AGSA & FCC on Strategic Plans, 2015/16 APPs and Budgets of DAFF; DAFF on Agricultural Policy Action Plan; Progress report by DAFF on deregistration of Ncera Farms (Pty) Ltd

Meeting report

AGSA Presentation
Mr Stephanus Kok, Senior Manager: AGSA, centred his presentation of the annual performance plans of the Department for 2015/16 on three programmes:  Food Security and Agrarian Reform, Forestry and Natural Resource Management, and Fisheries: Marine Living Resource Fund. He also presented the budget for the 2015/16 period.

Programme 3: Food Security and Agrarian Reform
The AG found that 13% of targets were not measurable and 13% of indicators were not verifiable. The strategic objective is to lead and coordinate government food security initiatives. A number of hectares of under-utilised land in communal areas have been cultivated for production. The target set for the current period is 120 000 ha. A 30% data sample would be collected from each province at the end of the planting season. The indicator was not verifiable because Annexure E stated that the Department would only verify information on a 30% sample basis. So the total population would, therefore, not be measurable or verifiable.

Programme 5: Forestry and Natural Resource Management
The AG discovered that 22% of targets were not measurable, and 11% of targets were not specific. 22% of indicators were not verifiable. Against the strategic objective of ensuring the conservation, protection, rehabilitation and recovery of depleted and degraded natural resources, indicators stated that a number of hectares in irrigation schemes have been revitalised. The target set for the current period is 250 ha. Annexure E states that a number of hectares that have been revitalised would be collected from the reports of the PDAs because PDAs comply with the reporting procedure of CASP and the Ilima/Letsema Funding programme. The AG reported that Annexure E does not specify what supporting documentation, other than the reports, would be collected from the PDA reports to ensure that the target is measurable.

Indicators state that a number of plantations for Forest Stewardship Council have been certified. The target set for the current period is one. Annexure E indicates that a service provider would evaluate data against agreed external standards. However, Annexure E does not specify the specific data that would be collected from the service provider.

Programme 6: Fisheries: Marine Living Resources
The AG pointed out that 11% of targets were not specific and 33% of indicators were not well defined. The strategic objective is to ensure increased production and productivity in prioritised areas as well as value chains. The indicator states that the number of Aquaculture catalyst projects identified and listed under Operation Phakisa was supported, and that for the 2015/16 target, phase 1 for the four Operation Phakisa Projects has been supported. The indicator per the annual performance plan, read in conjunction with the target does not define the type of support that is required in order to achieve the objective.

On sustainable use of natural resources in the sector, the target for the current period is to recover plans for the three sectors: Abalone, West Coast Rock Lobster and Deep Sea Water Hake. The plans have been updated. The indicator plans to recover and maintain prioritised fish stocks. The AG maintained that the indicator per the annual performance plan, read in conjunction with the target, is not well defined, as the indicator should measure the achievement of the plan.

With regard to enabling the environment for food security and sector information, the target for 2015/16 is to develop sector specific policies and allocate rights to nine fishing sectors. The indicator indicates that rights to nine sectors have been allocated. The AG said the indicator per annual performance report, read in conjunction with the target, is not clear. Based on the assessment of the AG, the indicator should measure compliance and achievement on the FRAP framework.

The Medium Term Strategic Framework Outcomes were not fully reported in the APP where DAFF was allocated as the lead department.

Outcome 4: Decent employment through inclusive economic growth
The target for the first year saw a number of small-scale producers supported towards increased market participation and employment; and to implement proposals monitored by DAFF and National Treasury. By 2019 the target is to support 300 000 new small holders. The indicator talks about the development of smallholder production in the context of improved district planning and the link to land reform, extension, marketing and other systems. The target included in the final draft of the APP states that 1498 smallholders would be linked to the markets in five years. The AG pointed out that the five-year target listed (1498) does not agree with the annual target listed. The AG was also not able to establish whether the 2019 target of 300 000 new smallholders would be met due to a breakdown per department not being available.

Outcome 7: Vibrant, equitable, sustainable rural communities contributing towards food security for all
The first year MTSF target is to have 4,3 million vulnerable people benefiting from food security and nutrition initiatives and by March 2019 to have 1,6 million beneficiaries; and to have 1 million hectares by March 2019. The target included in the APP final draft indicates that 400 000 households per annum would be benefiting from food and nutrition security initiatives; and 120 000 ha of under-utilised land in communal areas would be cultivated for production every year. The indicator mentions implementing the comprehensive food security and nutrition strategy, and developing under-utilised land in communal areas and land reform projects for production.

The AG indicated that based on discussions held with the Strategic Planning directorate and per inspection of the MTSF outcome, other departments are supporting DAFF to achieve the 2019 target. However, the breakdown of how the 4,3 million and 1,6 million targets for food security, and the 1 million target for hectares would be achieved was not available.

Outcome 10: Protect and Enhance our Environmental Assets and Natural Resources
The target for the first year of MTSF is to rehabilitate 152 500 ha of land, and the target included in the APP final draft indicates 80 000 ha. The AG commented that the indicator is included in Programme 5: Forestry but the target set is set at 80 000 ha and not 152 500 ha.

(Graphs and tables were shown to illustrate budget 2015-2016: comparisons between current year and previous year, current payments, transfers and subsidies, and payment of capital goods)

Financial and Fiscal Commission (FFC) Presentation
Professor Nico Steytler, Commissioner, FFC, took the Committee through the employment state of agriculture in the country; Departmental MTEF analysis; Strategic Performance Plan and Annual Performance Plan of DAFF; assessment of conditional grants; and agriculture related recommendations.

