ATC141020: Report of the Portfolio Committee on Agriculture, Forestry and Fisheries on the oversight visit to NCERA Farms (Pty) Ltd In the Eastern Cape Province on 23 September 2014

REPORT OF THE PORTFOLIO COMMITTEE ON AGRICULTURE, FORESTRY AND FISHERIES ON THE OVERSIGHT VISIT TO NCERA FARMS (PTY) LTD IN THE EASTERN CAPE PROVINCE ON 23 SEPTEMBER 2014

The Portfolio Committee on Agriculture, Forestry and Fisheries, having undertaken an oversight visit to Ncera Farms (Pty) Ltd in the Eastern Cape Province on 23 September 2014 reports as follows:

1. Background

Ncera Farms (Pty) Ltd is a public company listed under Schedule 3B of the Public Finance Management Act (Act No. 29 of 1999), with the Department of Agriculture, Forestry and Fisheries (hereinafter referred to as the Department) as its sole shareholder. The primary function of the entity is to assist developing farmers and rural communities by providing a variety of services such as advice and training, agricultural extension services, the mechanisation of agricultural production, animal improvement schemes and marketing of agricultural products. The aim of Ncera Farms (Pty) Ltd (hereinafter referred to as Ncera ) is to contribute to the industry focused farm management training, farmer support services and the design of franchise-type agricultural business models for farmers and beneficiaries of land reform in the surrounding areas.

The Portfolio Committee on Agriculture, Forestry and Fisheries of the Fourth Parliament has since 2010 been having challenges regarding engagement with the entity, which never submitted a proper Strategic Plan or an Annual Performance Plan (APP) as required by the National Treasury and the Public Finance Management Act (PFMA). Additionally, despite the Committee not approving the entity’s Strategic Plans, which never submitted an APP, the Department continued to allocate funding to the entity. The entity also failed to submit a well-prepared Turn-around Strategy as was recommended by the Committee during the 2010/11 financial year. In addition, there were long-standing conflicts among the stakeholders that were never addressed by the Department, which involved the land reform farmers and the farm dwellers. The former Portfolio Committee during its 2013/14 Budget Report, recommended that the Ncera , which has been running at a loss for the previous 7 years and not fulfilling its primary function and intended purpose, be deregistered.

1.1. Objective of the Visit

During deliberations on the 2014/15 Strategic Plans and Budgets of the Department and its entities on 11 July 2014, the new Portfolio Committee of the Fifth Parliament, having interacted with some of the previous Committee reports on Ncera including its current Strategic Plan, the majority of Members of the current Portfolio Committee supported in principle, the decision that was taken by the previous Portfolio Committee. However, the Committee decided to first undertake an oversight visit to Ncera to get a better understanding of the situation, to interact with some of the stakeholders and to also determine the Department’s progress regarding deregistration of the entity and stakeholder engagements. The Committee agreed to undertake the visit to Ncera Farms (Pty) Ltd on Tuesday, 23 September 2014 to meet and engage with the communities and other affected stakeholders.

1.2. Delegation

The delegation of the Committee composed of Ms MR Semenya , ANC (Chairperson and Leader of the delegation); Mr CHM Maxegwana , ANC; Mr ZMD Mandela, ANC; Mrs TMA Tongwane , ANC; Mr TRJE Ramokhoase ; ANC; Ms Z Jongbloed , DA; Mr BD Joseph, EFF and Mr MLW Filtane , UDM. The delegation was supported by Ms A Kakaza, Committee Secretary, Ms N Mgxashe , Content Advisor, Ms N Qwabe , Committee Researcher and Ms N Diya , Committee Assistant.

The delegation was joined by the following Members from the Eastern Cape Provincial Legislature of the Portfolio Committee on Agriculture and Rural Development: Ms N Gqiba , ANC (Chairperson); Mr T Wele , EFF; Mr Tsengwa , UDM. The delegation was supported by Mr M Makeleni , Committee Researcher and Mr QN Mafuya , Legal Advisor.

