Department of Agriculture: Committee Training

Meeting report

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
7 February 2005
DEPARTMENT OF AGRICULTURE: COMMITTEE TRAINING

Chairperson: Mr N Masithela (ANC)

Documents handed out:
CASP PowerPoint presentation
Eco Agricultural Land Care Programme PowerPoint presentation
Agricultural Public Sector Strategic Review
Integrated Food Security and Nutrition Programme for SA PowerPoint presentation
Review of the Animal Health System PowerPoint presentation
Micro Agricultural Finance Scheme for SA PowerPoint presentation
Impact of Tariffs on Grain Prices PowerPoint presentation
International Agricultural Strategy PowerPoint presentation

SUMMARY:
The Committee received a full day of training from the Department on broad policy matters relating to their Eco Agricultural LandCare Programme, the country’s animal health system, the Agricultural Micro Agricultural Finance Scheme; the impact of tariffs on grain prices, the Integrated Food Security and Nutrition Programme, and South Africa’s International Agricultural Strategy. Due to time constraints, there was little time for Members to ask questions of clarification after the last four presentations.

MINUTES

Department Eco Agricultural Landcare Programme
Mr Bonga Msomi highlighted new strategic objectives, such as the expansion of the secondary enterprise phase of the landcare programme, and adding value to farm operations and better quality jobs. The Department explained that this would be achieved through development of agri-tourism, eco-technology and ‘green lung’ strategies.

He covered the major sub-programmes that addressed resource conservation issues, capacity-building of local communities and support staff, as well as policy legislation, research and evaluation. They had planned to foster partnerships between the private sector and farmers in order to identify market and product development opportunities. The key players would be private individuals, personal and company taxpayers and private companies, as well as the international community.

Agricultural Public Sector Strategic Overview
The Deputy Director-General (Production and Resources), Ms N Nduli, presented the Agricultural Public Sector Strategic Overview in which she highlight the Department’s vision over the following five years. This included macro-economic stability, increased levels of public investment, lower cost structures throughout the economy, and enhanced levels of competition. Also, the manufacturing and services sectors that were growing, creating jobs and meeting basic needs as well as being able to compete globally. The Department further wanted to see more black- and women-owned and managed enterprises.

Their broad strategies were to maintain a stable macroeconomic environment with microeconomic reforms to minimise input costs and increase access, and develop investment platforms for competitiveness. The Department’s ‘Second Economy Strategy’ was to address poverty and unemployment, and to create economic opportunities to build a single economy. In terms of their governance strategy, the Department intended to build institutional capacity to implement, sequence actions, and be able to monitor and evaluate their actions.

Discussion
Mr J Bici (UDM) enquired what mechanisms were currently in place to ensure that agriculture was prioritised in all the provinces. Mr Mbongwa (NDA) replied that the costing of policies and programmes was still a work in progress.

Mr Van Niekerk asked whether current Department strategies were sufficient.

Mr Bici (UDP) asked the performance position for the next six months. What were the monitoring mechanisms currently in place? Ms Nduli said that in terms of successes and failures, the system of communication had certainly improved, with some failures related to skills and capacity. In terms of monitoring and evaluation, the Department would give a better answer when they soon presented their strategy plans for 2005.

Mr Dlali commented that currently sufficient systems were not in place for monitoring. He asked what the Department intended to do in terms of evaluation, the slow delivery of land restitution, and the Integration of food security.

Mr Mbongwa replied that the Department would be meeting up with the Ministry in the following week to discuss the faster delivery of land restitution. Ms Nduli added that they were working with NEDLAC, civil society organisations, AgriSA and the National Farmers Union (NAFU).

Mr Dlali asked for further clarification on the ‘land problem’. Mr Mbongwa explained that specific amounts needed to go into the land restitution process.

Dr E Schoeman (ANC) commented that the goals were far too ambitious. Mr Schoeman asked how many new successful entrants were in the South African agricultural economy. There were vast tracts of land unutilised in the Eastern Cape due to the lack of capacity. He asked how they had planned on accommodating land restitution in such cases.

