Fertilizers and Feeds Bill [B41-2012]: public hearing

Meeting report

Red Meat Industry Forum (RMIF) submission
Mr Dave Ford, RMIF Chairperson, told the Committee that the Forum noted that communications with the Department of Agriculture, Forestry and Fisheries (DAFF) went unanswered. The commercial feed industry was a concentrated sector dominated by a number of large competitors many of whom were vertically integrated with poultry industry. All countervailing power would be eliminated if the Bill comes into effect and self-mixers were forced to buy from commercial feed companies.

The Fertilizers and Feeds Bill [B41-2012] was likely to increase concentration at farming level of the market and enhance the market power of already powerful commercial feed producers. According to the Competition Commission “Market power and concentration in food production was obviously of great importance as it affects the pricing of food to consumers and impacts on the producers at different levels of the various value chains, including farmers.” The Competition Commission had also expressed concern about historical oligopolies and virtual monopolies. There were concerns also that primary producers bore the full brunt of anti-competitive behaviour as they were squeezed from the input side and prices on products. There was a need for government to increase competition in the food value chain and if the Bill was passed it would be contrary to Parliament’s objective in the Competition Act.  Mr Ford said that the current lobbying effort by commercial feed sector to have self-mixing industries included in this Bill was a good example of this anti-competitive practice.

It was noted that DAFF faced severe limitations as demonstrated by the lack of enforcement of the ban on the use of ruminant by-products and also the failure to meet timely registration of animal feeds. The proposed Bill was under the guise of safe feed for safe food. At the moment the industry was not aware of a single negative case of feed contributing to ill health. It was highlighted that feed from a registered facility would not guarantee actual safety; it depended totally on farm management. The Constitution provided for participatory democracy and in the view of the organisation this had not been met and the Bill should be considered unconstitutional.

The Forum recommended that feeds and fertilizers be separated in their own Bills. Wide consultations also needed to be held in all the provinces for all affected parties to voice their opinions. It was also recommended that DAFF should consult with the Competition Commission on these potentially anti-competitive practices. The Forum noted that taxpayers funded the activities and services of DAFF and therefore there should not be a tonnage fee but a registration fee for ingredient suppliers and commercial mills renewed annually.

Discussion
The Chairperson gave a brief background on the Bill and told Members to ask questions relating only to the Bill and other questions on registration and licensing could be referred to the Department. The questioning must relate to the presentations only.

The Chairperson thanked the Forum for a precise and straight to the point presentation.

Mr S Abram (ANC) thanked the Industry Forum. He pointed out that it was necessary to have a code of good conduct in the Industry. The component ingredients which the farmers used were products made at milling plants and this could be equated to a hotel purchasing various ingredients and then selling them to consumers. He also asked whether the Forum made follow-ups to the consultations with the Department. He also inquired if the figure of 1.1 million (in the census) for farmers included small-scale farmers. Cost implications and unintended consequences of the Bill and the feasibility of the Department getting funds was also an issue of concern.

Ms A Steyn (DA) asked about the current situation with farm feeds and how many tonnes of farm feed where produced in South Africa. He also raised the question of compliance. He also asked about the role of the question of the Competition Commission.

Mr L Gaehler (UDM) asked a question on subsistence farmers not registered and whether the Bill affected the manner in which they fed their cattle. How could this affect them and how were the monitoring practices handled, including the cost implications. He also asked about the causes of tuberculosis. He also queried the issue of self-mixing and wanted to know the negative health implications. Was the stock feed organic?

Mr B Bhanga (Cope) raised the issue of capacity and the reason why this Bill had been introduced.

Ms M Mabuza (ANC) was concerned about the plump stomachs and obesity in society and asked if this was not caused by wrong feed being given to chicken. Why big stomachs? She quipped that it was rather better to eat donkey meat than chemically enhanced feeds. 

Ms N Twala (ANC) wanted more clarity on the RMIF’s opening statements.

Mr C Msimang (IFP) asked about alternatives to the Bill and whether the 1947 Act could be amended to meet present day requirements.

Ms M Pilusa-Mosoane (ANC) wanted to know more about the consultations. She said that even when Members sat as a Committee, Members even noted that consultations where not done. If the proposed Act came into effect, rural small-scale farmers would not be able to continue farming. The Bill must go for review in rural areas.