1.3 In attendance

The following officials were in attendance: National Department of Agriculture, Forestry and Fisheries: Mr MJ Kgobokoe , Deputy Director-General (DDG) for Food Security & Agrarian Reform (FSAR); Mr MS Masemola, Deputy Director (DD): Small Holder Development in Food Security and Agrarian Reform Branch; Dr SF Mkhize, Director: Provincial & State Owned Entities (SOEs) Performance Monitoring; Mr B Msomi , Chief Director: National Extension Support Services; Ms N Mafani , Parliamentary Coordinator; Mr RT Makoloane , Office Assistant; Ms R Thompson, Parliamentary Liaison Officer (Ministry); Ms V Vika , Parliamentary Liaison Officer (Office of the Deputy Minister); Mr SN Samuel; Principal Communication Officer, Mr AR Dietrich, Advisor to the Minister; Ms P Morai , Land Administration Officer; . Agricultural Research Council (ARC): Dr MA Magadlela , Acting Group Executive – Animal Science; Mr LF Monkwe , Chief Information Officer. Ncera Farms (Pty) Ltd: Mr M Titimani , Chief Executive Officer; Mr X Mlumbi , Section Manager; Mr PM Rubushe , Workshop Manager; Mr W Fourie , Farm Manager Provincial Department of Rural Development and Agrarian Reform: Mr M Gidwit , Deputy Director Coordination; Mr SO Mfuywa , Senior Project Officer Recap; Ms DN Nqhona , Acting Chief Director; Mrs PZ Njemla-Mntukatandwa , Director; Mr M Msimang , Acting Deputy Director; Mr B Mbewu , Project Coordinator; Mr J Armstrong, Chief Engineer. Provincial Department of Public Works: Mrs AP Maphoto , Deputy Director; A Umoetok , Director – PPM. Buffalo City Metropolitan Municipality (BCMM): Ms P Nazo , Councillor; Ms N Mqhayi , Coordinator Agriculture & Rural Development; Mr M Dike, Coordinator Agriculture & Rural Development; Mr V Mbatha , Head: Economic Development; Ms VC Hermanus , Programme Manager – Agriculture & Rural Development; Mr LE Simayile , BCMM Ward Committee and Mr V Peter, Standing Committee Member (LED); Mrs TC Mbilini , Technician (BCMM); Mrs T Msomi , Technician (BCMM).

It should also be noted that the representatives from Jongilanga and Phato Chieftaincies, resettled farmers, farm dwellers and other surrounding community members were also in attendance (Attendance register attached).

2. Engagements during oversight visit

2.1 Meeting with the Eastern Cape Provincial Portfolio Committee on

Agriculture and Rural Development

A Member of the Portfolio Committee delegation, Mr CHM Maxegwana opened the meeting and welcomed all present. He apologised on behalf of the Chairperson of the Committee, Ms MR Semenya who had a flight delay and would join the meeting at a later stage. Mr Maxegwana also noted apologies from the Minister and Deputy Minister of Agriculture, Forestry and Fisheries. He then gave a background and the purpose of the meeting/visit; and requested the Department to give a brief background on what lead to the recommendation by the Fourth Parliament Portfolio Committee to deregister Ncera as an entity, and how far the process was.

The Deputy Director-General (DDG) for Food Security & Agrarian Reform (FSAR) from the Department of Agriculture, Forestry and Fisheries, Mr MJ Kgobokoe gave a brief background of the challenges that resulted to the recommendation that was made by the Portfolio Committee of the Fourth Parliament to the Department regarding the status of Ncera Farms (Pty) Ltd. The DDG reported that after considering all the challenges and the parliamentary recommendations, the previous Minister of Agriculture, Forestry and Fisheries, Ms Tina Joemat-Petersson , approved the delisting of Ncera Farms (Pty) Ltd as an entity; and to incorporate the entity’s Service Centre (Welcome Home Farm) and personnel into the Agricultural Research Council (ARC), which is also an entity that reports to the Minister. In this regard, the Minister forwarded signed correspondence conveying the decision to the Ministers of Rural Development & Land Reform and Public Works, the Chief Executive Officer (CEO) of the ARC and the CEO of Ncera Farms (Pty) Ltd. The Deputy Director (DD) for Smallholder Development from the Department’s Food Security and Agrarian Reform Branch, Mr MS Masemola, further explained the challenges associated with land claims against some of the land that constitutes Ncera Farms (Pty) Ltd and the process that was followed in allocating the 10 farms. The progress on deregistering Ncera Farms (Pty) Ltd was reported by the Department as follows:

2.1.1 Finance and Legal Implications

· The transfer payment to the ARC will need to be increased in the Medium Term Expenditure Framework (MTEF) allocation to accommodate Ncera Farms once the entity has been delisted in terms of the PFMA. The allocation for 2014/15 for Ncera amounted to R3. 62 million.

