Budget &Strategic Business Plans 2006/07: National Agriculture & Marketing Council; Perishable Products Export Control Board

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Meeting report

AGRICULTURE AND LAND PORTFOLIO COMMITTEE
09 March 2006
BUDGET AND STRATEGIC BUSINESS PLANS 2006/07: NATIONAL AGRICULTURE AND MARKETING COUNCIL; PERISHABLE PRODUCTS EXPORT CONTROL BOARD

Acting Chairperson:

Ms D Hlengethwa (ANC)

Documents handed out:

National Agriculture and Marketing Council (NAMC) Strategic Plan and Budget: PowerPoint presentation
NAMC Five-Year Strategic Plan
Budget for the NAMC : 2006/07 Financial Year
Perishable Products Export Control Board (PPECB) Export Directory
PPECB Business Plan and Budget [please email
docs@pmg.org.za]

SUMMARY
The National Agriculture and Marketing Council (NAMC) reported that they had to come up with new plans to focus on enterprise development and agricultural and market research. No other organisation currently did this. They also planned to assist emerging black farmers. Regarding food price monitoring, they had collaborated with the Department of Agriculture, the University of Pretoria and Statistics South Africa (Stats SA) to publish the Food Cost Review and quarterly food price trends.

In marketing schemes, the NAMC had made progress in the red meat industry where they were facilitating market-based incentives for livestock marketing; in Black Economic Empowerment in the agriculture sector (AgriBEE) ownership options; and with infrastructure and stock improvement requirements. In enterprise development, their key activities were to develop and implement models for Agribusiness Support. They also wanted to compile a supplier database with profiles of black agribusinesses and develop supplier relations with major buyers of agricultural products in South Africa.

The Perishable Products Export Control Board (PPECB) then presented its strategic plans for 2006-2010. The goal theme of "transforming for sustainability" should be achieved through fostering business confidence; closing the gap between stakeholder expectations; implementing risk-based assessment services through an integrated food safety and quality management system; and transferring skills. One of its strategic focus areas was to build relationships with stakeholders by staying market-driven and responsive. Another focus area was to streamline the structure and management of the PPECB with a performance- based approach using a ‘balanced scorecard’. Development was a key concern, and they wanted to build capacity in emerging markets through skills and information transfer. They recommended a revision of the current legislation to enable the performance of food security, quality assurance, risk management and other ancillary services in the supply chain.

There was not enough time for the PPECB presenters to reply to the Committee’s questions so the Chairperson asked them to send written responses.

MINUTES

National Agriculture and Marketing Council briefing
Mr M Karaan, NAMC Chairperson, said that the current board had been appointed for two years and had been in place for ten months. The NAMC had had to come up with new plans and focus its efforts on assisting emerging black farmers, and enterprise development and agricultural and market research as no organisation currently did this. They were also interested in getting involved in international trade, but this would be difficult as this was mainly the domain of the Department of Trade and Industry.

The NAMC had undergone some restructuring. For example, a new Chief Executive Officer had been appointed and the organisation had examined some of its critical competencies needed for the future. The company was now ‘realigned’ better, with relationships created with the Land Bank, the Department of Agriculture, the Competition Commission and private industries.

Mr T Ramabulana, the new CEO, then outlined some of the highlights of the NAMC’s Strategic Plan. In food price monitoring, they had collaborated with the Department of Agriculture, the University of Pretoria and Statistics South Africa to publish the Food Cost Review and quarterly food price trends. The NAMC had also trained 80 provincial food price monitors and captured rural food price data from identified rural stores and ‘spaza shops’. They were working on a Memorandum of Understanding with Statistics South Africa, the Department of Agriculture and Provincial Departments of Agriculture.

The NAMC had carried out investigations into some of the statutory measures that affected them. They had approved the dairy, red meat and sorghum statutory measures. However, they had not approved those that related to imported cotton lint and recommended the immediate implementation of the Cotton Strategic Plan. A total of R18.1 million had been collected as levies for use by previously disadvantaged individuals (PDIs).

The NAMC had some marketing schemes in progress, such as in the red meat industry where they were looking into facilitating market-based incentives for livestock marketing; AgriBEE ownership options, infrastructure and stock improvement requirements. They were also looking at the AgriBEE ownership options for the provision of grains and the marketing of citrus products. They planned to produce a series of Annual Specific Growth Perspectives; collaborate with the table grape industry to undertake market research on China and Russia; and address marketing issues that came out of the CEOs Forum and the Presidential Working Group on Commercial Agriculture. Those institutions had dealt with competition issues, the cost of business, exports and food safety, among others.

Mr Ramabulana said that the NAMC wanted research fund to be ring-fenced for economic research purposes only, with the company contributing an amount to get it off the ground and other donors encouraged to contribute. The research council would come up with the study themes and other proposals would be received from universities and other research associates. The focus areas would include competitiveness, price analysis, markets, supply chains and policy issues. They were hoping to create partnerships with international research organisations as well.

Regarding enterprise development, their key activities were to develop and implement models for Agribusiness Support. They also wanted to compile a supplier database with profiles of black agribusinesses and develop supplier relations with major buyers of agricultural products in South Africa. Then they would link the agribusinesses in the supplier database to identified buyers. The NAMC would develop policies on export exposure visits and identify agribusinesses in the supplier database that were ready to export goods. Partnerships with other organisations would have to be created to facilitate the visits.