There has been consistent decline in agricultural employment over time from 1,8 million in 1962 to 764 000 in 2013. This trend has continued with the labour force survey showing nett job losses in the first three quarters of 2014 compared to 2013. The long-term trajectory of the sector raises questions about the effectiveness of existing interventions to turnaround job creation prospects. The outlook for 2015 is expected to put further upward pressure on food prices with the recent increase in the fuel levy and policy on cost-reflective electricity tariffs.

The National Development Plan (NDP) informs the focus of the Department over the medium term and relates to increasing food security, creating decent jobs in its sectors, and increasing the contribution of these sectors to the national GDP. Over the 2015 MTEF period the DAFF is allocated a total of R19, 5 billion. This represents a real annual average decline of 5, 2% per annum. The decline is the result of Cabinet-approved reductions amounting to R158 million in 2015/16. The reductions are in areas of compensation to employees, goods and services and conditional grants. This is mainly due to persistent under spending and the build up of cash reserves.

The Agricultural Production, Health and Food Safety Programme is said to consume the largest share of the budget of DAFF over both periods reviewed. Over the 2015 MTEF period, the proportion of the budget allocated to Food Security and Agrarian Reform Programme highlights the priority attached to food security. R834.8 million has been reprioritised to Fetsa Tlala over the 2015 MTEF while Ilima/Letsema was allocated R1, 5 billion to boost food production in previously disadvantaged farming communities.

Pertaining to SPP and APP, DAFF spent 99.1% and 98.9% of its total budget in 2012/13 and 2013/14 respectively. The reasons for the 2013/14 under spending relate to delays in the processes of the Department of Public Works (DPW); incomplete procurement processes; and transfer payments withheld as a result of under spending by a province.

DAFF intends to implement a stakeholder engagement strategy that may relate to addressing coordination blockages from other sector departments such as the DPW, and to implement the IGR forums in each province so as to strengthen support to provinces.

In relation to the level of spending 99% of budget, the achievement of targets in 2013/14 was standing at 75%. Despite this low ratio, the number of indicators for 2015 has increased by 40% while the budget has risen by 4% to 2013/14. The assessment of the two largest programmes of the Department – Agricultural Production and Food Security, indicates targets have also not been scaled down to account for the minimal rise in the budget.

Prof Steytler said the AG raised a number of key findings in its 2013/14 audit report. Concerning cases of irregular and fruitless expenditure, the APP indicated that DAFF would review and implement a fraud prevention and anti-corruption strategy and timeframe for resolving misconduct cases. Regarding the non-existent audit committee, it is unclear from APP how DAFF intends to ensure the audit committee is functional. It is difficult to monitor whether this issue the AG raised would be achieved in 2015/16.

On insufficient oversight of reporting and internal controls, the APP points out that DAFF intends to implement a three-year rolling strategic plan to address the gap the AG identified. Pertaining to no risk assessment or management strategy, the APP shows that DAFF intends to conduct a risk assessment and review the risk management strategy in 2015/16.

Agricultural conditional grants have experienced a real decline over the MTEF period as a result of under spending, especially with respect to the CASP grant. The main reasons for under spending include poor planning, contractor challenges, late changes to business plans and weak and ineffective procurement processes. It is felt that effective intergovernmental (IG) coordination is crucial in order to achieve optimal grant performance. Besides establishing IGR forums in each province, it is unclear how DAFF intends to address some of the practical implementation challenges related to the conditional grants.

In his conclusion, he shared with the Committee some recommendations. First, the Commission stated that DAFF should strengthen its ability to enforce the conditions in the grant framework to ensure better oversight of provinces so that spending and performance of agricultural conditional grants could be improved. Second, the Commission recommended that special focus be put on improving the operations of different food security programmes that accelerate reduction in household food security without necessarily increasing programme expenditure.

Third, the government should clarify the legislative mandate and responsibility of municipalities in relation to food security. DAFF should develop a policy on urban food security with concrete proposals on how such a mandate would be funded. Fourth, the terms of reference for the Committee to review the conditional grants should be finalised. The review should be comprehensive in scope and include assessing the value chain of conditional grants and unlocking operational constraints related to planning, procurement, comprehensive smallholder support, cash-flow and monitoring and evaluation.

Finally, the government should consider developing a vulnerability index to isolate households that are vulnerable to climate change and other shocks. Any fiscal and financial interventions to alleviate the impact of climate change should take into account the differential vulnerabilities of rural communities and aim to support their autonomous adaptation responses. These comprise promotion of multi-purpose crop production, small grains, drought and water stress tolerant crop varieties and improved agronomic practices.

DAFF SPP, APP and APAP Presentation
Professor Edith Vries, Director-General: DAFF, briefed Members about key issues affecting the agricultural sector in the country and the interventions that would be made through the programmes of the Department; and indicated that APAP is a replacement agriculture strategy that comprises sectoral key action programmes and provides a long-term vision and focused interventions in a five-year rolling schedule.

In analysis of some key issues, it emerged that thousands of hectares of under-utilised arable land in the former homelands are posing a challenge. The land in these communal areas would be put into production with focused support for input access, technical support and linkages to local markets. The increased movement of goods and people has led to increased risk to the country and the necessity for increased measures to anticipate and prevent possible introduction of animal diseases, plant pests and other undesirable articles such as unsafe food and feed.

The challenge of growing the smallholder sector is closely tied up with the challenge of making smallholder agriculture more remunerative. Currently more than half of all smallholder households live below the poverty line. Market access for developing producers has also been identified as one of the key challenges for the Department.

