Onderstepoort Biological Products; National Agricultural Marketing Council Budget & Strategic Plan 2007/8

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
6 March 2006
ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD & NATIONAL AGRICULTURAL MARKETING COUNCIL BUDGETS AND STRATEGIC PLANS 2007/8: BRIEFINGS

Chairperson: Ms D Hlengethwa (ANC)

Documents handed out
Onderstepoort Biological Products LTD
National Agricultural Marketing Council

Audio recording of the meeting

SUMMARY
Onderstepoort Biological Products and the National Agricultural Marketing Council presented their 2007/08 budgets and strategic plans.

Members wanted to know if Onderstepoort was prepared for an outbreak of avian flu; how it helped emerging farmers and how it made emerging farmers aware of its services. They also wanted to know more about the academic support programme of the Council and how it supported black agri-businesses.

MINUTES
Onderstepoort Biological Products (OBP) LTD Presentation

Ms N Shabalala (Chairperson OBP Board) and her team took Members through the Business Plan for 2007/2008. The presentation highlighted some of the goals and objects OBP had set. Mr M Van Jaarsveld (Chief Financial Officer) informed the Committee that they hade a budget totalling R31 million for 2007/2008. He added that OBP has budgeted for a loss of R13 million. He explained that this loss was mostly due to the negative trend which had started in 2004/2005. He added that OBP is hoping to turn this around within the next year. (See presentation)

Discussion
Dr A Van Niekerk (DA) wanted to know if OBP was prepared should there be an outbreak of Avian Flu in South Africa. He wanted to know what OBP’s relationship with the Botswana facility is. He commented that live vaccines had always been a debatable subject and wanted to know if it could not have been identified earlier that the European Union would not be importing live vaccines.

Mr S Seane, OBP Non-Executive Director, replied that there is a strain of Avian Flu in the country; however it is not as bad as it is in other countries. Research is being conducted collaboratively between OBP and the University of Cape Town. The research into other vaccines is not short term but rather long term. There are different strains of the disease that had to be looked at before a vaccine could be formulated. The research that OBP is currently working on started three years ago and a vaccine has not been created yet. Had research started earlier OBP would have been better off at this point.

The OBP Acting CEO, Mr F Hadebe, replied that the competition with Botswana is welcomed as it is healthy to have competition.

Mr A Nel (DA) wanted to know if OBP has any intentions of listing on the JSE.

Advocate D Mitchell, OBP Non-Executive Director, replied that OBP has no intention of listing on the JSE. The stock exchange could be very tough to master. OBP owns their own land and buildings and there is no debt to be repaid on buildings; however they are now responsible for their own maintenance work, water and electricity.

Mr J Bici (UDM) wanted to know for how long the Acting CEO would remain acting. He also wanted to know how emerging farmers are being helped by OBP. He asked if animal diseases could be predicted. He wanted to know if the projection that export sales would increase after 2007/2008 is realistic.

Mr Seane replied that if outbreaks could be predicted, there would be no need for OBP. Certain weather patterns could indicate the possibility of an outbreak and farmers then have to ensure that animals are vaccinated.

Mr D Dlali (ANC) commented that appointing people in acting positions in the public service is an ongoing problem. He did not want to see a male-dominated delegation again should the OBP be asked to appear before the Committee in the future. He asked that more clarity be given why travel expenses would be increasing and he also wanted to know more about skills development and the equity plan. He added that this was not reflected in the presentation. He also wanted to know if OBP would be expanding their mandate to include human science as well as animal science. He commented that he has a problem when the public service makes use of consultants to do work for them. He wanted to know if it would not be cheaper for them to employ staff on a full time basis to do the work.

Ms Shabalala replied that at the last meeting with the Committee the team was still intact. However a week later the CEO tendered her resignation and had been appointed in another position already. OBP then had to replace both a board member as well as a CEO. The process of finding a CEO has started and candidates should be interviewed shortly. OBP felt that it would be irresponsible for them to just appoint a CEO without looking at the necessary qualities needed. She added that the current acting CEO does have a business of his own to run and has indicated that he would only be available for 6-8 months.

She added that at times it is useful for them to make use of consultants, as some of the projects that have to be completed are short term and could cause problems if someone is appointed permanently as a severance package would then have to be paid. OBP would also save on having to pay benefits such as medical aid and pension fund contributions. She added that by October there would definitely be a difference in the composition of the delegation. There is a plan in place to implement a skills development plan. However an audit would first be done to determine what skills are still needed in OBP after which the programme would be opened to outsiders.

Ms B Thompson (ANC) wanted to know how the OBP marketed themselves.