Ms Nduli replied that MinMEC was meeting in a few days to discuss some of these concerns. While the Department had these goals, they were often under-resourced in terms of capacity and allocation. Mr Mbongwa commented that cluster formation, while sometimes helpful, could also be cumbersome.

CASP Recharged report
Ms Nduli reported that the Department had conducted provincial visits in July, October and November 2004. During these visits, they had identified and monitored constraints as well as reiterated implementation strategies. Many delivery systems lacked in-depth analysis on current procurement processes. Also, they had identified the lack of mobilisation of civil society, and they sought to adopt participatory approaches. Under the current system, planning was poor in terms of business plans working with ground operations. They had identified the issue of weak monitoring and evaluation communication lines.

Discussion
Mr Bici (UDP) commented that the underspent budget was a bad reflection on the Department.

Mr Dlali (ANC) stated that often money was misused towards the end of a financial year and that this money was often misappropriated. He asked the Department what mechanisms were currently in place to ensure accountability.

Mr B Msomi (Department) sated that their reports had been sent to the Treasury on 20 February annually. However, there were always problems of compliance. When there was a rollover, there was insufficient capacity to utilise this money. These funds would then be used for social spending, such as on education. The Auditor-General currently monitored the Department. There were also Department Quarterly Reports detailing spending.

Mr Dlali asked when the issues of ‘lack of capacity’ would be addressed.

Mr Schoeman (ANC) commented that Parliament often drafted reports, but these were not operationalised. Thus far, none of his colleagues had ever been reprimanded for non-compliance.

Mr Radebe (ANC) suggested having interns working to solve problems of capacity.

Animal Health System review
Department Director for Disease Control, Dr Cornelia Gerzenberg, presented a review of the animal health system. She highlighted that livestock production relied heavily on the availability of accessible, efficient and quality animal health advisors. The international Food and Agricultural Organisation (FOA) had estimated that infectious diseases accounted for a 35% loss in productivity in the developing world.

Dr Gerzenberg noted that two vital functions needed to be in place. Firstly, namely reliable disease surveillance and secondly, a control system backed by a diagnostic service to scientifically verify the claims of disease freedom and to provide guarantees to South Africa’s trading partners.

Dr Gerzenberg said that the challenges included the stark difference in the quality, nature, accessibility of veterinary services available to various farmers. Livestock production in the black farming sector had also been confined to predominantly the communal areas. This success was due to an integrated veterinary service and training for veterinarians, which was linked to research and updated animal disease surveillance.

The Director noted that in post-1994 South Africa, the opening of the international markets had led to an increased volume and incidence of illegal imports and uncontrolled movement of livestock and products across borders. The new Constitutional Imperatives in Schedule 4 (Part A) "animal control and diseases", had been identified as a functional area of concurrent national and provincial legislative competence. Schedule 5 (Part A) of the Constitution said that "abattoirs" and "veterinary services excluding regulation of the profession". Schedule 5 (Part B) "municipal abattoirs" had been identified as functional areas of exclusive provincial legislative competence. Section 15(6) further made provision to assign these functions to municipalities. This had led to the fragmentation of the existing veterinary services, which could not deliver quality services and provide guarantee for animal health and import/export control.

The Director explained that decentralised provincial management of veterinary services had resulted in inadequate disease surveillance. Also, the fragmentation of veterinary services has led to unco-ordinated provincial laboratory services, untrained veterinary laboratory staff (veterinarians being appointed straight from university into laboratories). In addition, there was a lack of human resources, infrastructure, laboratory apparatus and support staff to sustain the activities of the provincial regional and state veterinary laboratories at an adequate level.

The Director put forth the Department’s two options for improvement. The first option was the creation of one veterinary system. In order to achieve this, the Department would need to review the Constitution, create a national office, strengthen capacity and the monitoring capability when auditing provincial government, as well as incorporate all regulatory activities currently performed by the provinces into a national function. While this would result in improved and well co-ordinated disease reporting mechanisms and control measures, improved budgeting systems and national early warning systems across borders, there were four disadvantages. These included the increased budgetary demands in the creation of one veterinary system; the perceived complexity of this system and the duplication of activities, especially if there was a lack of clarity between a national system and the auditing functions of provinces.

