DAFF & Department of Rural Development and Land Reform 2019/20 Annual Performance Plan; with Minister

Meeting report

Department of Agriculture, Forestry and Fisheries

Mr Mike Mlengana, Director-General: Department of Agriculture, Forestry and Fisheries (DAFF), reported there had been an increase in the percentage of ownership of productive land by previously disadvantaged individuals, because 80 000 smallholder producers were supported; a reduction in the rural unemployment rate, because 300 000 jobs had been created; improvement in natural resources and food security due to 152 500 hectares of land under rehabilitation; and reduction in the percentage of households vulnerable to hunger because 1.6 million households were benefiting from food security and nutrition initiatives.

Regarding agricultural production, health and food safety, farmers would be mobilised and data collected for Kaonafatso ya Dikgomo (KyD) and poultry schemes. Quarterly reports on monitoring of seed crops and fruit schemes would be produced. 189 compulsory community service veterinarians would be deployed before the end of the financial year. Seven export protocols for phytosanitary requirements would be implemented.

Concerning food security and agrarian reform, quarterly reports on national food and nutrition security interventions would be developed. A draft status report on graduates placed in agriculture, forestry and fisheries sector would be compiled. A draft annual report on the Implementation of the national policy on extension and advisory services would be developed. 20 extension support practitioners would be deployed to commodity organisations. 86 256 had been targeted for support with agricultural food production initiatives. 109 534 hectares would be planted for food production.

On trade promotion and market access, an annual report on the implementation of the SA Good Agricultural Practices (GAP) certification programme for the producers of fresh produce for exports would be developed. 60 agro-processing entrepreneurs would be trained on processing norms and standards. A report on the implementation of the Agri-black economic empowerment (BEE) enforcement guideline would be developed. 144 cooperatives would be supported, and12 commodity-based cooperatives would be established. Four quarterly progress reports on strategic engagements of partners within south-south, north-south and multilateral agencies would be developed. Four progress reports on compliance to African Union (AU) and Southern African Development Community (SADC) obligations would be compiled. A market opportunity profile research report for forestry product exports would be developed.

945 hectares of forestry and natural resources had been targeted for planting in temporary unplanted areas. A transaction advisor would be appointed for the re-commissioning of the Western Cape state forest plantation. An annual report would be developed on the implementation of the climate-smart agriculture strategic framework. 300 hectares of state indigenous forests would be planted. A mid-term performance monitoring report on the climate change programmes would be developed as part of monitoring agricultural land rehabilitation interventions.

National Agricultural Marketing Council

Mr Zama Xalisa, Chief Executive Officer: National Agricultural Marketing Council (NAMC), informed the Committee that the agriculture industry was facing many challenges because it had to be sustainable, make a profit, and provide security. They were holding strategic sessions yearly. The NAMC, like many other institutions, had experienced budget cuts. He said the purpose of Y-Agriculture was to attract youth to agriculture and address the lack of job opportunities because the sector was failing to attract young people due to insufficient access to information, knowledge and education about agriculture at the secondary level. Most learners from non-agricultural schools did not have access to agriculture subjects, as these were excluded in their syllabus, and they were inadequately prepared by tertiary institutions for the work environment. As a result, NAMC was providing career guidance to inform students about bursaries and internship programmes available in the agriculture sector. Since 2016 it had awarded bursaries to both under-graduate and post-graduate students.

The NAMC was also working in consultation with the Buhle Farmers Academy to train young emerging farmers and agro-processors. NAMC had devised various ways of disseminating the Agripreneur publication for maximum access by smallholder farmers. The entity had developed and agreed with the industry on the transformation guidelines. It engages the industry on transformation targets annually, and coordinates liaison with government programmes. It was designing and facilitating the implementation of development schemes aimed at integrating the developing agribusinesses into the commercial mainstream.