2.1.2 The state land disposal process is guided by the following pieces of legislation which need to be considered and adhered to:

(a) Land Administration Act, 1995 (Act 2 of 1995).

(b) State Land Disposal Act, 1961 (Act 48 of 1961).

(c) Agricultural Debt Management Act, (Act 45 of 2001).

(d) Extension of Security of Tenure Act (ESTA), (Act 62 of 1997).

(e) Policy on the Disposal of Agricultural State Land.

(f) The Public Finance Management Act, (PFMA), of 1999 (Act 29 of 1999).

It was reported that the 10 state farms will be transferred to the Department of Rural Development and Land Reform under the Proactive Land Acquisition Strategy (PLAS). The transfer will be done by the Department of Public Works.

2.1.3 Human Resource and Labour Relations Implications

Ncera Farms (Pty) Ltd has supplied a comprehensive report detailing the Human Resources (HR) for analysis by the ARC before the merger. A plan of action with targets and dates on a HR Plan/change management is being implemented.

2.1.4 Assets Identification

The ARC has been handed an Auditor-certified list of all assets of Ncera Farms (Pty) Ltd. The ARC will conduct a validation process on the assets before the incorporation or the merger. The assets of Ncera Farms (Pty) (Ltd) will be transferred to the ARC based on the certified Asset Register.

2.1.5 Consultation Process

The Minister of Agriculture, Forestry and Fisheries is in the process of informing the Minister of Finance about the intention to de-list Ncera Farms as required by the PFMA in order to obtain concurrence.

After the de-listing process has been approved and concluded, the Department will proceed with the deregistration of Ncera Farms (Pty) Ltd as a company.

It was further reported that a memorandum was being prepared by the Department and the ARC to advance the takeover of Ncera by the ARC, which will enable the ARC to develop a Master Plan. The planned target date for the merger of Ncera Farms (Pty) Ltd with the ARC is 1 April 2015, pending the approval of the delisting of the entity from Schedule 3B of the PFMA by the Minister of Finance.

2.2 Stakeholder meeting

The delegation was welcomed by the CEO of Ncera Farms (Pty) Ltd, Mr M Titimani . Mr CHM Maxegwana , a Member of the Portfolio Committee, in consultation with the Chairperson of the Committee, Ms MR Semenya , gave a brief background and the purpose of the meeting. He then requested the Department to brief the meeting on the recommendation by the Fourth Parliament Portfolio Committee to deregister Ncera as an entity and progress thus far.

2.2.1 Progress report on deregistration of Ncera Farms (Pty) Ltd as an entity

a) Presentation by the Chief Executive Officer of Ncera Farms (Pty) Ltd

The CEO Ncera Farms (Pty) Ltd, Mr M Titimani gave a background about the area including the communities that surround the entity. He reported that the entity is surrounded by nine villages that are under Chief Jongilanga’s Chieftaincy ( Imidushane ) with a population of ±18 000 people. He reported that other traditional authorities surrounding Ncera include amaGqunukhwebe ( Phato Chieftaincy) and amaNdlambe Traditional Authority. The area is said to have an estimated unemployment rate of 80%. Mr Titimani also reported on his employment as CEO, the development of a Turnaround Strategy for Ncera that was rejected by the previous Portfolio Committee, what he did since his appointment as CEO, the envisaged plans for the entity and lack of financial resources to implement those plans.

b) Presentation by the Department of Agriculture, Forestry and Fisheries (DAFF)

The Chief Director for National Extension Support Services from the Department, Mr Bonga Msomi briefed the meeting on the challenges that Department experienced with the entity in previous years which included failure to produce acceptable Strategic Plans and Annual Reports for approval by Parliament, which further led to the recommendation of the previous Portfolio Committee to deregister the entity. Mr Msomi emphasised and explained the matters that have been reported by the DDG in an earlier meeting with the Parliamentary and the Eastern Cape Legislative Committees. He also explained the process that needs to be followed as outlined in Section 2.1 for the benefit of the stakeholders.