One of the main limitations with fisheries is that catch volumes depend on fish stocks that vary naturally and are subject to depletion owing to over-exploitation. Inshore species tend to be in a state of stock depletion. This leads to an increase in illegal fishing and poaching and increasing demand for access to finite marine resources.

Prof Vries pointed out a decline in both softwood and hardwood plantation areas planted since the mid 1990s, and there has been an increase in the area for pulpwood purposes compared to the area for saw logs and mining timber. Shortages of timber products have been recorded.

It was indicated that the strategic planning process and performance monitoring and reporting is an institutionalised business process. The presentation focused on the six programmes and what they intend to achieve.

Programme 1: Provision of leadership and administrative support to achieve sector and all organisational goals in accordance with prescribed framework
The programme, within five years, intends to maintain a sound system of internal controls and risk management through the implementation of:

Risk management plan, development of an internal audit plan, and fraud and corruption prevention strategy
Effective oversight of departmental performance management
Reduction in the number of days to finalise misconduct cases
Improvement in the financial management to obtain unqualified audit opinion
Legislation review programme

The programme is focusing on strengthening relations and communication between national, provincial and international stakeholders through the coordination of institutional structures and development of media plans. It also institutionalises integrated planning processes and mechanisms to reflect the broad strategic outcomes of government by providing oversight to public entities; ensuring a common project management approach; strengthening the sector information management system; and coordinating the policy and research agenda to align with the mandate of the Department and key strategic priorities and protocols.

Programme 2: Enhancing production, employment and economic growth in the sector
The programme is working towards promoting animal production and products through monitoring the implementation of animal and plant improvement schemes for prioritised value chain commodities. It enforces regulatory frameworks to reduce the level of disease outbreaks in production areas to a minimum by ensuring animal diseases management and access to primary health care services through the implementation of the Animal Diseases and Management Plan; conducting planned plant disease and pests risk surveillance; conducting planned animal disease and African horse sickness risk surveillance; and implementing regulatory compliance and monitoring interventions to prevent plant and animal disease outbreak. Auditor-General of South Africa (AGSA) on the

Programme 3: Enabling environment for food security and sector transformation
The programme would institutionalise the National Policy on Food and Nutrition Security initiatives by 2019/20 by increasing the number of households benefiting from food and nutrition security initiatives by 200 000; supporting 80 000 smallholder producers and cultivating 600 000 hectares of under utilised land in communal areas for production.

The programme would also improve delivery capacity in support of sustainable growth in the sector through the implementation of the National Agriculture, Forestry and Fisheries Training and Education Strategy and National Policy on Extension and Advisory Services.

Further, it would provide strategic leadership to ensure effective and efficient utilisation of all producer development support through the development and implementation of the Comprehensive Producer Support Policy and creation of 110 000 jobs through CASP and Ilima/Letsema by 2019/20.

Programme 4: Sustainable use of natural resources in the sector
The target over the next five years is to improve market access through the implementation of the:

South African-Good Agricultural Practices (SA-GAP), global GAP and SA-Livestock-GAP certification programmes
Citrus Emerging Export Excellence Programme
Fruit and Aquaculture Value Chain Round-Table Network
Trade Strategy and International Relations Strategy
Trade Competitiveness Development Plan

Programme 5
Working towards ensuring the conservation, protection, rehabilitation and sustainable forest management by:

Revitalising hectares on irrigation schemes
Creating 7 875 jobs through the refurbishment of Category B and C plantations
Promulgating the Preservation and Development of Agricultural Land Framework Bill by Parliament
Creating 4000 full-time equivalent jobs through the Land Care programme
Certifying three plantations for the Forestry Stewardship Council

Programme 6

Through this programme, within five years the Aquaculture Bill would be implemented; support would be provided to aquaculture catalyst projects for sustainable development of the aquaculture sector as per Operation Phakisa and supporting research projects; and 2 251 jobs would be created through Working for Fisheries programme.

This would also see the development and implementation of the Framework for the allocation of fishing rights and the implementation of the Small-Scale Fishing Policy to alleviate poverty, promote food security and to ensure access to marine living resources.

The programme aims to ensure compliance and management of fish stocks through the implementation of the Integrated Fisheries Security Strategy enforcement mechanisms to combat illegal fishing activities; and updating recovery plans for Abalone and West Coast Rock Lobster to increase fish stock levels.

(Graphs and tables were shown to illustrate staff establishment and budget breakdown: per programme and per economic classification)

APAP
Professor Vries enlightened the Committee that the APAP programme is modelled on the Industrial Policy Action Plan (IPAP). It comprises sectoral key action programmes (commodities) and transversal key action programmes (research and innovation). It introduces an export-led and import substitution, replacement agriculture strategy. It provides a long-term vision and focused interventions in a five-year rolling schedule.

The purpose of the sectoral and transversal key action programme for the APAP is to begin to address the growing concentration within the market which impacts on job creation and seeks to localise food networks through infrastructure development and incentivising support for SMMEs and small-scale producers across the agriculture, forestry and fisheries value chain.

Criteria for the selection of role players in the sector focused on contribution to food security, job creation, growth potential, and potential contribution to trade balance. Some of the role players the presentation focused on for priority value chains and transversal action programmes include, amongst others: red meat, poultry, wheat, forestry, and fisheries.

Poultry
The consumption of white meat is expected to expand by 34%. This increase is supplemented through high levels of imports. High animal feed prices dampen domestic production. Despite an increase in domestic Soya production of over 300% since 1999, it is a far cry in keeping up with a rising demand for animal feed. The strategy is to increase production of poultry and animal feed with the aim of lowering feed costs.