Mr Ford replied that farmers must be audited, registered and monitored to see if they were in compliance with the Bill. It was also held that no two self –mixing facilities worked the same. He referred the tuberculosis question to the veterinarians from DAFF. The issue of diseases should get immediate attention from DAFF. He had no idea on the cost to administer the Bill. He also reserved comment on the issue of chicken. The issue of consultation remained the biggest problem. The Forum had no idea about the number of tonnage on the registration of feeds. There were attempts to consult with the Department but it was clear the DAFF had made its mind up.

Mr Bhanga had a further question on whether the self-mixing industry supported the registering of facilities that processed, mixed, value-added and distributed feeds ingredients, compounded feed and pre-mixes offered for sale to a third party.

Mr Abram alluded to the fact that meat was being imported into South Africa and there was uncertainty if there was monitoring of what that livestock was eating. He noted that children were being feed with junk food and their bodies lost shape as a result. The Department was failing in its duty. It was important that the government listened to the people, and the process of participatory democracy was crucial, as the concerns of the people could not be ignored. In his view DAFF was totally dysfunctional.

Ms Twala asked about the need to register self-mixers. If they had no standard formula on how to go about this, how did the Forum suggest this be addressed?

Ms Mabuza told the Committee that in the disposal of chicken waste mixed with pork fat and then given to cattle, the taste of beef at times was hard to distinguish from pork.

Mr Ford said that he did not have the figures of the number of subsistence farmers in the country but he knew that 50% of the farmers in Limpopo were taxi drivers. He stated that he DAFF was not very helpful in the consultation process. The Forum did not comment on the issue of chicken waste being mixed with pork fat and referred that question to the Animal Feed Manufacturing Association of South Africa. Self-mixing industries would continue to pursue the application of good management practices.

The Chairperson said that advice would be sought from the State Law Advisor on the question of the constitutionality of the Bill.

Mr R Cebekhulu (IFP) was saddened by the comments that 50% of cattle owners in Limpopo were taxi drivers as this comment was highly discriminatory and unwelcome.

The Chairperson said that the Department would speak in its presentation on the licensing and registration phases.

Fertilizer Society of South Africa (FSSA) submission
Mr Adam Mostert, FSSA CEO, an agronomist by profession, said that his organisation was a non-profit company representing fertilizer producers, fertilizer distributors, agricultural lime producer, agricultural lime and gypsum distributors, micro-element producers and distributors, coating and additive producers and speciality fertilizers. 90% of the fertilizer sales were made in South Africa and Zimbabwe.

The fertilizer market produced over 2 million tonnes per annum and almost 50% of fertilizers were imported into South Africa. Primary producers and import traders supplied a large number of blending facilities and distributors. The organisation continuously took into account the requirements of the Competition Act. The organisation applied the highest ethics of business practice in dealing with customers, suppliers and competitors (Consumer Protection Act).  Members of the organisation had obtained legal opinions on the Bill. The organisation acknowledged the need for regulation of the fertilizer industry as far as product quality was concerned. The organisation also noted the important role that fertilizer played in food production.

FSSA rejected the Bill in its current form and requested a separate Bill for Feeds and Fertilizers. A transparent consultation process was needed to redesign the Fertilizer Bill. The organisation had expectations of a level playing field for small and large fertilizer suppliers. The organisation felt that the Bill does not meet its objective of ensuring safe food production and food security. The registration of production facilities instead of final product was unacceptable. It was highlighted that the Bill must clearly state how it would support food production, food safety and food security. The Bill needed to be also clear on what the fertilizer industry and other stakeholders must do to support the above. The Technical Standards Advisory Council must have its powers limited and the FSSA should be represented on the Council. The FSSA also felt that it needed to be consulted in the appointment of advisors.

The FSSA also pointed out that the Bill had to make provision for specific time frames and be clear on what had to be registered. There was potential for some of the imported products to be of poor quality and contain harmful elements in imported products. It was important that strict control had to be done at ports. FSSA also objected to tonnage-based licensing, as control over declared tonnage would be difficult to enforce and administer. The organisation made it clear that the DAFF had no mandate to regulate factories as other government departments do audits on occupation, safety, health and the environment in terms of applicable acts. FSSA told the Committee that most members had voluntarily implemented quality management systems such as International Standards Organisation (ISO) 7000, 14000 and 18000 by the factories. The organisation supported self–regulation as opposed to DAFF regulations.

