ATC110415: Report: Budget & Strategic Plan of Department of Agriculture, Forestry & Fisheries & its Entities
REPORT OF THE PORTFOLIO COMMITTEE ON AGRICULTURE, FORESTRY AND FISHERIES ON THE BUDGET AND STRATEGIC PLAN OF THE DEPARTMENT OF AGRICULTURE, FORESTRY AND FISHERIES AND ITS ENTITIES, DATED 14 APRIL 2011
The Portfolio Committee on Agriculture, Forestry and Fisheries having considered the Strategic Plans and Budget of the Department of Agriculture, Forestry and Fisheries (DAFF) and its Entities reports as follows:
The Department and its entities are required to table their Strategic Plans as set out by the National Treasury Guidelines. A Strategic Plan sets out an institution’s policy priorities, programmes and project plans for a five-year period, as approved by its executive authority, within the scope of available resources. Its main focus being the strategic outcomes oriented goals for the institution as a whole, and objective for each of its main service delivery areas aligned to its budget programmes and, where relevant, also its budget sub-programmes.
It is against this background that the Portfolio Committee on Agriculture, Forestry and Fisheries held hearings on the Strategic Plans and Budget of the Department of Agriculture, Forestry and Fisheries and its Entities. These hearings were held in Parliament on the 29-30 March 2011. The briefing was mainly focusing on the strategic priorities and budget allocation of the Department of Agriculture, Forestry and Fisheries and Entities for the Medium Term Expenditure Framework (MTEF) period,
2. Entities that were considered:
a) The Onderstepoort Biological Products (OBP)
b) The Agricultural Research Council (ARC)
c) The National Agricultural Marketing Council (NAMC)
d) Ncera Farms (Pty) Ltd.
e) Perishable Products Export Control Board (PPECB)
f) The Forestry Sector Charter Council (FSCC)
The Department and Entities reported on the following:
Ø Outcomes and strategic goals
Ø Challenges in the sector
3. The Department of Agriculture, Forestry and Fisheries
The mandate of the Department of Agriculture, Forestry and Fisheries is to lead, support and promote agricultural, forestry and fisheries resources management through policies, strategies and programmes to enhance their sustainable use; and to achieve economic growth, job creation, food security, rural development and transformation. The Government priority outcomes through which agriculture, forestry and fisheries sectors will play a role in addressing the country’s broad national challenges in the medium term strategic framework (MTSF) are:
Ø Decent employment through inclusive economic growth (Outcome 4).
Ø Vibrant, equitable and sustainable rural communities contributing towards food security for all (Outcome 7).
Ø Protect and enhance our environmental assets and natural resources (Outcome 10).
The key strategic goals for the Department over the MTEF period as identified in the 2011/12 Strategic Plan and on which each programme’s strategic objectives are based, are:
Ø Increased profitable production of food, fibre and timber products by all categories of producers (subsistence, smallholder and commercial).
Ø Sustained management of natural resources.
Ø Effective national regulatory services and risk management systems.
Ø A transformed and united sector.
Ø Increased contribution of the sector to economic growth and development.
Ø Effective and efficient governance.
3.1. Challenges in the sector
The following challenges have been identified:
Ø The unregulated market environment, which exposes the sector to fluctuations in world prices,
Ø The decreasing share of field crops in agricultural production and South Africa’s move from being a net exporter of foods to a net importer,
Ø The growing dominance of retail chains and an increasing farmer to retail price differential,
Ø High input costs for, among others, fertiliser, fuel and feedstock,
Ø Poorly skilled subsistence and emerging farmers, who only achieve low production volumes and productivity levels,
Ø A lack of agricultural spatial planning and poor infrastructure, which makes it difficult for farmers to liaise with buyers, access markets and boost sales,
Ø Poor information and knowledge management for small holder farmers, which prevents them from correctly addressing production challenges, and
Ø The misalignment between agricultural research and development (R&D) and practical implementation, which implies that research, has little impact on the growth and development of the sector.
3.2. Challenges in the Commercial sector
The following challenges have been identified:
Ø There has been a significant increase in the concentration of the commercial sector as a result of smaller and less efficient business not being able to take advantage of increasing economies of scale and being forced out of the sector,
Ø Inadequate monitoring and enforcement of compliance in the sustainable use of natural resources,
Ø Profitability has increased, but at slower rates, which is attributed to a concentrated few that has been able to survive the global market and financial challenges,
Ø Transformation in the commercial sector in all three sectors (Agriculture, Forestry and Fisheries) remains a challenge:
i. Differences in interpretation, and implementation.
ii. Transformation is still mainly translated as the number of ‘black’ individuals in a company.
iii. Challenge with transformation not having significant socio-economic impact.