The International Trade Administration Commission provided protection against a surge of low cost imports of poultry products. Risks are around increasing energy prices and unstable energy supplies, and increasing input costs in fertiliser, animal feed, fuel and mechanisation.

The Strategic Infrastructure Projects (SIP11) increased infrastructure investment in poultry, soybean and yellow maize production and processing, and established hatcheries for parent stock. The plan is to improve support packages to poultry and soybean producers; expand training programmes in support of smallholder farmers; and strengthen the Agri Broad Based Black Economic Empowerment support for the poultry industry.

Targeted areas are KwaZulu-Natal, Limpopo, Mpumalanga, Gauteng and Eastern Cape, and the project is expected to start in April 2015. Leading departments are National Agricultural Marketing Council (NAMC), DAFF, Department of Rural Development and Land Reform (DRDLR), Department of Water and Sanitation (DWS) and Agricultural Research Council (ARC). It is hoped that these actions would add 14 481 jobs to the current 107 784 jobs through increased tonnage of 663 500 poultry production by 2019. The interventions would increase the current levels of smallholder and subsistence producers by 5% in 2019.

Red Meat
Red meat consumption has increased by about 20% since the early 1990s, and it is projected to increase by a further 20% by 2023. South Africa has consistently imported about 10% of its red meat consumption needs over the past 10 years. It is stated that he country could rely less on imported frozen meat if it could improve market linkages with the vast herd in the former homelands. The legislation has to work on introducing the Animal Improvement Policy.

Sip 11 has increased investment in livestock production systems to develop the livestock value chain in communal areas. This would be done by expanding training programmes of extension officers in support of smallholder farmers; activating mobile veterinary clinics for remote areas to provide basic animal healthcare services; and enhancing LandCare and Rangeland Monitoring and Improvement Programme. There would be a review and assessment of the Vet and Animal healthcare strategies and programmes according to OIE requirements.

This project is expected to start in April in all provinces. Leading departments are NAMC, DAFF, DRDLR, DWS, Department of Trade and Industry (DTI), Department of Environmental Affairs (DEA), Independent Development Corporation (IDC) and ARC. It is believed it is going to improve income generation schemes through improved market access for smallholder farmers; and it would increase contribution to gross value of Agriculture GDP from 12,5% to 15% by 2019. The smallholder production would by 2019 increase by 5%.

Wheat
South Africa was able to supply 93% to 97% of the domestic demand in 2000/01 to 2002/03. The domestic consumption has since doubled while production has remained static. There are different perspectives on whether South Africa must be self-sufficient in wheat yet the present levels of import dependence are excessive, and that is impacting on the bread price. The strategy is to increase land under production for domestic consumption.

Investment from the IDC is improving the milling capacity of the Western Cape and the Free State in order to improve returns to farmers. A SIP7 infrastructure investment in rail transport would decrease transport costs. A decrease in public and private investment in research and development of wheat cultivars might pose a risk, and it would also be around declining average gross income per hectare.

SIP11 looks at reducing bulk transport costs by progressively increasing the use of rail that would determine options for expanding the wheat milling capacity in the Western Cape. Production would be increased through the recapitalisation and development of support provided to smallholder farmers by capacitating rural youth engaged in wheat production and processing; providing on-farm infrastructure to new farmers; and improving export market access for the surplus production of the exceptional high quality wheat of South Africa. A training and communication system is going to be developed to support extension staff with technical and advisory support services for wheat production.

This is scheduled to commence in April 2015 and is going to take place in the Eastern Cape, Free State, Gauteng and Western Cape. Participating departments are DAFF, DRDLR, NAMC, IDC, DEA and Department of Science and Technology. It is envisaged this would create an additional 8000 new jobs to the existing 28 000 by 2019; increase production from 1, 2 mil tons by an additional 200 000 tons by 2019; reduce the levels of imports by 10% from the current 50%; and increase gross income which is currently at R3 billion by R180 million.

Forestry
The uptake of low a forestation is reported to be due to the cumbersome licensing processes, under-investment in long rotation uses such as timber for saw logs, and dominance by a few big, vertically-integrated forestry operations. The availability of fibre is identified as the key constraint.  The increase in the afforested area; and the rehabilitation and improved management of the categories B and C and re-commissioning of state-owned forests are two principal sources for maintaining and increasing the availability of fibre.

Risks centre around under-investment especially in long-rotation forestry for timber, cumbersome water licensing requirements, environmental risks, increasing input costs, financial constraints for refurbishment, and poor public and private investment in research.

Actions to be taken involve the review of conditions around the issuing of water licenses; utilisation of settlement land claims process to transform the sector because plus minus 50% of forestry land is under land claims; and re-commissioning of the Western Cape and Mpumalanga and replanting is going to commence in all exited areas.

This is penned to commence in April 2015 and is going to take place in the Eastern Cape, Free State, Gauteng, Western Cape, KwaZulu-Natal, Mpumalanga and North West. Departments that are taking part are DAFF, DRDLR, NAMC, IDC, DEA and DWS. It is envisioned this would bring 100 000 ha from 10 000 that are targeted in the Forest Transformation Charter. 147 000 ha would result in 9 800 jobs in the primary sector and 39 200 in processing resulting in 49 000 jobs created. 22 000 ha in the Western Cape are due for replanting while in Mpumalanga the figure is standing at 4000 ha.

Fisheries and Aquaculture
The Fisheries sector is facing depleted stocks of marine and coastal wild capture fisheries, but shows enormous potential in terms of aquaculture. The strategy is to provide the legislative framework for developing small-scale fishers and fishing communities within strategic fisheries zones; and to establish the Aquaculture Sector through the institutionalisation of support, key services, and regulatory framework.