The second option was to leave the current concurrent function between the national Department and provincial departments, in which case each province would be accountable for disease outbreak control. This could result in the duplication of activities with possible multiple reporting systems to the provincial head of departments, unco-ordinated services, and an unco-ordinated budgeting system. Dr Gerzenberg recommended the first option, noting that this would need additional resources and discussions with legal services about the review of the Constitution.

Discussion
Mr Schoeman (ANC) asked why the suggestion for the European Union to sponsor two diagnostic vet clinics had been vetoed. Despite rumours about a national breakout of disease in ostriches, there had been no reports of sick ostriches. In addition, he asked about the procedures if a person wanted to bring an animal or animal product into the country.

Dr Gerzenberg replied that the Department did not currently have animal admittance. Should a person want to bring an animal or animal product into the country, they would need to apply for an animal import product licence. The only two countries from which a person would not be required to apply for a permit would be Namibia and Swaziland, since their regulations were considered equivalent (or superior) to South Africa’s regulations. She could not answer the question regarding the European Union sponsorship.

Mr J Bici (UDM) asked for clarification on the lack of incentives, and the Food and Agricultural Organisation (FAO) estimate of infectious diseases accounting for 35% loss in efficiency. Dr Gerzenberg replied that the World Trade Organisation (WTO) had set standards for which animals could be traded internationally; and hence there was a need to comply with these standards.

Mr E Salamuddi (ANC) asked about the rumours of a possible "Asian Flu" which could affect South Africa, and the preventative mechanisms currently in place. Dr Gerzenberg replied that this influenza would not be able to spread from animals to humans.

The Chairperson commented that due to the lack of time, the Committee would hear the following four presentations followed by a unified discussion.

Micro Agricultural Finance Scheme for South Africa (MAFISA)
Department Deputy Director-General, Mr M Mbombwa, presented policy issues relating to the Micro Agricultural Finance Scheme for South Africa (MAFISA). He explained that MAFISA was a state-owned scheme that provided micro and retail agricultural financial services to households, individuals and entrepreneurs in rural areas on a national, commercial and cost-effective basis. Their vision was to empower the rural working poor, small entrepreneurs and farmers to improve their livelihoods. The micro-financing demands of the working poor could be met by profitable, sustainable institutions in widely different environments. Authorities should provide an enabling environment if institutional commercial micro-finance was to succeed. Donors could support commercial micro-finance assistance through capacity-building initiations. He then presented the Agricultural Support Programme’s financial assistance towards the hunger alleviation, household food security, and subsistence and farming business activities.

Impact of tariffs on grain prices
Mr Bonga Msomi of the Department compared the characteristics of the pre-1994 South African agricultural economy to the post-1994 economy. In the pre-1994 economy, agricultural marketing done through co-operatives owned by agricultural control boards. The sector had been characterised by price controls, subsidisation, import/export controls, and restricted access to raw materials such as grains for the milling and baking industries. Farmers operated under a price guarantee system with no marketing research and no price risk management. Surpluses in the market had been pooled together and removed from the markets to maintain certain prices.

The post-1994 South African economy was characterised by the prices of most agricultural products, especially grains, being determined by import and export parity pricing; tariffs; net domestic and regional demand and supply conditions; domestic and regional stock levels, as well as grain prices being determined internationally.

Mr Mbombwa stressed that South Africa was currently experiencing a huge carry-over stock of maize from the previous season, estimated between 3 - 3.5 million tons. The expected harvest was estimated at 9 million tons and the domestic consumption at 8 million tons per annum. Surplus maize pushed domestic prices to export parity in much the same way that shortages in 2001/2002 pushed prices to import parity. Regional maize production was improving, thereby leading to limited export opportunities to regional markets (Mozambique, Tanzania, Zambia, Angola). Local surpluses would be fed into the market and reflected through lower producer prices.

