ATC140711: Report of the Portfolio Committee on Agriculture, Forestry and Fisheries on the Strategic Plans, Annual Performance Plans and the Budget of the Department of Agriculture, Forestry and Fisheries (Vote 26) and its Entities, dated 11 July 2014.

Report of the Portfolio Committee on Agriculture, Forestry and Fisheries on the Strategic Plans, Annual Performance Plans and the Budget of the Department of Agriculture, Forestry and Fisheries (Vote 26) and its Entities, dated 11 July 2014.

The Portfolio Committee on Agriculture, Forestry and Fisheries examined Budget Vote 26: Agriculture, Forestry and Fisheries and the Annual Performance Plan of the Department of Agriculture, Forestry and Fisheries (DAFF) for the 2014/15 financial year, along with the Strategic Plan for the period, 2014/15 to 2016/17 and budget projections for the Medium Term Expenditure Framework (MTEF) period. During the process, the Portfolio Committee also examined the Strategic Plans, associated Annual Performance Plans (APPs) and budgets for the MTEF period of the following DAFF Public Entities:

• Marine Living Resources Fund
• Ncera Farms (Pty) Ltd
• Agricultural Research Council
• National Agricultural Marketing Council
• Onderstepoort Biological Products
• Perishable Products Export Control Board

Having considered the APPs and budgets of the Department and its entities, the Committee reports as follows:

1. Introduction

In terms of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999), Accounting Officers must provide Parliament or the relevant legislature with their respective institution’s Medium-Term Strategic Plan (MTSP) and, where applicable, with its APP. The Strategic Plans, APPs and Budgets of DAFF and four of its Entities were tabled in Parliament on 27 June 2014. The Strategic Plan, APP and Budget of the Onderstepoort Biological Products (OBP) was tabled on 30 June 2014 and those of Ncera Farms (Pty) Ltd were tabled on 01 July 2014. All the tabled plans were referred to the Portfolio Committee on Agriculture, Forestry and Fisheries for consideration and report. In performing its constitutional mandate, the Committee considered the Strategic Plans and APPs (2014/15) of DAFF and its Entities taking into account their alignment with the following:

• State-of-the-Nation Address (SONA);
• Key Government Priority Outcomes;
• The Industrial Policy Action Plan (IPAP);
• The New Growth Path (NGP);
• The National Development Plan (NDP);
• The Integrated Growth and Development Plan (IGDP); and
• The Agricultural Policy Action Plan (APAP).

The above serve as Government’s fundamental programmes of action for the medium term strategic period and in the long term. The Committee, in considering the Department and its Entities’ Strategic Plans and Budgets, wanted to determine whether the funds that are allocated to the Department and its entities through different programmes translate to actual service delivery within the borders of the country, particularly in rural and underserviced areas. In this regard, t he Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009), grants Parliament the power to reject, recommend or amend budgets of departments and entities.

2. The Department of Agriculture, Forestry and Fisheries (DAFF)

2. 1 The Mandate of DAFF

The mandate of DAFF is to address production and consumption in the agriculture, forestry and fisheries sectors. In this regard, DAFF has to advance food security and agrarian transformation in the three sectors through innovative, inclusive and sustainable policies and programmes. DAFF ’s legislative mandate is derived from Sections 24(b)(iii) and 27 (1)(b) of the Constitution and is further reflected in a number of Acts, which include inter alia the Conservation of Agricultural Resources Act, 1983 (Act No. 43 of 1983), the Agricultural Product Standards Act, 1990 (Act No. 119 of 1990), the National Forests Act, 1998 (Act No. 84 of 1998) and the Marine Living Resources Act (MLRA), 1998 (Act No. 18 of 1998) (Certain Sections i.e. (i) Sections 5 to 7, 10 to 15, 17, 18 to 27 and 29 to 41, 44 to 50; (ii) Sections 1 to 4, 8, 9, 13, 16, 28, 42 and 51 to 83 in so far as they relate to the powers and functions transferred under item (i) above).

2.2 Strategic Goals and Objectives of the Department

Having analysed the Medium Term Strategic Framework (MTSF) for 2014/15 to 2018/19, DAFF identified issues that are relevant to the Department and developed the following key strategic goals (SGs) for the medium term:

1. Effective and efficient strategic leadership, governance and administration.
2. Enhanced production, employment and economic growth in the sector.
3. Enabling environment for food security and sector transformation.
4. Sustainable use of natural resources in the sector.

The four goals are aligned with the Government Priority Outcomes to which the Department contributes, namely, Outcome 4 (SG 2), 7 (SG 3), 10 (SG 4) and 12 (SG 1). DAFF further developed eight strategic objectives through which the four strategic goals will be realised over the medium term. The strategic objectives are to:

• Strengthen the culture of compliance with statutory requirements and good governance practice.
• Strengthen institutional mechanisms for integrated production and productivity in prioritised value chains.
• Effective management of biosecurity and sector related risks.
• Ensure support for market access and processing for agriculture, forestry and fisheries products.
• Lead and coordinate government food security initiatives.
• Strengthen planning, implementation and monitoring of comprehensive support programmes.
• Enhance skills capacity for efficient delivery in the sector.
• Ensure the conservation, protection, rehabilitation and recovery of depleted and degraded natural resources.

