ATC160419: Report of the Portfolio Committee on Agriculture, Forestry and Fisheries on the Strategic Plan, Annual Performance Plan and the Budget of the Department of Agriculture, Forestry and Fisheries (Vote 24) and its Entities, dated 19 April 2016

Agriculture, Forestry and Fisheries

Report of the Portfolio Committee on Agriculture, Forestry and Fisheries on the Strategic Plan, Annual Performance Plan and the Budget of the Department of Agriculture, Forestry and Fisheries (Vote 24) and its Entities, dated 19 April 2016

 

The Portfolio Committee on Agriculture, Forestry and Fisheries examined Budget Vote 24: Agriculture, Forestry and Fisheries including the Annual Performance Plan of the Department of Agriculture, Forestry and Fisheries (hereinafter referred to as DAFF or the Department) for the 2016/17 financial year and budget projections for the Medium Term Expenditure Framework (MTEF) period (the 3-year period from 2016/17 to 2018/19).

 

During the process, the Portfolio Committee also examined the Strategic Plans, associated Annual Performance Plans (APPs) and Budgets for the MTEF period of the following DAFF Public Entities:

  • Marine Living Resources Fund (MLRF)
  • Onderstepoort Biological Products (OBP)
  • Perishable Products Export Control Board (PPECB)
  • Agricultural Research Council (ARC)
  • National Agricultural Marketing Council (NAMC)
  • South African Veterinary Council (SAVC)

 

In preparation for the briefings by the Department and entities on their Strategic and Annual Performance Plans, the Committee engaged with the Financial and Fiscal Commission (FFC) and the Department of Planning, Monitoring and Evaluation (DPME). The APP of the MLRF was considered in conjunction with that of the Department (DAFF) as the MLRF is responsible for funding operational activities of the Department’s Programme 6, Fisheries Management.

 

Having considered the Strategic Plans, APPs and Budget Vote 24 (includes the Department and its entities), the Committee reports as follows:

 

1.         Introduction

 

The Strategic Plans, APPs and Budgets of DAFF and its Entities were tabled in Parliament as required in terms of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999), on 10 March 2016. All the tabled plans were referred to the Portfolio Committee on Agriculture, Forestry and Fisheries for consideration and report on 16 March 2016. In performing its constitutional mandate, the Committee considered the Strategic Plans and 2016/17 APPs of DAFF and its Entities, taking into account their alignment with the objectives of the National Development Plan (NDP) and the Medium Term Strategic Framework (MTSF) 2014-2019. 

 

The Committee, in considering the Department and its Entities’ Strategic Plans and Budget Vote, wanted to determine whether the funds that are allocated to the Department and its entities through different programmes translate to actual service delivery, particularly in rural and underserviced areas. In this regard, the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009), grants Parliament the power to reject, recommend or amend budgets of departments and entities.

 

2.         Consideration of the Strategic Plans, Annual Performance Plans (APPs) and Budgets of the Department of Agriculture, Forestry and Fisheries and its Entities

 

The strategic goals and objectives of the Department, which were revised in 2014/15 to align with the MTSF Outcomes (Outcomes 4, 7, 10 and 12), remain the same.

 

The budget allocation of the Department (Budget Vote 24) for the 2016/17 financial year is R6.3 billion, a decline of R65.8 million from 2015/16. Although the budget will increase up to R6.99 million in 2018/19, according to the FFC, the allocation represents a real average decline of 3.2 per cent over the over the medium term expenditure framework (MTEF) period. Despite the nominal increases, in real terms (i.e. taking into account inflation), the decline in budget growth over the MTEF will be notable in the Forestry and Fisheries Programmes despite increased attention being given to aquaculture for potential job creation. The budgets of priority programmes such as Agricultural Production, Health and Food Safety (Programme 2) and Food Security and Agrarian Reform (Programme 3) are also declining over the MTEF period in real terms. The budget cuts on the Vote will also had a negative impact on the allocations to the Department’s public entities, particularly the Agricultural Research Council (through Programme 2) and the Marine Living Resources Fund (through Programme 6).

