Department, Ncera Farms (Pty) Ltd, Marine Living Resources Fund, National Agricultural Marketing Council & Perishable Export Control Board on their 2013/14 Annual Reports

Meeting report

Overview of Annual Report for DAFF
Ms Nontobeko Qwabe, Researcher: Parliament, briefed the Committee on the overview of the annual report of DAFF for the 2013/14 financial year. The department had a total of 37 targets and achieved on 25 of these. Various reasons were given for over performance or non-performance and these include the involvement of other departments, provinces utilizing their equitable share, appropriate supporting documents as well as poor planning. DAFF was appropriated a total amount of R6.18 billion in the 2013/14 FY which was almost R320 million more than the R5.86 billion that was appropriated in the 2012/2013 FY. The Department spent 98.8% of its appropriated budget in 2013/14.Over 77% of the Department’s budget was spent between three programmes namely, Programme 2,Agricultural production, Health and Food safety(32.74%) and Programme 3,Food Security and Agrarian Reform(26.01%) and Programme 5,Forestry and Natural Resources Management(18.7%). An amount of R2.15 billion (34.75% of total appropriation) was transferred to provinces for conditional grants; and R1.37 billion (22.21 % of total appropriation) was allocated to public entities. Almost 70% of the transfer to public entities was to the ARC and almost 19% to MLRF. The Department also transferred an amount of R169.28 million to public corporations. The Department had managed to transfer 100% of the allocated funds to its entities. The Department’s revenue increased to R809 million in the reporting year compared to the 2012/13 financial year’s R198 million due to the R637.2million of unspent conditional grants and project received from provinces and Land Bank.

The Department spent 98.8% of its appropriation funds and had only achieved 67% of the planned targets in the five programmes considered in this analysis-

Programme1: Administration
11 targets were met out of 15 targets that were supposed to be achieved under this programme. The department had failed to achieve 100% adherence target.

Programme 2: Agricultural Production, Health and Food Safety
The programmed achieved 5 targets out of the 6 targets for 2013/14 FY;  the department had not met its target on conservation of 2 indigenous animal species. The department must indicate if there was economic benefit that could be derived and if there were any plans to promote species propagation in this regard.

Programme 3: Food Security and Agrarian Reform
The department achieved 3 out of the 4 targets set for 2013/14

Programme 4: Economic Developed, Trade and Marketing
The department fully achieved three of the seven targets that were planned for the 2013/14 FY.

Programme 5: Forestry and natural Resources Management
The Department had planned five targets for this programme only three were achieved.

Programme 6: Fisheries Management
This programme is anlaysed separately by MLRF.

The Department had no audit committee for the majority of the financial year under review. The Department indicated that its internal control was adequate and effective. The audit committee acknowledges that because there was no risk assessment performed for the Department, the internal audit plan was not risk based. The Department received an unqualified audit opinion from the AG with a correction on the financial statements of prior period error(2012/13 year end) on the impairment of accrued departmental revenue due to agriculture debt account to the tune of R58 million. It is highly imperative that the Department maintained realistic planning that could be implemented in line with the broader government outcomes. Issues for consideration include-  lack of internal controls and unreliability of reported performance information, lack of leadership as well as flaunting of treasury regulations and PFMA which had been raised by the AG in the past financial years and  still recurred. The capability of the Department to remedy issues raised in the report of the AG seemed uncertain.

Overview of the 2013/14 Annual Report for MLRF and the Fisheries Management Branch

Mr Joseph Ginindza, Researcher: Parliament briefed the Committee on the analysis of the 2013/14 MLRF annual report. There were some levels of inconsistencies in the way targets, indicators and outputs were structured between the 2013/14 strategic plan and the 2013/14 MLRF annual reports which impacted on the targets set. The reporting of some actual achievements was confusing particularly when reading both the Annual report of the Department and the annual report of the MLRF. Inspections at the airport and the borders were not taken seriously because it was not incorporated in the previous FY. On the success of rebuilding the collapsed fish stock, the Portfolio Committee may need be informed whether the stock were recoverable enough to accommodate the small scale fishers or how the stocks were performing so that when the small scale fishery policies were to be implemented it would balance with what the Department  and fishers said. Fishing right allocation process was successfully concluded which could be questionable because the review process was completed and if there were people who had appealed, that would be written off. Once it had been done, then it could be considered as concluded. . In the report of the Department and MLRF there were some inconsistencies, for example sea base inspection. In the report of the Department, its target was 600 while it achieved 679 (overachievement) whereas as in MLRF report it was reported as 497 – this could be a reflection of inconsistency.

The issue of confiscation of illegally harvested fishery resources could be an achievement, but is also a reflection that the law enforcement was not working because the ultimate goal was to stop people from fishing illegally instead of arresting them; the implementation of the fishery security strategy which encompasses the whole security from harvesting illegally. Aquaculture is doing exceptionally well with realistic planning. The Department may need to inform the Committee on the need to expand fisheries into new fisheries. The Department should report on In-land fisheries policy and steps taken to address it. Some figures like the financial expenditure from the department and MLRF were inconsistent. The Department had been struggling to use the money allocated to it hence its under expenditure keeps increasing. The fruitless and wasteful expenditure seemed to be uncontrollable due to some of the regulations considered. The Committee may enquire on wasteful expenditure.

Discussion
Mr B Joseph (EFF) commented that there was a difference in the actual targets set in the annual performance plans and strategic plans at the end of the term; he asked if there was need for the Department to provide evidence to enable the Committee report correctly on issues.

The Chairperson commented that treasury annually reviewed the framework sent to the Department including the report format. In some instances when the Department migrates into a format, they do not inform Parliament hence the communication gap. The interaction was becoming difficult between the Department and Parliament to monitor the actual performance on a quarterly basis. How can the Portfolio Committee make the Department understand that reliable information was critical in order for the Committee to be able to assist the Department in oversight? If there were changes in formats, the Department had the responsibility to brief the Portfolio Committee.

