, intended to serve his community, but now he had heard that people had to apply for portions of the land. He enquired about the communities next to the land. Originally they had purchased 14 000 hectares. Ten thousand hectares of this land had been allocated to the Chief and his community. The community would also be part of the service centre.

Mr B Radebe (ANC) asked how beneficiaries were identified. Mr Malatji said they published advertisements and had received a number of applicants. Mr Radebe asked what were required from the applicants. Mr Malatji said the applicants had to complete forms to provide information. They were then called for interviews and had to explain what form of agriculture they planned to do. Further details of the process were in the Disposal Report.

Mr Radebe said management fees were their largest expense. Ms E Ngaleka (ANC) asked how long they would continue to have high management fees and if there was nothing they could do to decrease the role of management and when the people would be able to run the farms on their own. Mr Bici (UDP) asked what the management fees entailed. Mr Marais said the Board was situated in Pretoria; therefore they had appointed a management agent on the farm. There would be management fees as long as the government was working on the farm. The manager’s salary increased as much as that of any other public servant. Mr Marais thought this was a good deal. The manager saw to the day to day running of the farm.

Mr T Ramphele (ANC) asked to what extent farm workers would be considered and how they would benefit. One of the farms, Rocklands, had not been advertised for settlement. This farm would be used for the settlement of farm workers. There would be negotiations with all parties concerned regarding the farm workers.

Mr Ramphele said the service centre seemed like something they could learn from. He asked if it would be possible to use the training centre as a training academy for entrants into farming and if the government would assist.

Dr E Schoeman (ANC) asked if the erection of a security fence would decrease their use of guards. Mr Marais said it was a big farm with four or five homesteads. They had to put security on the land to prevent theft. Once the service centre was finished, they would not have to employ security guards.

Mr Radebe asked who would provide training and advice services. Ms B Ntuli (ANC) asked what training beneficiaries would receive. Mr Marais said the service centre would help the local community with maintenance. They would be charged, as they had to recover some money. They also provided computer training to the community, which was not really part of their day to day business, but it was a way to help the community.

Ms Ntuli asked what problems had been mentioned in the Audit Report. Mr Marais said there were no problems; they had a squeaky clean report.

Mr Bici thought the Department could run the farm until it became sustainable. He asked how this related to the applicants Mr Malatji had mentioned. Mr Marais said the project entailed the establishment of a service centre on the land. They would be running the service centre to be sustainable. Once the service centre was sustainable, it would be handed to the community.

Ms Ngaleka asked for a breakdown of gender and racial representation in the management of the farm, as she was concerned that there was inadequate transfer of skills. Mr Marais said they were still establishing the service centre to facilitate the transfer of skills. This could only be done when the farmers were able to manage the service centre. Six people formed the management team. There were two ladies. The whole team was white. A black female trainer, as well as a black male trainer, left the farm for better career options. The management team were busy training trainers, and once they handed over the management, the team would consist only of black members. They were working towards getting the racial composition right and only black farmers would be beneficiaries.

Mr Ramphele enquired about the relationship between the service centre and PAETA, as well as the future of the service centre. Mr Marais said before the management team left, the service centre had to be ready to be sustainable. If they left earlier, the project would not be a success.

Mr S Abram (ANC) understood that they were talking of 4 000 hectares of land. He asked how many separate farms there would be. He also asked how they would divide the land after they had identified the beneficiaries and if the subdivision of land would be viable. A representative of Ncera Farms (Pty) Ltd said some portions of land were very small, less than 2 hectares. The Committee recommended that the portions had to be consolidated to make them economically viable.

Mr Abram said the farm’s dairy did not seem very profitable. The farm’s cattle herd also had to be reduced. He asked if this was a normal reduction, as it only showed an R 83 000 profit. Mr Abram was concerned that the 14 beneficiaries would not become successful farmers. Mr Marais said the cattle were sold as part of closing Ncera Farms; therefore it was sold for less than market value. It had nothing to do with the dairy.