 

Table 1. Budget Allocation per Programme for the MTEF Period (2016/17 – 2018/19)

 

Programme

 

2015/16 allocation

 

2016/17 allocation

 

2017/18 allocation

 

2018/19

allocation

Proportion to total vote for 2016/17

R Million

 

 

 

 

 

1.  Administration

R 729.9

R788.1

R803.2

R839.9

12.4 %

2. Agricultural Production, Health &  Food Safety

 

R2 134.8

 

R1 953.4

 

R2 183.2

 

R2 292.6

 

30.5%

3. Food Security & Agrarian Reform

 

R1 930.3

 

R1 889.7

 

R2 018.0

 

R2 090.6

 

30.3%

4. Trade Promotion & Market Access

 

R 238.2

 

R297.6

 

R264.8

 

R275.4

 

4.7%

5. Forestry & Natural Resources Management

 

R 906.6

 

R945.6

 

R961.4

 

R1 002.5

 

14.9%

6. Fisheries Management

 

R 443.3

 

R458.6

 

R475.7

 

R498.0

 

7.2%

 

Total

 

R6 383.0

 

R6 333.0

 

R6 342.54

 

R6 999.0

 

100%

Adapted from National Treasury (Estimates of National Expenditure, 2016)

 

The bulk of the Department’s resources are allocated to transfers and subsidies in the form of conditional grants to provinces and transfers to public entities, which constitute approximately 60 per cent of the Department’s budget. The spending allocations to conditional grants are also declining over the MTEF period mainly as a result of underspending and reallocating resources into other priority areas. CASP is reduced by R150 million over the MTEF period and an amount of R2.8 billion in the MTEF is reallocated to Fetsa Tlala from the infrastructure allocation of CASP to support farmers with production inputs. CASP will therefore, fund less infrastructure projects in the MTEF as a result of the decrease. DAFF will retain at national, R60 million of CASP grant over the MTEF for the monitoring and evaluation of provinces’ use of the grant. The strengthening through resource allocation, of monitoring the implementation and utilisation of CASP is commended as the use of conditional grants by provinces is a continuous challenge. DAFF also intends to use allocations from CASP and Ilima/Letsema grants to assist in providing drought relief to farmers. For the 2016/17 financial year, CASP will transfer R1.64 billion to provinces and Ilima/Letsema R491.36 million.

 

3.      Overview of Committee Deliberations and Observations on the Strategic Plan, 2016/17 APP and MTEF Budget of DAFF including the MLRF and presentation on CASP and Ilima/Letsema Conditional Grants

 

The Committee welcomed the presentations that were made by the FFC and DPME on DAFF’s Strategic Plan and APP and budget over the MTEF. It further welcomed the presentation by DAFF, which included the MLRF, on DAFF’s strategic goals and objectives in relation to its 2016/17 APP and budget; as well as the presentation on CASP and Ilima/Letsema.

 

The Committee commended the FFC for its comprehensive report and appreciated its recommendations. It further encouraged the FFC on its submissions to the National Treasury on the Division of Revenue Act (DORA) to ensure that Agriculture gets enough funding from the national fiscus to enable the sector to meet its NDP objectives. The Committee thanked the DPME for assisting the Committee on its oversight function over DAFF through the information that it provides and further welcomed its announcement regarding the Cabinet approval for the establishment of Phakisa for Agriculture. The latter is believed to be essential in addressing some of the challenges relating to funding, producer support and capacity that impact on the implementation of sectoral programmes and the fulfillment of the NDP objectives for the sector.

 

The Committee also appreciated the additional information that was provided by the Department on CASP and Ilima/Letsema grants but requested the Department to submit to the Committee full details of the projects that are supported including the Fetsa Tlala projects. The Committee acknowledged the interventions of the Ministry on the deregistration of Ncera Farms (Pty) Ltd, a matter that is with the National Treasury; the engagements on the issues that were raised by the South African Veterinary Council (SAVC) in 2015 including the continuing discussions on legislation; and the discussions with previously disadvantaged academic institutions to attract youth into agriculture and the veterinary profession. The latter include discussions with the University of Fort Hare on the establishment of another Veterinary Faculty for the country.