Ø An increase in production in agriculture has mainly been in horticultural crops, with a significant decrease in field crops (source of staple food), which translates into increasing concerns around National Food Security (Household Food Security),
Ø Increasing food prices and anti-competitive behaviour impact on national food security,
Ø Three important proximal factors are the slow progress in terms of increasing production efficiency, poor innovation systems, and the slow rate of opening up new markets and value adding opportunities,
Ø Many of the challenges stem from a lack of implementing programmes and regulations.
3.3. Challenges in the Smallholder sector
The following challenges have been identified:
Ø Weak Support services / extension services essential to grow and develop the smallholder and subsistent sector,
Ø Technical support services are currently inadequate. There is a need for an upscale and expansion of support offered,
Ø Lack of spatial plans to guide implementation of support programmes, access their economic impact and ensure easy monitoring and evaluation,
Ø Inadequate and unstructured intervention with regard to provision of on-farm infrastructure such as water sources (dams, windmills, irrigation schemes) essential for sustainable production
Ø Implementation of the mechanisation support programmes are very weak due to the lack of a targeted programme,
Ø Lack of support for the established smallholders to establish commodity groups,
Ø Inadequate access to agro-processing industries for value addition,
Ø No guaranteed market for products produced by smallholders,
Ø Poor infrastructure to ensure equitable access to development finance through the grant system and loans programmes,
Ø Uncoordinated or lack of targeted training for smallholders
Ø Aquaculture – no meaningful investment made in terms of experimental facilities, hatcheries, research and disease management to promote aquaculture,
Ø Non-existent support (access to equipment, finance, extension and training) for the established smallholders in the fishery industry,
Ø Poor infrastructure to ensure equitable access to development finance through the Department’s grant system and loans programmes
3.4. Policy and programme interventions
The Department’s policies and programme interventions derive from:
Ø The adoption by government of the 12 Key outcomes at the January 2010 Cabinet Lekgotla.
Ø The signing of performance agreements and delivery agreements with DAFF directly contributes to the three national priority outcomes that relates to the Department’s mandate.
Ø The second Industrial Policy Action Plan (IPAP2).
Ø The New Growth Path.
Ø DAFF’s Draft Integrated Growth and Development Plan for the three sectors of the Department.
3.5. Programme interventions: development targets
Ø Increase the number of smallholder farmers from 200 000 to 250 000 by 2014,
Ø As a result of the continued success of commercial farming, the number of employees on commercial farms should rise from 780 000 to 800 000 by 2014,
Ø Aim to place 300 000 households in smallholder schemes by 2015 (goat, sheep, wheat, aquaculture, forestry, etc.),
Ø Create 145 000 jobs in agro-processing by 2020,
Ø Create 5520 jobs through Community Works Programme Plan by 2014,
Ø Rehabilitation of a percentage of agriculture land by 2014,
Ø Recovery of targeted fish stocks (abalone, hake and West Coast Rock Lobster) by 10% by 2014.
3.6 The Departmental Budget
The total budget of the Department was R4 billion for 2010/11 while R4.7 billion is budgeted for 2011/12. The overall budget allocation for 2011/12 has increased by 12.5 per cent in real terms compared to the previous financial year’s allocation. A significant proportion of the Department’s budget for 2011/12 will be allocated to the Administration (27.5 per cent) and the Food Security and Agrarian Reform (26.4 per cent) programmes, respectively, while the Trade Promotion and Market Access will receive only 4 per cent of the Department’s total allocation.
3.6.1 Programme 1: Administration
The purpose of the Administration programme is to provide strategic leadership, management and support services to the Department. This programme’s budget for 2010/11 was R1.1 billion while for 2011/12, R1.3 billion is budgeted. The Administration programme budget for 2011/12 showed a nominal increase of 16% and 10.7% in real terms.
This increase seeks to:
Ø Assist in reviewing the PDMS system, monitor and evaluate performance,
Ø Improve financial systems and practices,
Ø Align the communication strategies to the Government National Communication Strategy
Ø Optimise ICT infrastructure and utilization.
