Department of Agriculture briefing on Annual and Financial Reports 2005/6

LAND AND ENVIRONMENTAL AFFAIRS SELECT COMMITTEE
31 October 2006
DEPARTMENT OF AGRICULTURE BRIEFING ON ANNUAL AND FINANCIAL REPORTS 2005/6

Chairperson: Rev P Moatshe

Documents handed out:
Annual Report of the Department of Agriculture [available later at www.nda.agric.za]
Presentation to the Select Committee by the Department of Agriculture: Part1 & Part2
Financial Statements for 2205/06

SUMMARY
The Department of Agriculture briefed the Committee on its performance over the past financial year 2005/2006. The Department had recently been restructured. The priority areas were broad based black economic agriculture (AgriBEE) and integrated food security, sector investment, bio-security and disaster management, research extension, education and training, and cooperative government and building of partnerships. Its vision was to fast-track agrarian reform to achieve equitable and sustainable socio-economic development. Each of the units presented and discussed their key programmes, with an indicator of outputs and statistics on beneficiaries, plans for the future, communication and legislative amendments. The Financial Statements were tabled and indicated the actual spending per programme. Agriculture had received an unqualified report, but the Agricultural Debt Account had a qualified report, through failure to comply with International Accounting Standards. Steps had been taken to rectify the discrepancies. There was a functioning audit committee. Total spending on all programmes had been R878 million, although the appropriation was R1.9 billion, resulting in under spend of R89 million. This was attributed to vacancies, a carry through effect on administration, inventories, and equipment, invoices not having been submitted timeously, and outstanding claims in respect of swine fever. Steps had been taken in all instances to prevent recurrence.

Members asked questions on the loans, training initiatives, steps taken to assist farmers who were in debt, and what was being done about rising prices of production. The Committee indicated its concerns about some of the areas in Limpopo and suggested a joint visit with the Department. The responsibility for aquaculture, between the various departments, was clarified.
Further questions related to officials sitting on Boards, the vacancies and allocation of funds, and
provincial monitoring. The Committee felt that the Department could have achieved more and was concerned about the large under spend.

The minutes of the last Committee meeting were adopted.

MINUTES
Mr. Masiphula Mbongwa, Director General: Department of Agriculture (DOA) briefed the Committee on the Department’s strategic framework for the past year and gave a projection for the next few years. He tabled the new structure of the Department, and indicated its various priority areas, broken down into Broad based black economic agriculture (AgriBEE) and integrated food security, sector investment, bio-security and disaster management, research extension, education and training, and cooperative government and building of partnerships. Its vision was to fast-track agrarian reform to achieve equitable and sustainable socio-economic development.

The Agricultural Economics and Business development unit presented and discussed the key programmes, with full indicators of outputs, targets and status being discussed. Farmer settlement was under way and 89 000 beneficiaries had been assisted. 84 cooperatives had been established. Food security pilot projects had been completed. Drought management plans had been developed and gazetted and provincial workshops were being held. Booklets had been printed and were being distributed and a number of reports had been published. Statistics were being compiled in a number of areas.

The Agricultural Production Report tabled and detailed animal and aqua production, plant production, scientific research and development, genetic resources, water use and irrigation and land use and soil management. The status of each programme was fully set out in the presentation. Avian influenza had been eradicated from the Eastern and Western Cape, and bio security measures had been introduced. Swine fever had been contained. Liquor Products legislation was still under away. Reviews of legislation on pesticides and animal feeds and stock remedies were approved. A task team to develop a food control system had been established.

The Planning, Monitoring, Evaluation and Communication Branch also tabled its achievements. These included mentorship programmes, strategies for training and development, training of 614 emerging farmers, programme planning, and organizational performance assessments.

Mr Tommie Marais, Acting Chief Financial Officer, DOA, then presented the Financial Statements, indicating the actual spending per programme. Agriculture had received an unqualified report, but the Agricultural Debt Account had a qualified report, through failure to comply with International Accounting Standards. It was noted that steps had been taken to rectify this. There was a functioning audit committee, and there were no serious problems with regard to internal controls or cases of non-compliance with the Public Finance and Management Act (PFMA). Total spending on all programmes had been R878million, and the appropriation was R1.9 billion, resulting in under spend of R89 million. This was attributed to vacancies, a carry through effect on administration, inventories, and equipment, invoices not having been submitted timeously, and outstanding claims in respect of swine fever. Steps had been taken in all instances to prevent recurrence

Discussion
Rev P Moatshe (ANC, North-West) asked what would happen to the loans that the Department was still trying to recover from the farmers, how much had been collected to date and what would happen to those that could not be recovered.