 

During the engagements and discussions with the Department, the Committee made further comments and raised the following for the Department’s attention:

 

  1. The Committee acknowledged the improvement in the quality of the Department’s Annual Performance Plan but emphasised the discrepancies that have been highlighted by the FFC and DPME on the Department’s Plans and the lack of alignment with the objectives of the NDP and priority Outcomes and/or Sub-outcomes that are outlined in the Medium Term Strategic Framework (MTSF) 2014-2019; as well as areas of improvement on technical compliance to National Treasury Regulations.

 

  1. The Department’s progress in achieving the NDP objectives and the MTSF targets, which are not explicit in their plans.

 

  1. Notwithstanding the Cabinet-wide budget cuts and the economic climate, the Committee registered its dissatisfaction with the continuing reduction in the budget allocation to the Department given the contribution of agriculture to the economy and its untapped potential, which is also outlined in the NDP.  For the MTEF, the impact of the budget cut will also be compounded by the impact of the drought and other climate change related disasters on the sector, particularly the smallholder and subsistence producers.

 

  1. Impact of introducing unfunded programmes on the Department’s ability to achieve its targets and consequently, service delivery for the MTSF period.  The Committee made examples of Fetsa Tlala and Operation Phakisa including the implications of the drought intervention programmes that were initiated in 2015 on other activities whose funding has to be redirected to fund these programmes.

 

  1. The differences in the implementation of some of the Department programmes in provinces e.g. Mpumalanga Province does not implement Fetsa Tlala Food Production Initiative but is continuing with its Masibuyel’emasimini Food Production programme.

 

  1. Development of baselines and databases of smallholder producers for effective implementation and monitoring of conditional grants and criteria that is used to allocate conditional grants in provinces.   

 

  1. Department’s programmes to ensure that smallholder producers that are supported through conditional grants have access to markets and whether such producers are linked to the Agri-Parks.

 

  1. Linkage of the Department’s Preservation and Development of Agricultural Land Framework (PDALF) Bill with the Department of Rural Development and Land Reform (DRDLR)’s Spatial Planning and Land Use Management Act (SPLUMA).  

 

  1. The placement of veterinary graduates through the Compulsory Community Service (CCS) for veterinary professionals, which are mostly placed in urban provinces and cities although the programme was developed to service rural and remote areas.

 

  1. Inadequate progress in the transformation of agriculture, forestry and fisheries sectors.

 

  1. Impact of drought including the additional impact of increases in electricity and other costs on the agricultural sector; the impact of drought on food prices; as well as the Department’s interventions to assist farmers to recover from the drought.

 

4.         Overview of Committee Deliberations and Observations on the APPs and          

Budgets of DAFF Entities

 

The Committee noted that all entities have made concerted efforts in the 2016/17 APPs to align their plans with the objectives of the Department and have made references to specific Programmes of the Department. The Committee commended the Minister and the Department for the improved APPs, and further acknowledged the budgetary challenges that are faced by the entities, which are directly linked to the budget cut of the Department of Agriculture, Forestry and Fisheries in the medium term.

 

Having examined and discussed the Strategic Plans, APPs and budgets of the Entities, the Committee raised the following:

 

  1. The Committee commended the Onderstepoort Biological Products (OBP) on reports on vaccine production and its activities in ensuring that the entity can sustain itself. The Committee also commended and welcomed its initiative to hold discussions with the Department regarding funding for the establishment of a Vaccine Bank and increased production of orphan vaccines. The Committee commended the OBP on this initiative.

 

  1. Delays from the Department regarding the finalisation of the Perishable Export Control Amendment Bill that relates to exports and how the Perishable Products Export Control Board (PPECB) carries out its activities; and the Agricultural Products Standards Amendment Bill that relates to quality standards. The Bills are expected to be tabled in Parliament during the current financial year as reported by the PPECB, and the Committee has enquired on the status of these Bills in the previous financial year.