2.3 The National Policy Mandates

DAFF’s strategic goals and associated objectives have been revised in the medium term in response to the objectives and targets of the New Growth Path, the National Development Plan and other national policy mandates; and are also informed by the Department’s own Integrated Growth and Development Plan and the Agricultural Policy Action Plan (APAP).

2.3.1 The National Development Plan (NDP)

The NDP’s overarching aim is to eliminate poverty and reduce inequality by 2030. The Plan recognises that South Africa needs an inclusive economy that is more dynamic and in which the fruits of growth are shared equitably amongst its citizens. Agriculture is identified in the NDP as one of the key sectors through which increased employment and poverty alleviation can be achieved. In this regard, approximately 1 million new jobs and a trade surplus are expected to be created from agriculture, agroprocessing and related sectors by 2030. The NDP’s focus is on smallholder farmers and it is expected that the 1 million new jobs target can be achieved by expanding irrigated agriculture. The Makhathini Flats and Umzimvubu River Basin have been specifically identified for the development of irrigation infrastructure. The NDP further expects that a third (33%) of the food surplus should be produced by smallscale farmers or households.

2.3.2 The New Growth Path (NGP)

The NGP is a national framework for economic policy and the driver of the country’s job strategy. Its aim is to target the country’s limited capital and capacity at activities that maximise the creation of decent work opportunities through macro and micro economic policies in order to create a favourable overall environment and to support more labour-absorbing activities. The main indicators of success will be jobs (the number and quality of jobs created), growth (the rate, labour intensity and composition of economic growth), equity (lower income inequality and poverty) and environmental outcomes. The NGP proposes strategies:

• To deepen the domestic and regional markets by growing employment, increasing incomes and undertaking other measures to improve quality and income distribution; and
• To widen the market for South African goods and services through a stronger focus on exports to the region and other rapidly growing economies.

The NGP identified agriculture as one of the key job drivers with the potential to create 145 000 jobs in agroprocessing and to place 300 000 households in agricultural smallholder schemes by 2020. Jobs are expected through smallholder schemes in industrial products and forestry; fruit and wine exports; and extension services for the smallholder sector. The NGP also recognises that the sector has the potential to improve the living conditions of the approximately 660 000 farm workers through upgrading of employment in commercial farms by 2020.

2.3.3 The Industrial Policy Action Plan (IPAP)

The IPAP 2013/14-2015/16 is informed by the NDP’s country vision and is framed by and constitutes a key pillar of the NGP. The more general industrial policy framework for IPAP is provided in the National Industrial Policy Framework (NIPF) that was adopted by Government in 2007. The overriding goal of the IPAP is to prevent industrial decline and support the growth and diversification of South Africa’s manufacturing sector. The IPAP emphasises the development and expansion of agroprocessing for the entire value chain in all three sectors. The focus for agriculture is food processing; for forestry it is paper, sawmills, timber and furniture making; and for fisheries it is aquaculture development and processing.

2.3.4 The Integrated Growth and Development Plan (IGDP) and the Agricultural Policy Action Plan (APAP)

The IGDP was developed in response to the Government Priority Outcomes that relate to job creation, rural development and food security, to which DAFF contributes. It is a four-year plan that was published in 2012 in alignment with the IPAP 2013-16, NGP and NDP. Its primary purpose is to achieve the transformation and restructuring of the agriculture, forestry and fisheries sectors that are currently dominated by a small number of large companies, and to ensure that constraints experienced in the areas of input supply, production and marketing are addressed cost-effectively and in a timely manner. The APAP has been developed in 2013 to serve as an implementation arm of the IGDP. The APAP is planned over a five-year period and will be updated on an annual basis. Its encompassing objectives are to promote labour absorption and broaden market participation; strategic interventions that aimed at increasing value-chain efficiencies and competitiveness focusing on selected subsectors and/or value chains.

3. Consideration of the Strategic Plan, the APP and the Budget of DAFF and

the Marine Living Resources Fund (MLRF)

The Strategic Plan and Budget of the MLRF was considered together with that of the Department (DAFF) as the MLRF is responsible for funding operational activities of the Department’s Programme 6, Fisheries Management.

3.1 Comments from the Executive Authority

The Minister of Agriculture, Forestry and Fisheries, Mr Senzeni Zokwana gave a political perspective and overview of the Strategic Plan of DAFF. He mentioned that the focus of the Department’s Strategic Plan is on key government medium-term priorities that are informed by the National Development Plan and the New Growth Path. The Minister also highlighted the Department’s specific deliverables as mandated by the NDP and the NGP in terms of job creation through agroprocessing. He also presented the projections on job creation opportunities through DAFF interventions over the 2014/15 to 2018/19 MTEF period, which included 3 596 jobs through LandCare and 12 000 jobs through reforestation of plantation areas. He mentioned that the Department’s focus will also be in achieving the vision for a united, prosperous and transformed agricultural sector that contributes to food security.

The Minister highlighted some of the Department’s achievements in the past five years including legislative and policy reforms that will take DAFF forward in championing the cause for marginalised and vulnerable people in the sector. He mentioned legislative reforms that gave effect to the finalisation of the Smallscale Fisheries Policy, which is going to be implemented in the 2014/15 financial year to ensure allocation of commercial fishing rights to fishing communities and smallscale fishers; support that was given to smallholder agricultural producers to increase production and assistance with access to export market opportunities through the World Food Programme; and the regaining of the country’s Foot-and-Mouth Disease (FMD)-free status, which has created a platform for resumption of the country’s red meat trade on international markets. The Minister further mentioned new export opportunities in Asian markets, trade agreements with other emerging economies and expansion of trade with other African countries.