Mr Abram was concerned about the future of the beneficiaries. He asked what each beneficiary was going to get and if they had done a feasibility study. Dr Schoeman said the profitability was tied up with the grant. The whole viability of the enterprise became questionable. Ncera Farms’ representative answered that an extensive resource survey had been done and that they could give sound advice. Each farmer would be assisted with planning, but there were still factors outside their control, like the weather. Normal farming activities would not include the cost of social services that were eating away the profitability, such as security. Once the farmers had occupied the land, there would be a larger amount of people living on the farms, which would reduce the threat of stock theft. The cost would then come down. The farmers would be able to make a good living.

Mr Abram asked for a report that would indicate how much each beneficiary would get and what sort of enterprises they would run. He did not want to be party to something with all the signs of collapse. He wanted to see all the factors. Mr Malatji said he had all the details of all the beneficiaries and knew what each of them wanted to do. He also had their business proposals. The service centre would be there to help them. All the details would be in the report. Mr Marais said the National Department of Agriculture administered the settlements, the Board was not involved. They could do the report in writing. Mr Radebe requested that the report include their disposal policy.

Mr Ramphele was not really concerned about the settlement of farmers. He thought Ncera offered an opportunity to train the community in agricultural skills.

Mr Holomisa asked if the money generated by the dairy had been mentioned anywhere in the report. Mr Marais said the dairy showed a gross profit of R62 000. It was run on the tribe’s land and the milk was only sold to the members of the community.

Mr Holomisa asked what was expected of the beneficiaries. He asked what the basis for the allocations was. Mr Malatji said they had used the state’s land allocation policy to allocate the farms. The beneficiaries would be put on a lease-hold with the option to buy the farm.

Ms Ntuli was worried about what would happen to the farm workers when the beneficiaries arrived. Ncera Farms’ representative said the farm workers would be retained, except the security guards. Mr Ramphele said the arrangements with farm workers had to be in line with government policy.

Ms Ntuli asked if Ncera Farms’ planning was integrated with that of other relevant departments or agencies. Mr Marais said Ncera was part of the Department of Agriculture. They could plan up to a point, but then they had to take the plans to the Minister and Director General. Mr Malatji said their committee consisted of many stakeholders.

Primary Agriculture Educational and Training Authority (now AgriSETA)
Mr Machiel van Niekerk, Chief Executive Officer of the former PAETA, said they had amalgamated with Secondary Agriculture SETA (SETASA) and formed the Agriculture SETA (AgriSETA) in July 2005. Their full levy income amounted to R59 million, making them one of the smallest SETAs. Plant production enterprises supplied 55% of the levy, animal production 13%, mixed farming 22% and others 10%.

PEATA’s governing body consisted of 18 members, nine from employers and nine from labour. There also was an audit committee and executive committee. The latter had six members and the chief executive officer. There were twelve staff members: six black and six white, of which seven were female and one disabled.

Overall PAETA achieved 90% of their performance indicator goals, and received a 5 out of 5 rating from the Department of Labour.

PAETA’s total revenue was R93 million and their expenses were R90 million. Their annual financial statements and Audit Report did not yield any qualifications, matters of emphasis or significant matters.

PAETA had committed R85 million to more than 20 projects, ranging from learnerships, land reform, capacity building of providers and governance.

Mr Van Niekerk said the success of land reform was dependent on integration. They estimated that they could make a real difference if they had an additional R50 million a year for at least five years. Other challenges could be met by capacitating learning centres, especially Agriculture Colleges, into centres of excellence, high quality, relevant and in depth agricultural and agricultural processing research, the creation of infrastructural linkages to make down-stream activities more accessible to small farmers, and an impact on extension and monitoring services.

Discussion
The Chairperson said some of the recommendations of the Land Summit would address some of the challenges Mr Van Niekerk had mentioned.