Ms Qwabe explained that for each target set out in the Annual Performance Plan of the Department, there would be extended explanation on the target, action plans, performance measurement of each target and evidence to backup target achievement. If there were changes to the strategic plan there should be a reviewed strategic plan tabled to inform the Portfolio Committee about the changes and the reasons for the changes would be stated. On a quarterly target it’s difficult to see changes on quarterly basis same with expenditure.

Mr Joseph requested clarity on how quarterly targets that were carried over into the next quarter were reported as the previous quarter delivery.

Ms Qwabe replied that the researchers only reviewed the information reported by the Department and that thirty days after a quarter had been concluded, the Department could make available the report of what it had achieved, the Department could also engage the Committee on how far it had gone with the Q3 and Q4. It was increasingly difficult for the Department to pick up momentum to reach the annual targets; by the Q4 targets not met in previous quarters should have been concluded.

DAFF on its 2014/15 First Quarter Performance and Expenditure Report
The Chairperson welcomed the Director General of the Department and her team to the meeting on the Annual reports of DAFF and its entities. The focus would be on DAFF, Ncera farms, NAMC, PPECB and NAMC. The meeting would be on the first quarter report and the achievements of the department and its entities. The Committee had met with the AGSA on the overview of the department’s performance and also met with DPME. Apologies were read from Ms T Gasebonwe-Tongwane(ANC),Mr P Mabe(ANC),Mr Z Mandela(ANC),Mr T  Ramkohoase (ANC) and Mr M Hlengwa(IFP).She asked after the Minister and the Deputy Minister.

Ms A Steyn (DA) expressed dissatisfaction over the absence of the Minister and the Deputy Minister as it was important that they were both present at annual report discussions in order to take responsibility for the Department.

Ms Edith Vries, Director General: DAFF explained that the World Food Day was being held same day at Limpopo - an event where the agricultural sector met globally to draw attention to Food security and reflect on how far the sector had gone and then make new commitments for the following year. The Minister and Deputy Minister were at the World Food Day function in Limpopo and tabled an apology on behalf of the Minister and Deputy Minister. As the Accounting Officer , she was delegated to present the Annual report and assured the Committee that all questions would be well answered. She
The Chairperson commented that the Minster had asked for a change of date when he got the invitation from the Committee as the date clashed with the World Food day held on the 16^th of October. It had been communicated that it was impossible to shift the date due to Parliament programme as the Committee had two weeks to submit its report to the Parliament. However, it was expected that e the Deputy Minister would be present at the annual report meeting while the Minister attended the event.

Mr C Maxegwana (ANC) accepted the apology of the Minister and added that the Minister should have communicated days before the event about his programme to attend the event in order for the Committee to put such into consideration. Going forward, the Department had the responsibility of informing the Committee on events and should therefore communicate days ahead.

Mr M Filtane(UDM) commented that the reason for the absence of both the Minister and Deputy Minister was quite plausible but it was not understood why they would prioritize an International event over a critical matter of annual report. Consequently, the Minister should be invited at another date to present the annual report of the Department while other reports of the entities be discussed at the current meeting.

Ms Steyn commented that she knew about the World Food day but it was unfortunate that it clashed with the meeting and agreed that the Minister be invited another day to present the annual report of the Department while other reports be discussed at the current meeting.

Mr Joseph commented that the reports of the entities were meant to flow from the annual report of the Department hence the Committee should entertain the annual report of the Department.

The Chairperson commented that in terms of procedure, the Committee could not hear the annual reports of the entities before the annual report of the Department and e suggested that the first quarter report of the Department be considered while the annual report shifted to another day. Officials of Parliament should always assist the Committee by informing it about public event days that could not be altered in order to plan Parliament programme.

Ms E Masehela (ANC) commented that it would have been better if the Minister or his Deputy was present at the meeting. Considering the tight schedule of Parliament, it would be more difficult not to get the annual reports and the reports of the entities could not be discussed before the Department’s report hence it was suggested that a message be relayed to the Minister that in future the Minster or his Deputy be present at annual report meeting if there was a clash in assignment. It was suggested that the annual report of the Department be discussed while questions that required the Minister’s response are handled at a latter day.

Mr Maxegwana commented that due to the timeline of Parliament and the deadline date (24^th of October) for finalization of this process he suggested that the meeting should proceed.

Mr S Mncwabe (NFP) commented that it was wrong for both the Minister and his Deputy to be absent. However considering the time frame given to the Portfolio Committee to finalize,the meeting should proceed, the Committee’s displeasure must be communicated to the Minister and his deputy about their absence.

Mr Filtane commented that the meeting should proceed as weekend was not an option for another meeting. It was hoped the team would convey the Committee’s sentiment to the Ministry about their absence. 

Ms Steyn expressed her displeasure about the absence of the Minister and his deputy as she had a lot of questions for the Minister to answer.

The Chairperson said the meeting would have to proceed as majority had suggested however the Committee would write to the Minister to express its displeasure.

Ms Steyn commented that issues that could not be addressed by the DG should be sent to the Minister in writing and must be answered within ten days.

The Chairperson concurred with Ms Steyn’s proposal and declared the meeting open.

Ms Vries promised to convey the message to the Minister. The Minister did not take the decision lightly as the year 2014 was declared the year of agriculture and food security.FAO and UNO also declared 2014 the International Family Farming year while the agricultural sector claimed October as the month of food security.

Ms Vries briefed the Committee on the 2014/15 first quarter performance and expenditure report of DAFF. The period 1 April to 31 May was devoted to performance reviews an the verification of performance information which was submitted to the AG on 31 May 2014.The Department had 55 targets reporting its milestones for the Q1;no fraud and risk management report  were recorded for Q1. 56% of the quarterly performance milestones were achieved. The department had set a target to reduce recurrent audit queries by 60%. Identified areas for improvement include- legislative review and the approval of key policy documents needed to be fast tracked; the following would be fast tracked in Q2: 14 pieces of legislation earmarked for finalization during the 2014/15 financial year-the target would not be achieved.4 pieces of legislations would be taken to cabinet in Q2.Policy document such as the Agricultural trade, competitiveness development strategy and agro processing policy and strategy would be taken to the cluster in Q2 as well.