The Minister also acknowledged the challenges that are faced by the sector, which include inter alia, international trade, export market access, smallholder development support, poor infrastructure, disasters and climate change. The Minister presented some of the planned activities for the MTEF period including a specific focus on the previously disadvantaged smallholder sector in agriculture, forestry and fisheries. In this regard, he mentioned:

• The introduction of compulsory community veterinary service for remote rural areas to strengthen animal disease control and management. The distribution of mobile veterinary clinics will also continue in these areas.

• The National Policy on Food and Nutrition Security that was approved by Cabinet in September 2013 to address household food insecurity and to minimise risks to South Africa’s food security status, particularly escalating food prices and the impact of climate change.
• The Fetsa Tlala Food Production Initiative that was introduced by the President to address immediate household food insecurity. The programme is implemented by DAFF.
• Continued targeted support for enhanced food production at national and household level through programmes such as the Comprehensive Agriculture Support Programme (CASP) and Ilima/Letsema.
• Tabling of the Department’s APAP and IGDP, whose focus will be infrastructure upgrading as mandated by the NDP.
• Operation Phakisa through which DAFF plans to grow the aquaculture sector value to reach between R4 and R6 billion with a potential job creation of between 160 000 to 210 000 by 2030. Operation Phakisa was described as an Inter-Ministerial Project that is led by the Department of Environmental Affairs (DEA) to realise economic opportunities for coastal communities.
• In terms of forestry, conservation, rehabilitation and recovery of woodlands and indigenous forests are critical interventions to restore the land to optimum production. Through the LandCare Programme, woodlands and indigenous forest management programmes, degraded land and indigenous forests will be rehabilitated.
• Implementation of climate change adaptation plans to ensure the resilience of the agriculture, forestry and fisheries sectors.

3.2 The Presentation of DAFF Strategic Plan, APP and Budget

The Department’s presentation was done by the Director-General (DG), Prof Edith Vries, who is the accounting officer for DAFF. The Marine Living Resources Fund presentation was done by the Deputy Director-General (DDG) for the Fisheries Branch, Mr Mortimer Mannya. The DG of DAFF presented an overview of the 5-year Strategic Plan of the Department for the period, 2014/15 to 2018/19, as well as the Annual Performance Plan (APP) for the 2014/15 financial year. She gave a brief background regarding the establishment of the Department in 2009 and highlighted the unanticipated complexities associated with combining the three sectors into one Department since 2009, which became a lengthy process. The DG mentioned that the Department is in the process of developing a Sector Plan.

The presentation highlighted the Department’s new strategic goals, which have been revised and reduced from six to four, the associated strategic objectives, as well as an overview of deliverables for the MTEF period for the Department’s six budgeted programmes as allocated by the National Treasury. The presentation highlighted some of the Department’s achievements in the past financial year, which included:

• The assistance of 250 000 cooperatives in Bushbuckridge to produce food for school feeding schemes;
• R180 million that was given to the World Food Programme (WFP) with the criteria that all maize should be procured from South Africa and 40% of which should be from smallholder producers;
• Further assistance that has been provided to smallholder producers for the production of dry beans. Through the intervention, approximately 40% of beans that are used in baked beans in the country come from smallholder producers;
• 23 mobile veterinary clinics that have been distributed to rural areas;
• An agri-village at the Dube Trade Port that supplies fresh produce (vegetables) to Woolworths; and
• An online extension advisory service.

In acknowledging that food security is central to the development and growth of the sector, the DG mentioned the Fetsa Tlala Food Production Initiative, which aims to increase production of food staples particularly in the thousands of hectares of underutilised arable lands in communal areas. In this regard, she highlighted increased departmental support for input access, mechanisation services, technical support and linkages to local markets to ensure that by 2019, 1 million hectares of the shallow lands are under food production. The DG further mentioned that a third (33%) of the Department’s budget (approximately R2 billion) is transferred to provinces in the form of conditional grants, which will play a pivotal role in addressing food security and creation of jobs through agroprocessing and beneficiation, particularly in forestry.

The presentation also mentioned the challenges that the Department faces in agriculture, which include inter alia risks associated with increased cross-border movement of goods and people including within the country, which necessitates more preventative measures in anticipation of, and to prevent, possible introductions of animal diseases, plant pests, and other undesirable products such as unsafe food and feed, including agricultural remedies. Given that the medium term focus is the development and inclusive participation of smallholder producers, the DG further reported that another challenge that faces the sector is diversification of export destinations while broadening the basket of commodities and value-added products that are destined for export markets when more than half of all smallholder households live below the poverty line. She mentioned that the challenge of growing the smallholder sector is closely tied up with the challenge of making smallholder agriculture more remunerative. Furthermore, some of the challenges are compounded by rising input costs, unsustainable land-use practices and inadequate investment in agriculture.

