Agricultural Research Council & National Agricultural Marketing Council 2006/07 Annual Reports

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
11 October 2007
AGRICULTURAL RESEARCH COUNCIL & NATIONAL AGRICULTURAL MARKETING COUNCIL 2006/07 ANNUAL REPORTS

Chairperson: Mr R Mohlaloga (ANC)

Documents handed out:
Agricultural Research Council Presentation
National Agricultural Research Council Annual Report 2006-2007
National Agricultural Marketing Council Presentation
Annual Report of the National Agricultural Marketing Council 2007
ARC Technical Report June 2007 vegetable garden project: to address Vitamin A deficiency in Lusikisiki,Eastern Cape
Pamphlet on orange-fleshed sweet potato to combat vitamin A deficiency.

Audio recording of meeting

SUMMARY
The Committee received briefings from the Agricultural Research Council and the National Agricultural Marketing Council on their annual reports for 2006-2007.

The Agricultural Research Council had a mandate to promote agriculture through undertaking and publishing research, developing and transferring technology, conserving natural resources and contributing to a better quality of life. Its main functions were outlined, and the strategic goals were tabled. The main areas of research were summarised. Support services contributed to studies on poor farming practices, and advice had been given to assist the Department to deal with locust outbreaks. Partnerships were an important part of the work and were currently focusing on traditional plant knowledge. Retention of staff was identified as a challenge, but was receiving attention. In 2005/06 a qualified audit report was given by the Auditor General, but all the issues raised had since been resolved. It was noted that this was the start of a new term of office for the Board and CEO, and it was hoped that performance would improve. Members expressed appreciation for the comprehensive report, and raised questions about the parliamentary grant, mentoring of junior staff, languages of the pamphlets, and cost difficulties for farmers in remote areas. Questions were asked on the Auditor General’s concerns, testing of livestock, retention of staff, and contribution to rural development and environmental protection, and the asset register was requested.

The National Agricultural Marketing Council aimed to be the most efficient and effective advisor in the marketing of agricultural products in South Africa. It advised the Minister of Agriculture and directly affected groups on all agricultural marketing issues, taking into account the needs of stakeholders. It had achieved an unqualified audit, although the Auditor General had raised some comments, as fully outlined in the presentation. Budgetary constraints were a challenge. There were ten part time members of council, and the CFO position was currently vacant. The outputs and service delivery trends were outlined, together with some of he programmes. South African producers were faced with stiff competition from subsidised foreign producers, and there was perhaps some need for protectionist measures. The various marketing schemes in design were outlined, and the engagements with industry were summarised. It was to be hoped that the new legislation would address problems.
Members raised queries on communication with the Minister and Department, the funding of the budgetary shortfall, optimal use of land, the reasons for high food prices, deregulation and its benefits and downsides.  Further questions addressed the new Act, tariffs, the new corporate logo, focus on growing markets, the Competition Commission investigation into possible collusion on pricing of food, and the possibility of subsidies. The Chairperson suggested a follow up discussion on bio fuels. 

MINUTES
The Chairperson welcomed Members, delegates, and visitors, and tendered apologies from Members. The Committee expressed condolences to Mr D Dlali on his recent bereavement.

Agricultural Research Council (ARC) Annual Report Briefing
Dr Shadrack Moephuli, President and CEO, Agricultural Research Council, tabled the ARC-Roodeplaat Vegetable and Ornamental Plant Institute’s publications on practical measures to combat vitamin A deficiency in South Africa, noting that these were good examples of the ARC’s work in progress and of the collaboration between the ARC and the Medical Research Council (MRC). That particular work was community-based and consultative in nature and had been carried out in six provinces. The activities of the ARC-Roodeplaat Vegetable and Ornamental Plant Institute were also detailed in the Annual Report. Similar details and bibliographies of the ARC’s nine other research and development divisions were included elsewhere in the Report.

Dr Moephuli noted that the ARC was governed by the Agricultural Research Council Act, with a mandate to promote agriculture in South Africa by research, developing technology, and transferring technology, to facilitate and ensure conservation of natural resources, and contribute to a better quality of life. This mandate was funded through an annual parliamentary grant.

The ARC’s main functions were defined in the Act. Its main functions concerned undertaking research, promoting research, technology development and technology transfer. It was to utilise its technological expertise and publish information concerning its objects and functions. Collection and dissemination of information in connection with research and development, publication of results of research, control and establishment of facilities for research and cooperation with other state departments, institutions and other authorities were important. It should also promote training of research workers, grant bursaries and grants and contribute towards research, both nationally and internationally, on technological transfer of research in agriculture.