The NAMC also had to comply with statutory measures such as the monitoring and review of some of its activities, the need to report to the Department of Agriculture, the requirement to register directly affected groups and oversight by the Crop Estimate Liaison Committee. To assist these processes, the NAMC had planned four workshops. These addressed industry-specific competitiveness; trade strategies; market incentives, and the last was based on the report of the Fresh Produce Investigation. In total, the NAMC needed a budget of R19.7 million.

Discussion
Ms E Ngaleka (ANC) asked why cotton production had not been increased to maximise the levies that could be collected. Why had only 28% of the levies for dairy products been collected?

Mr Karaan replied that the 100% collection rate on cotton levies did not necessarily mean that cotton production was going well. In fact, cotton production was actually very low in South Africa due to cheaper imports from the Southern African Development Community (SADC) region, among other reasons. Repositioning the cotton industry would not fix the problem and would be very expensive. The dairy industry was very problematic as there was currently a clash between the dairy processors and the farmers. Big companies like Clover and Parmalat had refused to pay the levies. The NAMC was trying to mediate and find a way forward.

Mr B Radebe (ANC) noted that there were no specific targets for the number of black farmers they would assist. How many people would be identified? Why were the councillors of the NAMC all part-time workers?

Mr Karaan admitted that they did not have an exact number, but would look into getting an estimate for the Committee. The Councillors were only part-time as this is what the Minister of Agriculture had directed. She favoured this structure because she wanted the Council to maintain a purely advisory role without having to worry about managing itself. This model would be applied for two years to see if it worked.

Mr D Dlali (ANC) asked how many members of staff the NAMC would employ, as they required R7 million to pay their salaries.

Mr Karaan said that the NAMC had to have 26 full-time members, and even the part-time members had to be paid. The salary figure had actually been halved from last year’s when the salary figure constituted almost 50% of their budget.

The Chairperson asked what the NAMC could do to improve the quality of the ‘national herd’ owned by the PDIs.

Mr Karaan said that during apartheid, market schemes had helped many white farmers. The NAMC was now trying to do the same for black farmers. They were looking at procurement and pricing policies to help the situation. There had been a favourable reaction from the private sector that had to process the meat.

Perishable Products Export Control Board briefing
Mr N Hubinger, PPECB Chief Executive Officer, said that their strategic theme for 2006-2010 was "transforming for sustainability." This would be done by creating confidence, closing the gap with stakeholder expectations; implementing risk-based assessment services through an integrated food safety and quality management system; and transferring skills.

The PPECB’s service categories included: product and equipment inspection and certification; systems certification and auditing (of quality and food management systems); temperature management; laboratory services; standards and protocol management; statistical information, and advisory services and training.

One of its strategic focus areas was to build relationships with stakeholders by staying market-driven and responsive. Another focus area was to streamline the structure and management of the PPECB with a performance-based approach using a balanced scorecard. To maintain its ISO 17020 accreditation, the PPECB had instituted a skills competency accreditation system that was essential to ensure the PPECB’s international credibility and integrity.

Food safety was another key area, especially as the European Union (EU) had just passed a new General Food Law with new standards for the foods imported. EU representatives would also visit South Africa in October to ensure compliance with their new law, so the PPECB had to develop and implement new systems and structures by then.

Development was a key concern. They wanted to build capacity in emerging markets through skills and information transfer. The PPECB wanted to transform the demographics of its composition through Broad-based Black Economic Empowerment (BB-BEE) accreditation, ensuring that there was demographic representation at all levels, and create an organisational culture that embraced diversity. In 2003, 53% of all appointments were PDIs. In 2004, this had increased to 67% and in 2005, this number increased to 81%. Linked to this was a need for skills development through an improvement of leadership depth and capacity. Customers had to receive service from staff that were competent and so a basic skills course was on the cards.

The PPECB budget had grown at an average rate of 15% per annum. To build bridges between them and their stakeholders, there had to be better information delivery; a move to improve inefficiencies to lower costs; technical research and development; better management capacity; and better benchmarking and accreditation. The PPECB recommended a revision of the current legislation to enable the performance of food security, quality assurance, risk management and other ancillary services in the supply chain.

Discussion
Mr Radebe asked what had happened to their R4 million deficit from last year, and how they had managed to get a surplus of R300 000 – R600 000.

Ms Ngaleka asked if the PPECB was under any pressure abroad to label South African products in a certain way. What were the weaknesses in the current legislation and what changes did they want to see?

Adv S Holomisa (ANC) asked if the EU was keen on exporting Genetically Modified Foods to South Africa.

Mr V (Nadeco) said that during the Portfolio Committee visit, the PPECB had recommended that changes be made to the current legislation. Had they proposed amendments yet?

The Chairperson asked how South African products were rated internationally. In what way could the PPECB assist PDIs by outsourcing some activities to them, such as the transport of goods?

There was not enough time for the presenters to reply to the Committee’s questions, so the Chairperson asked them to send written responses.

The meeting was adjourned.

 

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