3.6.2 Programme 2: Agricultural Production, Health and Food Safety
This purpose of this programme is to manage the risks associated with animal diseases, plant pests, genetically modified organisms (GMOs) and registration of products used in agriculture; to promote food safety and to create an enabling environment for increased and sustainable agricultural production. The programme’s budget for 2010/11 was R610.2 million while R891.9 million is budgeted for 2011/12. This programme’s budget showed an increase of 39.5% in real terms.
This increase seeks to:
Ø Create an enabling environment and partnerships for the support of the production strategy,
Ø Facilitate programmes, schemes and support packages for smallholder farmers
Ø Increase the number of regulatory compliance and monitoring interventions (Regulatory interventions are policies, legislation, strategies, regulations, risk analysis, inspections, surveys, testing and diagnosis, permits and certification)
Ø Create an enabling environment for partnerships with other government departments and stakeholders for an efficient Bio-security system
3.6.3 Programme 3: Food Security & Agrarian Reform
The Food Security and Agrarian Reform programme aims to facilitate and promote food security and agrarian reform programmes and initiatives. This programme’s budget was R1.1 billion for 2010/11 while R1.2 billion is budgeted for 2011/12. This budget showed a real increase of 8.7%. This aims to:
Ø Facilitate the implementation of training extension personnel in technical and generic skills
Ø Provide appropriate training to new producers
Ø Monitor compliance to food security policy
Ø Implement the Zero Hunger Strategy
Ø Facilitate the implementation of training extension personnel in technical and generic skills
Ø Provide comprehensive support to new producers
Ø Monitor compliance to the mechanization policy
Ø Develop engineering norms and standards on production technologies
Ø Audit departmental processes and deliverables aimed at vulnerable groups, youth, subsistence and smallholder producers
3.6.4 Programme 4: Trade, Promotion and Market Access
The purpose of the Trade Promotion and Market Access programme is to ensure value chain integration and to facilitate market access for agriculture, forestry and fisheries products. This programme’s budget for 2010/11 was R145.6 million while R191.8 million is budgeted for 2011/12. This budget showed an increase of 25.7% in real terms.
The increase is to:
· Facilitate and support the establishment of commodity structures and associations,
· Facilitate the development and implementation of sector charters and strategies,
· Facilitate intra-Africa trade on DAFF products by promoting the export of valuable added trade.
3.6.5 Programme 5: Forestry & Natural Resources Management
The Forestry programme purpose, as stated in the Department’s 2011/12 Strategic Plan and the National Treasury’s 2011 Estimates of National Expenditure (ENE), is to develop and facilitate the implementation of policies and targeted programmes to ensure the management of forests; the sustainable use and protection of land and water; as well as to manage agricultural risks and disasters. The programme’s budget was R755 million for 2010/11 while R770.8 million is budgeted for 2011/12. This budget showed a nominal increase of 2 % and a decrease of 2.6% in real terms.
The programme seeks to:
Ø Create an enabling environment for planting 40 000ha of forest.
Ø Provide support to 10 000 new small growers.
Ø Support refurbishment and maintenance of 2% of smallholder government irrigation schemes.
Ø Facilitate the creation of 5 200 job opportunities.
Ø Develop and implement disaster risk mitigation strategies.
Ø Develop and implement climate change adaptation plans.
Ø Rehabilitate 3 200ha indigenous forests and woodlands.
Ø Increase number of hectares of agricultural land under rehabilitation.
Ø Develop and implement climate change adaptation plans.
3.6.6 Programme 6: Fisheries Management
The purpose of the Fisheries programme is to promote the conservation and sustainable use of fisheries resources. The Fisheries programme budget was R283.5 million in 2010/11 while R324.2 million is budgeted for 2011/12. This budget showed an increase of 9% in real terms.
The aim is to:
Ø Improve Small-scale Fisheries Policy.
Ø Develop the aquaculture sector.
Ø Empower communities and provide support through Working for Fisheries programme.
Ø Facilitate fishery programmes for economic development.
Ø Fisheries research to inform Total Allowable Catches /Total Allowable Effort and Stock Recovery Strategy
Ø Integrate Fisheries Security Strategy
Ø Improve stakeholder engagement, management and communication
Ø Improve the marine resource strategy
3.7 Committee Recommendations for Programmes 1 to 6
The Portfolio Committee recommends as follows:
Ø A report must be submitted to the Committee on how DAFF has re-structured its programmes and how it has re-prioritized its budget for the new programmes.
Ø The Department must outline the role it plays with regard to tariffs and subsidies.