Dr Moephuli tabled the specific strategic goals for 2006-2007. These included meeting customer needs, the sustainable use of natural resources and the environment; enhancing the competitiveness of the South African Agricultural sector; increased participation and access to the sector by resource-poor farmers; production of high quality, nutritious and safe food; and informing society better. Further goals included creating a centre of learning and innovation; effectively managing its financial resources, investing in the ARC’s personnel and transformation and building a better organisation.

 ARC recognised the need to contribute to the Accelerated Shared Growth Initiative of South Africa (ASGISA), the regulatory reforms of government, and the management of natural resources, including rehabilitation of irrigation schemes in various provinces. ARC also had a contribution to make regionally in collaboration with Southern African Development Community (SADC) and the New Partnership for African Development (NEPAD). The ARC was present in every province, with campuses throughout the country. In addition it had a number of laboratories, office buildings and research farms.

The ARC then set out some of the main areas of research. These included conducting research into climate change. A practical guide on maize production had been published and 9 000 copies distributed to poor farmers throughout the country. It had sought to improve competitiveness by introducing a new kind of nectarine that was less vulnerable to damage whilst in transit to market. It had conducted research to assist farmers to reduce the impact of veld fires. Further research was conducted to assist farmers, through immunisation and rapid diagnostic testing, to protect livestock from brucellosis and Rift Valley fever. Other diseases receiving attention were cross-boundary diseases such as foot and mouth disease and swine fever.

Support services had contributed to studies on poor farming practices, with the aim of improving crop yields. The ARC had informed the Department of Agriculture of outbreaks of locusts in the North West province and the Northern Cape Province, and the Department had been able to take effective action following the ARC’s advice. It had also produced maps.

Partnerships were important in the ARC’s work, and transfer of knowledge to the community was also important. ARC had worked with traditional healers in regard to indigenous knowledge systems, had learned from them about plants and their useful properties, and more about obtaining or cultivating them. It had piloted a small company to produce bio-fuels in the Limpopo province and had advised the Department of Agriculture with regard to bio-fuels.

Retention of staff remained a major challenge. The ARC was very keen to improve the quality of its scientific staff. Its staffing figures were nothing out of the ordinary and were in line with the trend in comparable organisations in the country. The ARC understood the necessity to focus on capacity building in human resources.

Dr Moephuli indicated that in 2005-2006 the ARC had received a qualified audit report from the Auditor-General, but the outcome had been positive and all the issues raised had since been resolved. The financial status for 2006/07 was shown in the annual report and on the slide presentation. The ARC had experienced many changes, being the start of the term of office of the new Board and new CEO, coupled with a new Minister’s appointment. The new direction of the ARC focused on building capacity, improving internal control and human resource systems, improving risk management and compliance, finding innovative ways to deliver on the ARC’s mandate, and improving communication. The past year had been difficult and presented hard work. ARC hoped that the improvements that it was implementing would improve its performance and achieve its objectives.

Discussion
Mr A Nel (DA) congratulated the ARC on its comprehensive report and said that the ARC was in the hands of a good board and management. He asked why the parliamentary grant this year was R23 million less than last year.

Dr Moephuli said that in the previous year, the ARC had received an extra allocation for a specific purpose.

Mr Nel asked what had happened to the ARC’s undertaking the previous year to recruit retired professionals to mentor junior staff.

Dr Moephuli explained that the ARC was now changing its policies with regard to recruiting retired professionals, though it was not making special efforts to recruit them. The ARC’s supply chain policy had precluded re-employment of any staff as consultants until two years after the end of their contracts. Now the policy allowed the retired staff to return as consultants or mentors.

Mr Nel asked about the languages in the ARC’s pamphlets.

Dr Moephuli replied that the languages used in the ARC’s publications were mostly English and, to a lesser extent, Afrikaans. Only a few publications had been published in indigenous languages because of the ARC’s limited funding. Additional resources were needed for translation into other languages. However, ARC conducted workshops to explain, in indigenous languages, the contents of the ARC’s popular publications. The Department of Agriculture had been asked for more resources to assist with the work of translation, particularly for the ‘how to’ manuals.

Mr E Lucas (IFP) said that he was worried about the cost difficulties to farmers, especially those in the more remote areas, in transporting agricultural products to market. He asked how they could compete with the farmers near to the urban areas.