In fisheries, one of the main limitations that was mentioned was that catch volumes depend on fish stocks, which vary naturally and/or are subject to depletion owing to overexploitation. Therefore, there is a growing demand for decreasing finite marine resources, a challenge that is also compounded by climate change. Stock depletion was reported to be more prevalent in inshore species due to increasing illegal fishing and poaching resulting in inadequate resources for new entrants. However, DAFF will promote transformation in the sector by modifying its licensing regime as per the Smallscale Fisheries Policy.

Under forestry, the DG reported that there has been a decline in both softwood and hardwood plantation areas since the mid-1990s, and there has also been a marked increase in the area planted for pulpwood purposes compared to the area for saw logs and mining timber. The food security and job creation mandates are threatened by shortage of timber products; biased equity distribution in the value chain; slow afforestation uptake owing to cumbersome licensing processes and the impact of natural hazards.

Under staff establishment, the DG reported that all but one DDG position have been filled and the Department’s vacancy rate at the end of June 2014 was 10.4%. However, the Department plans to fill most of its vacant positions by the end of the 2014/15 financial year.

3.2.1 The Budget of the Department

The Chief Financial Officer (CFO), Mr J Hlatshwayo presented the Department’s budget for the MTEF period as per its six programmes. The total budget of the Department for the 2014/15 financial year is R6.69 billion. It was reported that compensation of employees accounted for a quarter (25%) of the total budget of the Department. The budget presentation also highlighted the allocations as per each programme.

Table 1. Budget Allocation per Programme for the MTEF Period

Programme	2014/15 allocation	2015/16 allocation	2016/17 allocation
1. Administration	R 694 570.00	R 725 558.00	R763 904.00
2. Agricultural Production, Health and Food Safety	R2 199 796.00	R2 252 651.00	R2 089 434.00
3. Food Security and Agrarian Reform	R1 711 095.00	R1 718 832.00	R1 768 669.00
4. Economic Development, Trade and Marketing	R 294 223.00	R 247 491.00	R 309 945.00
5. Forestry and Natural Resources Management	R1 364 923.00	R1 233 410.00	R1 279 342.00
6. Fisheries Management	R 427 776.00	R 443 267.00	R 462 871.00
Total	R6 692 383.00	R6 621 209.00	R6 674 165.00

3.3 The Department’s Programme Deliverables and Budget Analysis of DAFF

The Department’s presentation also included planned activities for each programme as contained in the Strategic Plan for the MTEF period and the APP for the 2014/15 financial year. The Department’s spending focus in the medium term (2014/15 to 2016/17) will be on increasing food production by providing agricultural support to smallholder farmers through the Comprehensive Agriculture Support programme (CASP), and implementing Ilima/letsema food production, LandCare and Fetsa Tlala Food Security and Nutrition Initiative. The Department plans to spend over R7 billion on conditional grants to provinces over the MTEF period to support subsistence and smallholder producers and improve extension services. The 2014/15 budget allocation for the Department has grown by approximately R510 million from R6.18 billion in 2013/14 to R6.69 billion in the 2014/15 financial year. In terms of programmes, the largest budget allocation has been received by Programme 2: Agricultural Production, Health and Food Safety with R2.2 billion, followed by Programme 3: Food Security and Agrarian Reform with R1.71 billion and then Programme 5: Forestry and Natural Resources Management with R1.36 billion (see Table 1). The three programmes account for 78.8 per cent of the 2014/15 total budget of the Department. These are the flagship programmes as it is through these programmes that conditional grants and transfers to some of the entities are made.

Programme 1 - Administration

The purpose of the programme is to provide strategic leadership, a sound policy environment and support services to the Department. The programme comprises of the Ministry, Office of the DG, Financial Administration, Internal Audit, Corporate Services, Stakeholder Relations, Communications and Legal Services, Policy Planning, Monitoring and Evaluation and Office Accommodation.

Under the strategic objective that seeks to strengthen the culture of compliance with statutory requirements and good governance practices, the Department plans to align and integrate all the funding facilities such as Micro Agricultural Financial Institutions of South Africa (Mafisa), Comprehensive Agriculture Support Programme (CASP), Broad-based Black Economic Empowerment for Agriculture (AgriBEE) Fund, Ilima/letsema and LandCare into a Comprehensive Producer Support Package during the medium term. For the 2014/15 financial year (i.e. the reporting year), the Department plans to develop efficient and effective internal controls to ensure maintenance of an unqualified audit report status. The Department also plans to improve on intergovernmental relations by implementing an Intergovernmental Strategy through signing of Service Level Agreements (SLAs) by the fourth quarter of the reporting year.

Programme 2 – Agricultural Production, Health and Food Safety

The purpose of the programme is to promote agricultural production through the management of risks associated with animal diseases, plant pests, genetically modified organisms (GMOs) and registration of products used in agriculture. Its aim is to promote food safety and create an enabling environment for increased and sustainable agricultural production. The programme comprises three subprogrammes, namely, Plant Production and Health, Animal Production and Health and Inspection and Quarantine Services.

The spending focus for the reporting year (2014/15) would be on monitoring at least two animal improvements schemes (Kaonafatso ya Dikgomo and a poultry scheme); developing an integrated Animal Disease Management Plant to ensure effective biosecurity and related risks management; implementing the Primary Animal Health Care Programme through the delivery of mobile veterinary clinics; conducting two animal disease surveillance and one plant pests (invader fruit fly) risk surveillance to enforce a regulatory framework that will reduce the level of disease outbreaks in production areas and to reduce interception at export channels to a minimum. Over the medium term, the Programme’s focus will also be on the implementation of the Compulsory Community Service Programme for Veterinary graduates.