c) Presentation by the Agricultural Research Council (ARC)

The Acting Group Executive for Animal Science in the ARC, Dr MA Magadlela presented a brief background on the ARC’s plans to incorporate Ncera into the ARC’s Animal Production Institute. Dr Magadlela mentioned that there are various animal improvement schemes that are under the stewardship of the ARC since 1 April 1995 such as Kaonafatso ya Dikgomo ( KyD ), which is an ARC-driven livestock flagship programme aimed at accelerating the participation of smallholder producers in the mainstream economy of the country. He explained that KyD covers the whole spectrum of animal agriculture, which is relevant to what Ncera is currently or planning to do. Dr Magadlela emphasised that a Master Plan that the Department is talking about, which is also required by Parliament, will be informed by certain processes and details that still needs to be provided by the Department and/or Ncera . In this regard, the Department has not yet provided the required details to the ARC. However, Dr Magadlela reported that the ARC can in the meantime, utilise the Ncera Service Centre as a base for its provincial livestock improvement schemes such as KyD .

d) Farms and farmers settled on the Ncera State Farms

The communities around Ncera , Chieftainess Phato and other Chieftaincies’ representatives and farmers welcomed the proposal of incorporating Ncera to the ARC. They explained that their major concern was the closing down of the entity, which provides job creation for some community members. Stakeholders also raised a concern regarding visits to Ncera by Parliamentary Portfolio Committees, which always go there to listen to the stakeholder concerns but never follow-up and ensure that raised issues are effectively addressed. Another concern was the plight of farm dwellers who were born and raised in the state farms and have no other alternative means of livelihood.

2.3 Site Visit

Due to time constrains it was agreed that the delegation will only visit one farm and the Ncera CEO, Mr Titimani proposed that it should be Mr Matinise’s farm, which has the most extensive invasion and is also on the way to the airport.

2.3.1 Mr Matinise’s Farm

Mr Matinise informed the delegation that his main challenge has always been the group of people that are led by a gentleman called Mr Albert, who invaded his farm and denied him access to farm the land. The group invaded his farm since 2008 immediately after it was allocated to him and the invasions have continued since. Mr Matinise reported that he had immediately reported the matter to the Department, which was then the Department of Agriculture and Land Affairs, and the current Department after 2009 but to date, nothing has been done. He reported that when police tried to intervene, Mr Albert threatened them with his political connections and the police have since refused to be involved. Mr Matinise also informed the delegation that he and some of the Government officials that tried to intervene in the invasions are constantly threatened by the group. Mr Albert, who later joined the delegation to Matinise’s farm, responded and claimed that they were not invading the farm but occupying what is rightfully theirs as some have been born on the farm and their ancestors were buried on the farm.

3. Committee Observations

The Committee observed that:

· There was still conflicts which stem from the allocation of the state farms and this was the main concern that needs to be addressed urgently.

· The communities and the farmers around Ncera welcomed the proposal of incorporating Ncera Service Centre to the ARC as long as it will assist and benefit the surrounding communities and the province on livestock improvement and food security.

· There is a need for continued monitoring of progress on deregistration of Ncera Farms (Pty) Ltd by the Department and the process of transferring the 10 farms to the Department of Rural Development and Land Reform.

· The verification of land claims against the entity will also hamper productivity on the farms and therefore, needs to be fast-tracked to ensure that farmers are able to farm.

4. Recommendations

The Committee deliberated and resolved that:

• The Department of Agriculture, Forestry and Fisheries (DAFF) should ensures that Ncera Farms (Pty) Ltd is not closed but deregistered as an entity and the Service Centre incorporated into the ARC.
• DAFF should ensure that the Ncera Service Centre continues to assist the surrounding farmers and communities including the Eastern Cape Province with livestock improvement and food production programmes.
• DAFF and ARC should develop a Master Plan that will inform how the ARC will incorporate Ncera Service Centre within its livestock improvement programmes. The Plan should include budget allocation to the ARC that will assist the programme for the benefit of the Province.
• The Minister should ensure that a meeting is convened between the Provincial Portfolio Committee, Buffalo City Metropolitan Municipality and relevant stakeholders to address the invading in the state farms around Ncera , particularly those in Mr Matinise’s farm as well as to address and verify land claims against by some of the people.

Report to be considered.