National Agricultural Marketing Council & Ingonyama Trust Board 2006 Annual Reports: briefings

Meeting report

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
17 October 2006
NATIONAL AGRICULTURAL MARKETING COUNCIL & INGONYAMA TRUST BOARD 2006 ANNUAL REPORTS: BRIEFINGS

Chairperson: Ms D G Nhlengethwa (ANC)

Documents handed out:
National Agricultural Marketing Council (NAMC) Annual Report Presentation
National Agricultural Marketing Council (NAMC) Annual Report
Presentation on Annual Report for the year ending 31 March 2006 by the Ingonyama Trust Board
Ingonyama Trust Board Annual Report for 2005/2006
Notes on Slides: Presentation on Annual Report for the year ending 31 March 2006 by the Ingonyama Trust Board
An extract from Deed of Grant 4671 of 1875 … [Ingonyama Trust Board]
Information Services: Research – Brief Analysis of NAMC Annual Report
Information Services: Research – Brief Analysis of Ingonyama Trust Board Annual Report

SUMMARY
The Committee was briefed on the Annual Report 2006 of the National Agricultural Marketing Council. The briefing emphasised the importance of trade intelligence, improved funding especially of research, and granting of executive powers. Members sought clarification about the Council’s aims and objectives, expressed their concern about abject rural poverty and the necessity to alleviate it by creating jobs and added value products, concern about the ownership of such assets as game farms almost entirely by overseas and privileged South African investors, the need for co-operation, discussion and sharing ideas between departments and agencies, unfilled vacancies and a decrease in the number of outreach workshops held, and supported the Council’s call for an audience with the Minister and to be given the necessary resources and mandate.

The Committee was also briefed on the Annual Report 2006 of the Ingonyama Trust Board. Whilst in law and statute the Board owned land – to the extent that the Trust was the largest landowner in KwaZulu-Natal – the real owners were the Traditional and Community Authorities. The Auditor-General had qualified the accounts once again but none of the qualifications related to financial mismanagement. With regard to land holdings, the Board considered the qualifications to be harsh and unnecessary since the Deeds Registry had not always updated its records. Of great concern was the introduction of new legislation under the Municipal Properties Rates Act of 2004. Members expressed the view that the Board should be enabled to undertake its own developments to benefit communities, sought clarification on sustainability of jobs, on the Auditor-General’s observations, and asked for the latest information on privatisation of forests and staffing levels.

MINUTES
The Chairperson welcomed Members and delegates, tendered apologies, and proposed deferring adoption of previous minutes to a subsequent meeting.

Although two short of a quorum, Mr S Abram (ANC) proposed beginning the meeting, since there would be no voting.

Mr A H Nel (DA) did not object to beginning the meeting, but said that attendance was “not good enough”. He added that half his party’s membership of the Committee was present and the other Member was on his way.

The Chairperson said that other Committee Members were on their way too.

National Agricultural Marketing Council (NAMC) Presentation
Dr Mohammad Karaan (Chair), Ms Dora Ndaba (Vice-Chair), Mr Ronald Ramabulana (Chief Executive Officer) and Ms Lina Keyter (Council Member) represented the NAMC.

Mr Ramabulana thanked the Chairperson for the opportunity to present an overview of the Council’s Annual Report. He outlined the Council’s strategic programmes - of which the theme was Strategic Positioning of SA Agriculture in Changing Global Markets - including Council activities such as outreach/marketing schemes and food price monitoring. His explanation of service delivery trends of the Council included statistics (expected number and actual number) of Council meetings, Executive Committee meetings, Management Committee meetings, submissions to the Minister, and Ministerial enquiries. Corporate governance structures included the Audit Committee, Human Resources Committee, Risk Management Committee, Executive Committee, and Management Committee. The actual number of workshops achieved (21 reaching 1736 farmers) under outreach/marketing schemes had fallen short of the target of 38 workshops reaching 2500 farmers: reasons for this included changed strategy since outreach did not provide key support such as market access, capacity building, and finance, while the new strategy focused on business linkages. Statutory measures introduced included extension of the Maize Marketing Scheme and appointment of inspectors in the potato industry.

Mr Ramabulana spoke further of the importance of the Council’s Markets and Economic Research Centre (MERC), its research areas of trade intelligence which were important in order to develop new markets such as India and Thailand, competitiveness, supply chains analysis, statistics, and rural livelihoods, and the Markets and Economic Research Fund, Section 7 Committees, academic support programmes, and a research library. Examples of current research projects included possibilities for fruit exports to Russia, regulatory constraints and challenges, the possibility of government intervention to remove bottlenecks, a study to assess the impact of RSA class 1 fruit exports to African and Indian Ocean Island countries, a SA-New Zealand comparative study on the effects of deregulation, a study of taxes in the agricultural sector, supply and demand models for the potato industry, rural and urban food price monitoring, input cost monitoring, and input on deregulation for agricultural efficiency and productivity.