Mr Abram believed it was a major challenge that departmental officials could not merely employ a person on the basis of tertiary qualifications, but people needed to be put on specific courses. He asked if there was a programme for public servants that could be tailored to change people’s mindsets. The government needed capacity. Mr Van Niekerk said the PSSETA trained public servants. They would welcome the challenge and would like to speak to relevant departments to touch on the concept of working together. They had to turn things around. The different groups would have to get together. PAETA had close ties with the National Department of Agriculture.

Referring to farmer settlement, Ms Ntuli asked if they provided training before or after settlements and if it included financial management training. Mr Van Niekerk replied that unfortunately they only got involved after a project had been launched and problems arose. They had to create joint ventures and make provision for specific training before the start of projects.

Ms Ntuli asked how learners were identified. Mr Ramphele said PAETA’s training should focus on the poor. He asked if they had made any serious attempts to reach out to the poor. Referring to a strategy to reach out, Mr Van Niekerk said they had had very little media exposure, because it would put pressure on funds.

Ms Ntuli enquired about on-farm training. Mr Van Niekerk answered that most of their training was on-farm training.

Mr Radebe enquired about extension services. He also asked what relationship they had with extension officers and what could be done to improve services. Mr Van Niekerk said extension officers had a serious problem. They were not capable of doing their jobs properly because of capacity constraints.

Mr Radebe said that according to his figures, 5 000 people had started a program, but only 519 had finished it. He asked why. Mr Van Niekerk said the final results would only be seen after 18 months. Their drop-out rates were between 5 and 7%.

Ms Ngaleka asked Mr Van Niekerk to share the Barberton daisy success story. Mr Van Niekerk said the ladies imported cuttings from the Netherlands and grew the flowers in South Africa. No flowers were exported as of yet, but they had been very successful. Everyone had their own greenhouses, and relied on expert support.

Ms Ngaleka asked how they networked with the eleven agricultural colleges. Mr Van Niekerk said the agricultural colleges had serious problems. There was uncertainty whether they should go to the Department of Education or the Department of Agriculture; therefore nobody was prepared to put money into them.

Mr Ramphele said each province had five districts, meaning there was a total of 45 districts in the country. He asked if PAETA had a presence in all of these districts, because PAETA was not seen in some areas. Mr Van Niekerk was not sure about their presence in every district. They did not have provincial offices. He acknowledged the problem and mentioned the availability of money as a problem. They were only a phone call away, but this might not be sufficient.

Mr Ramphele said whites occupied four critical staff positions. He said not whites should occupy these positions. He implored PAETA to look at the situation, especially the position of the grants administrator. Mr Van Niekerk said the new board had been dealing with this problem. They were trying their best to look at it. He said most new farmers would like to talk to grant administrators in their own languages.

Mr Ramphele said reports indicated that PAETA was one of the better SETAs. He asked what strategies they had to address the general complaints people had about SETAs.

Ms Ntuli asked if they provided specialised or general training. Mr Van Niekerk said they provided specific training. They tried to get training providers that could contextualise the training to the required needs. They also looked at fundamentals, such as literacy. They had general training and electives. They tried to be very focused.

Mr Ramphele asked for assistance on the restructuring of agricultural colleges. Mr Radebe asked what the advantages and disadvantages would be if the colleges stayed with the Department of Agriculture. Mr Van Niekerk did not know where the colleges belonged, but it was his personal opinion that they should stay with the Department of Agriculture. He was not sure if the Department of Education would understand agriculture.

Mr Ramphele asked if their budgetary constraints would worsen. Mr Van Niekerk said they would try to get support from the National Skills Fund (NSF). R50 million per annum for at least five years would help to make a difference. Their budget constraints were of such a nature that they needed to get additional funds.

Dr Schoeman found the presentation illuminating, but he did not know how the challenges would be met. Dr Schoeman said the success of land reform would depend on training. 

The Chairperson hoped the Committee took note of the challenges.

Adoption of minutes
The Committee adopted the minutes from the meetings held on 11 and 12 October 2005.

The meeting was adjourned.