The Parliamentary Grant to the Agricultural Research Council (ARC) and the budget allocation for the refurbishment of infrastructure for the Onderstepoort Biological Products (OBP) are also transferred through this programme. Over 70 per cent (73.9%) of the budget allocation for this programme (R1.63 billion) is transferred to provinces and municipalities, departmental agencies and accounts, and public corporations and private enterprises. In the current financial year, the Ilima/letsema project is allocated R460 million, the ARC is allocated approximately R1 billion and the OBP is allocated R127.5 million.

Programme 3 – Food Security and Agrarian Reform

The purpose of the programme is to facilitate and promote household food security and agrarian reform programmes and initiatives through the implementation of the national policy on food and nutrition security, targeting subsistence, smallholder and commercial producers. The programme comprises of three subprogrammes, namely, Food Security, Sector Capacity Development and National Extension Support Services.

The spending focus of the programme for the reporting year will be on the development and coordination of the Draft Food and Nutrition Security Policy Implementation Plan (Plan to be finalised by the fourth quarter); providing support to 16 000 smallholder producers; cultivating 200 000 hectares for food production to meet the objectives of the Fetsa Tlala Initiative; implementation of the National Extension and Advisory Policy; and reviewing the National Education and Training Strategy. O ver the medium term, 70 per cent (R1.7 billion) of CASP allocation for the infrastructure pillar will be reprioritised to support the Fetsa Tlala Initiative. The grants to Ncera Farms (Pty) Ltd (R3.6 million), CASP (R1.3 billion in the current financial year) and Ilima/letsema are transferred through this programme.

Programme 4 – Economic Development, Trade and Marketing

The purpose of the programme is to promote economic development, trade and market access for agriculture, forestry and fisheries products and foster international relations for the sector. The programme comprises of three subprogrammes, namely, International Relations and Trade, Agroprocessing and Marketing and Cooperatives and Rural Enterprise Development.

The spending focus of the programme for the current financial year is linking 18 smallholder and commercial producers in rural areas to mainstream markets; supporting 90 cooperatives with training; establishing 18 commodity-based cooperatives; ensuring that the country’s Comprehensive Africa Agriculture Development Programme (CAADP) Compact is signed; implementation of the Trade Promotion Strategy; and provision of annual reports on the implementation of the AgriBEE and the Forestry Sector Codes to monitor transformation in the two sectors.

In the reporting year, the programme transferred R36 million to the National Agricultural Marketing Council (NAMC), R1.8 million to the Small Enterprise Development Agency (SEDA), R3.7 million to the Forest Sector Charter Council and R85.3 million to the Land and Agricultural Development Bank of South Africa (Land Bank) to support the retail emerging markets (REM) model.

Programme 5 – Forestry and Natural Resources Management

The purpose of the programme is to provide strategic direction and leadership to the Department with regard to the promotion of the sustainable management, use and protection of forests and natural resources to achieve social and economic benefits and to promote development. The programme comprises of three subprogrammes, namely, Forestry Operations, Forestry Oversight and Regulation and Natural Resources Management.

The Department indicated that approximately 70 per cent of land in South Africa is degraded, which translate to approximately 800 000 hectares. The focus for the current financial year is to rehabilitate approximately 30 000 hectares of agricultural land and 500 hectares of woodlands and indigenous forests; advance APAP through increased agricultural production on 2 300 hectares; get the Irrigation Strategy approved by the Executive Committee (EXCO) of the Department; and implement the Climate Change Research Programme on crop suitability that is carried out by the ARC.

The Programme transfers R582.2 million to provinces under the LandCare (R67.8 million) and CASP (R493.8 million) activities. It would be beneficial for the Department to indicate the allocation per province to better understand the resource allocation in line with the actual needs.

Programme 6 – Fisheries Management

The purpose of the programme is to promote the conservation and sustainable use of marine resources and the recovery of depleted fish stocks by implementing the stock recovery strategy and conducting annual fishery specific research. The programme comprises of four subprogrammes, namely, Aquaculture and Economic Development, Fisheries Research and Development, Marine Resources Management and Monitoring, Control and Surveillance

The spending focus of the programme for the current financial year will be supporting 10 fish farms; getting the first draft of the Aquaculture Bill approved by EXCO; conducting research on reproduction and nutrition for 1 aquaculture species; drafting the Fishing Rights Allocation Process (FRAP) Framework; amending regulations that were promulgated under the Marine Living Resources Act (MLRA) (Act No. 18 of 1998) to include the management of the smallscale fisheries sector; and ensuring the implementation of 4 598 compliance and enforcement measures in the 4 prioritised fishery sectors, namely, hake, abalone, West Coast Rock Lobster (WCRL) and linefish.

The Programme experienced a reduction in the budget from R433.7 million in the 2013/14 financial year to R427.8 million in the current financial year. Fifty eight per cent (R251.3 million) of the Programme’s allocation will be transferred to the Marine Living Resources Fund (MLRF) for operational activities.

