Department of Agriculture Budget and Strategic Plan 2008/09

Agriculture, Forestry and Fisheries

11 March 2008
Chairperson: Mr R Mohlaloga (ANC)
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Meeting Summary

The Department of Agriculture gave an overview of its strategic plan, including a summary of the five Programme areas and the associated Budget Vote 23. Key strategic priorities were to improve alignment and synergy of operations with the Department of Land Affairs, addressing the impacts of global climate change and high agricultural prices and low commodity stocks and the implementation of Apex Project 7. The coverage and main aims of each of the programmes were set out, together with an indication of the budget for each. Particular focus was placed on the increase of black participation by 10%, providing universal access to support services to emerging farmers, increasing production by 10% to 15% and increasing agri-trade. It was mentioned also that food security and bio fuels were both being addressed by planting dual-use crops. There was emphasis on the impact of climate change. The total allocation to the Department was around R2.5 billion, and provincial allocations brought this up to between R4 to 6 billion, which still fell short of World Trade Organisation guidelines for agriculture. 

Members asked how the target of rehabilitating 100 000 hectares would be achieved, given the water scarcity, asked about buy-in of traditional leaders, whether new entrants to the sector could survive, expressed concern over the number of farmers leaving, and raised queries around the safety of genetically modified organisms. Further questions addressed the preparations for climate change, declining numbers of functioning dipping tanks,  the policy on biofuels and its effect on food security, and whether it was possible to institute one agency or special purpose vehicle to handle financial support to agriculture. Some Members were doubtful whether the targets would be attainable, and whether the extension officers were sufficient in number to provide post-settlement support, and what steps were taken to upgrade their skills. Further concerns were expressed over the fertiliser imports that had resulted in damage to South African fruit, current vacancy rates in the Department, poultry exports, and the response to a recent locust problem in Northern Cape.

Meeting report

Department of Agriculture (DOA) Strategic Plan and Budget 2008 Briefing
Mr Masiphula Mbongwa, Director General, Department of Agriculture, introduced his team for the briefing and outlined the key elements of the Land and Agrarian Reform Programme (LARP). He noted that the context of the project was the final year of the current government and that there was a need to review the record. Some people perhaps felt that the targets set by Apex Priority 7 were too ambitious but he did not share this view. He highlighted the issue of collaboration between Agriculture and Land Affairs. He hoped that the problems at the Land Bank would be resolved soon, as its role was critical in terms of financial support services to emerging farmers.

Mr Mbongwa summarised that Apex Project 7, the LARP, was launched in February 2008 to address the failures to provide adequate post settlement support to land reform beneficiaries in agricultural enterprises. It was a joint programme of the national departments of Agriculture and Land Affairs, as well as the provincial departments of Agriculture and Local Government. As  indicated in the 2008 State of the Nation Address, it identified specific initiatives such as an action plan for agriculture and agri- processing, the ‘War Against Poverty’ through an improved base and reach of the Micro-Agricultural Financial Institutions of South Africa (MAFISA) credit scheme. It would offer a determined rural development programme, increase the share of black entrepreneurs in agricultural production and speed up agrarian reform.

There was a pressing need to work more closely with provinces and municipalities. He also noted that the world was now in the era of high and increasing food prices, and that this, while unfortunate for consumers, would support farmers. Between 1994 and 2004 about 20 000 commercial farmers left the sector, leaving about 40 to 45 thousand currently. This had resulted in a loss of jobs. Higher food prices now offered hope to farmers provided that higher production costs, due to the costs of fuel, could be kept under control. Another key challenge ahead would result from global climate change, which meant that areas that previously had supported agricultural production, may not continue to do so.

Mr Sam Malatji, Acting DDG for Livelihoods, Economics and Business Development (LEBD), listed the primary purpose of the LEBD programme as promoting equitable access to the agri-sector, promoting growth and commercial viability of emerging farmers, ensuring household food security and facilitating market access for South African produce, both domestically and internationally. His programme also aimed to promote Black Economic Empowerment (BEE) in the sector and to produce economic and statistical data to monitor sectoral development.

The three delivery components were Livelihoods Development Support (LDS), Trade (Marketing) and Business Development (TBD) – including support to the National Agriculture Marketing Council (NAMC) - and Economic and Statistical Services (ESS). Key targets for LDS were 7 000 emerging farmers gaining access to financial services (MAFISA), 80 000 beneficiaries from land and agrarian reform, and 70 000 vulnerable households supported with agricultural starter packs. TBD aimed to have 11 000 farmers trained, 100 entrepreneurs facilitated and a number of sector specific strategies incorporating broad based BEE interventions. ESS would publish 16 economic reviews, 8 topical reports and 6 statistical reports by March 2009. The budgetary allocations for each of the components were described.