On market efficiency, Mr Xalisa said the NAMC was undertaking studies on food inflation, supply and demand estimates, farm to retail margins, and other value chain studies. It was further facilitating financial management and marketing training for smallholder farmers, and was working in collaboration with accredited service providers, national and provincial departments, the AgriSeta and financiers. It was also coordinating the implementation of statutory measures across 22 agricultural industries to support marketing efficiency. The entity was undertaking studies to identify export market opportunities for SA products. It was financing export promotions and quality control through statutory levies for the allocation of funds to industries. It was also facilitating technical support and certification for smallholder farmers in order to produce exportable products and provide access to local and international markets.

In the past five years, NAMC had seen the total trust asset value increasing by R43m. Expenditure on transformation by the trusts had increased by R14m. The grain trust had endorsed the Grain Farmer Development Association as a sole vehicle for transformation. The entity had established a transformation review committee as an independent committee to deal with matters relating to transformation.

The entity had been allocated R45.251 billion. The budget had been cut by R409m, but had increased by 4.65% compared to the previous financial year. The entity's budget was very small compared to the legislative task the organisation had to undertake. The funding of key government programmes, such as the Strategic Integrated Projects of the Presidential Infrastructure Coordination Commission, had not been mainstreamed.

(Graphs and tables were shown to illustrate budget allocations and expenditure)

Ingonyama Trust Board

Mr Amin Mia, Chief Financial Officer (CFO): Ingonyama Trust Board (ITB), said the entity had revised its administration programme in order to meet its human resources needs. It was also hoping to achieve an unqualified audit opinion for the current financial period. The Board was planning to approve 1 500 land tenure rights and achieve four updates to the land holding register. On proactive land planning, the target was to ensure six Traditional Councils had development plans, and to implement 12 community development initiatives.

The ITB did not have any conditional grants. Transfer payments were received from the Department of Rural Development and Land Reform (DRDLR), based on a budget approval process. The budget was not quantifiable on the public-private partnership with Tongaat Hulett, Adamopix and Merensky. The function of the Board was to administer the affairs of the Ingonyama Trust, and Trust land. This was a unique situation, since trusts were ordinarily controlled by boards of trustees.

Mr Mia reported the current annual budget was R19.272m. Separate budgets had been prepared and approved for the Ingonyama Trust and the Ingonyama Trust Board. It was revealed the DRDLR had up to now not fully funded the ITB in terms of the Ingonyama Trust Act of 1994. Over the past four years, there had been a shortfall in the funding of the ITB for operational costs. The estimated shortfall was to the tune of R56.87m. He concluded the fixed expenditure of the entity would be spent more or less consistently throughout the year, and employees would be appointed in a phased-in approach based on the needs of the entity in terms of the new organogram.

(Graphs and tables were shown to illustrate budget allocation and expenditure)

Commission on Restitution of Land Rights

Ms Nomfundo Ntloko-Gobodo, Chief Land Claims Commissioner: Commission on Restitution of Land Rights (CRLR), said from 2014/15 to 2018/19, the Commission had finalised 995 land claims against a target of 991. The target for the facilitation of the restoration of land rights or alternative forms of equitable redress by 2020 was set at 637 for the current financial period.

She pointed out there were a number of challenges affecting the Commission's delivery on its strategic objectives that had been identified. These were around backlogs on claims and non-standardised business processes; lack of capabilities and inadequate microstructure; lack of an appropriate organisation form for the Commission; and budgetary and funding limitations.

The recommendations dealt with establishing an autonomous organisation; ring-fenced funding; adequate human resource management; improved business processes; integrated IT solutions; an integrated information management system; service level agreements (SLAs) with relevant public entities; a review of the mandate and objectives of the Commission; and definition of the roles between the Commission and DRDLR. However, she pointed out that establishing an autonomous organisation might not resolve all the challenges, but micro-structure design and the business process of re-engineering the project could resolve some of the challenges regarding service delivery and micro-structure. She also revealed that the introduction of the Property Valuations Act and Office of the Valuer-General in 2016 had contributed to the decline of the Commission's performance, especially during the 2017/18 and 2018/19 financial periods.