4. Overview of Committee Observations and Conclusions on the Strategic

Plan, APP and Budget of DAFF

The Committee welcomed the strategic overview of DAFF by the Minister and the presentation by the Department on its strategic goals and objectives over the MTEF period. During the engagements and discussions with the Minister and the Department, the Committee made comments and further raised the following concerns:

• The need to fast-track the finalisation of the Implementation Plan for the Small-scale Fisheries Policy within 30 days of the adoption of the Report by the National Assembly; and also address the concern regarding limited financial resources to ensure successful implementation of the Policy.

• Lack of awareness activities and intervention programmes to ensure that indigenous coastal people and some inland rural communities understand the value of fishing beyond immediate food needs but as an income generating activity. This should be an ongoing activity.

• High unemployment rate in the country particularly of the youth, who also happen to be less interested in agriculture. The Committee wanted to know the Department’s plan for encouraging young people to consider agriculture as a profession and a business opportunity to assist in reducing high unemployment rate (job driver); and to further create opportunities to absorb the approximately 10 000 unemployed agricultural graduates.

§ Lack of Departmental plans to capacitate and assist smallholder producers to participate actively in the economy through the provision of infrastructure, agroprocessing, security, and markets. For example, raising the participation of the smallholder sector into the World Food programme to 100% instead of 40%.

• The smallholder livestock farmers are not receiving the necessary support particularly in communal areas despite the potential and many opportunities that are presented by livestock in some of these areas. An example was made of abattoirs that have been built by Government throughout the country, some of which are not operational.

• The Fisheries Branch has been involved in research on new fisheries since 2004; yet, no new fisheries have been opened since then.

5. Consideration of the Strategic Plans and Budgets of DAFF Public Entities

5.1 Agricultural Research Council (ARC)

The ARC was established by the Agricultural Research Act, 1990 (Act No. 86 of 1990) and is the main agricultural research institution in South Africa. The ARC’s mandate in terms of the Act is to conduct research and development and to effect the transfer of technology in order to promote agriculture and the industry, contribute to a better quality of life and facilitate and ensure natural resource conservation.

The ARC’s strategic goals over the medium term are to:

• To improve the productivity, production, competitiveness and sustainability of crop-based and livestock-based agriculture.
• To enhance the productive use and conservation of natural resources.
• To translate research results to support agrarian transformation and the efficiency and competitiveness of the sector.
• To achieve good governance, financial sustainability and a high performing and visible organisation.

The Chairperson of the Board of the ARC, Mr Jonathan Godden gave a brief overview of the strategic objectives of the ARC. The Chief Executive Officer (CEO), Dr Shadrack Moephuli presented the strategic plan and budget of the ARC. He mentioned that the ARC is funded mainly from government transfers (parliamentary grant) and income generated from applied research and other projects. The key strategic issues of the ARC over the medium term would be on the external income growth, replacement and upgrading of infrastructure and improving organisational processes to eliminate adverse audit findings. Some of the key projects and activities of the ARC that are aligned to the NDP objectives include the Kaonafatso ya Dikgomo, which is the smallholder livestock development project; collaboration with the Perishable Products Export Control Board (PPECB) on training of citrus farmers including control of citrus black spot (CBS); training of 350 extension officers (640 in the past year) and animal health technicians on functional innovation systems; and upgrading of the Foot-and-mouth disease (FMD) Facility from laboratory stage to manufacturing stage.

The total budget of the ARC for the 2014/15 financial year is R1.3 billion, of which R957 million is the Parliamentary Grant for operational and capital expenditure. The ARC reported that 40% of its income is generated from contracts and intellectual property; and that it was engaging with the Department of Science and Technology (DST) regarding the implementation of the Bio-economy Strategy.

5.2 Onderstepoort Biological Products (OBP)

The Onderstepoort Biological Products (OBP) was established by the Onderstepoort Biological Products Incorporation Act, 1999 (Act No. 19 of 1999). The mandate of the company is to prevent and control animal diseases that impact on food security, human health and livelihoods through sustainable veterinary vaccine manufacturing.

The company’s strategic goals over the medium term are to:

§ build a successful, high performance organisation.

§ improve business process and management practices.

§ build a profitable and sustainable company.

§ facilitate job through indirectly supporting clients and directly creating subsidiaries joint venture incubating, accelerating and spawning off new business entities.

§ contribute to government priorities with respect to food security and economic growth.

The Chairperson of the Board of the OBP, Dr JH Adams gave a brief overview of the OBP’s strategic objectives for the current financial year. The OBP does not receive a Parliamentary Grant but generates revenue from the sale and supply of livestock vaccines, mostly to the local commercial sector. In the MTEF period from 2013/14 until 2015/16, it received a grant of R492.4 million from National Treasury to modernise its aging vaccine manufacturing infrastructure. The presentation of the CEO, Dr Steven Cornelius focused on the OBP’s background, governance, its Corporate Plan, the review process, its alignment to government programmes, its strategic objectives, key indicators, financial information and performance monitoring. The OBP is the only entity that has met the employment equity and affirmative action requirements in terms of personnel representation (86% black and 48% female).

The OBP plans for the medium term include the establishment of a Vaccine Reserve; increased manufacturing of public good vaccines (orphan vaccines) and provision of rural farmers with vaccine packs to assist with the prevention and management of diseases. In this regard, the company has applied for additional funding from the National Treasury, with support from DAFF. The outcome of the funding application will be known by the end of financial year.