The legislation that would be key in this area is the Small-Scale Fisheries Policy, Marine Living Resources Amendment Bill, and Act No 18 of 1998 that makes provision for small scale fisheries sector, the Aquaculture Bill, and Freshwater fisheries policies.

Actions taken would be around the implementation of 23 aquaculture catalyst projects; establishment of an Interdepartmental Authorisations Committee; establishment of an Aquaculture Development Fund; and Government Preferential Procurement.

This is planned to start in April 2015 and is going to take place in the Eastern Cape, Free State, Gauteng, Western Cape and KwaZulu-Natal. Departments that are taking part are DAFF, DRDLR, DEA and National Treasury. This is expected to help in the implementation of the Phakisa Plan on Aquaculture as a growth sector and development zones in order to achieve the following by 2019:

GDP growth of at least R3 billion through the aquaculture sector
15000 decent jobs could be created in the aquaculture sector
Grow the fish consumption of South Africa from 8kg to 19kg/capita

Update on APAP
Professor Vries mentioned that Cabinet approved the finalised APAP and Agriculture, Forestry and Fisheries Strategic Framework. DAFF and DRDLR have devoted the last quarter (January – March 2015) to fast-track readiness to implement on the 1st of April. Focus areas, amongst others, are on:

Spatial planning
Robust stakeholder and communications strategy
Institutional arrangements
Land acquisition
Research and development
Funding model

It is hoped that if things are favourable, by 2019 the APAP would have increased the number of small holders from 164 000 in 2012 to 400 500; increased the value add of Agriculture, Forestry and Fisheries from R42.5 billion to R48.9 billion; increased the number of jobs in Agriculture, Forestry and Fisheries from 660 00 to 822 500 and a potential 1 million jobs by 2030; and decreased the value of diesel, fertiliser and machinery imports at an annual average of R9.6 billion to R7.4 billion.


Discussion

AGSA and FFC Presentation
Ms A Steyn (DA) asked how food security is measured and who the role players are; and how the AG measures outcomes.

Professor Nico Steytler said food security should be looked from both the production side and consumption side. Many role players are involved and the Department is not the only player in this area. It works together with the Department of Rural Development and Land Reform on matters regarding the size of the land, for example. So, the link is very important between the two departments.

Mr Kok, on the measurement of outcomes, explained that the AG looks at what the Department wants to achieve. The Department can achieve what it intends to do during the year. But if there is no growth or improvement in what it wants to achieve, then it must be understood that the intended objective has not been achieved. That gets reported as not having achieved anything though the target was set.

Mr T Ramokhoase (ANC) asked how far the Department is on issues of internal controls

Mr Kok stated there are three areas that need to be tightened. The leadership has to have policies in place; financial management measures; and procurement systems in order to comply. This is the framework set by National Treasury. So, all three areas have to comply.

Mr C Maxegwana (ANC) asked whether lessons were learnt from other countries seeing that employment in agriculture is on the decline. What was the Department not doing in its assessments of grants because so much under spending is reported and the blame is put on poor planning by provinces? What can be done to make sure co-operatives are viable?

Mr Mabugu, Research Director: FFC, regarding declining employment in agriculture, elaborated there are various case studies on this issue from different countries. Interventions implemented yielded different outcomes. These case studies point out that it is important to focus on the situation of your own country and devise solutions that are relevant to your own problems. Pertaining to grant assessments, he indicated there is no reason why the Department could not get information from provinces and exercise monitoring and evaluation on the game plans of the provinces.

Professor Steytler, concerning the viability of co-operatives, enlightened the Members that South Africa has a dual agricultural sector: commercial farming and emerging farming. The co-operatives are very important to bring individuals to participate in the sector. Studies conducted pointed out that decision-making powers of individuals in the co-operatives play a role and need to be approved. Sometimes individuals are not given powers for decision-making. This hampers the work of the co-operative. Communication between members needs to be improved because, sometimes, members are far away from the land they are working on and Board Members.

DAFF Presentation on Strategic and Annual Performance Plan and APAP
Ms Steyn asked whether there was communication between the Department and the Competition Commission. She remarked there is no direct link between the APAP and Strategic Plan, and it would be better if the two could be combined. She saw stronger linkages between DAFF and the Department of Rural Development and Land Reform (DRDLR) especially on issues of commonality like de-bushing.

Professor Vries, regarding the Competition Commission, informed the Committee that discussions were held with the Commission so that certain things could be brought to the attention of the Department, especially things related to procurement of vaccines. The Competition Commission is a partner of the Department and it assists and provides advice when called upon.

Mr Hlatshwayo, on linkages between DAFF and DRDLR, said the two departments have discussed a funding model agreement. According to the agreement, if DRDLR gets a piece of land, then DAFF would have to come up with a production input.

Ms Z Jongbloed (DA) asked if or when the Department is going to hand over to communities the commercially viable forestry land it is said to be sitting on; and also for clarity on the hectares under irrigation.

Mr Dennis Molaba, Chief Director: DAFF, reported that the land in question falls under Category B and C plantation. It is still under government control and is being processed by land requisite and land tenure rights. The Department is guided by DRDLR, which is facilitating the process.

Concerning hectares under irrigation, the National Development Plan expects 500 000 hectares, but the research of the Department indicates the availability of 30 000 hectares.