Mr Joshua Hlatshewago, CFO: DAFF continued the briefing with an expository on  the expenditure trends of the Q1-2014/15.Per Programmes:

Administration- budget was R 694 570 000 amount spent was R163 584 000   23.6%

Agricultural Production Health- % Food safety: budget was R 2 199 796 000 amount spent was R 628 015 28.5%

Food security and Agrarian Reform- budget was R1 711 095 amount spent was R350 587 000 20.5%

Trade Promotion- budget was R294 223 000 amount spent was R102 307 000   34.8%

Forestry and Natural Resources Management- budget was R1 364 923 amount spent was R102 307   34.8%

Fisheries- budget was R427 776 amount spent was R113 846 26.6%

Total budget was R6 692 383; total amount spent was R1 658 398 24.8% of budget spent.

Reasons for over/under spending against 25% target:

Programme 1: claims in respect of property management from D:PWD are awaited

Programmes2: double payment to ARC, half yearly payment to OBP and Q1 payment for conditional grants to provinces for Ilima/letsemsa were made.

Programme 3: Payments to provinces in respect of CASP conditional grants were made at 20% of the appropriated amount.

Programme 4: once-off payment to Land and Agricultural bank of SA and NAMC.

Programme 5: payments to provinces in respect of Landcare conditional grants were made at 10% of the appropriated amount and CASP conditional grants were made at 20% of the appropriated amount.

Programme 6: Q1 payment to MLRF was made.

Discussion
Ms Steyn expressed concern over targets coming from previous years and asked how many of these targets were carried over from the previous years as there was no visible progress from rolling over unachieved targets into another quarter as some were never met in the last five years. It was concerning that targets on Bills were not met. On Programme 2 and animal disease prevalence, was there planning and were there personnel on ground. Was there any fence in place between South Africa and the borders? Was the plan on foot and mouth disease surveyed annually? Were there personnel to implement the drought and nutrition security plan (Fetsa Tlata)? No producers were linked to market during Q1 and – were there personnel to implement the plans on Agro processing and marketing? It was extremely concerning that SA might start to import timber- this would have an impact on the building industry, was there a DDG responsible for forestry?

Ms Vries replied that considering the 2013/14 annual report and the Q1 report some targets were retained. Some targets would be retained as core to DAFF mandate such as support for small holder farmers (number of hectares that were planted), animal disease surveillance. Targets that were rolled over from the previous years were not accounted for in the annual report as only the targets in the annual report are accounted for. In quarterly reports, there are underperformances that are achieved at the end of the year. Some targets that were not achieved could be achieved at the end of the year while some may not be achieved. For instance on the protection of indigenous species; of the two species of livestock that were going to be protected through artificial insemination, the calves were not born by the end of 31^st March hence such target could not be rushed. Plans developed five years ago could not just be taken and implemented yearly based on incidence and events, the plans and targets to be implemented had to be reviewed. Animal disease monitoring and surveillance was an area in the agric sector that the Department was proud of. Foot and Mouth disease was factored in 2011 due to the work done by DAFF officials, both National and Provincial; the Department was able to assure a global regulatory authority that it had been corrected. The fences along the borders were like cables but there were some red zone areas; areas of biosecurity risks that were fenced. There was a difference between food and nutrition security policy plans and Fetsa tlatla. Fetsa Tlatla was one of the food production responses to food security. Food security policy was implemented and approved last year. There should be a food security plan that would address APAP. Food security plans should be measurable. Food security was not only the responsibility of agric department but other departments too hence should be set as a target There were category A and B forests that were commercial forests which were responsible for most of the pulps used in wood and paper industry. DAFF was responsible for category B&C forests which were not necessarily commercial forests rather land, forests and space land and hoped to get to a point where NDP would set a target for new forests to be planted and reforestation. Forestry made up about 19% of DAFF budget and there was no risk that the country would have to import timber.

Mr Filtane remarked that he was shocked when DG said the Department could not link producers to the market which was a long standing problem in the agric sector. What were the fundamental problems with the Department facilitating access to market because private producers had access to the market? How did the Department hold people accountable when they did not perform as expected were they issued letters of warning or was a disciplinary process was put in place?  The core function of DAFF was to meet demands/needs hence if meeting this target was a recurring problem one would ask if the Department was functioning in terms of food security and agrarian reform. How could the Committee help with this recurring problem? How were managers who did not deliver on what they were expected to do dealt with The Department should initiate a piece of legislation to enhance the actualization of certain targets. What

Ms Vries responded that none of the legislations put forward was new; there were 24 existing pieces of legislations that were reviewed last year. Some of the old legislations had to be reviewed because the legislations had to be brought in line with the Constitution. Further, refinement needed to be done to bring them in line with the NDP. Legislation and regulations was the framework of the Department. The Department had no jurisdiction to scrap legislations but could only make sure that it followed the channel, reviewed by the Parliamentarians and promulgated by the President. The previous Minister decided not to drive the Legislation programs toward the end of the term. The target had been set in the APP tabled in February- In the Q1 of the year, Cabinet was not going to review new Legislation and the new Minister was not expected to drive the target when he newly came into Office from week one. The Department began to drive legislation when the new administration began to understand the portfolio. Therefore as indicated, the Department may not be able to finish the 24 legislations targeted but hoped to do so. For the next three quarters, the reports would be to meet the 14 pieces of legislation and have them approved. Feed and fertilizer Act of 1957 needed to be reviewed as it was clumsy and involved areas outside the agric sector. The target to link producers with the market was unrealistic and more thoughts had to be given to the set targets hence huge improvement in the APP in terms of target settings. Some targets were not SMART and could not be achieved in three months but would be achieved in the annual report. The target of reducing 60% of audit query was set by the Department itself as it could not continue with the same audit findings. If there was non-compliance with performance agreement and other areas, disciplinary actions would be taken. Most disciplinary hearings in the last quarter had resulted in dismissals.