Dr Moephuli said that the successful transport of nectarines over a long distance was a fairly good example of the contribution that the ARC’s research had made to resolve the problem of transport to market. However, the ARC was not really an entity involved in the study of economics.

Adv Holomisa (ANC) commented on the Auditor-General’s concerns.

Adv Holomisa then asked what type of farmers performed tests on their livestock. He asked about the results received from tests for swine fever. He asked for a description in plain language of the disease brucellosis. He asked where ordinary farmers could obtain the maps to which Dr Moephuli had referred.

Dr Moephuli said that the tests on livestock were intended to show that meat produced by local farmers could be of the same quality as that produced by commercial farmers. These tests had been carried out in Limpopo and Mpumalanga. Many of those testing had been general commercial farmers. Brucellosis was a disease caused by a bacterium that caused miscarriages in cattle. Maps could be found in local municipalities or provincial departments of agriculture.

Mr C Greyling (ANC) asked what strategies were in place to retain staff with critically important skills. Secondly, with reference to the emphasis of matter and the issue of internal control highlighted in the audit report, he asked what collective measures had been taken to correct the issues.

Dr Moephuli said that a number of initiatives, including co-operation with universities to make dual-appointments, had been started to develop human resources. The ARC was supporting employees to read for higher degrees inside and outside South Africa. 

In regard to the audit report, the ARC was implementing a supply chain management policy. The ARC had dismissed its Chief Financial Officer (CFO) and was in the process of recruiting a replacement. Requirements for the post had been raised. It was now a requirement that candidates should be chartered accountants. Extra accounting staff had been recruited to separate duties that had previously been performed by the same person, to follow suggestions by the Auditor-General.

The Chairperson said that he had read both the 2005-2006 and 2006-2007 Annual Reports thoroughly, and considered that the current Annual Report showed a marked improvement on the previous year, especially with reference to the findings of the Auditor-General.

The Chairperson added that it was however important to pay full attention to the various issues raised by the Auditor-General. He read out a portion of the Report of the Auditor General from the Annual Report, noting that the statement that the annual performance report had been presented in a way that was not straightforward, meaningful or easy to follow, with the result that it was not easy for the AG to follow the performance information from the programme to the output, indicator and target.. It was also serious that the AG had found omissions as the achievements of targets included in the 2006/07 business plan did not find their way into the annual performance report. He was also concerned that certain achievements of targets could not be substantiated by adequate evidence or source documentation. Further comments by the AG noted that the output “to have an acceptable ratio between compensation of employees and total expenses” was not measurable. The term “technologies” was not defined and, as a result, it was impossible to verify the output of achieving 20% more technologies than in the previous year. When compiling the information for the Agricultural Research Council annual performance report, the personnel had experienced similar difficulties and as a result the target mentioned in the annual performance report was substantially more than the accumulated totals of the quarterly reports. He noted that it would be important to address those issues.

The Chairperson noted that one of the challenges facing the ARC was to contribute to rural development and environmental protection. He asked if there were any initiatives to respond to those challenges. He asked about the impact of the ARC’s work on the first economy, and how it helped to modernise the second economy.

Dr Moephuli said that he would try as much as possible to confine his responses to the year under review. However, some of those responses might reflect work that was ongoing. He said that the year under review had been characterised by changes in leadership. Some of the omissions that the Auditor-General had referred to in his report had been unintended errors. The ARC was constrained in its procurement of equipment by the specialised nature of its requirements and the small number of potential suppliers. The external accounts of the organisation were affected by the performance of the sector, in which profits were low. For example, when Dr Moephuli had arrived at the ARC he had met with a wide-range of representatives from the sector. He agreed that some of the items were difficult to represent from the way in which the business plan had been compiled. In regard to the comment about the definition of technology, he noted that there was a classic debate among scientists as to what constituted technology. The ARC had had a lengthy discussion with the Auditor-General on that subject, and his staff did appreciate the dilemma.

Mr S Abram (ANC) asked if the ARC had an asset register and when it could be made available to the Committee. He asked for an analysis of their expenditure. It was necessary to scrutinise expenditure closely.

Dr Moephuli had no objection to releasing the register but asked for a written request for purposes of documentation.

Mr Abram and the Chairperson were emphatic that the Committee had the authority to request the register without the need to submit a request in writing.

The Chairperson said the Auditor-General's concerns had already been raised and invited Ms Jean Davidson, Chairperson of the Agricultural Research Council (ARC) to conclude the ARC’s interaction with the Committee.