Trade intelligence was highly important if South Africa was to be competitive and win new markets. In particular it was necessary to lobby for an increase in the number of agricultural trade attachés and obtain intelligence about new markets. Difficulties that the Council was experiencing in obtaining data on rural prices for its Food Prices Monitoring programme (about which the Committee had been briefed in detail in its 5 September meeting) were being addressed. The Council’s limitations included, in particular, limited funding of only R16 million a year compared to much more generous funding of similar bodies in Australia and the USA, and its limited executive powers, which were to be addressed through the review of the Marketing of Agricultural Products Act (MAPA), 1996 (Act No. 47 of 1996).

Discussion
The Chairperson thanked Mr Rambulana for his presentation.

Mr Abram asked that jobs must be created to alleviate abject rural poverty and added value products be developed, rather than sending raw or unfinished products to the major centres. Game farms were almost wholly owned by overseas or privileged investors. He asked the Council to give the Committee ideas on intervention on behalf of ordinary people and creating jobs in rural areas, and said that co-operation and discussion between departments and agencies was essential: there should be “cross-pollination” rather than an apparent “operating in silos”.

Mr Nel asked if the Department of Agriculture should give more inputs on the International Trade Administration Council (ITAC).

The Chairperson asked what steps had been taken to fill the vacant positions for economists, and if the reduction in the number of outreach workshops compared with the previous year had had a negative impact.

Mr Rambulana said that having fewer workshops had not had a negative impact in terms of performance with the financial resources available.   Five of the seven vacancies for economists had now been filled, but more researchers were needed, and the Council was working with the universities to that end and developing skills in order to fill those positions.

Dr Karaan explained some frustrations that the Council faced: in particular, insufficient statutory powers to do what was needed – it was not enough to be just an advisory body; insufficient interaction with the Minister of Agriculture; paucity of funding for research compared with other countries, for example Chile and New Zealand; deregulation had not been well implemented, as compared with other countries like New Zealand which had taken full advantage of deregulation; paucity of market intelligence - more agricultural trade attachés were needed to enable South Africa to compete on equal terms with competitors; in particular South Africa was beaten in the Japanese and Chinese markets and it was necessary to promote the Council as the key agricultural marketing agency and promote exports. He further explained that the biggest casualty of deregulation had been market access for black farmers and to help them they recommended reintroduction for five years of the kind of marketing schemes that under the apartheid regime had assisted white farmers; he referred to a view expressed by the late Dr Martin Luther King that transformation was a function of the law.

Mr E T Lucas (IFP) said that if there was no mandate, the Council could not be expected to do its job.

Dr A Van Niekerk (DA) said that there should be interaction between the Council and the Department of Trade and Industry, and that if South Africa remained uncompetitive, there would be escalation of the problems of rural poverty and the drift to the cities. Though the rural economy constituted only 2% of the gross national product, it was essential to retain and develop it.

Mr Abram said that it was necessary to act decisively and congratulated Dr Karaan and the Council for their frankness in interacting with the Committee. It was not enough to be a member of the United Nations, if a country did not participate sufficiently in the international economy.

Presentation by the Ingonyama Trust Board
Judge S J Ngwenya (Acting Chair), Advocate W E R Raubenheimer (Board Member), Mr Chris Aitken (Secretariat) and Mr Amin Mia (Secretariat) represented the Ingonyama Trust Board.

Judge Ngwenya thanked the Chairperson for the opportunity to present an overview of the Board’s Annual Report. He explained the matter of communal land. Whilst in law and statute the Board owned land – at the end of 2006 to the extent of 2.7 million hectares with the Trust being the largest landowner in KwaZulu-Natal – the real owners were the Traditional and Community Authorities which enjoyed jurisdiction on Trust land (the 224 such Authorities were listed in the Annual Report.) These were now represented at District Municipality level and there was now a house of Traditional Councils for each of the District and Metro Municipalities. This presented an additional challenge to the Board and to the Trust to ensure that its policies were in tune with those of the various Municipalities, especially their Integrated Development Plans (IDPs). The Trust’s mandate was to manage land for the benefit of the community, and disposed of land only when there was agreement that land could be alienated. The Board preferred leases to Permissions to Occupy (PTOs).