Ø The Department must give the Committee specific details on how they will ensure the creation of jobs by smallholder producers through agro-processing.
Ø The Department must cooperate with existing commodity groups rather than re-inventing the wheel.
Ø There must be an established financing model for fisheries.
Ø There must be well coordinated training programmes between DAFF and other stakeholders to better serve the developing farmers.
Ø DAFF must present to the Committee a detailed progress report on the implementation plan on policy and programme interventions as part of their quarterly reviews.
Ø The Department must outline the programme on the interventions, how it would progress per year and which provinces it was targeting.
Ø The Department must provide its annual performance plan, outlining a plan per province.
Ø A plan on the extension services training must be made available to the Committee.
Ø The Department must present to the Committee, the Zero Hunger Strategy.
Ø The Department must outline how it administers the Marine Living Resource Fund in fisheries.
Ø There must be engagement with the provincial research institutions to promote and achieve co-ordination of research institution activities.
Ø A report on the reasons why the ARC had been underfunded for such a long time must be made available to the Committee.
Ø A detailed quarterly report on a number of smallholder farmers that are supported, their location/s and the support activities that they receive must be made available to the Committee.
Ø DAFF must report back to the Committee on time-frames as per programme interventions by the end of May 2011.
Ø DAFF must consider options with regards to financing models that will benefit developing farmers at accessible and affordable interest rates.
4.1 The Onderstepoort Biological Products (OBP)
The Onderstepoort Biological Products (OBP) is a state-owned company that operates in terms of the Onderstepoort Biological Products Incorporation Act, 1999 (No. 19 of 1999). The mandate of the OBP is the manufacturing of veterinary medication for the prevention and control of animal diseases that impact on food security, human health and livelihoods. The OBP is operating without a Board, but the OBP management took a decision that all business will operate as usual until a Board is appointed. The Board ceased to exist in October 2010. The organisation had been reluctant to present the Strategic Plan that was not approved by the Board to the Committee. It has been difficult to operate without an oversight body.
A decision was taken in 2008 that the organisation should introduce cost-cutting measures. The organisation had saved funds to buy equipment to operate but the Public Finance Management Act (PFMA) does not allow them to do so in the absence of the Board. The revenue for the current financial year is R158 million, of which R128 million is from local sales and R30 million from export, and this is R64 million above budget. This has been achieved on the back of a large increase in vaccine doses produced, resulting in more animals being vaccinated. Operating profit at the end of February 2011 stood at R30 million, compared to a R4.1 million loss the previous year. OBP had therefore managed to turn around its financial situation.
There is a need to recapitalise the facility, as its infrastructure and equipment are old. OBP had the funds to procure new equipment, but was hamstrung by the requirements of the PFMA. Management had to decide whether to proceed with the purchase of urgently needed equipment, which would in fact exceed their delegated authority.
The replacement of critical equipment to ensure security of vaccine supply would cost R48, 3 million in 2011/12, and a further R71, 8 million over the following two years. If necessary, external funding would be sought.
The Committee raised a concern about operations of the Entity taking place without a Board and felt that the Minister was delaying the operations by not confirming the Board of OBP when interviews have been finalised.
4.1.1 Strategic Objectives:
Ø SO1 – Build an innovative, passionate, high performance culture.
Ø SO2 – Build a profitable, sustainable and socially responsible bio-manufacturing company.
Ø SO3 – Focus on core competencies and unique strains, products and know-how to develop new product & leverage strategic partnerships.
4.1.2 Strategic Goals
Ø Growing revenue and operating costs.
Ø Investing in profits by way of developing new vaccines.
Ø Replacing critical equipment to maintain manufacturing capacity.
Ø Support the emerging sectors through the Provincial Government and rural vaccine distribution opportunities.
Ø Prioritise skills development through Learnership and Internship programmes.
Ø Increase bursaries and development programmes budget.
Ø Prioritise GMP Projects during 2011/12.
4.1.3 Committee Recommendations
Ø The OBP must assess their funding requirements for the recapitalisation of its facility and the replacement of old equipment and submit a detailed report to the Committee by the end of the first quarter.
Ø Permanent positions must be filled as a matter of urgency.
Ø Other Departments must be urged to access products from the OBP rather than from international companies.
Ø The DAFF must make available the report on Board and staff appointments by the 18 April 2011.
Ø The DAFF must appoint the OBP Board timeously.
Ø Reasons on why the current CEO’s contract is not being terminated must be made available to the Committee.
