Agriculture Conditional Grants & Capital Expenditure (4th Quarter 2006): briefings by Provincial Departments of Agriculture

NCOP Finance

09 May 2007
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Meeting report

FINANCE SELECT COMMITTEE AND SELECT COMMITTEE ON LAND AND ENVIRONMENTAL AFFAIRS

FINANCE SELECT COMMITTEE AND SELECT COMMITTEE ON LAND AND ENVIRONMENTAL AFFAIRS
10 May 2007
AGRICULTURE CONDITIONAL GRANTS & CAPITAL EXPENDITURE (4TH QUARTER 2006): BRIEFINGS BY PROVINCIAL DEPARTMENTS OF AGRICULTURE

Chairperson: Mr T Ralane (ANC, Free State)

Documents handed out:
Preliminary Outcome of Conditional Grants and Capital Expenditure as at 31 March 2007 (06/07 Financial Year)
Mpumulanga Department of Agriculture and Land Administration
North West Department of Agriculture, Conservation and Environment
Limpopo Provincial Government Department of Agriculture
Gauteng Public Hearing on Conditional Grants and Capital Expenditure
Northern Cape department of Agriculture Public Hearing on Conditional Grants and Capital Expenditure
Free State Department of Agriculture: Part1 & Part2
Kwazulu Natal Department of Agriculture
Eastern Cape Provincial Department of Agriculture
Western Cape Department of Agriculture

Audio Recording of the Meeting

SUMMARY
The  provincial Heads of Departments for the Departments of Agriculture in Limpopo, Gauteng, Northern Cape, Free State, Kwazulu Natal, Eastern Cape and Western Cape presented their reports to the joint sitting, relating to the expenditure that these departments had incurred in the past financial year, together with the challenges each department faced and their intended plans for the current financial year. Challenges identified included lack of start up capital for contractors and low supply of mechanisation from suppliers, scarce skills, difficulties in group dynamics, and under funding for projects. Many of the provinces reported fair spending on the Comprehensive Agricultural Support Programmes and Land Care, with poor spending on Disaster Management and relief. The Provincial Infrastructure Grants were also mentioned. The Departments outlined some of the steps being taken. KwaZulu Natal Provincial Department stated that it had managed to progress no further since the Auditor General's report had highlighted R90 million that could not be properly accounted for due to the lack of proper documentation,

Members posed questions around the issues of under spending, which were common to all provinces. It was clear that departments were under utilising resources and in some instances raised allegations of improper use of taxpayers’ money. Other issues that were brought to light were irregular spending patterns and the lack of planning capacity within the departments. Questions were asked on extension officer training and the relationships with the traditional leaders. There seemed to be lack of coordination and planning between the departments and municipalities. Further issues related to roll overs to the following financial year and the plans for unspent funds. No questions were asked of KwaZulu Natal as the Head of Department had only just been appointed and questions would be deferred to a later meeting.

Gauteng Provincial Department of Agriculture Briefing
Dr Steven Cornelius (HOD, Gauteng Department of Agriculture) stated that his department launched the Gauteng Agricultural Development Strategy and that they were focusing on land use and the complexities around that. He mentioned that their budget was spent mostly on infrastructure,  specifically on poultry, housing and fencing, piggeries and workshops as their development strategy was focused on Controlled Environment Farming. He admitted that his department’s expenditure on Landcare and on the Comprehensive Agricultural Support Programme (CASP) was about 95% percent of the budget, and that they had under spent on the capital because they were currently operating on month to month leases until they could move to the new buildings that had been purchased. He mentioned that the department was engaged in food gardens projects whereby it supplied families with seeds, implements and funds to provide boreholes. He said that they had a target of 9000 projects and had currently exceeded the target. He also said the department was planning to introduce further projects under CASP.

Eastern Cape Provincial Department of Agriculture Briefing
Mr Amon Nyondo (HOD Department of Agriculture, Eastern Cape) cited that his department had spent R6.5 million out of the R6.6 million allocated to Land Care. He said he also received additional funding that the department had requested but that the funding arrived late and thus could not be put to use so were rolled over to the current financial year. This roll over would be added to the current budget and will be spread out through the department’s intended projects. He said that most of the funds allocated to CASP and conditional grants had been put into infrastructure development as this was fundamental to the development of agriculture. He further stated that the Department had challenges of lack of financial capital for contractors (start-up capital) and low supply of mechanization from suppliers. He also remarked that the department had come up with remedial measures such as agreements with financial institutions to provide start-up capital to contractors. Mr Nyondo concluded by notifying the Committees that the Department had R8 million which is still to be spent in this current financial year.