The estimated operational expenditure of the OBP for the 2014/15 financial year is approximately R125.7 million. The OBP lost R30 million revenue in the past year due to lack of Good Manufacturing Practice (GMP) Certification. The lack of GMP Certification also constrained the OBP’s ability to generate more revenue from export markets.

5.3 The Perishable Products Export Control Board (PPECB)

The PPECB is mandated by the Department of Agriculture, Forestry and Fisheries in terms of two Acts. The Perishable Products Export Control Act, 1983 (Act No. 9 of 1983) requires the Board to ensure the orderly export of perishable agricultural products and monitor the proper maintenance of a continuous cold chain for exports, while the Agricultural Product Standards Act, 1990 (Act No. 119 of 1990) requires the Board to monitor minimum quality standards of perishable products for export.

The PPECB’s strategic objectives over the medium term are to:

• enhance the credibility of South Africa’s export certification.
• supporting the export competitiveness of South Africa’s perishable products industries.
• strengthen the PPECB’s capacity to provide a professional suite of services.

The Chairperson of the Board of PPECB, Mr Angelo Peterson gave a brief overview of the PPECB’s strategic objectives for the current financial year. The CEO, Mr Stuart Symington, presented the strategic plan of PPECB. He mentioned some of the challenges that are facing the organisation as well as progress going forward. He reported that the PPECB plans to be more entrepreneurial and less bureaucratic and in 2013, they have accordingly restructured their management and now have eight people reporting directly to the CEO. Furthermore, papers for inspectors are being replaced with Tablets to ensure faster and efficient service. The Tablet Project will be launched in October 2014. The PPECB is also assisting black farmers in four provinces with access to markets (mostly local, but a few on export markets). In terms of skills development, the PPECB has an Unemployed Graduate Programme where recently graduated previously disadvantaged individuals (PDIs) are put through a 12-month all-inclusive training programme. All 48 of those that were trained in past year have been absorbed into PPECB.

The presentation also mentioned export opportunities and untapped potential in the Continent. The CEO reported that Africa is becoming an exciting trading partner and approximately 23% of apple exports go to the Continent. He also mentioned the large supermarket chains that are moving large numbers of perishable products (dairy & tinned food) to the Continent, which is becoming a challenge for PPECB to keep up with the demand.

The estimated operational expenditure for PPECB for the 2014/15 financial year is R248.2 million . As PPECB is a service organisation, employee costs constitute 65% of their expenditure. The PPECB also does not get a Parliamentary Grant but generates revenue mainly from fees and levies for statutory services for the perishable products industry.

5.4 The National Agricultural Marketing Council ( NAMC )

The National Agricultural Marketing Council (NAMC) was established in terms of the Marketing of Agricultural Products Act, 1996 (Act No. 47 of 1996) to provide strategic advice to the Minister of Agriculture, Forestry and Fisheries on all agricultural marketing issues, improve market efficiency and market access by all participants, optimise export earnings, and improve the viability of the agricultural sector.

The NAMC’s strategic goals over the medium term are to:

§ ensure increased market access for all markets participants.

§ promote efficiency in the marketing of agricultural products.

§ optimise export earnings from agricultural products.

§ enhance the viability of the agricultural sector.

The Acting Chairperson of the Board of NAMC, Mr Andre Young gave an overview of the strategic objectives of NAMC for the current financial year. He also reported that the Board has 3 vacancies and 60% of the Board membership is about to expire. The Acting Chairperson of the Board also highlighted the need to review the Marketing of Agricultural Products Act to ensure that the NAMC has legal powers regarding the operations of Agricultural Trusts. The CEO, Mr Tshililo Ramabulana presented the strategic plan of NAMC and highlighted the programmes that the NAMC is implementing with funding from various sources including R372 million that was collected from statutory levies from all agricultural products in 2012. He further mentioned that the NAMC has been requesting additional funding from National Treasury for specific projects but due to other national priorities, such funding could not be allocated. One of the NAMC’s flagship projects is the National Red Meat Development Project, which received funding of approximately R340 million over a five-year period from 203/14 to 2017/18 from the Department of Rural Development and Land Reform. The NAMC also received R15 million from DAFF to coordinate and manage SIP 11.

The NAMC received a Parliamentary Grant of R36 million from DAFF for the 2014/15 financial year.

5.5 Ncera Farms (Pty) Ltd

Ncera Farms (Pty) Ltd (Ncera) is listed in the PFMA as a Schedule 3B public company. It is wholly owned by the Department of Agriculture, Forestry and Fisheries (DAFF). Its mandate is to provide extension, mechanical services and training and agricultural support services to land reform beneficiaries and communities that are surrounding Ncera.

The entity’s strategic goals over the medium term are to:

• Develop and implement effective and efficient Ncera management and governance systems and procedures.
• Develop franchise type agricultural business models in support of entrepreneurs in the sector.
• Produce and sell good quality vegetables and livestock to the market locally.
• Ensure organisational growth and sustainability.

The DG of DAFF reported that the Fourth Parliament has recommended that Ncera be closed down and there has been no final decision that has been taken yet regarding the future of the entity. She reported that the Department had submitted proposals to the previous Minister around April 2014 and the current Minister has to take the matter forward. It was further reported that until a political decision is taken, the Department is legally required to continue allocating a budget to the entity.