Mr Joseph commented that from all indications, the Department had failed to meet the annual targets in terms of the APP in the office of the DG. The milestone for Q1 was 3 only 1 was completed which pertained to the update of annual planning of strategic plan. The Department should have met the target of fraud and risk management; why was it not achieved and who was meant to assist the DG in risk management? Why was a Committee not set up for Fraud and Corruption plan? The Human Resource plan was not achieved due to extension for late submission of plan requested from the DPSA and reasons should be provided for non achievement as there was a request for late submission till 31^st July. Which of the performance indications of targets were met on stakeholder relationship and Communication plan? The first quarter targets were unachieved; a lot of things administratively were not achieved by the Department. Intergovernmental strategy was approved and implemented but not achieved at Q1; it should be adjusted t to assist the Department. Implementing and developing the strategic plan and APP in such a way that it was possible in terms of the Department project management circle to deliver on these issues especially at the beginning of a financial year was critical. The Department should not overload itself with the administrative processes in order to comply in terms of targets  in its APP.

Ms Vries replied that there was a strategic risk register in place- however the office of the DG did not have any staff who managed risk as the former staff responsible for this function was non-performing and incompetent. The only person who could perform this task was the DG herself, but time constraints were a factor. There was a fraud prevention plan/strategy and a fraud committee had been set up; the fraud prevention plan would be made part of the mandate of the Risk Committee which had to be corrected. DAFF had been given space by the Presidency to do adjustments to its APP to ensure alignment between its APP and the MTFS approved by the Cabinet by the beginning of June. If there were changes to be made to the HR plan, it would be done.

Mr Maxegwana commented that in the manifesto and National Development Plan, focus was to develop small holder producers. Food gardens and small holder producers must be encouraged in order to contribute to the objective of food security. DAFF was given a task to perform as it was important that small holder producers graduated to become big. What support could be given to the small holder producers to be part of the market and to realize the goal of food security? Eastern Cape was known for livestock production hence it was important to focus on the province. There was need to assist the people in ensuring that there was health in the livestock in order to keep excelling in animal production. What measures were in place to ensure that Eastern Cape did not fall off in livestock production as a province?

Ms Edith responded that food security was not only developing small holders but also about increasing the capacity to deliver food in the country to people who were most vulnerable for example the three priorities of the Minister were to increase food security, numbers of job and contribution of agric to GDP. Part of the Minister’s progamme was around food security. Limpopo province had done successful clustering where producers producing similar commodity would work together. The CASP programme was evaluated and about 80% of the producers had a market for their products. Eight veterinary mobile clinics were deployed to the Eastern Cape out of the twenty three pilot mobile veterinary clinics put in the system. DAFF had to make sure that farmers were serviced in order to ensure the health of the herds; the next set of vehicles would strengthen the norms and standards.

Ms Masehela commented that the Department needed to be helped with its overall performance of 48% which was below the 50% average. Small holder producers should be aggressively assisted in order to address poverty. What services could be put in place to assist small producers maximise production? The fraud prevention policy and plan which had not yet commenced was concerning and should be addressed immediately.

Ms Vries agreed that DAFF performance had to be upgraded; DAFF stood by its commitments in this regard. In the past the Department agreed with provinces on CASP, provinces did the implementation, when planning was done with provinces certain guidelines were set, provinces gave DAFF the business plans based on given guidelines and DAFF provided the resources. APAP and ARC information helped with land capability, DAFF gave farmer’s money to plant a particular commodity in an area.

Ms Z Jongbloed (DA) expressed concerns over the fishery sector as low targets were set. On the strategic objectives on monetary control and surveillance; targets for land and board inspection was 12, a total of 20 board inspections were conducted; the targets were overachieved.  More than 12,000 export permit were issued whereas only 20 inspections were conducted. Numbers did not tally because on paper targets looked good. How were targets determined?

Mr Mortimer Mannya, DDG, FM: DAFF replied that before targets were set, risks would be considered and matched with the desired mitigation measures and resources available. Five areas of risk management included sea, landing, port of entry, processing entities and right holders. Combinations were done to set targets for each one of them. All the ports of entries were considered, the levels of activities were reviewed and targets were set for those areas- for example 10% of right holders were investigated for compliance.

The Chairperson remarked on the issue of mitigation in terms of greenhouses in the annual report as the agric sector would be more affected by climate change than any other department hence DAFF needed to come up with action plan on climate change. On the management of performance of DAFF officials; there was a poor response to the fire outbreak that occurred in Free State. There was a need to address the issue of planning and implementation; monitoring, evaluation and alignment of planning. HODs of provinces would be called to account for their conditional grants and business plans. The Committee should be informed about changes in polices by the Department, for instance the Fetsa Tlata policy was to plant 1 million hectares of land by 2019 which was changed to 1 million jobs to be created by 2019.

Ms Vries responded that there was no specific target that dealt with mitigation of greenhouse gas emission but planting the correct indigenous trees by increasing aforestation and deforestation would help with climate change. The officials that were negligent at the fire outbreak had been dealt with. The national department was not responsible for fire management- it was the responsibility of the province to provide a disaster management plan. A target of 250 000 hectares was set last year, this year a target of 400 000 hectares was set but no new money came in hence it had to allocate from CASP money to meet Fetsa tlatla target. Provinces received equitable share to do their work while some province relied on CASP money. The target of 1 million hectare was for the sector included social development and rural development.

Mr Filtane stated that the Department needed to go back to improve on its report on basic management skills. The Department at the national level had the responsibility of food security and poverty alleviation. There was need to write to the Minister for the statistic of civil servants who were under performing. The issue of fertilizer was in the public domain which was a national problem that had to be resolved by the national department. There should be a solution to the monopoly of fertilizer production. The President in his SoNA referred to a radical change; figures of civil servants who were not performing were required.