In the current financial year, the Commission had shifted from quarterly targeting to monthly targeting to achieve more efficiency. This was part of the turnaround strategy under Project Kuyasa and would be institutionalised during the 2019/20 period to improve internal performance. One of the enhancement projects of the Commission was a re-engineering project which aimed at implementing the recommendations of the skills audit outcomes to ensure alignment performance prioritised areas with the requisite human resources capacity. However, increased pressure on the fiscus and the budget allocated for compensation of employees had meant that the need to enhance efficiency in the manner of doing their work had had to be prioritised. Consequently, the Commission was operating at 55% capacity due to budget cuts.

Pertaining to finances, she pointed out budget trends were indicating there were not enough resources to fast track land claims. The total budget allocated to the entity was standing at R3.608 billion.

(Graphs and tables were shown to illustrate budget allocation and expenditure)

Onderstepoort Biological Products

Dr Baptiste Dungu, Chief Executive Officer: Onderstepoort Biological Products (OBP), said the entity was busy expanding its distribution strategy in targeting smallholder farmers, and had improved stakeholder satisfaction through innovative products and services. The OBP was continuing with the upgrade of the facility and modernisation of the production plant, because that was a certification to allow it to enter previously inaccessible international markets.

There had been continuous improvements in peoples’ performance and business excellence. The OBP, like other state-owned entities (SOEs), was battling with aging infrastructure and outdated equipment with diminishing financial resources, even though it had to balance the public good with private good whilst doing this with efficiency, competitiveness, and responsiveness in the private sector in which it operated.

To ensure financial sustainability, the OBP was targeting to reach R234m in gross sale revenue and R37m on improving operational profit. In order to become a global manufacturer and distributor of vaccines and other biological products, its target was to achieve 90% of bacterial and viral vaccine construction completed, as per the project plan.The entity was aiming to improve customer satisfaction by 7.5% compared to the 7% of 2018/19, to ensure a global competitive product and service portfolio, and was planning to retain the 100% previous improvement of its product portfolio in order to satisfy customer needs.

For effective business and resource management, the OBP was planning to repeat the achievement of a clean audit and increase employee satisfaction by 3% from the baseline, because this would enable optimal organisational performance. The entity was further planning to retain the previous 100% achievement for International Organisation for Standardisation (ISO) accreditation and performance reviews, and to achieve 90% on training implemented against the training plan. This would improve employee performance and develop skills to enable employees to deliver on their mandate.

As a contribution to socio-economic development, as per government priorities, they were planning to create two new distribution points in rural areas to ensure product accessibility to emerging farmers. The entity was also targeting to be on Level 5 in order to improve its broad-based black economic empowerment (BBBEE) scorecard. This would enable it to contribute to distributing across a broad spectrum of previously disadvantaged South African society.

Dr Dungu referred to key strategic risks, and said they were working hard to achieve production efficiency, as well as trying to recover from its lack of market share by ensuring its products were available. The entity had brought in expertise from many sectors in order to address insufficient research and development output. He reported that the entity had been allocated R234 135m for its budget for the 2019/20 financial year.

(Graphs and tables were shown to illustrate budget allocation and expenditure)

Office of the Valuer-General

Mr Pelekolo Mwiya, Acting Valuer-General: Office of the Valuer General (OVG), said the OVG had seen the approval of its first ever APP in the 2018/19 financial year, with its performance being measured against set targets, and with valuations for land reform purposes being the core indicator. The OVG had plans in place to ensure all targets were met in the 2019/20 financial year. The implementation of the Property Valuation Act (PVA) regulations had brought about additional requirements to ensure efficient valuations were done by the OVG. This had placed even more pressure it to urgently capacitate the office, and the finalisation of the organisational structure would assist the office in the effective and efficient implementation of the regulations.

To support land reform, the annual appropriation from the fiscus, received as a transfer payment from the National Department of Agriculture, Land Reform and Rural Development, had been earmarked to, amongst other things, cover the cost of land reform valuations to be executed by the OVG, as per agreement with the Department. The number of valuations that could be performed during the period would thus be limited by the available funding.

With regard to developing  criteria, procedures and guidelines to standardise valuation practices for land reform valuations, the annual appropriation from the fiscus had been intended to also cover the cost of development in this regard, although any own revenue earned from non-land reform valuations would also supplement costs accordingly. The entity was planning to achieve 100% implementation of the approved valuation criteria, procedure and guidelines.

