Agricultural Debt Management Repeal Bill; Liquor Products Amendment Bill: briefing and adoption

NCOP Land Reform, Environment, Mineral Resources and Energy

06 August 2008
Chairperson: Rev P Moatshe (ANC)
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Meeting Summary

The Department of Agriculture sketched the background to the Agricultural Debt Management Repeal Bill and emphasised that the purpose of the Bill was to streamline the accounting systems of the Department of Agriculture.

Concerns were raised by members that the amount of debt outstanding was still substantial and the capacity to recover those debts would be lost when the Agricultural Debt Management Repeal Bill was repealed. Committee members wanted assurance that the funds which were recovered from debtors, would be ring-fenced for agricultural use only once they had passed to the National Revenue Fund. The Department of Agriculture team assured them that the funds would be properly ring-fenced and that his staff members currently tasked with recovering debt would remain in their posts until all the debts had been collected.

The Committee approved the Bill in its current form with a minor amendment to the wording.

The Department of Agriculture then briefed the Committee on the changes to the current Liquor Products Act as proposed in the Amendment Bill.

Concerns were raised by the members regarding traceability, the composition of the Wine and Spirit Board and on certain minor aspects of the wording of the Bill. These concerns were satisfactorily dealt with by the Department and the Committee adopted the Bill with amendments.

 

Meeting report

The Chairperson welcomed the Department of Agriculture (DoA) delegation consisting of Ms Wendy Jonker, Deputy Director General; Dr Mike Modisane (Chief Director: Food, Animal Health and Disaster Management); Dr B Ntshabele (Director: Food Safety and Quantity Assurance); Mr Tommie Marias (CFO); Mr Johan Venter (Director: Budgets and Reporting); Legal advisors: Adv M Kweta and Ms K Nagie and Mr Elton Greeve (Parliamentary Liaison Officer).

Agricultural Debt Management Repeal Bill [B24-2008]: Department briefing
Mr Marais gave a background to the Agricultural Debt Management Repeal Bill from the inception of the Agricultural Credit Act of 1966 to the Agricultural Debt Management Act of 2001 (ADMA). This piece of legislation had erroneously classified the process as a trading entity which it was not, necessitating that it be repealed.

In 1999 when the loan facility to farmers was stopped there was R 1.14 billion outstanding. At present there was R 329 million outstanding, a decrease of R 811 million. The recovery process was then surrendered to another mechanism, the Agricultural Debt Act (ADA) which submitted monies recovered to the National Revenue Fund (NRF).

Mr Marais stated that when the ADMA was repealed, the recovery process would become the responsibility of the Public Finance Management Act (PFMA), which would then remit funds through the books of the DoA to the NRF. Those funds would be ring-fenced for agricultural purposes. There was currently R686.9 million in the ADMA account and when it was finally closed these funds as well as all outstanding recoveries would be surrendered to the NRF.
 
In conclusion, Mr Marais stressed that the aim of the Bill was to streamline and simplify the accounting process of the DoA.

Discussion
Mr V Windvogel (ANC) asked whether funds would really reach needy workers and how strong the guarantee was that funds in the NRF would be ring-fenced for agricultural purposes alone.

Mr Marais replied that ADMA stipulated that funds could only be made available for agricultural purposes and he referred the members to the Memorandum of Objects attached to the end of the Bill.

Mr L van Rooyen (ANC) asked whether the NRF would have the capacity to collect the outstanding funds. He also required clarity on what exactly would be understood by the term “agricultural” and what criteria would be used for writing off debt.

Mr Marais noted that he had 70 staff members working with the debt recovery process who would remain in that function until the total debt was written off. The debt management process would not change and would remain within the ambit of the PFMA. To the second part of the question, he replied that it was a long process before a debt was written off, but once this happened, the matter was closed.

Ms H Matlanyane (ANC) asked what would happen to a debtor who had a debt written off as it would seem that the debtor would still require assistance. She questioned how any assistance could be forthcoming if MAFISA (
Micro Agricultural Financial Institutional Scheme of South Africa) was not represented in all nine provinces, which was currently the case.

Mr Marais noted that 90% of the debt was owed by white farmers, not emerging farmers and that Mafisa was in the process of being rolled out in all nine provinces.

Mr F Adams (ANC) asked what guarantees could be given that needy, emerging farmers would receive sufficient aid, especially in the case of natural disasters. Would they in fact be better off if the Bill were passed?

Mr Marais replied that the transfer of funds to farmers in the case of natural disasters was not within the ambit of ADMA nor the proposed Bill but was part of the larger budgetary process. Mr Marais admitted that possibly the budgetary process and the programmes discussed in the session did not talk to each other.

Mr Windvogel then stated that in the ten years since ADA and ADMA had been in existence they had failed to recover all the outstanding funds, which suggested that contrary to what Mr Marais had said there was not enough capacity. He expressed the belief that the Committee must look beyond the passing of the Bill to the practical implications for people on the ground. 

The Chairperson then asked for clarity as to the fate of the farms of those who defaulted on their loans.