Free State Provincial Department of Agriculture Briefing
Mr Tshepiso Ramakarane (HOD, Free State Department of Agriculture) began by giving figures allocated for the three conditional grants (CASP [R25,3m], Land Care Programme [R3,9m] and Disaster Management [R6,6m] ). He mentioned that the department had spent the entire budget on CASP, for Land Care 96% of the budget was spent, but just 48% expenditure was made in relation to Disaster Management. Mr Ramakarane admitted that the department’s performance on Disaster Management was a cause for concern and that the reason behind it was that the contracted service provider’s performance was not up to par and the department terminated his contract.  He went on to highlight that the department had outstanding commitments as follows: on CASP: R10.27million, on Land Care: R0.14million  and on Disaster Management: R3.9million. Mr Ramakarane stated that the department faced challenges in the demand for scarce skills and group dynamics. In conclusion, Mr Ramakarane enlightened the community on the department’s progress to remedy the challenges it faced. He said that they had developed sufficient capacity to monitor projects and had employed more staff to fill up the scarce skills vacancies.

Discussion
Mr E Sogoni (ANC, Gauteng) mentioned that the HOD for Gauteng had
not made mention of the department’s capital expenditure as other provincial departments had done.

Dr Cornelius stated that in terms of capital expenditure, the department had bought buildings that the department was supposed to move into, but at the moment was operating on monthly leases, so it would not make sense to spend on capital.

Mr Sogoni enquired why the Free State department was underspending, especially in the area of disaster management.

Mr Ramakarane responded that the department needed the funds as the province had experienced drought and that the natural disasters could never be anticipated. Furthermore the service provider who was hired by the department did not deliver as expected, and her contract was terminated once the department realised that her performance was below par. That was why there were unspent funds in this area.

Mr Sogoni further said he believed that the Free State Department did not do enough to support group empowerment, which might be the reason for the group dynamic constraints it was experiencing.

Mr Ralane advised Mr Sogoni to refrain from making general allegations that the Department was not supportive.

Mr Sogoni requested clarification on the Eastern Cape Department’s involvement in the Umtata Dam Project.
 
Mr Nyondo replied that the
Umtata Dam Project was one of the Department’s Land Care projects and that it was being funded by the Department.

He lastly made comment that the under spending within the Eastern Cape Department was a result of lack of planning.

Mr Nyondo accepted that planning was not as good as it should be, but the Department was working with service providers to improve around planning issues, where problems were not attributable only to the fault of the Department.

Mr M Mzizi (IFP, Gauteng) wanted to know who the beneficiaries were in the Eastern Cape rural areas where indigenous leaderships were found and how grants were made accessible to people there.

Mr Nyondo replied that the Department had a healthy working relationship with the Amakhosi and that the Department’s engagement in those areas was always done with the traditional leaders'   knowledge and approval.

Mr Mzizi questioned the Gauteng Department’s modus operandi in handling the implementation of projects, because he felt that most people believed that the Department’s projects were meant for ANC followers.

Dr Cornelius stated that
there was no discrimination concerning participation in the projects and that the Department would publicise projects for people to take part in but had no responsibility to persuade people to participate.

Mr L Van Rooyen (ANC, Free State) considered the employment of staff to monitor service providers by the Gauteng department was a waste of funds enquired the reason.

Dr Cornelius replied that the
department was in the process of revamping extension services so that it could hold extension officers accountable. He said each officer was given a particular number of farmers under his care and that through this process the department would be able to track performance of extension officers.

Mr van Rooyen further wanted the Gauteng department to explain the relationship or coordination between the department, and municipalities and the integrated development plans (IDP) as he had a feeling that there was no such cooperation.

Dr Cornelius mentioned that the department did interact on IDPs although this was a challenge. However, the Department was constantly in contact with municipalities on IDP presentation to ensure that they were aligned with the department’s policies, strategies and services.

Mr Van Rooyen wanted the Free State department to explain the relations between the allocated expenditure for CASP for the past financial years.

Mr Ramakarane mentioned that there were spill over projects from the previous financial years that led to the build up in allocations as some of the funds were used on spill over projects.

Mr M Robertson (ANC, Eastern Cape) congratulated the Eastern Cape department for their outstanding performance.

Mr Robertson raised his concern on the Treasury’s delay in availing funds to the various provincial departments and advised that this may lead to inefficiencies.

Northern Cape Provincial Department of Agriculture Briefing
Mr Wonders Mothibi (HOD, Northern Cape Department of Agriculture and Land Reform) mentioned that the Department had spent R15.7m of the allocated budget on CASP for the previous financial year. He highlighted the fact that the Northern Cape department had exceeded its budget expenditure in both CASP (103%) and Land Care (102%) while they managed to use 99.9% of the funds allocated to the Provincial Infrastructure Grant (PIG). The challenges his Department faced included lack of financing of production inputs and scarce skills. In closing, Mr Mothibi said there were plans to improve delivery on conditional grants, mentioning monthly expenditure review and ongoing monitoring and evaluation as some of the remedies.