Ø OBP must report back to the Committee by the end of May 2011.
4.2 The Agricultural Research Council (ARC)
The Agricultural Research Council (ARC) was established by the Agricultural Research Act, 1990 (Act no. 86 of 1990, as amended by Act 27 of 2001). The ARC is the principal agricultural research institution in South Africa. The mandate of the ARC is to conduct research, and its vision is excellence research and development while its mission is to conduct research with partners, develop human capital and innovation in support of the agricultural sector. The ARC has a new Board that started its operations in June 2010. It was vital that South Africa reduces its annual import bill of R4 billion for wheat. The ARC could assist in finding solutions for this, and also in increasing food production in other categories and improving the quality of local production.
The ARC funds from contracts had decreased and it was therefore unable to grow its human resources and it could not achieve all its objectives. The ARC cautioned that although it was under-funded for the type of work that it carried out, it had been able to cope up to this point, but warned that the decrease in funds obtained from contracts placed greater strain on its resources.
There was also a need to increase food production in a wide range of other food categories, such as vegetables, fruit and teas, and to improve the quality of local production. This objective would lead to job creation and poverty alleviation. Rural farmers with limited incomes should focus on high value crops such as fruit trees and essential oils.
South Africa is also a net importer of meat, and ARC supported animal improvement schemes that enabled farmers to keep records and thereby improve their breeding programmes and marketing expertise.
4.2.1 Strategic Objectives
Ø Sustainable use of agricultural resources,
Ø The management and mitigation of agricultural risk,
Ø Food safety and security,
Ø Technology transfer and
Ø The generation of new knowledge
4.2.2 Key Challenges
Ø 1% Decline in operational parliamentary grant (PG).
Ø External Income growth declining year on year.
Ø Limited funding to fulfill the mandate.
– required number of critical vacancies
– Research and development mandate
– Agrarian reform needs – technology transfer
– Mitigating agricultural risks
Ø Aging Infrastructure.
Ø Ageing scientific capacity (demographics).
Ø Reduced skills base for recruitment (scientists, engineers & researchers etc).
Ø Urban encroachment – increasing costs of security and competing demands for land use.
Ø Meeting its transformation obligations e.g. 50/50 gender representation.
Ø ICT information systems requiring upgrade.
Ø Insufficient funding (PG and contract income) that may lead to staff lay-offs.
4.2.3 Key Focus Areas
Ø Submission of comprehensive motivation for additional Parliamentary Grants.
Ø Identification of new revenue streams to increase external income.
Ø Review and prioritization of programmes to manage costs.
Ø Review of current ARC infrastructure requirements.
Ø Cost sharing arrangements with Universities.
4.2.4 Committee Recommendations
Ø There has to be a drastic increase in the funding of the ARC.
Ø There must be a dedicated economic research division that will focus on areas of mitigating and managing risk and future projections in the agricultural sector.
Ø The ARC must instigate programmes to DAFF for the purpose of transfer of information to the farmers.
Ø The ARC must present a report on how the Kaonafatso ya dikgomo programme benefits developing farmers and how the Animal Recording Scheme fits into the programme.
4.3 Ncera Farms (Pty) Ltd.
Ncera Farms (Pty) Ltd is a public company listed in Schedule 3B of the Public Finance Management Act, 1999 (PFMA), with the Department of Agriculture, Forestry and Fisheries as the sole shareholder.
In terms of the mandate granted by the shareholder the objective of Ncera Farms (Pty) Ltd is to provide:
Ø Industry focused farm management training
Ø Provision of farmer support services
Ø Design of franchise type agricultural business models.
Ø Absence of a CEO and Board.
Ø Lack of governance and policy.
Ø Delays in administrative requirements.
Ø Irrelevant and skewed services and programmes.
Ø External challenges caused by illegal settlements.
Ø Poor farm infrastructure.
Ø Lack of respect between stakeholders and ineffective enterprises.
4.3.2 Committee Recommendations
Ø DAFF must submit to the Committee, audited Financial Statements and Budget of Ncera Farms for 2010/11 and 2011/12 financial years, as well as the 2010 Forensic Audit Investigation Report before the 24 May 2011. The Committee needs this information to consider what the Department presented as a Strategic Plan.
Ø The DAFF must meet with the Provincial Departments, agricultural training institutions and other relevant stakeholders to strategise on a way forward to take Ncera Farms out of the current crisis situation.