Dr Kgabi Mogajane, DDG: Biosecurity &Disaster Management (BDM), DOA, identified the purpose of this programme as managing the risks associated with animal disease, plant pests, genetically modified organisms (GMOs), agricultural products registration and developing disaster management plans to deal with natural disasters. The programme aimed to ensure food safety for consumers and to ensure compliance by the sector with international norms and standards.

Key targets by March 2009 were guidelines for the GMOs Act appeals process, a South African Qualifications Authority (SAQA) accredited border control inspection manual, a plant health policy, a strategy for the SA food safety system, an agri-sector climate change plan and an animal health care programme. She noted, in particular, that global climate change was impacting on animal health because diseases that were previously only encountered in certain areas were becoming more widespread. She set out the budget allocations across each programme.

Dr Sizwe Mkhize, Acting DDG: Production and Resources Management (PRM), DOA, identified the programme purpose as optimising agricultural productivity through the sustainable use of land and water resources. The programme aimed to promote crop and livestock massification through the establishment of two community gene banks, animal breeding support (the distribution of 500 breeding materials) and establishment of three community seed production schemes.

The unit also aimed to improve the management and enhancement of natural resources through the mechanisation programme (200 power hoes to be distributed), land use planning (3 municipalities zoned) and irrigation development (100,000 hectares established/rehabilitated). He highlighted the importance of the plant massification programme in the context of food security and boosting trade income, and the Biofuels Feedstock plan. The budget allocations were R56 million for agricultural production, and R201 million for Engineering Services and Resources Management, with R50 million of the latter earmarked for the provinces.

Ms Vangile Titi, DDG: Sector Services and Partnerships (SSP), DOA, explained that the programme’s purpose was to co-ordinate international relations, provide training, extension and advisory services as well as promote research and technology development through the Agriculture Research Council (ARC). It aimed to maximise growth in the sector by providing specific support services to emerging farmers, including youth, women and disabled people. She noted that by March 2009, 3 000 black entrepreneurs would receive targeted training and extension support and there would be an agreed National Research Agenda. By June 2008, norms and standards for agricultural training institutions would be adopted and a strategy for engaging with national and international stakeholders approved, and this would lead to a number of structured partnerships by March 2009. The budget allocations were set out, and included an allocation for R514 million for ARC.

Mr Attie Swart, Chief Programmes Officer, DOA, explained his relatively new role in the Department in terms of firstly aligning the work of the Department with broader government initiatives and strategies, and secondly ensuring good linkages between the different tiers of government and specifically between DoA and Land Affairs. A good example of this latter point was the new LARP, which was a major joint project involving both departments.

Mr Tommie Marais, Chief Financial Officer, DOA, briefly summarised the departmental budget for 2008/9, highlighting the additional R30 million for inspection services and R100 million for extension and advisory services. In terms of the programmes’ breakdown, the BDM and SSP components received the biggest increases at 28% and 22.8% respectively. The total increase across all programmes was 11.1%.

The DG concluded the presentation by noting that, according to WTO guidelines, a country like South Africa could allocate up to R10 billion per year to the agriculture sector without risking gross market distortions. The current allocation was just over R2.5 billion and if the provincial allocations were included the total would be somewhere between R4 billion and R6 billion, leaving plenty of room for further support to our farming communities.

Discussion
Mr A Botha (DA) asked how it was possible to establish or rehabilitate 100 000 hectares for irrigation, given that South Africa was already a water scarce country.

Dr Mkhize replied that the target was both realistic and sustainable as there were many areas in the country that were suitable but currently under-utilised.

Adv S Holomisa (ANC) asked whether the Department had sought to get the buy in of traditional leaders.

Dr Mkhize replied that it had, and that traditional leaders were involved as partners as a matter of routine.

Advocate Holomisa expressed concern over the alarmingly high numbers of commercial farmers leaving the sector, and asked if the new entrants would be able to survive.

Mr Mbongwa replied that the departure of so many farmers was a concern as South Africa depended on the commercial farmers for its food security. The global conditions for agriculture had not been good and USA farm subsidies had also given the farmers from America an unfair advantage. After 1994, support mechanisms had been removed too quickly and now it took time to replace them. He noted that government support for agriculture should not be based on its contribution to GDP as this was misleading. He recalled that the Maputo declaration advocated that 10% of government spending should be allocated to agriculture support. If this happened in South Africa the allocation would be in the order of R30 billion. However, he also noted that the smaller number of commercial farmers remaining today were survivors and were much more competitive.