Ms Davidson said that the ARC, although faced with many challenges, was committed to fulfilling its mandate. The ARC sought to obtain an increase in its parliamentary grant in order to give more assistance to emerging farmers. She thanked the Chairperson and the Committee for their encouraging words.

The Chairperson agreed that the Committee needed to devote the necessary attention, including interaction with the Department of Agriculture, to providing sufficient resources for the ARC.

National Agricultural Marketing Council (NAMC) briefing
Mr Tshelilo Ramabulana, Chief Executive Officer, National Agricultural Marketing Council, summarised some of the slides, noting that the NAMC vision was to be the most efficient and effective marketing advisor in the marketing of agricultural products in South Africa. Its mission was to advise the Minister of Agriculture and directly affected groups on all agricultural marketing issues in the agriculture and food industry, taking into account the needs of stakeholders. Its core business was to provide accurate, relevant, independent and timely information. Its core values were to be accountable; to act with integrity, to value individual performance, to value personal respect and equal treatment, and to act in partnership with directly affected groups.

South African agriculture was at last emerging from a difficult period of low commodity prices, intense agricultural competition and severe drought. The NAMC’s work throughout the year had provided a wide-ranging critique of what was wrong with the marketing of agricultural products and attempted to provide a clear alternative through programmes such as market intelligence, statutory measures and enterprise development.

The Auditor-General had in this year, for the first time, begun to audit performance information. This required greater alignment of the strategic plan, business plan, key performance areas and progress on implementation. Every knowledge worker at the NAMC was responsible for a contribution that could materially affect the capacity of the organisation to obtain results. Creating a healthy environment to support those decisions had become more critical and the importance of intuition and judgement had never been greater. NAMC had worked hard to provide staff with incentives for outstanding performance. The NAMC had once again achieved an unqualified audit.

The NAMC had continued to experience budgetary constraints. The previous Council, whose term had expired on 31 March 2007, had worked hard to address the problem. The new Council, whose term had just begun, would have to work even harder to ensure that the organisation was properly funded in order to address challenges facing South African agriculture.

Mr Ramabulana noted that the NAMC was established by the Marketing of Agricultural Products Act , and its mandate, as outlined in the Act, was to investigate the establishment, continuation, amendment or revocation of statutory and regulatory measures affecting the marketing of agricultural products, and to report to and advise the Minister. The NAMC could undertake its own investigations and advise the Minister on agricultural marketing policy and its application and effects, as well as co-ordination of policy in relation to national economic, social and development policies and international trends and developments. The objectives of the Act were to increase market access for all market participants, promote the efficiency of the marketing of agricultural products, optimise export earnings from agricultural products, and enhance the viability of the agricultural sector. The NAMC was funded by Parliament through Vote 26 under the National Department of Agriculture (DoA).

Mr Ramabulana outlined the functions of the Council, which was to give leadership, provide advice to the Minister of Agriculture, and act as the accounting authority of the NAMC. It comprised ten part-time members whose term of office began this year. The CEO headed the administration, assisted by the Chief Financial Officer (CFO) and management team in the day-to-day running of the organisation. The CFO position was currently vacant. There were a number of sub-committees. The Council’s outputs and service delivery trends were outlined. The NAMC had about 27 employees, and was committed to affirmative action. Since 1997 the staff profile had become more demographically representative.

Mr Ramabulana highlighted some of the programmes that the NAMC had implemented. The Food Price Monitoring programme produced a quarterly food cost review, collecting data in collaboration with the provincial departments of agriculture. It was concerned how to address the 11% inflation in food prices, particularly when viewed against the background of much of the country’s agricultural land not being productively used. Land rights issues and lack of infrastructure were constraints on optimal use of agricultural land. The NAMC was unable to control international factors constraining the supply of food.

NAMC understood the concerns about vulnerability of South African producers, faced with competition from subsidised foreign producers. There was perhaps some opportunity for protectionist measures. The NAMC was studying product mix and considering which existing and new products might be suitable for export.

The NAMC was training young graduates and was happy to provide them with employment opportunities.

It was designing marketing schemes, in particular for grains. It was hoped to obtain funding from the Department of Agriculture for a similar scheme for citrus fruits. The NAMC had undertaken a facilitating role in the dairy industry. There had been increases in the price of cotton, but more work needed to be done to ensure the survival of that industry.

It had a number of engagements with industry, with workshops on trade issues as well as on Competition Act issues. Agribusinesses in Africa came to South Africa on an annual basis. This provided a good networking opportunity. 