Ø While the Committee is still awaiting all the reports from DAFF, Ncera Farms must continue its operations on a month-to-month basis.
4.4 The National Agricultural Marketing Council (NAMC)
The National Agricultural Marketing Council (NAMC) was established in terms of Section 3 and 4 of the Marketing of Agricultural Products Act (No. 47 of 1996), as amended by Act No. 59 of 1997 and Act No. 52 of 2001. The mandate of the NAMC is to advise the Minister of the DAFF and other directly affected groups on agricultural marketing policy.
Its main objectives are to:
Ø To increase market access for all participants
Ø Promoting efficiency of the marketing of agricultural products
Ø To optimize export earnings and
Ø To enhance the viability of the agricultural industry.
The Council was targeting the job creation, information exchange, trade, training, and budget allocation. The current market structure was shaped largely to cater for existing mainstream market participants. The market structure at the processing and retail level was highly concentrated. The reason for this was because it was inherited from the previous regulated marketing regime and Government support incentives, and because it was providing a breeding ground for a non-optimal competitive environment and high entry barriers for smallholder farmers.
4.4.1 Key actions
Ø A paradigm shift to benefit the grain industry, meat industry, cotton industry, fish processing and forestry,
Ø The size of the cake needs to be increased by reviewing the bio-fuel policy; realignment of export promotion policy and tools; and encouraging buying of local products,
Ø The potential of quick wins needed to be leveraged so as to develop new and expand existing development incentive schemes; and to leverage the potential of institutional markets
Ø Contributions by the private sector.
4.4.2 Job creation measures as presented by the NAMC
Ø National Red Meat Development Project (NRMDP)
Its funding value is R42 million spread over 5 years. In order to realise this, funding must be secured; infrastructure must be developed; there must be market information; there is a need for training; and special programmes should be designed per custom feeding programme.
Ø Vineyard development scheme
Its investment value is R62 million for 570 ha of vineyard. Funding is required for infrastructure, operating capital, training and extension services, and market linkages.
Ø Grain crop development scheme
Its investment value is R140 million. Funding is required for operational and risk mitigation funding, training and extensions services, on farm storage, and mechanisation.
Ø Deciduous Fruit Trust - tree planting project, +- R5.1 million Comprehensive Agricultural Support Programme (CASP) funds administered in 2010
Total = R12.2 million. 1st Phase = 1 000 ha by 2014 – 600 ha in the Western Cape in partnership with the Western Cape Department of Agriculture (WCDA)
Ø Winter Cereal Trust - Commercialisation of and promotion of wheat production amongst developing farmers in the Free State, Western and Southern Cape. Total expenditure for the development project is R4 067 549.
Ø Maize trusts - funding to the Grain Farmer Development Association to assist small holder farmers in soil preparation, input costs, harvesting and storage of grain.
Ø Oil and Protein Seed Trust - its aim is to assist 165 emerging farmers to plant 15 100 ha of sunflower. A total of 1 250 temporary job opportunities would be created during the season.
4.4.3 Budget Allocation: 2011/12 – 2013/14
The NAMC has received an MTEF budget allocation letter for the period from DAFF.
Ø 2011/12 R35 988 000
Ø 2012/13 R30 115 000
Ø 2013/14 R32 220 000
The decrease of R5 million in 2012/13 is a result of the fact that the NAMC had in the previous financial years, received additional funding to expand the export promotion programme meant for affording 100 emerging agribusinesses the opportunity to participate in international trade. This funding was for the Medium Term Expenditure Framework (MTEF) period 2009/10 – 2011/12 only.
4.4.4 Other sources of income
The NAMC is anticipating generating income from the investment of the grants to be received from DAFF at the beginning of the financial year 2011/12.
The following are the projected interest to be generated:
Ø 2011/12 R1 350 000
Ø 2012/13 R1 200 000
Ø 2013/14 R1 400 000
Total income for the MTEF period:
Ø 2011/12 R37 249 000
Ø 2012/13 R31 315 000
Ø 2013/14 R33 620 000
4.4.5 Committee Recommendations
Ø There must be an economic research unit that analyses future market requirements of various commodities based on economic principles that advises DAFF on what should be produced in future.
Ø The NAMC must regularly report to the Committee on progress made on its job creation measures.
Ø The NAMC must provide the Committee with full details on various activities of its Trusts including their financial statements.