Mr Ramokhoase asked what kind of research the FFC is doing; and if the Department is going to have money to train co-operatives if its budget keeps on decreasing because there is a big budget gap between the Strategic Plan and the APAP. He further remarked that the Department forgot to mention and expand on pronouncements like AgriParks, as this would help those doing oversight to check the commodities happening in specific areas.

Professor Vries, pertaining to research, indicated that it is sound and would be presented in the strategic workshop that would be held soon. It is available. Marine research is getting recognition the entire world over and is being peer reviewed. With regard to training of co-operatives, the budget would come from the Department of Small Business Development (DSBD), but the target is that of the Department. The project is going to be done through the DSBD and would be put in the APAP plans. On the issue of AgriParks, the Department would assist the DRDLR as to where the AgriParks would be.

Mr Maxegwana remarked that the documents that guide us are developed by people and are about the experiences of communities. For example, the APAP process had some elements of things to be done, but it does not state the inputs of some stakeholders during the consultative process. The Fruit Industry Value Chain sector has not transformed, and in the mid-term it has to see transformation, not much has been said of it during the presentation. He further wanted to know the beneficiaries of the Forestry sector, and asked for clarity on the integrated funding model for APAP.

Mr Molaba, on beneficiaries, said they have been advised to employ the local youth and women.

Mr Hlatshwayo said the Department has consulted widely on the integrated funding model. Even the private sector was involved. According to this fund, money is put in a central pot. The model then states what is to be funded and not funded, and it even indicates the amount to be allocated.

The Chairperson asked if aquaculture had a budget.

Mr Hlatshwayo reported there is no budget for it. The Department engaged with National Treasury about it for the past two years and there has been no positive response from National Treasury.

Professor Vries, responding to the concerns of Members about the budget cuts and projection costs for the implementation of the Strategic Plans and APAP, made it clear that no money has been allocated for APAP. Things are going to be aligned in order to achieve some of the targets set. The Department is not going to be able to have all the projects happening in one year, but it is important to have a focus and target one thing at a time and make sure it is done correctly. This is going to need a paradigm shift, and people should start thinking of doing things differently.

Mr Hlatshwayo also noted that most of the money of the Department is not centred on administration. The bulk of the money gets transferred to other activities of the Department. The Department is experiencing budget cuts but it has not underspent. For the past three years, it has spent 98% of its budget.

Professor Vries concurred with Hlatshwayo by stating that CASP money taken from Ilima/Letsema has been spread all over to execute some of the activities to be done for people. The CASP money has been directed towards APAP.

Mr Bheki Cele, Deputy Minister: DAFF, agreed with Prof Vries saying all the MECs, DDGs and Chief Directors of DAFF, nationally and provincially, were told no money was going to be available for agriculture. There was no discussion on what could be done. So, the Department had to do with what it has; yet during the State of the Nation Address agriculture had a big mention. He hoped the Ministers and DGs of DAFF and DSBD would work together to ensure that co-operatives get the necessary training. But without money, nothing is going to be achieved.

The Chairperson said she was under the impression that the Department did not present a convincing and realistic budget to National Treasury. The Department has to present what it needs to do against what it has got in terms of money. She exemplified by saying if the Department has to cultivate 9000 hectares of land and it only has R100, one hectare has to be cultivated at a cost of R100. It is better that it works that way.


MLRF Presentation
Mr Mortimer Mannya, Director-General on Fisheries: DAFF, mentioned that over the next medium term, the Fisheries sector would focus on some key strategic priorities, including: implementation of aquaculture catalyst projects as part of the Operation Phakisa initiative; conducting of research into genetics and nutrition for selected aquaculture species; expediting the allocation of fishing rights to registered small-scale fishing co-operatives to alleviate poverty, promote food security, and equitable access and sustainable utilisation; development of recovery plans to address depletion of fish stocks challenges for three of the four prioritised stocks (abalone, rock lobster, line fish and hake); and conducting research and compiling reports on the status of fish stock levels.

Regarding issues of risk management, the inability to carry out core fisheries functions and mandates and ability to meet predetermined objectives would be mitigated through the formulation of a plan to improve efficiency of revenue collection; realistic planning and target setting; revisiting strategic plan; and investigating potential additional sources of revenue.

Inadequate ICT systems and aging technology would be remedied through developing appropriate policies including an infrastructure plan and electronic data management system, while inadequate supply chain management processes would be mitigated through further training for supply chain management practitioners and developing enterprise procurement plan.

Insufficient human resources and appropriate skills in key positions would be resolved through coordination with Corporate Services Branches and the CFO, and MLRF would adopt applicable human resource policies. Insufficient budget to cover personnel and operational requirements would be mitigated through business case motivations to the National Treasury and DAFF, and efforts would be increased to collect all sources of revenue.

Amidst limited financial resources, the Fisheries Branch would devote its resources towards achieving the Strategic Objectives over the medium term through following innovative and efficient mechanisms. Focused spending would be on performing enforcement and compliance operations in prioritised fisheries sectors.

Efforts and resources would be synchronised strategically to avoid silos, duplication and wasteful expenditure. Jobs would be created in the coastal and rural communities so as to broaden the scope of the aquaculture sector. This would serve as a catalyst towards sustainable growth and food security.

The major expenditure elements of fisheries are under the direct control and administration of the MLRF and are expected to increase over the MTEF. Most expenditure would be on the vessels for patrol and research, and there would be an increase in the Extended Public Works Programme and Working For Fisheries Projects. These areas would be funded through the collection of own revenue and transfers received from DAFF.