The CEO of Ncera, Mr Mziwamadoda Titimani, was allowed to present the Annual Plan of Ncera Farms (Pty) Ltd. In his presentation, he mentioned that the aim of Ncera Farms is to contribute towards an industry focused farm management training, farmer support services and the design of franchise type agricultural business models for farmers in general and beneficiaries of land and agrarian reform particularly within the immediate catchment area of Ncera. However, the entity is unable to fulfill its objectives due to financial constraints and other challenges including the organisation’s governance structure. The CEO also provided possible recommendations to address the challenges.

The 2014/15 financial year budget allocation for Ncera from DAFF is R3.6 million and the CEO reported a R1.8 million shortfall which is encountered every financial year.

6. Overview of Committee Observations and Conclusions on the APPs and

Budgets of DAFF Entities

Having examined and made observations on the APPs and budgets of the entities, the Committee raised the following concerns:

6.1 Agricultural Research Council (ARC)

• Insufficiency of funds that are allocated to the ARC to enable it to achieve its objectives for the benefit of the country. Among these are research activities to prevent and address challenges associated with the diseases such as citrus black spot (CBS) and foot-and-mouth disease (FMD).
• Misalignment of the ARC’s activities with provincial plans.

6.2 Onderstepoort Biological Products (OBP)

• Lack of a budget allocation to the OBP to enable it to achieve its objectives for the benefit of the country and the region, given the prevalence of animal disease outbreaks and notwithstanding that the OBP is a National Key Point.
• Invisibility of the OBP in provinces.

6.3 Perishable Products Export Control Board (PPECB)

§ Direct impact of CBS on export revenue and indirectly on employment.

6.4 National Agricultural Marketing Council (NAMC)

• Lack of coordination of research into markets in provinces and the African Continent.

6.5 Ncera Farms (Pty) Ltd (Ncera)

• Poor performance of the entity, which is not assisting the surrounding communities as per its mandate; and the protracted process by DAFF in closing or re-establishing the entity.

7. Committee Recommendations

After discussions and deliberations on the Department and the Entities’ Strategic Plans, APPs and Budgets, the Committee makes the following recommendations to the Ministry and the Department of Agriculture, Forestry and Fisheries:

• Ensure the development of a strong business case that will be presented to the National Treasury for additional funding for DAFF that will also include a plan that shows how the Department will work in a coordinated and collaborative manner with its entities by the end of September 2014.

• The Department of Agriculture, Forestry and Fisheries (DAFF) should provide an action plan to the Committee on the implementation of the Integrated Growth and Development Plan (IGDP) and Agricultural Policy Action Plan (APAP) before the end of the second quarter of 2014/15 (October 2014).

• The development of a long-term integrated Sector Plan that will encompass agriculture, forestry and fisheries should be prioritised to ensure coordinated development, growth and transformation of the sector within 12 months of the date of adoption of this report by the National Assembly.

• Enforce intergovernmental relations (IGR) to avoid duplication of activities from limited financial resources and to ensure optimal resource use for efficient service delivery and maximum impact. For example, DAFF should be involved in collaborative activities with its entities and other Departments such as Rural Development and Land Reform, Trade and Industry, Environmental Affairs, Water and Sanitation, Public Works and others.

• Fast-track the full scale implementation of the Small-scale Fisheries Policy before the end of the next financial year (2015/16) to ensure participation in fishing activities, by poor coastal communities, some of whom have no alternative livelihood options besides fishing.

§ DAFF and the National Agricultural Marketing Council (NAMC) should provide a Mechanisation Policy and an implementation plan for Fetsa Tlala Initiative and the Agroprocessing Strategy during the second quarter of the 2014/15 financial year.

• The NAMC must submit a detailed report of projects that are funded through the Strategic Infrastructure Project 11 (SIP 11) that is aimed at improving investment in infrastructure to support agricultural, forestry and fisheries production (including aquaculture). The NAMC should also provide a full briefing to the Committee on its role in SIP 11 during the second quarter of the 2014/15 financial year.

• DAFF should strengthen capacity in the Department’s Monitoring and Evaluation (M & E) Division and present an M & E Plan to the Committee in this regard by the last quarter of the 2014/15 financial year.

• DAFF should fast-track the finalisation of the changes to the Marine Living Resources Amendment Bill and the Policy on Inland Fisheries before the end of 2015.

• DAFF should provide the Committee with a report on research that has been conducted on new fisheries within 30 days after the adoption of the Report by the National Assembly.

• DAFF should fast-track the deregistration of Ncera Farms (Pty) Ltd as the Committee also supports the decision of the Fourth Parliament’s Portfolio Committee on Agriculture, Forestry and Fisheries regarding the entity.

• DAFF should provide the Committee with an action plan including financial implications for the implementation of the Forestry and the AgriBEE Charters; and prioritise the tabling of the National Forests Amendment Bill before the end of 2014.

• DAFF should intensify the development of the extension service particularly visibility in communities and the quality of service that is provided; and should brief the Committee on the National Policy on Extension and Advisory Services by October 2014.

• DAFF should develop by the end of the 2014/15 financial year, a disease priority matrix to strengthen the control and management of animal and plant diseases; and consolidate research and development funding in this regard.

Report to be considered.