4.5 The Perishable Products Export Control Board (PPECB)
The Perishable Products Export Control Board (PPECB) is a national public entity that is listed under Schedule 3A of the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA). The PPECB derives its mandate from the Perishable Products Export Control Act, 1983 (Act No. 9 of 1983) as amended. The mandate of the PPECB is to certify perishable products for quality and safety, apply cold temperature protocols (cold chain) for designated markets, conduct research and provide advice and training. The PPECB aligns its strategies with those of the Department of Agriculture, Forestry and Fisheries (DAFF) with careful attention given to the Medium Term Strategic Framework (MTSF). The PPECB’s strategic objectives for the 2011/12 financial year are therefore, to:
- Enhance the credibility of the South African Export Certificate.
- Support the export competitiveness of South Africa’s perishable product industries.
- Strengthen the PPECB’s capacity as a credible source of information.
- Support Government in ensuring confidence in quality assurance and food safety systems for local perishable product markets.
- Support Government in developing systems to ensure compliance with South African food safety and quality standards for imported perishable products.
4.5.1 Strategic Objectives
Ø To enhance the credibility of South African Export Certificate.
Ø To support competitiveness of South Africa’s Perishables Products Industries.
Ø To strengthen PPECB’s capacity as a credible source of strategic information for serving Industries and Stakeholders.
Ø To support Government in ensuring confidence in quality assurance and food-safety systems for local perishables products markets.
Ø To support Government in building systems to ensure compliance with South African quality and food-safety standards for imported perishables products.
4.5.2 Budget 2011/12
The Budget of the PPECB is mainly informed by two drivers, namely, the fulfilment of the mandate from government and execution of the previous three-year strategic plan that was approved by the Board and approved by PPECB’s Executive Authority and the Parliamentary Committee.
The budget provides for a shortfall of R2.8 million that is to be funded from previous year’s surpluses. The R2.8 million funding relates to the implementation projects namely the development of an electronic export documentation system of R1.4 million, a major upgrade of Navision of R900K and preparing the PPECB for an ISO 17020 certification of R500k. The PPECB received a budget allocation of R15 million from DAFF over three years.
A more sustainable strategy is to re-engineer current operational methodologies that will lead to improved efficiencies without compromising the desired outcome. Another opportunity would be for PPECB to grow its scope in value adding services and generate additional income by leveraging PPECB’s infrastructure, intrinsic knowledge and existing capabilities. The budget provides extensively for interventions to transfer skills and management of change through training, development, mentoring and increase supervisory capacity.
The PPECB CEO has been suspended by the Board based on the serious allegations levelled against him.
Ø Capacity of the Department of Agriculture, Forestry and Fisheries (DAFF) to support realisation of the PPECB Strategic Objectives.
Ø Capacity shortage caused by aging technical skills.
Ø Effectiveness of communication due to the diversity and geographic spread of stakeholders.
Ø Outdated legislation and regulations.
Ø Escalations in business costs
Ø Increased international competitiveness.
Ø The must provide a full report to the Committee on the suspension of the CEO and the outcomes thereof.
4.6 The Forestry Sector Charter Council (FSCC)
The FSCC was launched on 22 May 2008 and was legally constituted as a Section 21 Company. Its main responsibility is to oversee, monitor and encourage implementation of the Charter. The Council comprises people from the forestry industry, Government, labour, communities, the Forest Industries Education and Training Authority (FIETA) and the Independent Development Corporation (IDC). Its main objective was to extend economic opportunities and benefits of the forestry sector to the previously disadvantaged communities.
The CEO was suspended by the Board on the 17 February 2011 after a few allegations were made against him and following investigations. The CEO was requested to make available the budget of the Council but that was never made available until the relationship between him and the Board was irreparable. Presently, the Chairperson of the Council oversees the running of corporate matters. There is also no Financial Officer. The Council operates with a budget of R3 million, and overemphasised the need to have a CEO and a CFO who will manage the Council and oversee its budget, respectively. The Board admitted that they were reluctant to appear before the Committee, which is for the first time, given the current state of the Council.
The Committee was not happy with the Council’s current status and was not impressed with the unavailability of its financial information.
All Entities’ representatives were reminded that they should openly outline their matters that hamper operations to the Committee in order for the Committee to be able to assist.
4.6.1 Committee Recommendations
Ø Another meeting must be convened to focus on the challenges facing the Council and the transformation of the forestry sector.
Ø Financial information of the Council must be made available to the Committee within two weeks of the strategic plan and budget hearings.
Ø FSCC must provide the Committee with full details on the suspension of the CEO.