Ms Steyn commented that SA had the highest cases of fire outbreak this year. Few people and animals died in the Free State fire outbreak; the role of the national department should go beyond monitoring at this crisis stage. There was a disagreement between the local government and the province on who would assist the victims.

The Chairperson commented that the Department had taken cognizance of the issues raised. There was Intergovernmental Relation framework Act such that if the municipality did not respond then the other sphere should respond There was  need for a radical change, however the improvements made were appreciated. Issues raised should be implemented; the Committee would be going to monitor Fetsa Tlatla in November.

DAFF on its 2013/14 Annual Report
Ms Vries briefed the Committee on the performance highlights of DAFF over the 2013/14 financial year. Key highlights included- There was accelerated production to enhance food security: The National policy on food and Nutrition was approved by Cabinet in September 2013 and the Fetsa Tlatla food production initiative was launched to enhance food production at national and household level. On general household survey (2013), the number of persons who faced difficulties in accessing food in 2013 increased to 13.8 million persons as against 13.6 million persons in 2012. The Department targeted support to producers in order to facilitate greater inclusivity through CASP and Illima/Letsema. On access to markets, the Department mobilized and supported smallholder producers to increase production and access export market opportunities through World food programme;88 smallholders produced sufficiently high quality maize. On bio security success, South Africa is now foot and mouth disease free. Conditional Extension Recovery Plan (ERP) was set in place to strengthen and improve extension and advisory support services in SA. A total of R339 927 million was budgeted over the year under review. The extension –farmer ratio had also improved form 1:1200 in 2007 to 1:878 at the end of the year under review. The norms and standards recommend a ratio of 1:250-500 depending on the commodity. Conditional Grants: Land Care: a total of R108 997 million was allocated and an amount of R105 823 million was transferred to provinces. The actual project expenditure of Landcare amounted to R102 008 million which was 96% of transferred funds to provinces. MAFISA was set up to provide funding through provisionally accredited DFIs to on-lend to targeted HDI agricultural micro businesses covering irrigation, livestock, equipment and production inputs. DAFF introduced an external bursary scheme in 2004 along side with the career awareness programme as a measure of recruiting young people at an early age to follow a career in one of the identified scarce and critical skills in agric, forestry and fisheries. In the financial year 2013/14, 35 interns who participated in the young professional development programme were employed. 57% of bursaries awarded went to females and 43% to male. On complexities as per intergovernmental coordination, DAFF receives funding from the national fiscus and allocates conditional grant funding to provinces in accordance with the Division of Revenue Act. DAFF had a national policy responsibility to develop and promote inland/fresh water aquaculture as an economic activity contributing towards food production and security. The presentation further highlighted the performance summary of the Department per programmed in the year under review – in total, 79% of its total targets were achieved and a total of 9 932 jobs created in 2013/14 (see document).

On its 2013/14 Audit Report and the AG’s findings, the Department had an unqualified audit opinion for 2013/14 in respect of the financial information The AG drew attention to the following matters: Predetermined objectives(performance information, strategic planning and management);Audit outcome not in place; Ineffective internal audit; procurement and contract management; insufficient oversight on reporting; insufficient HR; risk assessment not conducted; risk management strategy not in place.

Mr Joshua  Hlatshwego, CFO: DAFF briefed the Committee further on the state of expenditure as at March 2014. A total of R6 111 313 was spent as at the end of March out of a budget of R6 182 282 making a total of 98.9%. 99.4% was spent on Compensation of employees; 99.7% on transfers and subsidies; payment for capital assets 96.8%. The 2014-19 Focus of the Department was- 1. Food security: to ensure that 12million citizens who were vulnerable to hunger and food insecure had sufficient access to safe and nutritious food. 2. Transform the sector: promote and empower small holder producers through targeted support measured to increase their competitiveness edge towards becoming sustainable producers. 3. Create jobs: achieve the NDP goal of creating 1 million new jobs by 2030. 4. Increase the contribution of Agriculture to GDP: implement APAP; strengthen animal disease and plant pest control capabilities and surveillance measures to enhance exports and trade. 5. Conclude trade opportunities with other emerging economies and accelerate trade on African continent.

The Portfolio Committee recommends the tabling of the 2013/14 annual report of DAFF.

Discussion
Mr Maxegwana commended the Department on its unqualified audit; a clean audit would have been better than the unqualified audit.  Managing resources was good but the impact was more important. There was an alignment in DAFF plan with the NDP which was an achievement. The conditional grant and how they were utilized was a source of concern. The Fetsa tlatla pet project needed to be understood; what was being done on the 1m hectare target to be achieved. The Department should act like one from the local to national level.

Ms Vries appreciated the comment on the improvement and retaining the unqualified audit report for the last five years and remarked that a clean audit was the Department’s aspiration. There was CASP report which confirmed that the evaluation report done by the University of Pretoria did not have a good impact as it should have therefore there should be improvement. DAFF had tightened the planning with provinces and monitoring of provinces.

Ms Masehela commended the Department on its report. The department was not doing well on the issue of equity in terms of women and people living with disabilities. Did the department have systems to check whether transfers to provinces were used for the right purposes and if such money was monitored to see if they were used fruitfully? What was the Department doing to assist farmers to make sure that crops were not destroyed due to invader food flies in the Northern Cape and Limpopo? Fetsa Tlatla was a good project in the rural areas where people had land - what role was played by the extension officers in order to reach the 1m hectare target.

Mr Mannya replied that the food fly invasion formed part of the surveillance that the Department controlled and there were control measures available over the last few years. The emphasis on part of national livestock program was on the recording because it linked to genetic information system. If the farmers had the history of keeping information, they would be able to monitor the performance of the animals. It was intended to monitor the performance linked to the research problems of ARC.

