Report of the Portfolio Committee on Agriculture,
Forestry and Fisheries on the Public Hearings on Transformation in the Agricultural
Sector, dated 18 January 2011
1.
Introduction
The Portfolio Committee on
Agriculture, Forestry and Fisheries held public hearings on 17 September 2010
to allow government entities, stakeholders in the commercial and developing
agricultural sector and unions representing farm workers to share perspectives
on the issue of transformation in the agricultural sector. Officials from the
Departments of Agriculture, Forestry and Fisheries and Trade and Industry,
representatives of commercial and developing farming sectors, commodity based
organisations, trade unions and academic institutions provided input at the
hearing. They were asked to focus on the following themes:
2. Terms of reference
The
agricultural sectors offer not only opportunities to the economy of the
country, but towards the recognition of a developmental state, which has to
address the unequal distribution of resources inflicted by colonialism and
apartheid. The Constitutional imperatives also strongly underpin the issue of
ensuring food security.
The
primary objectives of the public hearings were to assess the:
·
Current status of transformation in the agricultural sector
within the developmental agenda of the country.
·
Draft AgriBEE Charter, which provides the framework to
address the inequities prevalent in the agricultural sector.
·
The way in which current initiatives in the sector empower
black South Africans to partake in agricultural activities and enterprises
along the entire sector value chain.
3. Findings
Department of Agriculture, Forestry
and Fisheries
The Agri
BEE Charter Council has been established to attend to black economic
empowerment in the agricultural sector. The Council had drafted a detailed
workplan, and had already met six times to discuss and agree on the activities.
The terms
of reference for the three working groups established by the Council comprised
the following:
·
Aligning Section 12 Charter with the final codes from the
Department of Trade and Industry (DTI).
·
Checking the seven elements of the generic Scorecard and
their allocation of points with the indicative AgriBEE scorecards.
·
Drawing up a budget of the activities of the Council.
·
Investigating and developing a cost-effective monitoring and
reporting system on AgriBEE implementation.
In
addition to the above, the Council agreed to commission a study to review
thresholds for Exempted Micro Enterprises (EMEs) and Qualifying Small
Enterprises (QSEs), and made a commitment to complete a Draft Sector Code by
the next Council Meeting.
The
Council argued that it is currently difficult to respond to the transformation
of the sector under the current Section 12 Charter. The department was unable
to give statistics on scorecard targets and indicators, other than on the basic
information contained in the BEE Portal of the DTI.
As a way forward,
the Council resolved that it would facilitate the gazetting of AgriBEE
Sector Codes, and facilitate the signing off of the Section 9 Code by the key
agricultural stakeholders and reporting by all agricultural stakeholders who
fell under the scope of the AgriBEE Charter. It would also draft a
Comprehensive Report to the Minister and the Advisory Council.
Agri SA
There are
two identifiable approaches with regards to transformation. The formal process
was State-led and funded while an informal process was also followed,
comprising private initiatives. The formal process had a 90% failure rate with
community farming not working properly and there was no involvement of Farmers’
Associations.
In respect
of the informal process, a Farmer Development Conference was held in February
2010 in Somerset West. This gathering resolved to contribute R200 million over
a five-year period to establish equity schemes in Western Cape, Northern Cape,
and Eastern Cape, and to create 73 commodity driven projects.
They noted
some challenges in relation to:
·
Corruption and maladministration, which resulted in high
expectations, but little delivery.
·
Government and organised agricultural bodies working in
silos, with no co-operation and little trust. This had tended to polarise
agriculture rather than achieve restructuring or transformation.
Potatoes
With
regards to skills development, there is a noticeable lack of passion for
agriculture amongst black students. Agriculture was not a career of choice for
them. Failures in transformation also mitigate against this industry not being
more attractive.
Potatoes
SA has designed a two-pronged approach to develop young and current talent.
Sixteen learners were funded in undergraduate programmes, fifteen were in internships
and workplace experience, and ten were placed in postgraduate programmes.