Mr Mbombwa asked the Committee to consider that farmers would always argue for higher tariffs to limit import competition, whether fair or not, and that millers would argue for lower tariffs to get grains as cheap as possible. Consumers want affordable food and therefore tariff setting was often a balancing act. During years of surplus domestic production, domestic prices discounted the tariffs, as was the current situation. In the case of domestic shortages, domestic prices included tariffs – therefore the high prices, as in 2001/2002. The current problem was over-production, which was not a trade-related matter that could be solved through a tariffs policy.

Integrated Food Security and Nutrition Programme
Ms M Ramabenyane of the Department’s Food Security division, gave brief statistics of the national food security situation. Rainfall in November 2004 had been restricted to Mpumulanga and KwaZulu-Natal. They had revised their intention to plant summer crops for the 2004/05 production season in November 2004. The area of planted maize was expected to be 3.05 million hectares. Cattle, sheep and pig numbers had decreased respectively by 2%, 1.8%, and 0.6% between August 2003 and August 2004.

As far as export progress was concerned, the final adjustment from the South African Grain Information Services (SAGIS) had exceeded estimates with a total of 9.71 million tons – 8.7% above the final figure of 8.934 million tons. This higher level of production had resulted in a projected exportable surplus from two million tons to 2.75 million tons. Planned exports represented 26% of the total exportable surplus, while total exports thus so far equalled only 14%. With this slow progress on export rates, South Africa faced a large carry-over of stock that might influence farmers to reduce planted areas in 2004/05 and might continue to keep ‘farmgate prices’ of maize low. South Africa received no food aid.

The extent of food insecurity in South Africa was vast - 1.5 million children experienced under-nutrition and 15 million people suffered from food insecurity. At a national level, one third of households were unable to purchase food for the dietary requirements of children, the elderly and the sick. A greater percentage of households in rural areas experienced hunger relative to urban areas. Some measures for food insecurity were household incomes, with wages and salaries (57%), social grants (14%) and remittances (10%).

Current government initiatives in the Integrated Food Security Programme included LandCare and CASP for the malnourished, subsistence producers, and emerging/commercial farmers. The Health Department also provided an Integrated Nutrition Programme (INP), a Food Fortification Programme, food supplements and markets. The Social Development Department was also involved in the Comprehensive Social Security System, Food Fortification Programme, food supplements and markets.

Ms Ramabenyane highlighted the issues for focus for 2005/06, including the establishment of an effective Food Insecurity and Vulnerability Information Monitoring System (FIVIMS). FIVIMS was a database produced through a FIVIMS survey to complement existing data and provide lower resolution information as well as survey analysis through reports, tables, graphs, and maps. They also planned to improve the reporting capabilities of trained personnel, and to disseminate their strategies to policy makers, technicians, and councillors.

International agricultural strategy
The Department Senior Manager for International Relations, Ms June Josephs, reported that the Department would focus on increasing international trade; research collaboration on technologies; human resource development, mentorship and technical assistance; and establishing and consolidating bilateral and multilateral relations at a high political level. They had also prioritised multi-stakeholder dialogues, farmer to farmer exchanges, academic and student exchanges, etc.

Regarding their international strategy for Africa, Ms Josephs stated that the underlying principle was regional stability in South Africa’s interest. Land, agriculture and the environment were priorities in the African Union. Consolidation of ‘people to people’ relations was a project of ‘African Footprints’. The Department intended to focus on intra-African trade facilitation by harmonisation and markets.

In terms of the African Agricultural Development Programme (AADP), the areas of focus would be the development of Integrated Food Security Strategies (IFSNP), disease combating, management of a micro-financing infrastructure, and international trade negotiations.

Discussion
Mr J Bici (UDM) asked what strategies were currently in place to ensure that the IDP worked with communities.

Mr T Ramphele (ANC) asked whether deregulation and subsidies had been taken into account when the decisions to follow international trends were made. He asked for more detail on food security and other feeding schemes

Mr Nefolovhodwa (APO) asked how the public could access the money relating to food security.

Mr E Salamuddi (ANC) enquired about the input costs to produce one ton of maize. Ms Msomi (NDA) responded that maize constituted 50 % of the input costs. The other questions went unanswered due to lack of time.

The meeting was adjourned.