Mr Johan Venter responded that contracts and security existed in the case of each debt. If a defaulter has taken no action and made no attempt to communicate with the DoA for six months, the State Attorney takes action and if the farm has been taken as security, it was duly auctioned. If the debt has still not been recovered, the state would then buy the land and would transfer it to emerging farmers who can then enter into rental contracts with the state.

A fairly lengthy discussion then began on the merits of the use of ‘will be earmarked for agricultural development’ in relation to funds remitted to the NRF in respect of point 3.1 of the Memorandum of Objects to the Bill. It was felt by the members that ‘will be’ was open to manipulation and should be amended to read ‘must be earmarked for agricultural development’. The legal advisors agreed to amend it as the members had suggested.

In response to further queries, Mr Marais agreed to make available to the Committee the actual figures regarding outstanding debt, province by province. 

Voting on the Bill
The Chairperson thanked Mr Marais and his team and read the motion of desirability to the Committee. The motion was carried with one amendment, that of the substitution of ‘must’ instead of ‘will’ in section 3.1 of the Memorandum of Objects.  

Liquor Products Amendment Bill: Department briefing
Ms Wendy Jonker (Deputy Director General, DoA) referred to the hard copy of a slide presentation she had given to the Committee.

She highlighted certain key points: Slide 5 dealt with the reason for the amendment to the Act, Slide 6 detailed the composition of the new Wine and Spirit Board, which would consist of eight members in total. Slide 7 discussed the Wine and Spirit Agreement with the EU, WTO agreements regarding wine trade and TRIPS. Slide 8 explained that the reference to the KWV must be scrapped. Slides 9 and 10 dealt with the expansion of the scope of permitted wine production to include the genus vitis, rather than the narrower provision of permitting only vitis vinifera. Slide 11 addressed traceability and 12 dealt with the consultations which had been held to date.

Dr B Ntsabele (DoA) added that the existing Act was not informed by any other policy and the DOA wanted to rectify this. The question which remained, however, was how far to regulate beer and fermented products. It was the intention of the DoA to arrive at a policy instrument which would encompass all aspects.

Finally Ms K Nagie (a legal advisor from the DoA) noted the amendments briefly.

Discussion
Mr Windvogel asked whether sorghum beer was included and noted that in principal he supported the Bill with a few minor points of correction.

Dr B Ntsabele (DoA) replied that because it was very difficult to distinguish between home production and commercial production of sorghum beer, it had not been included in the Bill. 

Mr Van Rooyen also declared his support for the Bill with some reservations. Firstly that emerging, small scale wine farmers had been omitted and were not represented on the Wine and Spirit Board. He also was concerned that the bill did not specify how the board members would be selected. He asked what role Parliament would play if the Minister would merely ‘notify’ Parliament of the selection of the board members after the fact. He also expressed concern that the consultation had not included small and emerging farmers.

Ms Nagie answered that the Act excluded small emerging producers and the Bill had been drafted to address this. The intention of giving the Minister the final say was to include emerging farmers. The selection committee was chosen at the discretion of the Minister and a policy document would soon emerge detailing how the board members would be appointed. She conceded that this could be problematic but that fundamentally, the Minister was accountable to Parliament.

Mr Elton Greeve (DoA parliamentary liaison officer) added that Parliament could object to the appointment.

There was further discussion on the composition of the Board and its role in the transformation of the wine industry but Ms Jonker emphasised that the Wine and Spirit Board was a solely technical body. She understood the need for transparency but told the Committee that it was engaged in daily operations critical to the industry and it could not afford to be delayed in any way.

Mr Windvogel persisted with his line of questioning, however, and asked Ms Jonker if she agreed that Parliament should play a role in the composition of the Board.

Ms Jonker agreed to this, with the provision that Parliament should not prevent or delay the members from performing their operations.

Dr B Ntsabele (DoA) suggested that the Minister could inform Parliament of the possible candidates before they were appointed to which Ms Kagie added that the section could stipulate that the Minister appoint the members ‘in consultation’ with Parliament.

Mr van Rooyen asked whether the DoA had the capacity to implement the practice of traceability and did this practice apply to local wines as well.

Ms Jonker replied that traceability was handled by the DoA currently. Every wine whether produced for local consumption or export, had a lot number. Exporters had to apply for an export certificate which had all the details of each consignment and it was possible to trace any batch. In terms of current legislation, local producers were not compelled to keep records (though some did) but the Bill would compel them to do so.
 
Mr Adams required clarity on the ‘low-cost production’ referred to on page nine of the presentation. He asked whether we were reverting to the papsak again?

Ms Jonker replied that low cost vine cultivation did not mean low quality. The new villa blanc variety was resistant to drought, frost and cheap to cultivate. It would make entry into the industry less costly for emerging farmers.

Voting on the Bill
The Chairperson then read the motion of desirability which the Committee agreed to with one amendment, that of the selection of the members of the Wine and Spirit Board. The motion was carried and after the adoption of minutes the meeting was adjourned.

 

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