Potatoes SA has also established a base for practical skills development and
technology transfer in rural areas, and for small commercial farmers. It had
developed a potato-training course for extension officers and had partnered
with the Department of Agriculture in
The board
members of Potatoes SA have made a commitment to establish at least six
sustainable small commercial black potato growers per year, to subsidise potato
seed for these projects, and to create access to finance for the new growers.
It would also be involved in the mechanisation of small projects and would
focus largely on technical support footprint to mitigate production risk.
However, in order to achieve this, it needed access to a broader range of more
accurate data about available resources, access to land, water and finance,
farmer and market development, partnerships, and an integrated centre of
excellence between industry bodies for generic transformation objectives.
Transvaal Agricultural
The South
African Transvaal Agricultural Union (TAU), emphasised that the creation of job
opportunities, development of rural communities for food security, sustaining
natural resources, and development of the infrastructure were all typical
objectives which could not be achieved by farmers alone.
The TAU also noted that the loss of expertise in other sectors resulted in the
increased contamination of water resources, and crops and livestock were now
being exposed to water polluted by chemicals, heavy metals and sewerage. This
would inevitably affect the safety of food, resulting in associated health
related problems with extremely detrimental effects on the populace, as well as
the ability of the State to provide health services.
They
argued that the migration of South African farmers to other countries on the
continent was causing uncertainties, which not only impacted on production and
productivity, but which increased the reluctance to invest in agriculture.
They were of the view that the safety and security situation in rural areas had
deteriorated to such an extent that the relationship between farmers and the South
African Police Service was at an all time low.
The South African Transvaal Agricultural Union suggested that transformation
should be approached taking into account all critical factors, to ensure
general well-being. Those who could and were willing to act as mentors should
be contracted specifically. Rising food costs required a reassessment of policy
to enable
Susan Pletts
Levels of
literacy were identified as a key challenge in training emergent farmers, from
subsistence level to large land project owners. Evidence suggested that course
participants ranged from being totally illiterate to semi-literate, with a very
small minority being reasonably literate.
New
farmers could never triumph whilst they operated within the current
constraints. Education required constant reinforcement, not only through
processing of information in theory, but also constant practice. The main
problem was that technicians and agricultural college graduates were teaching
agriculture, but do not have the requisite practical experience in that
business.
Based on the above, it was recommended that agricultural land should be given
to screened applicants who demonstrated the required skills and passion for
working the land as a business. This would engineer transformation within the
sector.
Agricultural Business Chamber
It was
pointed out that
Current government policy on agriculture was correct, but that there was lack
of effective government support for agriculture and implementation of
agricultural policy. The incoherence of policy implementation between the
Department of Trade and Industry and Department of Agriculture, Forestry and
Fisheries (DAFF) on the issues of agro-processing and trade tariffs remained a
stumbling block. The policy approach was also too narrow, being mainly
production oriented, and insufficiently focused on ensuring the competitiveness
of the individual value chains.
Two critical issues in the broader agro-food industry were financing, and
research and development. The principal supporting institutions were the Land
Bank and the Agricultural Research Council (ARC). Land Bank, the principal
developing finance institution in agriculture, had been dogged by major
governance problems, while the ARC’s role has diminished to the extent that the
private sector, and in particular, multinationals such as Monsanto, PHI, and
Syngenta, have now surpassed the ARC as the principal providers of new research
technology to industry.
National Agricultural Marketing
Council (NAMC)
The
National Agricultural Marketing Council explained that emerging producers in
Training was one of the factors that contributed to the lack of access to
markets by the emerging sector. NAMC facilitated a number of training
programmes in order to capacitate black producers to operate their businesses
successfully. NAMC also engaged with the Trusts leadership to discuss issues
around statutory measures, with specific focus on agricultural transformation.
All the Trusts were running a bursary programme that supported a large number
of black post-graduate students. The Meat Trust was currently funding 12 PhD
students, while the citrus trust was funding 54 students. Other trusts were
assisting students to find internship and workplace experience placements.