Adv Holomisa asked why mention was made of risks associated with GMOs, because when the legislation had been passed Parliament had been assured that no risks existed.

Dr Mogajane replied that all the GMO products that were allowed into South Africa were safe. A team of scientists and independent referees monitored all potential imports and homegrown products to ensure safety for consumers. There was close co-operation with other Departments such as Health and Environmental Affairs. Some products from the USA had been refused entry to South Africa.

Adv Holomisa asked what progress had been made in preparation for the impact of climate change.

Dr Mogajane replied that an early warning system was in place and that a disaster management unit was prepared to assist provinces and local authorities.

Dr Mkhize also noted that there were programmes to introduce much tougher and more sustainable breeds, which would be able to survive on less water.

Mr D Dlali (ANC) expressed concern about the declining numbers of functioning dipping tanks for disease control. Alternative options were costly and beyond the means of emerging farmers.

Dr Mogajane pointed out that the use of dipping tanks was in decline, partly due to the high cost of maintaining them. There was also a problem of resistance. The alternative spray option was also more practical because climate change meant that diseases were migrating away from their traditional areas.

Mr Dlali asked how the policy on biofuels might impact on food security and rising food prices.

Dr Mkhize replied that the decision had been taken two years ago to only grow dual-purpose crops as biofuels. In this way food security would not be jeopardised. In any case rising global food prices were not related to the development of biofuels.

Mr Dlali noted the lamentable state of the Land Bank and wondered therefore how long it would take to roll out the MAFISA programme to all provinces. He asked why there should not be just one agency or special purpose vehicle (SPV) to handle financial support to agriculture.

Mr Swart replied that an SPV with one account for this purpose was not possible in South Africa, as this would transgress current financial regulations.

Mr S Abraham (ANC) asked why either the Director General of Agriculture or the Acting Director General of Land Affairs did not sign the LARP charter document, and whether this was indicative of their reservations about meeting some of the targets outlined in LARP.

Mr Swart replied that both the Acting DG Land Affairs and the DG of Department of Agriculture had signed the document on 25 February.

Mr Abraham expressed grave doubts about the chances of success for the targets identified, given the resource implications in terms of finance and human resources. While he was gratified by the increase in the number of extension officers this was still insufficient to provide the level of post-settlement support that would be required if five million hectares of white owned land were transferred to emerging farmers. He was very pleased to see land being returned to the people but he would be even more hurt if the land was left idle through inadequate support services.

Ms Titi replied that the programme intended to upgrade the skills of existing extension officers as well as recruiting new ones from the universities, and that these were being produced in sufficient numbers.

Dr A Niekerk (DA) asked about the incident where cadmium from imported fertiliser had found its way into pineapples and that these were then refused for export to certain European Union countries such as Switzerland. He asked what steps the Department was taking to monitor and control such imports, since they could spell disaster for the South African agricultural export sector.

Dr Mogajane replied that the issue here was not so much to do with the improper registration of imported fertiliser but with incorrect application methods of certain farmers. The fertiliser did comply with international agreements in terms of acceptable cadmium levels, but it had to be applied correctly for safe use.

Dr Niekerk noted that extension officers needed to have their skills upgraded and that an offer to mentor them had been made by successful commercial farmers. He asked if the Department had taken up this offer.

Ms Titi confirmed that the offer had received a positive response and that the mentoring was being undertaken under the auspices of the various agricultural associations.

The Chairperson asked for information on the current vacancy rates in the Department.

Mr Marais replied that vacancy rates had declined from 25.6% in 2006 to 13.3% at the start of 2008. He pointed out that since January 2008 the Department of Public Service and Administration (DPSA) had introduced more stringent and extensive pre-appointment checks and this delayed recruitment processes further.

The Chairperson pointed out that this current rate was still well below the DPSA recommended norm of 8%.

The Chairperson asked about the situation with regard to poultry exports, especially to the EU, and whether any loss of market access there could lead to job losses in SA.

Dr Mogajane explained that most poultry exports were not to the EU but to neighbouring countries, but that there was a need to explore alternative markets as well.

Dr Niekerk expressed concern that the Department’s response recently to a locust problem in the Northern Cape was late and therefore ineffective. He asked why local farmers had not been used to do the job instead.

Dr Mkhize replied that the problem was not so much due to not using local farmers, and that this step had been attempted, but that there had been a delay in authorising new transport tariffs. The chemicals for dealing with the problem had been available but these time delays in getting them into the fields had exacerbated the problem.

The meeting was adjourned.

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