 

  1. The Committee commended the Agricultural Research Council (ARC) for research that it is doing in the development of a new vaccine for heartwater, a tick-borne disease of economic importance that has a negative impact in the livestock industry, particularly in the eastern regions of the country.  

 

  1. The Committee noted with concern the impact that the ARC’s budget cut (Parliamentary Grant) will have on its research activities and ability to raise external revenue. The Committee further noted that the budget cut will also impact the completion of the Foot-and-mouth disease (FMD) Vaccine Production Facility, which is expected to play a significant role in the prevention of FMD, a disease of economic importance that severely affects livestock farmers and can cost the red meat industry billions of rands in lost export revenue.

 

  1. The Committee acknowledged the challenges that were raised by the South African Veterinary Council (SAVC) and the impact that these have on the veterinary profession; and further noted the efforts of the Ministry as acknowledged by SAVC in engaging with the Council on some of these challenges, which include inter alia:
  • Constraints experienced by veterinarians when working on wildlife due to Threatened and Protected Species (TOPS) Regulations from the Department of Environmental Affairs (DEA).
  • Concerns regarding poor regulatory control measures of the Medicines and Related Substances Control Act (Act No. 101 of 1965) and the Fertilisers, Farm Feeds, Agricultural Remedies and Stock Remedies Act (Act No. 36 of 1947).
  • The registration of all Animal Health Technicians with SAVC.   

 

 

 

 

5.         Committee Recommendations

 

After discussions and deliberations on the Department and the Entities’ Strategic Plans, Annual Performance Plans (APPs) and Budget Vote 24, the Portfolio Committee on Agriculture, Forestry and Fisheries makes the following recommendations to the Minister of Agriculture, Forestry and Fisheries regarding Budget Vote 24:

 

  1. Ensure that DAFF develops a strong business case that will be presented to the National Treasury for additional funding, highlighting the impact of the budget cuts to the sector (including role of entities), which has been identified in the NDP and the New Growth Path as one of the key sectors through which increased employment and poverty alleviation can be achieved. However, the budget allocation to Vote 24: Agriculture, Forestry and Fisheries is disproportionate to what national policies expect from the sector and its challenges, notwithstanding the drought that has hit the country from 2015; the rising food costs and unfunded mandates such as SIP11 and Operation Phakisa for Agriculture that is under development.  DAFF should report on the submission to Parliament by the end of October 2016.     

 

  1. Ensure that DAFF’s next Strategic Plan and APP are fully aligned with the MTSF and the discrepancies and areas that need improvement in respect of technical compliance with National Treasury Regulations, that were reported by the FFC and DPME on the 2016/17 APP, are addressed. The MTSF commitments should be clearly reflected in the Strategic Plan and the APP; and the Department should work closely with DPME in ensuring this. A progress report in this regard should be submitted to Parliament by the end of November 2016.

 

  1. Each Quarterly and Annual Performance Report of the Department including briefings to Parliament, should clearly reflect alignment with the MTSF including the contribution of its planned activities towards achieving MTSF targets and financial resource allocation and use for each target.

 

  1. The strengthening of the monitoring of the Comprehensive Agriculture Support Programme (CASP) by DAFF is commended. However, while DAFF is awaiting the DPME review of the conditional grants’ impact assessment reports to finalise the National Policy on Smallholder Development Support, the Department should further strengthen the monitoring of all conditional grants including Ilima/Letsema and LandCare to avoid wasteful expenditure and underspending; and to ensure optimal support is provided to smallholder farmers. In this regard, a detailed report should be submitted to the Committee on how DAFF plans to monitor the use of conditional grants in provinces, also indicating shortfalls in areas where CASP grant will be redirected to Fetsa Tlala and drought relief. The report should be submitted to Parliament by the end of September 2016.