Department of Trade and Industry
The Department of Trade and Industry has a number of incentive schemes. The
Enterprise Investment Programme was accessible to local and foreign owned
entities investing in
The
Cooperative Incentive Scheme promoted cooperatives, by providing a matching
grant, and assisted cooperatives to acquire what they needed for start-up, and
increased their viability and competitiveness by lowering the cost of doing
business. The priority sectors were manufacturing, retail, service, and
agriculture.
The Export
Marketing and Investment Assistance partially compensated exporters for costs
incurred in developing export markets and recruiting new foreign direct
investment (FDI) into
The Sector
Specific Assistance Scheme was a cost-sharing grant scheme to non-profit
business organisations, for collective sectoral development. It targeted
Agro-processing, chemical allied Industries, electronic industries, textile and
clothing, metals and allied industries, creative industries, and motor industry
components, amongst others.
The various Export Councils that received support from DTI included the
Farmed Abalone Export Council (FAEC), South African Flower Export Council (ASSO
Flowers), South African Ostrich Business Chamber (SAOBC), Wines of South Africa
(WOSA), Fresh Produce Exporters’ Forum/Fruit SA, South African Fruit &
Vegetable Canners’ Export Council, Meat Exporters of South Africa and the South
African Dairy Foundation.
South African Agricultural Processors Association (SAAPA)
The South African Agricultural Processors
Association submitted that in order to maintain food security in
The Association (SAAPA) also recommended that serious investment was needed in
rail infrastructure, pointing out that in the 1980s, 85% of all grains were
transported by rail and the processing sector had been developed for rail
intake. Most new bulk carrier ships were being built larger, which then
necessitated a deeper draft in the ports of
Government spending on research in agriculture had decreased in the past ten
years, and, especially given the impact of climate change, this must again
increase to maintain the current levels of production. The continuous supply of
electricity to the processing plants of the country remained essential for food
security.
An analysis of the white maize crop estimates over the last fourteen seasons
had shown underestimates for thirteen crops, leading to higher maize prices to
consumers. SAAPA recommended that the producer independent crop estimate system
be maintained, and that only scientific inputs be used for estimates.
SAAPA noted that although DAFF had approved a new trade and tariff policy
regime, it was not being implemented because the major implementation body
reported to the DTI. The trade and tariff policy was a very powerful policy
tool to enhance food security.
SAAPA further recommended that no food crops should be used for the
manufacturing of biofuels. The speculation on the Johannesburg Securities
Exchange should be limited, where it affected food.
SAAPA called on government to continue its fight against collusion and to
increase competition to drive prices down, in support of a healthy free market.
Milk Producers
Organisation
According
to their submission, transformation in the milk producers’ sector was taking
place at three tiers. In the upper tier, various joint ventures in the
In the middle tier, some emerging farmers had advanced to milking more than 100
cows, and had become independent after they were mentored. Jackalskraal Trust,
near
In the lower tier, there was demand for mentorship in the small-scale
dairy-farming sector. The Milk Producers’ Organisation (MPO) and its affiliate,
Cendel, had coordinated a mentorship relationship between established and
previously disadvantaged dairy farmers. From 2007 to 2009, Cendel participated
in DAFF’s Pilot Master Mentors Programme, and 198 individuals benefited from
mentorship in 13 dairy projects. This Master Mentors Programme was aligned to
the provinces, but had been slow and some activities were abandoned through
lack of funding, whilst for other the Agricultural Sector Education and
Training Authority provided funding.
Cendel
had a dedicated team of dairy experts to provide mentorship and in-service
training to previously disadvantaged farmers, and would provide a range of services
from feed cost analyses, through animal health, and financial planning. There
was a need to continue engaging new entrepreneurs in dairy farming in all three
tiers of milk production.
Developing Poultry Farmers Association
The South African Poultry Farmers Association noted that the
chicken business was retail driven, and provided food to South African urban
areas (about two-thirds of the country). The Living Standard Measure (LSM) had
calculated that those in lower income categories spent about 70% of their
income on food. Frozen products were dominating the poultry industry, with
about 52 to 104 deliveries per week being demanded. This effectively excluded
the smaller farmers. The live sales were not as financially sustainable as
frozen sales.