Mr Ralane made comment that the Department was doing well in other projects except for CASP where there seemed to be fluctuations. He advised that the department should pay more attention to CASP.

Western Cape Provincial Department of Agriculture Briefing
Ms Joyene Isaacs (HOD, Western Cape Department of Agriculture) mentioned that her department had taken nine black wine makers to the wine show in Italy as well as cheese makers to France to improve their expertise. She said these initiatives were part of empowerment by the Department. She further said that currently 54% of the department’s land reform projects were successful but that there were gaps that needed to be attended to for productivity to increase. Ms Isaacs stated that the Department was looking at human capital development strategies as a long-term plan that would encourage the young to go into agriculture as a career. She gave records of the department’s spending patterns, highlighting the R4 000 under spending on CASP, R26 000 over spending on Land Care, and full utilisation of the PIG budget. Ms Isaacs closed off her presentation stating the department had under spent on drought relief as some of the payments had been made the previous financial year.

Discussion
Rev P Moatshe (ANC, North West) wanted to know why most of the provinces except Limpopo were not looking into poverty.

The Chairperson reminded Rev Moatshe that the departments’ presentations were in response to a letter he had sent to them and that the issues of poverty and human empowerment were not part of the agenda.

Ms D Robinson (DA, Western Cape) wanted to know where the drought-affected areas were in the Western Cape.

Ms Isaacs responded that some of the areas that were currently experiencing drought were Prince Albert, Laingsburg, and Ladismith.

Ms Robinson also wanted the Western Cape department to explain what the use of the phrase ‘sleeping partners' tail wagging the dog’ meant.

Ms Isaacs replied that this referred to the Department’s project in the Eden district, where the Department bought land for seventy farmers who had formed a trust to raise the funds. The majority of the farmers in the trust were just sleeping partners. They were the ones who were keen to accept an offer for the land from a property developer.

Mr Sogoni expressed concern that the issue of sleeping partners indicated that the Western Cape department was spending funds on people who were not poor and were not in need of such assistance.

Ms Isaacs explained that the group of farmers had a legal trust and that this put a barrier for the department to take action.

Mr Mzizi wanted the Western Cape department to relay its intentions for the funds that were not spent.

Ms Isaacs explained that there was a target of 29 projects under land care and the department managed to complete 28, which was the reason for the outstanding amount. She also explained that there were 904 beneficiaries in total from the drought relief programme, but many of the farmers had not come forward to claim benefits and the Department was still waiting on them to make claims.

Mr Mzizi also wanted an explanation from the Northern Cape on why they were appointing so many officers, some of whom were not properly qualified. He wanted to know whether the department had future plans for these officers.

Ms Isaacs stated that the Western, Eastern and Northern Cape departments were busy with extension officer training and they expected to have trained 225 officers in three years time. These were people already employed within the Department. The human capital development was targeted at youth with the right agricultural skills to recruit into the Department.

Mr Mothibi added that the private sector was competing for scarce skills in the market, making it hard to acquire officers with such expertise. He also said that they were planning to offer scholarships to matriculants with good performance in agriculture to remedy the problem of scarce skills.

Mr Sogoni requested an explanation from the Northern Cape on its ever-fluctuating expenditure on PIG, which raised suspicions of irregular expenditure.

Mr Mothibi replied that during the implementation of the project some service providers ran into cash flow problems and some projects did not meet safety standards with the South African Bureau of Standards, requiring the department to intervene. This was the reason for the fluctuation in spending patterns.

Kwazulu Natal Provincial Department of Agriculture Briefing
Mr F Adams (Acting HOD, Kwazulu Natal Department of Agriculture) made mention of the Auditor General’s report and said that the department had been stuck at that point since then. He stated that one of the major problems that plagued the Department was lack of supporting documentation, which was why R90 million could not be accounted for. Other problems mentioned were asset management, unauthorised or irregular expenditure, lack of proper records and uncleared suspense account. Mr Adams however mentioned that his Department had to make sure there were competent people in management, set up different sub committees for different processes with the ultimate goal of stream lining processes.

Mr Ralane pleaded with the Committee not to bombard the Department of Kwazulu Natal with questions because Mr Adams had just been newly appointed and still getting acquainted with the Department. He advised that the committee rather allow them time to work out the problems within the Department and then ask questions at the next meeting. He finally advised all provincial departments to deal with the problem of under spending as it was common to all departments.

The meeting was adjourned.

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