Agriculture Provincial Conditional Grants & Capital Expenditure

Meeting report

MINUTES
Limpopo Provincial Department of Agriculture Briefing
Mr Mamogaudi Maloa, Head of Department, Limpopo Provincial Department of Agriculture, outlined the Comprehensive Agricultural Support Programme (CASP) progress report for the 2007/08 financial year, the Incentives Grant Project (IGP), and Land Care grant. He said that the Department planned on delivering well-planned and manifested projects, and assisting with the capacity building of farmers.  The Department projected spending for the third quarter would amount to R45 million, and the funds would be used to build irrigation infrastructure, poultry houses, livestock infrastructure, training and capacity building. The Department had also spent 90% of the IGP, in which 42 micro enterprises with 1247 beneficiaries were developed.  All funds for the land care grant were expected to be committed by February 2008, and expected spending for the grant would be R6.9 million, with R1.8 million expected to be rolled over. The Department was faced by various challenges, which included the late appointment of engineers and the limited engineering capacity to monitor mega projects. The Department however planned to make use of external engineering capacity where necessary.
 
Discussion
Mr E Sogoni (ANC, Gauteng) noted that a lot of work had been done, which the Committee appreciated. The Department should however provide a written report on the farmers that had been trained. The Committee had visited a number of poultry farms and discovered that there were many workers who were exploited, and the Department was asked to comment on what was being done to resolve this situation. Another area of concern was those people who received tractors from the government, where not enough clarity had been provided on who qualified for the tractors. The Department’s targets that had been provided in the presentation appeared unrealistic and he asked for further comment.

Mr Sogoni also said that there was a shortage of engineers in the country and the Department should provide clarity on how it was tackling the challenge. The Department’s report mentioned that Eskom was not being effective in rolling out electricity, and in this regard Mr Sogoni asked that the Committee be given further information so it could understand what the matter was and the extent of the problem.  Finally he noted that there was a problem with people trying to access various funds from the Department.

Mr Maloa said the Department was not trying to exclude people from accessing funds, however not all people qualified to be farmers. The Department was trying to target people who demonstrated capacity to manage operations. It had also been proven that if people were given resources because they had political mileage, then the resources ended up becoming useless. On the question of the engineering shortage each year, he commented that the Department made engineering bursaries compulsory.  However the recipients were just youngsters straight out of university, who still needed at least four or five years mentorship with an experienced engineer. Most of the engineers tended to leave the country after a four year internship with the Department. The main challenge also lay in finding experienced engineers to mentor the graduates. With regard to the question of access, the Department of Roads and Public Works did not deal with access roads to agricultural lands and the Department had managed to convince the executive council to enable the Department to buy infrastructure. In regard to the alleged exploitation of poultry farmers, the middle man was still seen to be “king”. When the Department assisted the farmers to build the poultry farms, they made sure that the farmers could set a correct profit margin between 15c and 25c. However there was very little the Department could do with the forces such as middle men.

The Chairperson said that the Committee was concerned with the issue of integration, and on the particular issue of access roads he thought it unfair that the Department was left to deal with the particular issue. Some form of integration was needed and the Committee would persuade other provincial Departments to come on board.

Mr Sogoni pleaded with the Department to look into the issue of the middle men, as the farmers were suffering.

Ms D Robinson (DA, Western Cape) stated that she was encouraged with the business-like strategy shown by the Department. There was a problem, however, of leaving out the small business. The Department should also comment on the capacity building of the rural farmers.

Mr Maloa replied that the Department offered a variety of courses that were targeted for land reform beneficiaries and Small, Medium and Micro Enterprises (SMMEs). Farmers were taught a number of courses and were provided with training on tractor management operations.

The Chairperson said that some of the figures in the presentation needed to be corrected before they were finally presented to the Committee.

Mr Sogoni added that the Department had spent less than 5% of the funds during the financial year, and they hoped to spend all their money before the end of the financial year.

The Chairperson said that the Department did not provide an adequate overview of their expenditure and the presentation did not provide adequate or credible plans on how it planned on dealing with a number of issues.

Mr Moloa explained that with regard to the less than 5% expenditure, the Department could assure the Committee that all the projections were credible as work had already begun.

Mr Sogoni said that the importation of tractors was a big problem

Mr Maloa replied that the tractors were not imported, but bought from independent dealerships in the province.

Mr Sogoni said that the Department had included disbursements as part of expenditure and should explain what was meant by that

Mr Maloa replied that the disbursement were for the work that had been done, but the Department was forced to set targets for the completion of the projects and had no other way of preventing the spike in expenditure.