Mr P Ditshetelo (UCDP) wanted to know how visible the OBP is to emerging farmers and if their products are readily available to emerging farmers.

Ms M Ntuli (ANC) wanted to know if they had measures in place to help those farmers who do not have access to vets when there is an outbreak of disease in the area.

The Acting CEO replied that there is a strategic document on how to help and make emerging farmers aware of the OBP. A contract has recently been signed with the SA Broadcasting Corporation (SABC) for radio advertisements and talk shows in different languages. The programmes will target emerging farmers living in rural areas.

National Agricultural Marketing Council (NAMC) Presentation
Mr Ronald Ramabulana (Chief Executive Officer (CEO)) took the Committee through the presentation. The presentation covered the following aspects: issues raised in the last Committee meeting, the review of the Agricultural Marketing Environment, Food Pricing, the Markets and Economic Research Centre and the Academic Programme as well as the 2007/2008 Budget. (See attached document).

Mr Mohammed Karaan (Chairperson) added that they would like the NAMC to be a centre of market intelligence. He said they are currently working with an expert from New Zealand to help identify certain trade policies that would be useful to South Africa. He added that South Africa is not utilising its bilateral trade agreements fully. He would not necessarily have entered into an agreement with China. He felt that trade agreements pertaining to the agriculture industry should rather be negotiated by people from the industry rather than from just the Department of Trade and Industry (DTI).

Discussion

Dr Van Niekerk commented that NAMC is funded by government but does not listen to government and that the agriculture industry is vulnerable at the moment. He wanted to know how the NAMC sees the future of agriculture in the country. He also wanted to know if the price levies should not have been used when the time was right.

Mr Karaan replied that a decision was taken that the NAMC would only be concentrating on the domestic market, while the Department of Agriculture would be focussing on the international market. The countries that were quick to deregulate their food prices stood to benefit more from it. South Africa was one of those countries who were able to deregulate their prices fairly quickly. However, after South Africa had deregulated its food prices, it did not change the composition of trade goods. This has led to the market being saturated.

Mr C Greyling (ANC) wanted to know who the other donors for the Market and Economic Research Centre were. He also wanted to know if the fives students identified to receive funding from NAMC for their Masters Degrees and PhDs would be studying at the same university.

The CEO replied that some of the donor funding came from the maize sector.

The Chairperson wanted to know whether bursary students would have to work for the NAMC after completion of their studies.

Mr Ditshetelo wanted to know if the academic support programme had been researched anywhere.

The CEO replied that the bursary would cover the cost of the tuition, accommodation and research work. Students who are funded are not expected to work for the NAMC once they had completed their studies.

Ms B Ntuli (ANC) wanted to know if the NAMC had created a market for those farmers who have a harvest but do not know where to sell it. She wanted to know if Agricultural Colleges are being used to train emerging farmers. She raised some concern about research being conducted in other countries and the information received from them not being accurate.

The CEO replied that the Agricultural Colleges are being used again for training of farmers.

Mr Dlali wanted more clarity on how South Africa was not taking full advantage of the trade agreements. He also wanted to know more about Mr Karaan’s view on the China Trade Agreement which South Africa had signed. He commented that the Accelerated Shared Growth Initiative of South Africa (ASGISA) might not help to half poverty, even if the economy does grow at 6%. He explained that this is mainly due to the fact that a lot of the jobs that are created in the economy are either part time or a contract position which ends after a few months. He also wanted to know if the NAMC could shed light on the recent Sudan Red Dye which was found in some spices as reported by the Sunday Times.

Mr Karaan replied that the only limitation placed on China is that they cannot export any textiles and machinery into the country. Within the next ten years, China will start importing vegetables and fruit as SA was one of the world’s biggest producers of these products. He said that this was not looked at when the trade agreement was signed. He added that all the Chinese products do not come directly from China but via Hong Kong. He told the Committee that this is why it is important for the country to decide who they would trade with.

The CEO replied that NAMC does not oversee the production of food spices. This fell under the Department of Health.

Mr P Holomisa (ANC) wanted to know who represented the Agricultural Sector when trade agreements affecting the industry are discussed. He commented that it appears as if the sector is not well represented.

Mr Karaan replied that the NAMC does not have a representative on any of the agricultural bodies. He raised some concern about having an agricultural forum decide on what countries South Africa should trade with.

Mr Bici wanted to know how many farmers benefited from the dedicated R2 million allocation and what it was used for.

The CEO replied that the R2 million was used to send farmers overseas to tradeshows. A list of the farmers that have been helped is available and will be sent to the Committee.

The meeting was adjourned.