In
regard to egg sales, more than half of all egg sales were done informally, and
because there were no complex cold-chain requirements, this was better suited
to the developmental State dynamics. However, the growth of this sector was
limited by consumer habits.
Small scale players were still struggling to get access to resources, ready
markets and technical skills, as well as to obtain finance, largely because of
the poor financial performance, historically, of small businesses. Land was not
usually a limiting factor in this sector.
The
State could procure services from small farmers to supply caterers at State
institutions like hospitals, the army, police and correctional service sectors,
as well as small quantities to central warehouses.
Agricultural Research Council
The Council (ARC) was experiencing many challenges that impacted on its mandate
to carry out its duties. These challenges centred around the non-availability
of funds to scale up pilot projects, lack of appropriate partnerships to
improve the role played by extension officers, and the status of women and
youth. In addition, ARC had an ageing research infrastructure and scientific
capacity, with a shortage of scientists, engineers and researchers.
Despite these challenges, the ARC had managed to make interventions in a number
of areas, including distressed land reform farms, the Comprehensive Rural
Development Programme (CRDP), and capacity building and entrepreneurship.
In terms of research and development it focused on meeting customer and
industry needs for competitiveness and sustainable growth through knowledge
generation. There was also a need to improve on quarantine services and climate
change research. Technical support would be given to small producers for market
access. Agricultural production would focus on new technologies and
agricultural practices, and agronomy, including training on entomology, soil
health and horticulture. Training in harvest technologies would focus on
harvesting, packaging, transport and storage. Development and training in
skills had to focus on scientific, technical and agricultural skills. Bursaries
were provided from undergraduate up to post-doctoral level.
The
ARC also had partnerships with other government departments. It had received R2
million from the Department of Science and Technology for the creation of about
160 employment opportunities. Furthermore the ARC was working on a draft
Memorandum of Understanding (MOU) with the Department of Correctional Services,
so that the correctional service centres could, wherever possible, produce
their own food, and also train offenders in the process.
Grain SA
Grain SA elaborated that the grain industry needed one common and united voice.
Agriculture remained the cornerstone of many economies, particularly the
developing economies, and rural prosperity was reducing the pressure on urban
resources. If 30% of the land was to be in the hands of black farmers, then
black farmers should produce 30% of the agricultural produce.
Development
was about people, and therefore the focus must be on empowering individuals to
become independent farmers, building on their existing foundations.
They
indicated that the budget for grain production had grown from R2 million to R16
million per year over the past five years, with a total of R66 million spent in
the industry.
Challenges
experienced by farmers included the low profitability of grain production, lack
of knowledge, skills and experience, lack of production finance, and poor
condition of tractors, implements and infrastructure. He pointed out that there
were 156 farmers capable of planting 23 575 hectares of summer crops now, but
the production of grain at the current prices was not profitable, which meant
that many would not plant at all.
National Wool Growers’ Association of
The organisation comprised 10 000 members, of whom 5 500 were
commercial farmers and 4 500 were communal farmers. It was bringing R2 billion
into the Gross Domestic Product (GDP) through wool exports. R20 million of the
budget was allocated towards transformation. The organisation was fully
demographically integrated, with commercial and communal farmers from
67% of the NWGA budget was spent on communal farming, in order to develop
infrastructure, provide training and mentorship, marketing support, resource
management, and genetic improvement. One of its projects was done in
partnership with the Eastern Cape Provincial Department of Agriculture,
breeding and distributing rams across the
Predation was the biggest challenge threatening food security. There had been
calls on the DAFF to intervene without success, and the Department of
Environmental Affairs had passed legislation, but it was not being properly
implemented, nor was service delivery up to par.
Food and Allied Workers’
FAWU submitted that the
Charter Council should ensure that the ultimate Section 9 Sector Code must be
fully coordinated, with an adequate reflection of all pillars and scorecard
aspects. The most contentious issues were always substantive rather than
procedural in nature. There seemed still to be some seriously contentious
issues during the engagement on the Code.