Mr Z Kolweni (ANC, North West) said that a chunk of the disbursement was spent on one month’s juice processing in Makhado. The Department should comment on the matter, as Makhado was a place the Committee once visited.

Mr Maloa replied that the juice processing farms were land restitution farms, and one of the problems was that the land restitution process had only accounted for the land but not the infrastructure. If the government bought the land then they would leave out the process farmers, and the Department made several submissions to the Department of Land Affairs, stating that the farmers would be excluded from the market. Once the CASP programme came into play, an amount of R20.5m was allocated to land reform, and there were many challenges with respect to the valuation process that led to the funds being disbursed in March.

Mr Sogoni asked Mr Maloa to go back to the province and verify the R20.5 million figure given, as it was not provided for in the budget, as the budget only provided land care which was R7million.

The Chairperson said that the amounts that had been allocated in the disbursements column were listed as projected expenditure. The Committee would go back and review their decision on disbursements as actual spending for this reason.

Mr Kolweni appealed to the Department to get better clarity on the issue.

The Chairperson suggested that the Committee should look into the issue in March once the amount was paid out.

Mr Maloa replied that the facilities were found on the farm when the land restitution took place, and the Department was forced to buy the business afterwards.
 
The Chairperson asked the Department to explain what was meant by the projected spending in all the municipalities.

Mr Maloa replied that it meant that all municipalities qualified in having the various facilities, and the projects would have to be planned by engineers in the municipalities with the assistance of the local District Council.

The Chairperson asked the Department to comment on the projects’ alignment to the Municipal Infrastructure Grant (MIG)

Mr Maloa replied that as far as maintenance was concerned the Department made sure that the beneficiaries maintained the infrastructure themselves. Where there was a situation where people were not in a situation to maintain, the local municipality would budget for it. However the Department was moving away from having government maintaining infrastructure for commercial purposes.

Gauteng Provincial Department of Agriculture Briefing
Mr Steven Cornelius, Head, Gauteng Department of Agriculture, took members through the presentation and said that the Department had spent 58% of its conditional grants during the financial year. On the CASP grant the Department spent approximately R13 million on land reform projects, household food production and animal health. On the Land Care project, the Department projected on spending the total allocation of R300 000 by year end. The funds would be spent on various projects, which included bamba manzi alien vegetation removal projects and the burning of fire breaks projects at various nature reserves. In order to improve monitoring capacity, the Department had signed business plans and contracts with appointed service providers to implement projects on behalf of the Department.  Weekly site visits had been undertaken to verify operations on the ground, and monthly Division of Revenue Act (DORA) reporting was provided to National Treasury and the National Department of Agriculture.

Discussion
The Chairperson said that the Department had the Committee’s support in respect to ending the public works programmes. There was no point in overloading the Department of Public Works (DPW), especially when they did not deliver. There would however at one stage need to be service level agreements between the Departments of Agriculture and DPW. The Committee would continue to monitor progress, as there were still certain issues that needed to be looked into.

Ms Robinson commended the Department for taking the approach they did, and hoped that other provinces should follow their example.

Mr Sogoni said that DPW was tasked with responsibility of building infrastructure in the provinces. However, when it came to the Department’s 17% expenditure, this may not be the right Department for providing service to agriculture. There was a challenge in coordinating the working processes of national, provincial and local governments. However there was only one point where delivery took place, and that was local government. It was, in his view, time that the Departments worked out who was responsible for what types of projects.

Dr Cornelius replied that it was not easy to get other contractors other than DPW, as the Department had limited funds and the Department might also be reprimanded for overspending. The Department was looking into ways of solving the issues.

The Chairperson proposed that during the public hearings on the Division of Revenue Act, all municipalities should be brought under one roof, with the Departments, in order for them to find solutions to certain issues. During these hearings the Departments should list the successful municipal projects that had created great benefit.
 
Dr Cornelius said that the Department was busy with an agricultural plan with the municipalities, and the plan also involved the Department of Land Affairs. The plan was to focus on various hubs and assist the municipalities in creating business plans for the hubs. The plans would hopefully be completed before the end of the next year.

Mr Bonga Msomi, Manager: Conditional Grants, National Department of Agriculture, said that Gauteng was one of the provinces that had performed well with the conditional grants. During the Department’s assessments of the projects, the Department tried to make sure that all implemented projects were in line with the IDP. Gauteng was a very good example of correct spending on conditional grants was spent, and the Department was very happy on the oversight role that was played by the Committee. 

The meeting was adjourned