Steps had been taken to help black farmers to produce fresh fruit to export to Europe, and efforts were being made to gain entry to the US market for black wine labels.

Mr Ramabulana provided information on the status of industry trusts, highlighting the holdings of each industry at the end of the financial year.

He noted that the NAMC had received a grant of R12.7 million from the Department of Agriculture. NAMC’s expenditure was standing at just over R19 million.

The audit report had highlighted a problem in regard to leasing of photocopiers. NAMC had now corrected the situation to ensure compliance with the Auditor-General’s requirement that leases for such equipment should be longer than six months. Furthermore the AG had commented, in the audit report for the year ended 31 March 2007, on material non-compliance with the Public Finance Management Act (PFMA) as the NAMC had not yet developed adequate policies, procedures, techniques and control mechanisms for each of its activities. This had resulted in significant deficiencies identified during the audit.

According to the PFMA and the Framework for Supply Chain Management, public entities were obliged to determine a framework for an appropriate procurement and provisioning system that was fair, equitable, transparent, competitive and cost-effective. The Auditor-General noted deviations from prescribed Supply Chain Management principles. There had been purchases authorised only after invoicing, amounting to more than R3 million, non-adherence to a Practice Note pertaining to written price quotations, to the value of R400 000, and non-adherence to a Practice Note pertaining to the tender process for expenditure, amounting to almost R1.6 million. These were highlighted in the Annual Report.

Mr Ramabulana noted that the NAMC had dismissed its Chief Financial Officer (CFO) and was recruiting a replacement with higher qualifications. A qualification in chartered accountancy was now the minimum requirement.

He concluded that it was of great concern to the NAMC that the emerging black agricultural sector was in serious trouble. It was to be hoped that the new Act that was being drafted would help to address these problems.

Discussion
Mr Nel said that last year the NAMC had told the Committee that there had been insufficient communication with the Minister and with the Department. There still seemed to be a lack of communication about what the NAMC aimed to do and what it was actually doing. It was important that the NAMC should enlighten the Committee on what was happening. He assumed that all the NAMC’s studies were available on its website. He asked for clarification about protection of South African products.

Mr Ramabulana replied that communication had improved. There had been regular meetings with the Minister, and interaction on numerous occasions with the Department. These improvements had contributed to alleviation of the NAMC’s budgetary problems.

Mr Nel asked how the NAMC was funding the R5.3 million shortfall in its budget.

Mr Ramabulana explained that the shortfall arose between the funds allocated and the final requirements. The NAMC covered the shortfall through rollover, sponsorship, and collaboration with other institutions.

Adv Holomisa asked about the subject of communal land, and what recommendations the NAMC had to ensure that land was used optimally.

Mr Ramabulana explained that there were a number of reasons why food prices were high. USA had diverted resources to growing of bio-fuels and this had an effect on the agricultural industry. International commodity prices affected South Africa, and the growing population in India and China was having an impact on food prices. However, even if hectares of land in South Africa were to be made available, there were still other constraints to be addressed. The Director-General had highlighted problems of infrastructure, such as water supply and roads, in rural areas. Grants could be given to people in the rural areas to help them buy implements in order to grow their own food. He noted that the Department had commissioned the sub-sector studies, because of the needs indicated by the food price monitoring reports. It was hoped these studies would enable the sub-sectors to contribute to the 6% growth that was the target of ASGISA.

Dr Mohammad Karaan, Vice-Chairperson, ARMC Council, said that the Marketing Review Committee had found that the general impact of deregulation was that South Africa was one of the countries whose farmers were least supported by producer subsidy equivalents, and only Australia and New Zealand gave their farmers less support. This raised the question of who gained and who lost through deregulation. The people who gained through deregulation were large firms, agribusinesses and farms. They had become bigger, better, more productive and efficient. Over a ten to twelve year period, 400 000 jobs for farm workers had been lost, both through shedding and casualisation of labour. Medium and small farmers had also lost out, with about 1000 going out of business every year. Output had grown and exports had grown. The big were getting bigger, but the small were tending to disappear, especially family farms. There was destabilization of the land. The agribusinesses had expanded and become more privatised. The sizes of farms had increased. The biggest losers had probably been black businesses. In an environment that had become more competitive, there had been very little put in place to make such businesses more competitive. He concluded that he was not saying that there should not have been deregulation, but that measures should have been instituted to offset its negative effects.