Ownership equity was a challenge, and there was therefore a need to find
agreement. The current debate concerned whether to draw a threshold line to
exempt some farms from being bound by the Sector Code. FAWU suggested that the
50/50 ownership model should be a prerequisite, as a way of advancing farm
worker equity ownership interest, unless some compelling reasons were making
this proposition untenable.
FAWU also said that AgriBEE should be seen as supplementing, but not replacing,
the Land Reform initiatives. One aspect of land reform had to do with ensuring
security of tenure for farm dwellers, including human rights issues such as
access to graves or burial sites, and access to grazing land. These obligations
should be enforced over and above the AgriBEE-inspired transformation component.
FAWU concluded that the Section 9 engagement process and Code were an
imperative expected by society from the agricultural sector.
South African Wine Industry Trust (SAWIT)
SAWIT had facilitated a major broad based BEE deal with KWV. SAWIT was also in
the process of developing a Wine Charter, which set higher standards than the
AgriBEE Charter, and was committed to and would implement the AgriBEE Charter
objectives.
Between 2003 and 2009, SAWIT was involved in a number of initiatives including
support to BEE wineries, grants to numerous community initiatives and
organisations, providing education and training for black leadership and
technical skills, and assisting with marketing and export promotion of black
wineries. Some challenges highlighted by SAWIT included the following:
SAWIT was planning to design a monitoring tool
for implementation of and compliance with the Wine Charter guidelines and
called for the establishment of the Wine Charter Council. It advocated an
increase in resource flow from urban to rural areas.
The major challenges to the transformation of
the wine industry lay in monitoring of key priorities, stimulating partnerships
to facilitate change and transformation, and reflecting the impacts and
challenges. SAWIT would look into providing strategic direction to the industry
and assisting it to identify the actions necessary to facilitate its
transformation agenda. It would also create shared goals, supported by the
setting of clear targets for the industry.
4. Conclusion and resolutions
In
evaluating the inputs from the various stakeholders the committee noted that:
There is a tendency by the Department
of Agriculture, Forestry and Fisheries to recycle issues. For the committee to
fulfil its oversight role more effectively, it is important that the
Department’s presentations to the committee focus on how it intends to
implement its plans instead of recycling issues every time it appears before
the committee.
There is
an urgent need for the Department of Agriculture, Forestry and Fisheries to
address the vacuum caused by poor databases, lack of statistics and information
in the sector. The lack of reliable data affects proper planning and this
impact on the pace of delivery and transformation in the sector.
Training
for emerging farmers is essential for meaningful participation in the sector
and transformation. While the committee noted that, although various
roleplayers were running bursary schemes and training programmes, the impact of
these are not felt wide enough to make a significant contribution to
transformation and empowerment in the sector.
There
is a need for more visionary leadership at all levels of the Department of
Agriculture, Forestry and Fisheries.
The
Department should be putting its thinking and strategies into areas that were
less developed. That meant concentrating on unproductive land in order to
develop it.
In
view of the vulnerability of many South Africans to food security, the
government should use the mealies that were in abundance to feed the 14 million
people who were starving.
The input of the Department of Trade and Industry pointed out numerous economic
opportunities that existed in agriculture. Such opportunities should be
exploited to facilitate empowerment and transformation in the sector.
Agricultural
producers should indicate what interventions they would like the Committee to
make, in order to help them do their work better.
There is a
need for needs-driven scientific, research-based programmes to be carried out,
that contains databases for land reform and Black Economic Empowerment to
facilitate better planning.
The
Agricultural Research Council experiences a lack of funding to scale up pilot
projects. It has an ageing research infrastructure and scientific capacity,
with a shortage of scientists, engineers, and researchers. This impacts
negatively on the availability of empirical research, which is a vital
requirement for development in the sector.
While the
Department of Trade and Industry has a number of incentive schemes which
supports the agriculture industry, emerging producers in
Visionary
and creative leadership is required at all levels in the department to deal
with the challenges it faces in speeding up transformation and to ensure food
security.
Report to
be considered.