For the 2015/16 period, the Fisheries Branch has supported four Operation Phakisa projects for phase 1. It plans, amongst other things, to conduct two new research studies on genetics and nutrition for aquaculture species; allocate rights to registered small-scale fisheries co-operatives; implement recovery plans for abalone, hake, rock lobster and deep water hake; and carry out 4548 compliance and enforcement measures in the four prioritised fisheries sectors – hake, abalone, rock lobster and line fish.

(Graphs and tables were shown to illustrate revenue projected and expenditure allocations over the MTEF periods)

NAMC Presentation
Mr Tshililo Ramabulana, Chief Executive Officer: NAMC, informed the Committee that NAMC operates within a dynamic environment characterised by a number of local and global socio-economic and policy challenges such as the shortcomings of land reform, market dominance by some role-players along the agro-food chain, lack of effective collaboration between government and the private sector, and proliferation of food safety standards and regulations.

However, there are some opportunities that could be exploited. The opportunities are around the stable production of raw material which provide a competitive and stable supply chain, development and growth over a large geographical area provides a more stable way for long term growth of the country, and well positioned agricultural sector to advance exports.

Regarding statutory measures, during the 2013 financial year a sum of R450 million was collected. Twenty industries are administering statutory measures relating to registrations, records and returns. Research is contributing 29%. GFADA forks out 22% towards transformation. For export promotion, WOSA pays 17%. 12% and 8% from SAGIS and SAWIS go to information and local promotion, respectively.

The statutory measure ensures that transformation activities of the Industry Organisations are aligned with government policy; that spending is in line with Transformation Guidelines; and R83.7 million of statutory funds is used for transformation.

The Markets and Economic Research Centre (MERC) within NAMC gauges the efficiency of the market for every agricultural commodity; it undertakes market and trade research to inform interventions aimed at enhancing the viability of agro-food; and intensifies research efforts on options to link smallholder farmers to the agro-food value chain.

The Strategic Integrated Project (SIP) 11 is said to assist project owners to strengthen the project business cases to raise funding and to coordinate reporting on existing and proposed new high-impact / anchor agro-logistics and rural infrastructure projects. Current focus is on the mobilisation of funding for many of the anchor projects. Currently, only R3 billion has been secured.

The Agricultural Information Management System (AIMS) offers accurate and verifiable baseline information required for business, production, resource conservation and marketing for practitioners, farmers and decision makers. The NAMC has been appointed to coordinate the national rollout of AIMS.

The Agribusiness Development division of NAMC boasts of having development schemes which are driven to address food security and domestic market access. This division is made up of seven development schemes:

Vineyard development scheme: facilitated with Winetech and the Northern Cape Department of Agriculture
Grain development scheme: facilitated with GFADA and grain trusts
Dairy development scheme: facilitated with Milk South Africa and Free State Department of Agriculture
Lucerne development scheme: facilitated with NLT
Mohair development scheme: facilitated with Mohair Development Trust
Sunflower development scheme: facilitated with Oil Seed Trust and Limpopo Department of Agriculture
Red meat scheme: facilitated with DAFF (CASP), district municipalities and DRDLR, and sells 3000 animals per cycle

The Agribusiness division provides training and mentorship programme aimed at emerging agribusiness entrepreneurs, and is driven by the need for human capital development in agriculture in order to meet the goals of South Africa and to redress past imbalances. It collaborates with Mzinti and Madzivhandila Agricultural Colleges and other non-governmental organisations. It also provides management training for women in agribusiness.

Pertaining to the Agricultural Trusts, NAMC attends to all industry trust board meetings; facilitates the appointment of Trustees; and produces the Status Report on Agricultural Industry Trusts. From 2015/16, NAMC would also track job creation by various industry trusts.

Mr Ramabulana reported the entity has been allocated R34.63 million. The transfer indicates a nominal decrease of R1.37 million as compared to the 2014/15 financial-year. Almost 82% of the transfer is allocated to Administration and Markets and Economic Research Centre.

(Graphs and tables were shown to illustrate performance indicators and MTEF budget allocation)

PPECB Presentation
Mr Cyril Julius, Acting Chief Executive Officer: PPECB, made it clear to Members the spending focus over the medium term would be on continued service delivery without compromising the integrity of product quality and continued contribution towards social responsibility in building capacity and assisting small farmers as well as focusing on establishing a professional and well trained staff compliment that could add value to the perishable export industry.

The 2015/16 budget is informed by four main drivers: delivery of statutory services; execution of the Board approved strategic plan; mitigation of the main risk areas in the service delivery of PPECB priorities; and moving towards electronic export certification.

From 2014/15, expenditure is set to increase for the next five years by an average annual rate of 10.4% to R424 million in 2019/20. It is assumed that the activity base used in 2015/16 would track the growth in exports. The activity base refers to the operational resources deployed, kilometres travelled and relief duty days. There was an increase of an average of 12% in computer expenses due to the introduction of mobile technology.

Over the three-year MTEF period, it is expected that personnel expenditure would increase by an average of 11.4% per annum to R235.5 million in 2017/18. Salaries including promotions are adjusted by an average of 6% per annum. The period ending 2019/20 would continue to address human resource constraints to ensure the entity meets its mandate and strategic goals. Employment costs of R172 million in 2015/16 are set to increase to R283 million over the next five years. 67% of total expenditure is made of personnel costs. The vacancy rate is kept at 6% of total staff over the five-year period.

Over the three-year MTEF period, it is expected that expenditure would increase by an average of 11.9% per annum to R353.9 million in 2017/18. It is assumed the activity base used in 2015/16 would track the growth in exports. The expenditure is adjusted by 5% per annum with the exception of accommodation, airfares, fuel and employment costs which are adjusted by between 8% and 10% per annum to accommodate growth in export volumes.