Mr Greyling asked about the new Act. 

Dr Karaan noted that the Marketing Review Committee had tabled its recommendations and those had been submitted to the Minister. The Minister had since asked for a committee to be constituted to redraft the new Act, and this should be gazetted within the next few months. Consideration must be given to whether South Africa really needed a new marketing Act, and it was hoped that if it was accepted as necessary, then the various initiatives of the Marketing Review Committee would be encapsulated therein.

Dr Karaan noted also that an extensive review had been undertaken of all the tariffs on agricultural products and of the potential for increasing tariffs. The general finding was that there was some scope to increase tariffs, but the scope was so small that it was probably not worth the effort.  A greater benefit for increasing production and exports could be achieved by focusing on new markets through special free trade agreements. Since there was a global trend for falling of tariffs, it was unwise to try to introduce increased tariffs aggressively. For the next couple of years, there would be a cycle of raised commodity prices, with notable exceptions. There was less argument now than in the recent past for any increased tariffs.

Ms Ntombi Msimang, Chairperson of the Council, said that she was expecting to have a meeting with the Minister and the Deputy Minister soon and was confident of their co-operation and assistance. The NAMC was investigating new markets and valued the Committee’s support.

The Chairperson asked about the change of the NAMC’s corporate logo, with particular reference to the slogan ‘Strategic positioning of South African agriculture in dynamic global markets’, which had replaced ‘Market driven production pays’.

Dr Ramabulana said that the meaning of the former slogan was unclear and misleading. There were in fact a large number of farmers in South Africa who were not helped to earn a living by market-driven production, especially when faced with competition from subsidised farmers in Europe. The NAMC’s new pledge made more sense and indicated that South Africa needed to change the direction of its trade, and focus on those markets that were growing, which had been identified. South Africa was still sending the bulk of its food exports to Europe, whereas the growing markets were China and India.

The Chairperson appreciated the frank dealing with issues that the Auditor-General had raised. He noted that NAMC had dismissed its chief financial officer. He further questioned the NAMC about the Auditor-General’s observations.

Dr Ramabulana said that The NAMC was working to resolve the problems that had attracted the Auditor-General’s attention.

The Chairperson wondered if there was any duplication of programmes, in particular with reference to the study of the Russian market.

With regard to food price monitoring, he was happy with NAMC’s explanation, but he said that there had also been reports about collusion between companies. He asked further about the factors contributing to rising food prices.
 
Dr Ramabulana noted that the Competition Commission should rightfully address the question as to whether there was collusion in maintaining high food prices. The NAMC had conducted studies in the dairy and grain industries and reported its findings to the Commission. However, he agreed that collaboration between the production sector and the retail sector had tended to elevate prices of certain commodities.  South Africa, unlike the USA, could not afford to subsidise its farmers. South Africa would ask the World Trade Organization to remove subsidies to farmers in first world countries. The European market was saturated and it was desirable to seek new markets.

The Chairperson noted that South Africa had arable land but still imported food. He asked if imports were from countries that subsidised their farmers, and, if so, what were the implications for South Africa’s own farmers, as well as for their ability to compete in an international market. He asked if the policy matter of the possibility of the introduction of farm subsidies was a matter that should be taken up by the Committee.  He thought that the former Chairperson of the Council should be able to attend the audit committee meeting.

Dr Karaan said that the food price monitoring system was essential in a country like South Africa. In the next few years, unprecedented increases in food prices were expected globally. He referred to the ratchetting effect, Zimbabwe being a good example. The tendency for the private sector was to increase food prices beyond what was reasonable in terms of the retail price index. When the NAMC had not monitored, the increases in food prices were higher.

Dr Karaan agreed that South Africa should subsidise farmers, but it was difficult to implement the measures allowed by the World Trade Organization.

The Chairperson wondered if the NAMC had conducted a study on the impact of bio-fuel on food prices and food security and what sort of crops would be most appropriate so as not to threaten food security. He suggested a follow-up discussion on bio-fuels, with detailed and comprehensive hearings to give other stakeholders the opportunity to present their views to the Committee.

Mr Abram asked the NAMC about dairy products, of which SA had become a net importer. He asked if the NAMC had any suggestions as to how emergent farmers could supply the difference. He conceded that dairy farming was capital intensive, though it did not require extensive areas of land.

Mr Ramabulana said that it was necessary to revert to co-operatives to increase dairy production.  This advice had been conveyed to the Minister and to the Land Bank.

The meeting was adjourned.