The goal for organisational sustainability included growing the business from a non-land reform valuation perspective, enhancing the quality of valuations, establishing operational and governance processes, and achieving operational sustainability.

Mr Mwiya said the OVG had a target of 11 potential clients to be surveyed before the end of the current financial period. It also planned to hold 12 independent valuation review and quality assurance committee meetings. It would further implement a property data management tool, in accordance with the project plan approved by the Valuer General, and 50% had already been implemented. The OVG planned to achieve 100% for the year on completion of valuations submitted by Restitution within the specified times.

For the current financial year, the entity had been allocated a budget of R142.1m. It was estimated that it would rise to R147.5m for the 2020/21 period.

(Graphs and tables were shown to illustrate budget allocation and expenditure)

Agricultural Research Council
Dr Shadrack Moephuli, Chief Executive Officer: Agricultural Research Council (ARC), said the ARC would continue to provide scientific solutions to support rural development and agrarian reform as priority programmes of the Department. It had technologies that could provide targeted producer support to achieve the vision of agrarian transformation and vibrant, equitable and sustainable rural communities. It had entered into a partnership for the assessment of Proactive Land Acquisition Strategy (PLAS) farms, and recommendations were that the farms should be rehabilitated for sustainable agriculture.
The ARC had developed a new vaccine for heartwater. It had provided 100% protection for animals in clinical trials. The entity was now in the process of producing a master seed which would be given to the OBP in September 2019. The OBP would then produce a pilot batch on an industrial scale, followed by three experimental batches on an industrial scale for data generation towards dossier production. The generated data would be compiled for registration. The vaccine was expected to be on the market in 36 months.
The entity had completed the development of a new production process for foot and mouth disease (FMD) vaccine. It had produced and tested the vaccine, which had been shown to confer strong protection against the disease. It was now in the process of compiling a dossier for product registration. It was conducting vaccine efficacy trials for regulatory registration.
Dr Moephuli revealed the ARC was operating in a declining funding environment from the Parliamentary grant. Over the years, the entity had been experiencing sluggish growth in external income.  It had been incurring over-expenditure since the 2016 financial period. It was facing liquidity challenges which had resulted in its inability to pay invoices in time. Current liabilities were exceeding current assets. It had got a high ratio of personnel costs.
The entity had been allocated R1.55 billion for the current financial year, but needed to reduce personnel costs to 60% of the Parliamentary grant.

(Graphs and tables were shown to illustrate budget allocation and expenditure)
Department of Rural Development and Land Reform
Ms Nomonde Mnukwa, Acting Chief Operating Officer: Department of Rural Development and Land Reform (DRDLR), said they were planning to pay all invoices within 30 days of receipt by the Department and its entities, and were also aiming for an unqualified audit opinion.
With regard to geospatial and cadastral services, the Department was planning to produce a diagnostic report on the land use master plan. The National Spatial Development Framework (NSDF) would be submitted for approval. The deeds transformation policy would be approved during this financial year. 95% of deeds would be made available within seven days from lodgement for execution. 200 maps of the national map series would be produced. 1 500 state land parcels would be surveyed. It would take 14 days to process registrable diagrams, sectional plans, and general plans.
With regard to rural development, 122 infrastructure projects would be completed, and 227 rural enterprises would be supported. 27 farmer production support units had been targeted to be functional. 7 465 skills development opportunities and 5 909 job opportunities would be provided through rural development initiatives.
Ms Mnukwa said 94 050 hectares would be acquired for land reform, while 42 750 hectares would be allocated to smallholder farmers. 162 farms would be supported through the land development support programme. 89 smallholder farmers would be allocated land. 443 Communal Property Associations (CPAs) would be supported to be compliant with legislation. 8 750 hectares would be allocated to farm dwellers and labour tenants. 3 666 labour tenants’ applications would be settled.

