National Agricultural Marketing Council Report 2004; Khula Land Reform Empowerment Facility: briefings

Meeting report

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
12 November 2004
NATIONAL AGRICULTURAL MARKETING COUNCIL REPORT 2004; LAND REFORM EMPOWERMENT FACILITY: BRIEFINGS

Chairperson Mr H Masithela (ANC)

Documents handed out
National Agricultural Marketing Council Annual Report 2004
National Agricultural Marketing Council Annual Report 2004 PowerPoint presentation
Khula Enterprise Finance Annual Report 2004 (available shortly at : www.khula.org.za)
PowerPoint presentation on Khula’s Land Reform Empowerment Facility

SUMMARY
The Committee heard about the National Agricultural Marketing Council Annual Report. The NAMC had been training emerging farmers to better market their produce and been advising the Minister on matters relating to national food production and marketing. They had encountered problems in the dissolution of the old sector marketing boards, such as outstanding levies of the Meat Board and intellectual property rights issues in the case of the Wool Board. Members concerns included not getting the reports at the same time as the Minister, as prescribed by the law. The Auditor-General had delivered a qualified audit report.

MINUTES

National Agricultural Marketing Council briefing
Mr M Rathogwa, Chairperson of Board of NAMC, reported about the role of the Council in marketing. The relevance of the Council in the regulated environment would be to stimulate growth in the first economy and increase its possibility to create jobs. The Council had been expected to advise the Minister on all marketing issues in the food industry. They were introducing emerging farmers to marketing products and identifying potential markets, and connecting them with ‘organised agriculture’.

Workshops with emerging farmers had been held countrywide, except for the Northern Cape. Former Control Boards had been dissolved except for the Meat, Maize and the Wool Boards. The reason for not terminating the Meat Board was the court case that dealt with outstanding medical scheme benefits. Outstanding issues with the Maize Board included the transfer of trademarks from the Maize Board to the Maize Trust, and the court case relating to the collection of outstanding levies. The Wool Board had reached a settlement with its Australian counterpart regarding its share of the intellectual value of the "Wool Mark" .The Board had then decided to write off all outstanding debts.

The Council had appointed an Audit Committee that would convene twice during the financial year as stipulated by the Public Finance Management Act. Internal auditing measures had been Implemented during the 2003/4 financial year. The Food Price Monitoring Committee had been working with six monitoring points in each province. The provincial monitors were working with the provincial Agriculture Departments and their primary duties were to forward food price data to the Council. Other projects included studying the impact of deregulation of the ostrich Industry, and marketing arrangements for emerging farmers. One challenge was to re-organise the Council to deal more with marketing, instead of playing an advisory role to the Ministry.

Discussion
The Chairperson said the challenge of changing the Council from an advisory body to an implementation body would require a policy shift. He asked if the report had complied with the Public Finances Management Act. Furthermore, he commented that the presenter had not mentioned the qualified financial report.

Mr Rathoga replied that the Council had not complied with the PFMA and apologised for not explaining the status of the report.

The Chairperson asked the why the Council had not simultaneously submitted the report to the Minister and to the Committee.

Mr Rathoga admitted that they had not submitted the report, as the law required. According to the law, the Council was expected to submit the report to the Committee to study it beforehand.

Mr Nel (DA) asked the value of the agreement between the Wool Board and its Australian counterpart, and what outstanding matters still needed to be solved. What were the problems with levies in the wool and the red meat industries?

Mr Mvabaza replied that the Wool Board had reached a settlement with their Australian counterpart. The South African accountants would not disclose details of the settlement until the audit was finished and they had submitted their report the Minister. The outstanding wool industry levies were irrecoverable and the Council had recommended to the Minister that they be written off. After complaints from the Cape Wool Board, the Council had however advised the Minister to suspend the debt write-off.

Mr Ngema (ANC) asked about the sufficiency of the Council budget to fulfil the mandate. Mr Rathoga replied that their budget had been sufficient. The Department had been looking into the need to improve the information infrastructure.

Mr Mvabaza replied that some red meat farmers were totally opposed to the levy system. The Council had recommended the implementation of the levy system under certain conditions. The conditions were still not conducive because of mounting opposition.