FSSA told the Committee that it was not practical to provide an invoice for each load of product. According to FSSA the despatch department did not issue invoices to prevent fraud and achieve segregation of duties. The FSSA also objected to approval of all advertisements by Registrar. It, however, agreed that the Registrar might have the power to call for withdrawal of advertisements under certain conditions, for example unregistered product or misleading claims. In conclusion the FSSA objected to Bill and requested a separate Fertilizer Bill, which would come with a transparent consultation process.

Pet Food Industry Association of Southern Africa (PFI) Presentation
Mr Barry Hundley, PFI Executive Director, was supportive of the proposed Bill, in particular the move towards Registration and licensing of manufacturing plant/factories. The proposed move would ensure minimum nutritional standards and that all local Pet Food Manufacturers adhered to Good Manufacturing Practices. These minimum standards should be reviewed in line with international standards. The Bill would alleviate some of the current backlog of product registrations with the current laws administrative regime. It was noted that due to the nature of Fast Moving Consumer Goods Industry, there was a specific window of opportunity within a year that new products could be brought to the retail market; this period was usually between March and October, failing which, the retail trade would postpone product launch until the following March.

It was acknowledged that the requirement for approval of all advertising which includes, packaging of pet food products, point of sale materials, brochures, pamphlets, billboards, TV and radio and print advertising was affecting the industry negatively. The DAFF also did not have staff with advertising and marketing experience and knowledge to make sound decisions on advertising. Multi-national members of this industry found it incongruous that they were able to develop and launch chocolates, breakfast cereals, ice creams through to baby food without requiring registration before launching into the market, and in particular not requiring any label review. The Department of Health did not regulate advertising within the food and cosmetics legislation but depended on the Advertising Standards Authority of South Africa. 

In conclusion the organisation supported the Bill but would urge the Portfolio Committee to seriously reconsider the removal of advertising, packaging design and point sale material from this proposed Bill and align with international advertising norms. The pet food industry would then be self-regulated through the Advertising Standards Authority of South Africa.

Animal Feed Manufacturing Association (AFMA) Presentation
Mr De Wet Boshoff, AFMA Executive Director, told the Committee that there needed to be a differentiation between licensing, which dealt with facilities, and registration, which regulated the components of animal feed. Feed safety was very important, as the consumer was the end user. The amount of animal feed in total was 11 million tonnes and the gross turnover was around R50 billion. The draft Bill came at the same time equivalent legislation in the USA and Australia. Animal feed was not always seen as being in the food value chain but this concept had evolved over the past four decades.

The organisation supported the safe feed for safe food motto and fully supported the principle of the Bill; in particular the organisation supported consumer protection and the sustainability of the environment among other objectives. AFMA was a member of international animal feed affiliates such as the International Feed Industry Federation (IFIF). The IFIF represented the global feed industry as an essential participant in the food chain that provided sustainable safe feeds. The organisation was also affiliated to the Food and Agricultural Organisation and also the World Health Organisation.

The fourth Global Feed and Food Congress (GFFC) would be held in Sun City from 08 to 02 April. AFMA would host this Congress. The organisation had a self-regulation mechanism through a code of conduct. The code of conduct comprised ten requirements, which included food safety and legal issues. The organisation felt that there must be criteria for licensing and this opaque area would cause confusion. All components used in the manufacturing should be registered. The composition of the Technical Advisory Committee needed to be reviewed and the Registrar could not be the chair of the Technical Advisory Committee. The focus must be on the technical aspect of animal feed. Legally the Minister might not override the Registrar’s decisions. The Appeal Board was a duplication of the process. The definition Clause of the Bill needed to be reviewed. The issue of public participation should be examined.

Discussion
Mr Abram got a sense that the fertilizer aspect of the Bill related to the fertilizer’s feeding the soil. There was no co-relation between fertilizers and animal feeds. He asked the Fertilizer Association if it found major gaps in the current legislation. Would two separate pieces of legislation not burden the fiscus financially? The major concern for South Africa was the huge population of poor people; his question was how the sector catered for the communities that could not afford natural food.

Mr Cebekhulu asked if manure could be defined as fertilizer and also bi-products from sugar cane. Did the feeds affect the quality of farm chickens? He wanted to know if the organisation did anything to protect consumers from some harmful feeds.

Ms Steyn wanted clarity from Mr Boshoff on the percentages of mixtures. She also wanted to know if the Department took account some of the considerations put forward by the associations.