Discussion

Deliberations with DAFF

Due to time constraints, not all questions from the Members were responded to. The Department requested to respond to unanswered questions in writing. Questions were around the nature of agriculture graduates to be placed in the agriculture sector; clarity on under-expenditure on capital assets; an explanation of why Agri-BEE had been taken to the Land Bank; the nature of training given to cooperatives; an update on agri-parks; clarity on the 145 jobs to be created through agro-processing; an update on work at the Umzimvubu River; an explanation on how much work had been done on land lying fallow in former homelands; and the total number of jobs created by Fetsa-Tlala up to now.

Ms A Steyn (DA) wanted to establish if the Department had the capacity to deal with the implementation of export protocols by adhering to phytosanitary requirements, because it appeared the matter had not so far been dealt with. She also asked if the blended financial model had been approved or not.Mr Mooketsa Ramasodi, Deputy Director General (DDG) for Agricultural Production, Health and Food Safety: DAFF, indicated that what Ms Steyn was referring to was semen, and that there was less capacity for doing that semen-related kind of work within the veterinary services.

Mr Mlengana said the blended financial model had received a lot of attention when the Department wanted to pilot it. Some people inside the government had applied for it. That was the major problem. That was why it had been suspended and taken away from the forum which was making the assessments. The Department had now re-looked it and developed new criteria because the programme was meant for the needy, especially people in rural areas. The criteria had to be polished for presentation to the new Minister of the Department.

Ms N Masipa (DA) said it was crucial that farmers got support for the way they were packaging their applications to the banks.Ms T Breedt (FF+) asked how the Department was going to achieve the target of 450 black farmers to be commercialized, because it had not been reached since it was pronounced.

Mr Mlengana responded that a proper farmers’ segmentation had been done already. A sum of R280m had been negotiated with the Small Enterprise Development Agency (SEDA) for the training of these farmers.

Mr M Montwedi (EFF) remarked that the model in place to identify farmers needed to be changed. He urged the Department to invest in young farmers who were going to contribute to the sector for the next 30 years. The Department must not create farmers, like the 74 year old man who had been turned into a commercial farmer but had died after two years. It must rather tap into people who were already farming. The programme must not fail just because they wanted to create farmers. He was not seeing the Department planting 90 000 hectares of land by only giving farmers seeds and fertilisers. That constituted 20% of help from the Department, while 80% would come from the farmers themselves because there was a lot of money involved in soil preparation, and it must be understood that most black farmers inherited farms with poor infrastructure.

Ms M Tlhape (ANC) commented that she was encouraged by the programmes the Department targeted, because they were about its mandate. Future reports from the Department should reflect their impact on the ground and contribution to the economy. Provinces, as implementing agents, should instill in farmers that agriculture was a business and they had to meet the Department halfway by investing in the business, and not rely only on the Department’s assistance.The Chairperson wanted to understand how the Department was going to ensure anthrax would not enter SA and if farmers were aware of the ban.

Ms Thoko Didiza, Minister: Department of Agriculture, Land Reform and Rural Development, said Lesotho had informed stakeholders about anthrax in its country and abroad. The SA government had imposed a ban on animals from Lesotho and communicated with provinces bordering Lesotho, such as the Free State, Eastern Cape and KwaZulu-Natal. Lesotho had also informed SA regarding its vaccine challenges for anthrax. Four veterinarians had been dispatched to Lesotho to assist with vaccines obtainedfrom OBP. Containment measures had been put in place.

She added that veterinary services were not strong in terms of personnel. That was why they were making use of health technicians and unemployed agriculture graduates. They had had discussions with National Treasury on the money needed for resources. Communities had been educated on vaccination and the erection and maintenance of fences. The major challenge was capital investment. The OBP factory had been funded to comply with international standards. She commented that the ARC had also received funding to improve its infrastructure.

The Department had to envision how to support existing farmers and see where to intervene to assist in capacity building. At the same time, they needed to look at how they were going to work with the provinces as implementing agents, which were assisting farmers.

Mr Mlengana said many communities had been assisted with land rehabilitation where there had been veld fires and overgrazing during May 2019. Validations have been done by Stats SA. He noted that poverty had moved with rural/urban migration, as had been seen in Gauteng.