It is assumed the total income would increase by 9.4% over the MTEF. The 9.4% increase is based on 6% inflationary adjustment to the levies and a 3% growth in product volumes inspected. A 3% growth is assumed for all the other products and services. It is also projected that the laboratory would generate an income of between R12 million and R15 million per year.

Over the medium term, the entity is committed to achieve, amongst others, the following outcomes:

Formulate and submit a PPECB strategy aligned with the Government imperatives and stakeholder expectations
Obtain ISO 9001:2008 certification and level 4 BBBEE verification
 Migrating from a manual to an automated inspection system
Introduce systems and processes that promote sound financial and governance practices without hampering business efficiency.
 Increase spend on Corporate Social Initiatives

The organisation has in the past eight years offered a learnership at NQF level 5, which exposes learners to the post-harvest agricultural value chain and provides them with a head start in advancing themselves professionally in this sector. The entity aims to continue with this initiative and would like to partner with the likes of CPUT to assist in enhancing the qualification the students obtain at PPECB. The programme is provided in partnership with DAFF and Agri-Seta.

Finally, Mr Julius said the organisation is putting a lot of emphasis in the area of capacity building. It provides development opportunities for both internal and external stakeholders. The focus, internally, is on youth and women. Leadership Development initiatives are being put in place to ensure women are accelerated so that they could assume leadership roles as these are occupied by males. The entity has introduced a Learning Management System with on-line on-boarding. The focus is on coaching and mentoring to ensure the youth entering the workplace are empowered to be able to provide customer service with confidence. The organisation also has a dedicated programme for ensuring uniform interpretation and consistent application of standards during the execution of product inspection, cold chain functions and food safety audits.

(Graphs and tables were shown to illustrate performance indicators and MTEF budget allocation)

Discussion

Marine Living Resources Presentation
Ms Jongbloed proposed that the consultation process on small-scale fisheries should be extended because people on the ground are not fully aware of the programme and there seems to be problems with co-operatives. She enquired what is going to happen to small-scale fisheries inland; and asked for clarity on the recovery plans for rock lobster, abalone, and hake and line fish.

Mr Mannya, on inland fisheries, indicated that aquaculture has two streams: marine aquaculture and inland aquaculture. The Department is developing a policy for inland fisheries, and this area is regulated by the Department of Water and Sanitation. With regard to recovery plans, the Fisheries section of the Department always monitors the status of the various species and has plans for each and every species.

Mr M Filtane (UDM) asked whether Fisheries is going to draw the business plans for the co-operatives or if it would receive them for implementation; and how Fisheries is planning to overcome the problem around accessing of the markets.

Mr Mannya, regarding business plans, explained that the Department of Small Business Development would provide business management plans, and Fisheries would train the co-operatives. Concerning access to markets, there are clear indications of how the branch of DAFF that deals with marketing would go about dealing with the matter.

NAMC Presentation
Mr Filtane asked what would be the anticipated negative impact of the 36% budget cut in professional services.

Mr Ramabulana stated that 60% of the work or research is done internally. 40% is outsourced to create centres of excellence so a lot of work could be done much cheaper; it is not possible to have internal capacity all the time. It also made sure people who make use of NAMC resources do comply.

Mr Ramokhoase wanted to find out about the participants in the dairy development schemes; and he asked for clarity on the levies.

Mr Ramabulana said the dairy scheme is located in Qwaqwa. The farmers on the scheme are still at a primary stage and need to be helped in order to benefit from the value chain. On levies, 20% goes to transformation rather than the 20% of the R36 million budget. The Act allows farmers to collect a certain portion of money to fund public good.

Mr Maxegwana enquired if the DAFF budget cut had an impact on the NAMC budget; and asked what percentage of the budget goes to consultants, if the entity is using of them.

Mr Ramabulana explained that it did have an impact because the entity had to cut down on travelling costs, consultancy fees, and it relies mostly on internal capacity. Around R250 000 per annum goes to consultants.

The Chairperson wanted to establish where the red meat scheme is happening; and asked if the norms and standards document has been implemented or is being implemented.

Mr Ramabulana responded that the red meat scheme started in the Eastern Cape because the province has the highest number of livestock. Other facilities are being supported at Kuruman in the Northern Cape and KwaZulu-Natal. The average price of the 3000 animals sold per cycle is R5000. The NAMC is providing a platform for small farmers to access the markets. The Committee would be sent detailed information of where the schemes are. On norms and standards, the work has just been completed and it is still to be processed and approved by DAFF.

PPECB Presentation
Ms Jongbloed asked what the vacancy rate of the entity is.

Mr Julius replied that it is less than 6%.

Mr Maxegwana enquired if the entity is able to track down students and farmers that have graduated so that they could plough back to the organisation, but at a different level.

Mr Julius stated that poaching is an issue they grapple with because people go to other companies or organisations. They do help smallholders but they are still at a primary stage and struggle with things like water.

Mr Filtane remarked that the presentation was difficult to follow. The presentation was scanty and badly delivered. He was interested to know if the entity collaborates with similar organisations in other countries.

Mr Julius replied that they do attend international forums, but the organisation expends its energies on making audits on goods leaving the country.

The Chairperson enquired if the entity is able to assist its members or clients with research.

Mr Julius reported the industry has its own research bodies such as Citrus Research. The only thing the entity does is to hold trials on new products.

The Chairperson remarked that the organisation should consider looking at the quality so that when it is processed for export it is at another level, even if it means the introduction of a levy.

The meeting was adjourned.