Ms Phaliso wanted to know the logic for the importation of fertilizers and needed clarity if the members were registered. The issue of transparency was also raised and who was not consulted. She also asked about the Congress in Sun City; who would attend? The inputs of AFMA were welcome.

Ms Pilusa-Mosoane asked the Fertilizer Association about the growth of chicken and hard body meat.

Ms Twala asked about the kind of protection offered to consumers. The self-regulation exercise of AFMA was also raised.

Mr Gaehler asked about the self-mixing but he felt the organisations had answered well. The matter of consultation was important. Was this raised with DAFF? Clarity was needed on concerns with regard to the Advisory Council. He also questioned the type of consultation envisaged by the FSSA.
The Chairperson said local industries needed protection and so the DAFF needed to speak on tariffs produced. Clarity was needed on the context of advertising.

Mr Mostert felt that there were gaps on the fertilizer side because the two things could not be in the same Act. If a single Act was to be introduced a particular section must apply to each. One Registrar could do the administration and it would be costly to administer. The Regulations of the current Act recognised a wide variety of fertilizers, including manure and sewerage. Agricultural limestone also fitted. Anything that added value to the soil could be held to be manure. If a product were sold, it would then have to be registered, unless one could prove that it was a natural mix. The question of allergies was difficult to answer but the scientific experiments were tested over and over.

The current CEO was not part of the original process of the consultations. The people looking at the Bill now were not same people who looked into the Bill two years ago. The reason for the imports was various economic factors and also persistent droughts. The production capacity locally had gone down and certain chemical products were not available in South Africa. There was opportunity for more production of fertilizer in South Africa and demand was high in Africa. All members were well established and were in good standing. The organisation’s membership was going to increase over the years. Self-regulation should not be part of the Act and industry could work out ways to do it. The Industry must decide on the rules with the aid of external examiners. He pointed out that genetically modified foods were very popular in the western world. Product labelling was important and the labelling must be specific and very descriptive. It was important that the Bill stood the test of time. The Advisory Council was not entirely necessary. The industry must be represented on any Council designated to deal with fertilizers. The Advertising Standards Authority must be in charge of advertising and not DAFF.

Mr Boshoff said that AFMA members fed according to the laws. 70% of the total revenue was from mixing. He noted that the Bill started as a feed bill before it incorporated fertilizers. The Congress would take place in April and was open to everyone. It was a tri-annual conference. The comments were welcome. The free-range chicken was bred for a specific reason. The older the chicken got, the tougher they got. A third party accredited internationally did the food safety code of conduct. All the checks and balances must be in place. Two separate Bills would mean two Advisory councils. The comments had been different because the Bill had changed over the years.

Department of Agriculture Forestry and Fisheries input
Dr Michael Modisane, DAFF Deputy Director General: Agricultural Production, Health and Food Safety, briefed the Committee on DAFF’s responses. He promised to follow up with a written presentation.

The process of consultation was very important and some provisions needed in-depth consultations. He indicated to Members that a necessity to review the Bill started in 2004 after suggestions that the current Act be split. It was important to come up with a Bill to look at specific areas taking into consideration the capacity of the Department. The cost of implementing the Bill would be around R4 million.

The DAFF in October 2010 had a meeting with various stakeholders including the ones currently present. He pointed out that at that meeting RMIF had raised concerns on mixers and the issue of competition. Representatives from the Competition Commission were called upon to answer some of the concerns raised by associations. It was resolved that shareholders of the stock feed companies be excluded from the Technical Advisory Council. The updated Bill was forwarded to the Competition Commission. It was acknowledged that the FSSA came a little later, but stakeholders in the industry were consulted. FSSA ha even written a letter accepting the Bill.

The current Act did not meet some of the developments in the global world. An example of the E. coli bacteria was given. The current Act could not control areas of risk that could cause harm to consumers. The Bill was introduced amid the debate going on around labelling. The nation did not have to wait for a crisis to draw up legislation. It was critical to look at the Bill itself and consider what must be legislated.

Hygiene at farms was very important so as to avoid diseases such as mad cow disease. The Bill did not intend to increase food prices or hinder investment in the Industry. DAFF would look at regulating the product rather than regulating the producer. The facility needed to be properly regulated to avoid contamination. The Bill would not be in conflict with other Acts; that was why reference was made to compliance with other legislation. The Bill did not intend to intervene in competition. He highlighted that there could still be people who were feeding chicken litter to cattle. The feeding of chicken litter was illegal. The contamination of facilities was a huge problem. DAFF admitted that it would not be easy to monitor the implementation of the proposed legislation.