Mr Mbonga replied that the process to recover loans started in 1997,when there was R2 billion in outstanding loans. At the moment only R500 million was currently outstanding, and the rest of the loans had been recovered by the department. Based on probabilities, it was most likely that only R320 million would be recovered and the rest of the loans would have to be written off.

Mr Moatshe also expressed the concerns of the Committee on many farming areas visited during the Oversight Visits. They had found that in most areas the farmers were in debt and they could not therefore sustain their farming businesses. He asked what the Department was doing to assist these farmers, particularly in Limpopo, and proposed that the Department and the Committee do an oversight visit together so that the Department could see the poor conditions of some of the schemes.

Mr Mbongwa explained that strategies to help the farmers in Limpopo on the schemes were still being negotiated. There were plans to help the farmers who were experiencing problems with their businesses, and he explained that these projects to help the farmers were still underway and some of them had already been assisted. He accepted the proposal by the Chairman that a combined visit by both the Committee and the Department must be arranged.

Mr L van Rooyen (ANC, Free State) also expressed his concerns with the constantly decreasing income of farmers. He enquired as to the causes, and what could be done by the Department to help maintain the income of farmers. Further he asked why the trading prices of farming goods kept decreasing and what could be done to prevent this. He asked for elaboration on the geographic atlas.

On the issue of prices, Mr Sizwe Mkhize, Chief Director: Engineering Services and Resource Management, DOA, explained that the cost prices of goods were influenced by the instability of the price of maize and milk. The Department was currently in the process of attempting to bring down the prices by constantly looking for other means of best practices and operations on farms.

The Chairperson asked who exactly was responsible for dealing with Aquaculture, between the Departments of Water Affairs, Land and Agriculture. He was unsure of the extent of the cooperation or separation of issues.

Mr Mkhize said that the mandates on Aquaculture were split according to which Department had the best expertise on each sector of the project. The Department of Agriculture only dealt with the sector of Fresh Water Aquaculture. Since South Africa was a water scarce country and the Department of Agriculture was the Department needing the most water it had been allocated the responsibility for developing the geographical atlas. In addition to that, the DOA had the most expertise in looking for water underground.

Mr Van Rooyen asked how many officials from the Department served as board members on the entities that fell under the Department, how much remuneration they received and why the unspent funds in the Annual Report, that were initially allocated to vacant positions, were now reflected as salaries.

Mr Tommie Marais explained that the Department had six entities and about six officials from the Department who sat on the Boards of the entities. He explained that the officials did not get remunerated at all for sitting on these boards.

Mr Mbonga explained that in cases where a vacancy was not filled in 6 months, it was automatically written off, since this clearly displayed that the office could cope without the person. The money that had been allocated was then also written off since it would clearly not be spent.

Ms M N Oliphant (ANC, Kwazulu-Natal) enquired if the Department had any intergovernmental relations that monitored how the provincial departments spent the budgets allocated to them, since there had been instances where some provincial departments had underspent.

Mr. Marais explained that the Department did not allocate more funds to the provinces in instances where they did not spend all their funds from the previous year.

Mr Mhkize added that the Department did have monitors that had been placed at the provincial offices to monitor the spending of budgets, among other things, and that there was another programme that monitored funds and spending by the provincial offices, run by the National Treasury.

Ms Oliphant questioned whether the Department was doing anything to assist people who were interested in farming, but had no relevant skills, to develop their skills with some kind of training. She also enquired if it was possible for the Department to help co-operatives that had been set up in provinces to develop and improve their skills with the aim of expanding their businesses, particularly those involved in vegetable farming, in order to contribute to the vegetable supply in the country.

Mr Mkhize said that training colleges were used as the main source of skills training and incentive to create interest in farming. This was mainly because it was currently difficult to locate people who were interested in farming if they had not come forward looking for help. Where they did so, the Department would train them in the relevant skills and assist them in starting out their new farming ventures. There was also currently a mentoring programme, run by the Department, which was aimed at helping both existing and upcoming farmers.

The Chairperson commented that he was not entirely happy with the progress as tabled by the Department. He felt that far more could have been done, particularly as evidenced by the large under spending by the end of the financial year. 

Adoption of Committee Minutes
The minutes of the last Committee meeting were adopted.

The meeting was adjourned.