Ms Vries added that the job descriptions of directorates had been increased to include monitoring. DAFF had 42% women in senior management there was an improvement compared to the past; Female candidates were preferred in senior management vacancies. There was plan for monitoring provinces report. DAFF had an extension recovery plan as tablet system was introduced where extension officers were able to demonstrate what had been done. There was a system that intended to put in place agric information management system which could take a few years to process.

Ms Steyn remarked that the number of hungry people in SA should be measured and considered as the basic thing the department was responsible for. It was concerning concern that hunger in SA was going up and this should be analyzed with massive support towards social grants and other programmes; the programme should be analyzed. According to the AG on the outcomes of the portfolio, the quality of submitted reports regressed since the previous year. For DAFF and entities, the most common root causes was slow response by management; For DAFF the root cause was lack of consequences for poor performance and transgression. The Minister should respond in writing how to fix these root causes. On the challenges with the utilization of transferred land and development of small holders; the fact that land reform was failing was the fault of DAFF - for not having plans in place. On the subdivision of agricultural land and the link between the municipalities, an Act that was reviewed in Sept 1998 but not proclaimed; it was this to be revisited? It was concerning that DAFF cancelled the planned agricultural census; if you cannot measure you cannot manage. Amount spent on consultants used to review legislation especially when there were legal team that could have reviewed same at the Department was worrisome. Also concerning was that 98% of the budget was spent with low targets achieved. The outcome of investigations ordinarily determines the disciplinary process by the accounting officer What was the Department doing to ensure the economic growth of the sector as the sector was not performing as it was supposed to- there was a need to come up with a proposal and a plan. On the registration certificates, it had become a source of concern that people were putting stuffs in the market illegally thereby putting the industry at risk; what was the Minister was doing to fix this? On the complaints mechanism of the Department, many letters were sent to the Minister and DG without response; what mechanisms were in place to address this?  There were massive problems in the fishing industry hence the need for policy development and legislative changes. A report on the status of Fetsa Tlatala and its impact was requested. What was the role of the Department in ensuring that OBP functioned properly in agric production health and food safety? What impact could vaccines unavailability have?  A full report on all aquaculture programmes in SA and the amount of money put into it was requested. On agro processing, it was suggested that there should be discussion with DTI and the private sector.

Ms Vries in response stated that the current administration desired to be known to make a difference to hunger in SA. Seminars would be done on food security, accessibility and affordability of food. The feedback from the AG acknowledged an improvement hence DAFF could not respond to the quality of regressed report raised. Managers were required to be in audit committee meetings in order to address the slow response of management. Land reform and agric department were working together; rural development was excited about APAP because it was the instrument that would bring about the revitalization of agric and grow the GDP and become the anchor around which the government was to hang land reform development. Research would be done about the subdivision of the Agric Reform Act which not been repealed. There was a plan for agric census to be reopened as pilot cost of about R60 million had been set aside. There were certain works that consultants were required to do. DAFF would like to present APAP to the Portfolio Committee on what it was doing to grow the sector. The Department had different improvement programmes; its mandate was not developing infrastructure. DAFF provides technical assessment plans but not implementation. DTI looked at the industry for agro processing as part of the revitalization of agric was to stop exporting many materials in raw form. The commodity group had worked with DAFF on APAP, CEO forum and Operation Pakista.

Mr Hlatshewajo added that DAFF was creating an enabling environment for developing policy framework for aquaculture. In working towards developing an aquaculture funding programme, some regulatory problems were encountered with respect to authorization with the Department of Environment. Operation Pakista was intended to accelerate the development of aquaculture.

Mr Mncwabe commended the initiative on youth development programme and asked for the breakdown of bursary funds to schools. Awareness was not wide spread, particularly in township as in rural areas on the high school bursary scheme. These programmes should be marketed well in rural areas as well as urban areas. Were the programmes nationally found in all provinces or selected universities? The feasibility of the programmes in schools was questionable.

Ms Edith Vries replied that Members would be provided with copies of the document to popularize the bursary schemes. Some agric colleges were reestablished for accreditation by the Council of Higher Education.

Mr Joseph expressed concern about evictions on farms in the Eastern Cape and how people had been threatened; animals shot in front of workers on farms. Other questions would be put in writing to the Minister.

Mr L Ntshayisa (AIC) asked for the criteria used by the Department to provide support to farmers and the procedure followed by farmers to access this support. for a  reconciliation of the 98% budget spent against the 79% target achieved was requested-  was it was due to lack of capacity or shortage of staff?  There was no policy or legislation on In-land fishing and this should be addressed urgently.

Ms Vries replied that criteria varied with provinces.

Mr Hlatshwajo added that R1.5 billion of DAFF budget went to compensation of employment; 60% went to departmental entities. There were targets within some entities that were not in the Department.

Mr Filtane asked what the Department meant by sufficient high quality maize. Did the R55 million spent on revitalization of agricultural colleges address the challenges in the college and did the internship programme have any impact on the Department?  Were transfers also made to municipalities? There was an ongoing debate that agriculture was not a constituency of a municipality of local government– what was the structure of funding for small holder farmers. Information from the department was not reliable according to the AGs opinion.

Ms Vries replied that the world food programme required that 30% of the maize be bought from small holders. World food programmme found the maize from small holder suitable which provided access to market. DAFF does not transfer to municipalities but had put in place in the last six months a provincial planning forum in each province by the HOD for rural development and agric.

Mr Hlatshwajo added that R55 million used for revitalization went to infrastructure. There had been improvement from DAFF in terms of audit queries for the last few years. DAFF kept improving information on its audit matrix and held each DDG accountable on how to clear the audit finding.

The Chairperson remarked that the quality assurance of the Department was questionable and Parliament should be respected by providing thorough report. Had the critical positions in the Department been filled? The structure should be reviewed to respond to the mandate and needs of the Department as there were a lot of duplications among the entities. The President had set up a commission to review the entities of government what were the recommendations and how did they would impact on agric? How did the department intended to implement the recommendations if adopted by the Cabinet? On the R23 million spent on training, what the type of training was done?  The pace of the consolidation of the conditional grants which was yet to be implemented as reported by FFC was concerning. How much was spent on contract workers versus permanent staff? The R10.2 million used for consultants and R1.5 million for one consultant in reviewing of legislation needed to be addressed.  Further details were requested on the empowerment funds and the number of farmers assisted- were the farmers indebted to the Department?