4.7 Agricultural Sector Education and Training Authority (AgriSETA)
The term for the AgriSETA Board was ending on the 1st April 2011 and that was why they could not attend the meeting.
4.7.1 Overarching Aims for 2011/12
Ø To disburse 78% of possible mandatory grants– R85 million
Ø To disburse al discretionary funds – R84 million
Ø To disburse all PIVOTAL grants – R22 million
Ø To roll-out large scale land reform project – R64 million over 3 years
Ø To increase focus on commodity organizations
Ø AgriSETA to remain one of the leading Sector Education and Training Authorities (SETA) in offering occupationally aligned qualifications
Ø To continue promoting learnerships, skills programmes, bursaries, internships, mentoring and Adult Basic Education and Training (ABET)
4.7.2 AgriSETA priorities to National Skills Development Strategy
Ø Sector Intelligence: to offer credible skills planning, and career and vocational guidance
Ø Responsive Management Information System (MIS): to offer credible skills planning, and career and vocational guidance
Ø Scarce skills information: to offer credible skills planning, and career and vocational guidance
Ø Responsive to rural needs: to support coops, small enterprises, etc
Ø Integrated rural support: to support cooperatives, small enterprises, and to form partnerships with government
Ø Impact on Black Economic Empowerment (BEE) and equity: to find better use of workplace learning
Ø Decent work: to provide access to occupational learning
Ø Responsive provider sector: to promote growth in the Further Education and Training (FET) sector
Ø Provincial presence: to form partnership with government.
4.7.3 Allocations of the R106 million Discretionary Funds for 2011/12
Ø Sector Intelligence – R1.3 million
Ø MIS Revised and aligned to NSD III – R0.3 million
Ø Career Information available throughout sector – R0.6 million
Ø Skills development support to the rural economy – R45 million
Ø Development of Extension Officers – R2.0 million
Ø Agri-BEE Charter support – R0.3 million
Ø Decent workplace work – R38.9 million
Ø Provider Development and Integration – R3.8 million
Ø Environmental Focus – R1.3 million
Ø Good governance and decent conduct – R3.9 million
Ø Provincial presence – R0.6 million
4.7.4 Learning programmes to be supported
Ø 800 Learnerships – R14.7 million
Ø 1 200 skills programmes (employed) – R5.3 million
Ø 800 skills programming (under resourced) – R3.5 million
Ø 80 apprentices – R3.4 million
Ø 160 foundational learning programme – R5.3 million
Ø 40 bursaries – R1.5 million
Ø 50 new ventures creations – R1.8 million
Ø Rural structures, commodity organisations – R12.5 million
4.7.5 Research Activities
Ø 210 post-graduate research programme have been funded
Ø 26 Agricultural Research Council (ARC)-specific post-graduate research bursaries have been funded
Ø Every 5 years extensive research into the agri-sector is being conducted
Ø During 2010/11 a sum of R0.3 million was allocated into Agri-BEE research
Ø R1.3 million for 2011/12 is set aside for research into environmental matters
Ø AgriSETA experienced delays in obtaining service level agreement from the Department of Higher Education and Training (DoHET)
Ø Rural development requires high level of commitment from all Government departments
Ø Poor and Ad-hoc access to National Skills Fund
Ø Low levels of education in the agricultural sector
Ø Few young people entering the sector.
The Committee applauded the AgriSETA for their dedication in the work that they do and the excellent presentation that covered what was required.
The Committee acknowledged that there are entities that are working hard to fulfil their mandates and commended these, in particular those that are not subsidised by the government such as the PPECB and the OBP. However, the Committee felt that a lot of work still needs to be done on those that are faced with challenges and the Department must take the lead. Finally, the Committee raised their concern regarding the serious lack of collaborations on training and research activities between the Department, its Entities and other departments such as Rural Development and Land Reform, as well as among entities.
The Committee recommends that the strategic plan and budget of the Department of Agriculture, Forestry and Fisheries (Vote 26), including those of the following Entities, be approved and passed:
a) The Onderstepoort Biological Products (OBP)
b) The Agricultural Research Council (ARC)
c) The National Agricultural Marketing Council (NAMC)
d) The Perishable Products Export Control Board (PPECB)
e) The Forestry Sector Charter Council (FSCC)
f) Ncera Farms (Pty) Ltd. – notwithstanding the challenges facing Ncera Farms (Pty) Ltd.
Report to be considered.
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