 

  1. DAFF should facilitate policy and programme coherence with provinces and entities to ensure optimal utilisation of resources according to each province’s sector potential (e.g. grain crops, livestock, fruit, vegetables, etc.) and personnel capacity; appropriate allocation of resources and effective implementation of the Agricultural Policy Action Plan (APAP) and other programmes such as the CCS for veterinarians; as well as to avoid duplication of programme objectives. DAFF should report on this every Quarter.  

 

  1. To ensure effective implementation of the CCS for veterinarians, DAFF should submit a proposal to the National Treasury motivating for additional funding to implement a rural allowance for veterinary professionals working in rural areas to ensure that rural and underserviced areas have access to veterinary services. The Department should submit a report in this regard to the Committee by the end of October 2016.

 

  1. DAFF should ensure that the distribution of veterinary mobile clinics in Provinces is linked to availability of veterinarians and other animal health professionals including CCS placements.

 

  1. The alignment of services between the Department and entities in the 2016/17 APPs is commended. However, collaborations that will lead to aligned activities between DAFF, provinces and other departments such as the Departments of Rural Development and Land Reform (DRDLR), Trade and Industry (the dti) and Small Business Development (DSBD) to ensure containment of costs, avoid duplication of activities and to maximise service delivery, have not been adequately addressed. In this regard, the Minister should continue engagements with the relevant Ministries including that of Water and Sanitation; and further ensure that the Integrated Funding Model/Policy that aims to consolidate development funding into one fund, is finalised.  DAFF has reported that the Policy is being developed in collaboration with the National Treasury; and with assistance from the International Fund for Agricultural Development (IFAD). A detailed progress report in this regard should be submitted and presented to joint Committees by the end of September 2016.

 

  1. DAFF should present to the Committee a progress report by the end of September 2016, on transformation in all three sectors including how the Department is addressing slow progress in some sub-sectors and the challenges that are associated with implementation of sector transformation codes. In addition, the Department and its entities must present progress made in terms of employment equity targets, particularly in middle to senior management positions as well as critical skills at professional levels.

 

  1. DAFF should prioritise and speed up the processing and tabling of the Preservation and Development of Agricultural Land Framework (PDALF) Bill, which despite its urgency and importance for the protection of high-value agricultural land, is expected to be tabled in Parliament only in 2017/18, according to DAFF’s Strategic Plan. DAFF should report on progress by the end of November 2016.

 

  1. DAFF should submit a motivation to National Treasury for additional funding for the ARC to ensure timeous completion of the FMD Facility and other research activities that are responsive to climate change and climate change-related disasters such as the development of drought-tolerant crop varieties, early-warning systems and new vaccines. DAFF should report on the submission to Parliament by the end of October 2016.

 

  1. DAFF should submit a funding motivation to National Treasury for OBP for the establishment of a Vaccine Reserve/Bank to ensure the availability of vaccines in sufficient quantities at all times to effectively address animal disease outbreaks and for manufacturing public good vaccines (orphan vaccines). DAFF should report on the submission to Parliament by the end of October 2016.

 

  1. DAFF should report to Parliament by the end of October 2016, on the status of the PPECB Bills that are not reflected in the 2016/17 APP; as well as progress regarding the outstanding challenges that affect SAVC in respect of TOPS regulations, Acts 36 of 1947 and 101 of 1965 and registration of all Animal Health Technicians with SAVC to ensure that standardised professional services are rendered by the profession.

 

  1. Ensure that DAFF’s early-warning systems adequately respond to natural disasters in light of climate change-induced droughts, veld fires and floods. The Department should also ring-fence disaster funding for the sector in order to speed up the disaster relief and compensation process. Report on progress by the end of September 2016.

 

  1. DAFF should ensure that all farmers fully understand and are prepared for climate change impact on the agricultural sector, as well as the forestry and fisheries sectors, through effective dissemination of climate change information, capacity building and implementable climate change response strategies for each sector. DAFF should submit a report in this regard by the end of November 2016.

 

Report to be considered.

 

 

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