Ms Vries commented that DAFF had nine DDGs, five positions filled with four vacant. Integration of conditional grants must be negotiated and approved by national treasury.

Mr Hlatshwajo added that DAFF appointed nine intermediaries to run loans on its behalf; the Department was not happy about some intermediaries in terms of performance and reporting hence it had three intermediaries left. The three intermediaries helped with loan recovery rate up to 70%- this amounted to R10.2 million spent on consultants for legislation review.

Ncera Farms on its 2013/14 Annual Report
Mr Mzi Titimani, CEO: Ncera Farms briefed the Committee on the performance overview of Ncera In the 2013/14 financial year. Under Mechanism, 8 tractors and 7 bakkies services/repaired/maintained, ploughing equipment to be repaired,1 truck to be repaired    : 6 tractors and 5 bakkies were service/repaired/mainytained;4 ploughs and disc harrow were repaired;1 truck was repaired.On Crop section, Purchasing of packing materials, fertilizer and selling of vegetables to the market was achieved. Five villages were assisted with mechanization services. Medicines, doses and feed for the livestock were purchased. All animals are dosed and dipped to control internal and external parasites.

Ms Khaghaz Guezda, CFO: Ncera Farms, briefed the Committee on the financial report for 2013/14.The entity maintained the record of the unqualified audit report. No irregular or wasteful expenditure was incurred by the entity in 2013/14 financial year. Most of the budget allocation was spent on compensation of employees, other administrative expenses and little for programmes. Findings of the AG include no board directors, no audit committee and internal auditors.

A budgetary allocation of R 5 020 000 was approved for 2013/14 for which actual expenditure was R4 994 208 and a variance of R25 792 was recorded. Further details on the expenditure pattern per programme were highlighted in the presentation (see document).

Challenges faced by Ncera Farms include lack of funding, no board directors, township establishment (Pilvering possibilities). In conclusion, the little budget Ncrea had was able to produce healthy Nguni cattle, assisted five villages with contract ploughing, assisted communities with good quality goats. A decision has been taken by DAFF to transfer Ncera to ARC.

Discussion
Mr Ntyshayisa pleaded that the Department fast tracked the transfer process in order for the workers on Ncera farm not to lose focus.

Mr Filtane asked if there were external methods for ensuring quality control or quality management for livestock marketability. DAFF should consider the possibility of accelerating the transfer process in order to counter the negative psychological state suffered by the worker on the suspension of the transfer.
The Chairperson noted that ARC would be present at the next meeting to give an update on the status of the transfer of Ncera to ARC.

Ms Vries commented that ARC could not do deregistration hence the Minister of Finance had been written for deregistration. The Minister had asked that communication be established with the staff of Ncera farms.

Marine Living Resources Fund (MLRF) on its 2013/14 Annual Report
Mr Mortimer Mannya,DDG, FM: DAFF briefed Committee on the  2013/14 annual report of MLRF. The presentation covered the strategic overview, governance overview and policy environment of the MLRF(see document). Achievements recorded for the 2013/14 were- the MLRF obtained an unqualified audit report both on financial and performance information. 20 farms were given technical support to access development funding to the tune of R87 million which led to the attraction of private investment worth R384 million into the aquaculture sector. MLRF completed the aquaculture sector performance study and published the South African Aquaculture Yearbook. National aquaculture policy framework and review of all pieces of domestic legislation governing aquaculture was undertaken and completed-24 pieces of legislation which affected and controlled aquaculture were reviewed. The second long term right allocation process was undertaken on eight sectors. The Fishing rights allocation program 2013(FRAP 2013) was concluded albeit objections. Fisheries protection vessels had been at sea to ensure surveillance and protection; multiple inspections were conducted on vessels at landing sites due to the 100 jobs which were created through working for fisheries program (WFFP) in the commercial monitoring project to monitor commercial landing. Joint operations were conducted and led to confiscations, arrests and successful prosecution; Increased law enforcement efforts within four key fisheries sector; hake, abalone, west coast lobster and traditional line fish.

Challenges faced by MLRF include- the historical legacy of an untransformed sector, illegal practices, limited capacity impact on these FRAP processes, large research vessel Africana had not been back at sea as its aging and would require replacement; Research capacity was limited by the number of experts and was not adequate for numbers of fish species to be investigated including the new species. New species under investigation had not yet yielded results of economic viability; the integration of sea based operations was not adequate; prosecution capacity was still limited and required more enhancement in collaboration with the relevant departments. Poaching rate had not dropped to desired levels.

Planned key focus areas for the periods 2014- 19 include: the development of the aquaculture s a growth sector under Phakisa; implementation of an integrated fisheries security plan as part of Phakisa Marine protection, the revitalization and strengthening fishing harbors operational management; finalization of the regulations and implementation of the small scale fishing policy etc.

It was recommended that the Portfolio Committee recommends the tabling of the 2013/14 report of MRLF.

National Agricultural Marketing Council (NAMC) on its 2013/14 Annual Report
Mr Andre Young, Chairman: NAMC briefed the Committee on the 2013/14 annual report of NAMC. The briefing discussed the mission as well as the legislative mandate and strategic objectives of NAMC (see document).