The Board was naturally concerned that the Auditor-General saw fit to qualify the accounts once again. It should be noted that none of the qualifications related to financial mismanagement. Whilst the qualifications were important to help and improve the management of the Board’s affairs, it was arguable whether the matters raised were justified as qualifications. This was evident from the comments made in previous years. In particular, reference was made to the issue of rates allegedly owed by the Board to several Municipalities. The Board was of the view that it was exempt in any event by virtue of the provisions of the Rating of State Property Act, 1984. The opinion of the Department of Land Affairs and the Department of Provincial and Local Government was inconclusive and the Board was therefore, at the suggestion of the Department of Land Affairs, seeking another opinion from Senior Counsel. Of great concern was the introduction of new legislation under the Municipal Properties Rates Act of 2004 that would introduce property rates in respect of every square metre of land in the country whereas the previous legislation covered mainly urban areas.

With regard to land holdings, the Board considered the qualifications to be harsh and unnecessary since the Deeds Registry had not always amended its records of many properties following approval of substitution diagrams by the Surveyor-General. It was the responsibility of the Deeds Registry to ensure that their records were correct and reliable. By way of illustration, an extract from Deed of Grant 4671 of 1875 had been circulated to the Committee. At that time imperial measurements and only rudimentary surveying techniques were used.

With regard to improvement of debtor control, it was now possible, under steps taken by the Board, to identify all debtors and take appropriate action against defaulters. The Board had approved a credit control policy and action was taken against major debtors. Debt collectors were interviewed and appointed to assist with the debt collection process.

The Board would during the coming year continue with the implementation of its Strategic Plan; in addition, a web site would be commissioned – this would include the legislation, the Annual Report, and an application form in respect of requests for the grant of tenure rights. The Board was also negotiating for the acquisition of new premises. At present the Board’s Secretariat was housed within the offices of the Department of Land Affairs Provincial Office. These offices were inadequate and needed by the Department for its own purposes. The Board proposed to acquire stand alone premises on the outskirts of Pietermaritzburg.

Another major activity of the Board during the present year was to review its policies, some of which required review because of Treasury Regulation requirements, some in the light of working experience and some in the light of comments raised by the Auditor-General in his report.

Discussion
The Chairperson thanked Judge Ngwenya for his presentation.

Mr Abram asked if there were any Black Economic Empowerment (BEE) or joint ventures following the granting of mineral rights. He further asked for latest information on the privatisation of forests and the Trust’s plans to protect the community’s prime land given that most prime land in the country was adjacent to coastal areas.   In this regard the Board should acquire the capacity to undertake developments, including such developments as shopping malls, by itself in order to benefit the communities. “Crown jewels” such as the V & A Waterfront were being sold to foreign interests to the detriment of local inhabitants. Schemes whereby those of modest means such as pensioners could buy shares in developments were desirable with the aim of “capacitating our own people.”

Judge Ngwenya advised that the Board insisted on joint ventures. The Department of Water Affairs and Forestry (DWAF) had halted privatisation, which means the community was still the owner in the narrower sense of the term. The Board welcomed the suggestion that it should be proactive and safeguard pristine lands for the benefit of the local communities, and sought the support of the Committee.

Mr D M Dlali (ANC) asked about issues of land restitution, and the Auditor-General’s Report.

Judge Ngwenya said that is was academic to make land claims on land owned by the Trust, since the Trust owned this land on behalf of the people who had been removed. The Trust owned land only in the official sense. Land claims put an interdict on development. Once land became the subject of a land claim, a farmer using the land would stop farming. The Communal Land Rights Act (CLaRA) had the effect of giving people better rights. The Auditor-General said that the Board had departed from Statements of Generally Accepted Accounting Practice IAS 16 (AC123), but had not violated them. The Board’s change in its accounting policy in that it had not shown land values in the accounts was to bring the Board into line with the parent Department of Land Affairs, and after consultation with the Auditor-General and the Board’s Audit Committee. The Board maintained that it was not economically cost effective to value 2.7 million hectares of land, which varied substantially in quality and use including unusable mountainous terrain, and land with a restricted use value such as proclaimed nature conservation areas and state forests. With regard to the Auditor-General’s identifying weaknesses in financial management, the Board accepted this and now had an Audit Committee and Internal Auditors and had approved an additional post to assist with the accounting functions. Policies and procedures were being reviewed to ensure that the Board’s Financial Regulations and Treasury Regulations were aligned and implemented. 

Mr Abram asked about the Board’s co-operation and interaction with other departments and agencies and frustrations that it encountered. The Committee needed to know about these matters.

Advocate Raubenheimer replied that the Board did meet regularly with various Government agencies; in particular there was co-operation with the Department of Housing. The Trust had made land available for new housing units at 38 places. The Board aimed to advance Government policy, and while it experienced frustrations, sought by meetings and consultations to resolve them.

The meeting was adjourned.