Border controls were very important and when countries exporting to South Africa breached the agreements, the DAFF was forced to rescind the contract.  An example was given of circumstances when cocaine was smuggled through. The DDG outlined the process involved in terms of the consultations and alluded to the fact that it was possible to exclude certain sectors from the process. The Department would not ban the consumption of bovine heads and intestines. There was no basis for this ban. South Africa had not had any serious disease outbreak to stop the consumption of bovine heads. The Committee would be informed if it were necessary to enforce restriction. Contagious abortion continued to be a problem but the Minister had approved schemes to fight these bacterial diseases. The current Act had assisted in this fight. Tests were conducted to see if slaughtered animals had tuberculosis; the carcass was destroyed with the farmers receiving a fair market value of the carcass.

The Department continuously developed capacity and was engaging external consultants on ways to improve it. The Department was trying to monitor what livestock was being fed.

Discussion
Mr Abram said the DAFF had given a mouthful of a presentation. He said that there was inaptitude in the Department. The high staff turnover amongst the senior management was an issue worth noting. The Department’s rake on consultation needed to be analysed. He did not see a sense of inclusivity in the process. The various associations had a right to have reservations on the Bill, because the DAFF had not held consultations in the past three years.  Financial implications of the Bill were important. The outsourcing of certain DAFF functions raised eyebrows. The amount of outsourcing was not given. Legislation making had to be in line with the requirements of a particular sector that had to be governed by the particular law.

The Chairperson said that adequate consultation was envisaged in the Constitution but this function should not be left to the Department alone. This was a Section 76 Bill.

Mr Abram noted that the DAFF had failed to do its homework and it was his duty to illustrate these gaps. The Committee had to decide how it would do the consultation. It was blatantly unacceptable that the Bill would cost just R4 million. He wanted to know how the DAFF arrived at such a figure; the Bill would be a burden to the taxpayer.

The objective of the Bill was crucial but the lack of adequate staff in the Department was a major hurdle to the progression of the Bill when it came into law. The Department must state if it was having financial problems. South Africa was a traditional society and most people slaughtered in public. Had these requirements been taken into consideration? Were livestock at auction houses safe for human consumption? There was a lot of thumb sucking in the Department in the way that it conducted its activities.

Ms Steyn applauded Mr Abram’s plea. She asked the need for the Bill. Was there was a crisis in the country and why must it be pushed hurriedly. The problem was not the lack of legislation but it was the lacunae in the implementation of laws. There was a backlog in the registrar’s office. The process was not transparent.

Mr Cebkhulu said that the Department must not emulate western standards of growth hormones. Did South Africa use growth hormones?

Mr Gaehler asked the Department to answer on the questions raised by AgriSA.  It was important to consult with stakeholders including provinces. The last consultation was a long time ago. The issue of carcasses with tuberculosis was worrying. The issue of skills in the Department was an on-going crisis and needed to be resolved. All stakeholders must be consulted.

Ms Pilusa-Mosoane pointed out that there were no crises in the DAFF but the consultation process needed to be re-looked at. The Department must go back and consult. She urged the committee to give the DAFF time to consult.

Ms Twala asked on the concerns of FSSA and the Agricultural Research Council on the registration time-line. The split of the two Bills necessitated clarity from DAFF. All stakeholders, even those on a small scale, needed to be consulted.

The Chairperson summarised the Members’ questions, comments and requests for clarity. The constitutionality of the Bill was raised.

Mr Modisane said that the cost of the Bill had gone up because of the time framework and the arising of other costs. The Bill had been on the table for long time, hence it was not a question of pressure, but government resources had been strained and finality was crucial. The other issues would be responded to in writing. The DAFF did not copy what was being done in other countries but rather looked at the practicalities of breeding chicken locally. Use of banned growth stimulants in the country was unlawful. There was a gap in terms of South African law on this. Scientific basis did not exist to show that some stimulants caused harm. The issue of skills was being worked on.

DAFF advised the issue that had been raised by the Agricultural Research Council related to tests that had been conducted and had been taken into consideration.

The Chairperson said that this was an important discussion, which must continue with input from the State Law Advisor.

The meeting was adjourned.