Mr Tshihilo Ramabulana, CEO: NAMC continued the briefing with an overview on the divisions of NAMC which were statutory measures; agri-trusts; market and economic research centre; agribusiness development and administration. 86%of targets were achieved on statutory measure investigations out of a target of 36,  31 were met. 54% of targets were achieved on statutory measures gazette out of a target of 24, 13 were met. On levies collected per commodity- Citrus (exported) amounted to R42 216 161;Lucerne 981934; Wine R6 1748 389. Functions financed through statutory levies in 2013/14: on transformation R 83 695 832 was spent; 22.5% of total levy expenditure. On research R61 262 679 was spent; 16.47% % of total levy expenditure. Activities regarded as transformation include production material/inputs, extension services, mentorship, bursaries, and salaries for black transformation managers etc. For Strategic Integrated Projects (SIP 11): the business plan was completed, it focused on 26 high impact agricultural infrastructures project and 600 smaller projects funded by CASP,IDC, 10 high impact projects had commenced.

Ms Sarah Muyhulawa, CFO: NAMC briefed the Committee on the finance and administration of NAMC. Sponsorship received was R26, 6 million, expenditure totaled R59.9 million, there was no unauthorized expenditure recorded. External audit report of the NAMC was unqualified. A 14% increase in personnel expenditure as a result of increase in the amount paid toward performance bonuses and the annual salary adjustments of 7% was recorded. There was a decrease of 22% on operating expenditure due to the decrease in the number of section 7 and workgroup investigations. There was an increase of 389% in professional services as a result of an increase in expenditure for sponsored projects. There was also an increase of 28% as a result of increase in expenditure for travel sand accommodation related to the sponsorship projects.

Discussion
Mr Filtane was impressed by the services of NAMC and asked if it gave provided to farmers in the Eastern Cape.

Mr Ramabulana replied that NAMC worked in the Eastern Cape as the majority of NAMC work was done through community organizations and associations. It worked in different parts of the Eastern Cape.

Ms Jongbloead asked how small scale farmers fit into NAMC objectives and if there were any indication of when other Provinces would be rolled out.

Mr Ramabulana responded that one of the first objectives in the NAMC Act was increasing market access for all market participants. NAMC needs to work towards opening markets; protecting small players who were disadvantaged against market influences that could kick them out. The first phase of rolling out aims to other provinces was to try to understand what each province and SOE had in terms of information system.

Ms Steyn advised that NAMC should try to work on a plan regarding fluctuation of prices of certain commodities as it was sometimes difficult for farmers to determine input costs at the beginning of a season. What type of guidelines could be given so that there could be subsidy or assistance?  Some of the levies had not been renewed – they should be renewed annually. When would the renewal happen and what was the impact on specific commodities if not renewed? , Had the impact study on the industry been done and what percentage of transformation happened through the levies? NAMC’s report was requested for the Committee.

Mr Ramabulana agreed that there were certain commodities that became less viable. There was some level of transparency in terms of market functions in order for farmers to take the right decisions on if and what to plant.  There was impact of levy renewal; NAMC was engaging with traders and importers to address the problem of gazetting new measures. NAMC reviewed what had been done on an annual basis and provided the report to the Ministry on that. Every third year NAMC carried out independent work to review the impact of transformation.    The report had been sent to the Committee but NAMC would ensure that each Committee Member received it.                         

The Chairperson congratulated NAMC for the clean audit but noted with concern that there was a regression and advised the entity to do more on compliance. Could NAMC research potential markets in government and gives guidelines to government?
 

Perishable Export Council Control Board (PPECB) on its 2013/14 Annual Report
Mr Angelo Peterson, Chairman: PPECB briefed the Committee on the entity’s 2013/14 annual report. The briefing highlighted the vision and mission of PPECB as well as its strategic objectives. A new board was established in October 2014.

Mr Johan Scwiebus, CFO: PPECB briefed the Committee on the financial performance of PPECB for 2013/14. Amount budgeted for expenses for 2013/14 was R212 969; actual amount spent was R226 067 leaving a deficit of 6.2%. An analysis of expenses was as follows- 14% of total cost was spent on activities (subsidies and travel), actual cost of R48 million different from of the budgeted cost of R46 million. Important indicators highlighted: the entity had reserves of R92.5 million and cash investments of R79.5 million; Debtor’s Collection was achieved in40days against a target of 55days and Fruitless and wasteful expenditure stood at R518 455 000. 69% of the budget was spent on employees; 15% spent on activities;8% on administration;4% on computers;3% on rental;2% on training;2% on depreciation.

Mr Stuart Symington, CEO: PPECB briefed the Committee on its operations.173 970 containers were inspected,11% were rejected due to -22% false codling moth,3% decay,36% blemishes,372% citrus black spot and 74% injuries.53 020 export certificates were processed. PPECB had revolutionized its business with tablet technology that provided real time information; created a collaborative supply chain; a paperless environment; complying with regulation, maximized efficiencies, leverage Gen-Y skills and worked from anywhere. The Organizational performance of PPECB was measured by 62 performance indicators; 84% were fully achieved; 13% partially achieved and 3% of indicators not achieved. 152 Small farmers were trained in good agricultural practices; food safety; market access training; quality management training etc.

Risk management identified lack of integrity of export certificates; insufficient IT infrastructure; inability to roll out technology; insufficient IT disaster recovery; outdated inspection methodology as challenges currently faced by the entity.

Discussion
Ms Steyn remarked that she was impressed by the export certificate as the EU had put some other measures in place. What was the cost on the black spot issue to the industry and would it be fixed before the next season. There was a massive increase in unshelled nut exports to China. It was a product that was usually stolen from trees which increased over the last three years. PPECB was arguably the best performing entity in the Department.

Mr Symington in response acknowledged the team work of the entity and thanked the Committee. It was difficult to quantify losses. The export standard between DAFF and the industry was determined by unshelled nut at the moment as it was the fastest growing product for export.

Ms Masehela remarked that areas like Limpopo had many produces like potatoes, tomatoes and fruits; why was it not possible to have processing in those areas in a bid to create jobs?

Mr Symington replied that PPECB dealt with unprocessed products however the DTI could answer the question on processing.

Mr Filtane complemented PPECB on the great job done.

The Chairperson welcomed PPECB’s good performance and hoped it would do more and share its skills with other entities of the Department.

The meeting was adjourned.