Dr Schoeman (ANC) commended the work of the Food Monitoring Price Committee and recommended that this committee look into the prices of inputs in agriculture. He made an example of the prohibitive price of fertiliser. What were the problems with the Potato Trust and with poultry farmers? How accurate had Crop Estimate Committee figures been, when compared to the actual crop harvest? Why had the workshops scheduled for the Northern Cape not been held?

Mr Rathoga replied that the Food Monitoring Committee had been investigating the impact of inputs such as fertiliser. The confidential forensic report on the potato industry had been submitted to the Ministry The Northern Cape provincial department had been required to identify priority areas for the workshops, but had had capacity problems.

Mr Mvabaza answered that the Council had issued a questionnaire, and had established a separate chamber for emerging poultry farmers. When the Council had asked for the reasons for establishing such a separate chamber, Poultry SA had replied that they wished the emerging sector to drive the process

Mr Mvabaza added that the Crop Estimate Committee was independent from the Council, and was part of the Department of Agriculture and Land Affairs. The role of the Council had been to advise the Crop Estimate Committee.

Mr B Radebe (ANC) enquired why the World Food Programme (WFP) had not procured maize from South African farmers while they had contributed significantly. What was the role of the Council in advising negotiators in the World Trade Organisation (WTO)? He also asked for more details on the Black Economic Empowerment component of the Council’s procurement strategy?

Mr Rathoga replied that they were not advising the negotiators or the Minister on the WTO. The Council had no say in where the World Food Programme procured their maize. The Council had procured many services from historically disadvantaged community firms, and the list of those companies would be made available to the Committee.

Mr T Ramphela (ANC) enquired about opportunities for emerging dry crop farmers. What efforts had been undertaken to help land reform beneficiaries? What had the Council done to accommodate people with disabilities?

Mr Rathoga replied that the Council had not focussed on land reform beneficiaries, but had focused on emerging farmers. The Council had not employed people with disabilities, but was looking into the issue.

Khula Enterprises Land Reform Empowerment Facility briefing
The Khula Enterprises Finance Ltd Land Reform Empowerment Facility was a section of the Department of Trade and Industry that facilitated financing for land reform beneficiaries. The facility had received applications from such beneficiaries, those applications then had to be approved by financial intermediaries such as commercial banks and the Industrial Development Corporation. The Western Cape had benefited most from the Facility because there had been most applications from that province. The Facility would be embarking on a marketing campaign targeting the Northern Cape and other provinces. Their projects consisted of mortgage and equity share schemes.

Mr G Mothoa, Business Manager, reported that the Facility was financed by the Department of Land Affairs, the European Union, and the Department of Environmental Affairs and Tourism. They helped enable farm workers to participate in the ownership, management and control of land-based enterprises. Performance indicators were skills development, the development of black agricultural entrepreneurs, and job creation.

The Facility had approved a number of projects in eight provinces, but not the Northern Cape. In terms of provincial spread, 47.8% of the projects were situated in the Western Cape. The Facility had been targeting the Northern Cape because no applications had been forthcoming from that province. Facility challenges included inadequate funding, inequitable provincial spread, the portfolio mix, broadening the lending base, skills development and capacity building.

Discussion
Mr D Dlali asked why there was a bias towards the Western Cape. What rural areas did the Facility concentrate on? Was the emphasis on equity share schemes or mortgages? He asked Mr Mothoba to provide a list of companies that had secured procurement tenders.

The Chairperson wanted to know the difference between mortgage and the equity scheme.

Mr Mothoba replied that they worked with both equities and mortgages. The Black Economic Empowerment (BEE) Charter recommended equity so that former land owners farmers could have a stake in the business and stay on to transfer essential skills. Mortgages were equally important for the transfer of land to the previously disadvantaged.

Mr Mothoba replied that the Western Cape had submitted more applications, but the marketing had since focussed on the Northern Cape, Gauteng and the Free State provinces.

Mr Ramphela enquired about the sustainability of the approved projects and how were they monitored.

Mr Mothoa replied that there were two aspects of monitoring progress and sustainability. Khula Enterprises had been required to advise the recipients on their rights and obligations. The finance intermediaries had assessed economic viability before granting loans. A all but one recipient had been paying back the loans - Spier Estates had been the only defaulter.

The Chairperson encouraged the Facility to utilise the Committee to inform provinces about their services. He also encouraged the use of the mass media to publicise its work.

The meeting was adjourned.