Minister Didiza suggested the Committee should arrange a meeting with the Department after the budget debate, so that they could deliberate on all outstanding matters that could not be answered during the interaction with the Committee, and clear the grey areas.

Deliberations with National Agricultural Marketing Council

Ms Tlhape remarked it appeared the Department would not fail in terms of enhancing capacity, but what was key was the alignment of resources to avoid duplication.

Mr N Capa (ANC) remarked that the market efficiency programme of the entity was good, but there was not sufficient marketing to make it known.

Mr Xalisa said they marketed their programmes through the agriculture sector publications to whet the appetite of the market, but funding remained a challenge.

Ms K Mahlatsi (ANC) wanted to establish if the entity would be able to implement its targets due to budget cuts, because it had a good story to tell.

Mr Xalisa said that budget cuts had been there for the last three years. As a result, the entity had made an effort to be funded by the DRDLR, while other funding came through partnering with AgriSeta. The NAMC was trying hard to get partners for extra funding. Funding remained a challenge for them to execute some of the projects, and they had not stopped engaging with the new Department on this matter.

Mr Bonani Nyhodo, Senior Manager: Agricultural Trusts: NAMC, said there were business linkages they were involved in for some of their programmes. One of their programmes was being done in partnership with the Western Cape, especially the deciduous industry. Some of the funding came from overseas. A programme of replanting and certifications was being done through the blended finance model.

Mr Montwedi that commented the EFF would contribute to the success of the government in bringing services to the people. He was pleased with the amalgamation of the Departments of Agriculture and Land Reform and Rural Development. NAMC could be heading in the wrong direction in its efforts to identify markets, because there were no new markets, especially for the grains such as lucerne, barley, etc.  He wondered why the entity was not introducing a grading system for the grains, seeing that it seemed not to have internal capacity. He said black farmers were being robbed during the grading by being paid less, because their product was perceived to be no good, yet the buyer would sell the product at a higher price.

Mr Nyhodo agreed it was true that a reasonable amount of lucerne that was produced was not accounted for. In the grading of lucerne, there had been a machine imported from Italy. However, when it arrived in SA, it was calibrated and made to belong to the Lucerne Trust.

Ms Breedt wanted to establish the number of farmers trained by the NAMC, because nine out of ten black farmers were not meeting their needs.

Mr Xalisa explained they had a qualified veterinarian as a programme manager. Before they opened any facility, they always provided training to the local communities. They had also started to educate people in communities that feeding a young animal was more profitable than feeding a five-year old animal, because these two animals were responding differently to feeding. The old ones were taking a long time to respond to the feed. Those were the basics they were educating smallholder farmers on in communities.

The Chairperson enquired if the Parliamentary grant funding it was receiving through the export earning programme was enough to realise the work of the entity.  He also wanted to understand what the Department was doing to correct injustices in the trading of animals between buyers and sellers, especially in rural areas, because white farmers were buying livestock from rural black farmers at a price of between R2 000 and R3 000, and then gave the black farmer a heifer. The white farmers would then put the bought animal on a feedlot for 60 to 90 days and then sell it at anything from between R15 000 and R20 000.

Ms Steyn added that in the past many feedlots had been built, but had ended up being dysfunctional. The purpose was to address the injustices the Chairperson had referred to.

Mr Xalisa said the programme was previously funded by the Department of Rural Development and Land Reform, and now he hoped it would be financed by the newly established Department.

Mr Mlengana agreed the injustices were there, and were not growing the local economy. Feedlots in villages were a good concept, but sustainability remained the challenge. The whole matter had to do with the coordination of efforts.

Mr Xalisa said the injustices were a sad reality. Some of the injustices manifested themselves during winter time, when animals were dying because there was no grazing. White farmers usually came to buy these weak animals for next to nothing, and made fortune out of the situation. NAMC’s interventions had been always there for people not to lose their property during winter time. He warned however, that before one could market one’s stock, one had to have created an appetite for one’s livestock in the market.

Deliberations with the ARC

Ms Tlhape wanted to establish what the impact of expanding beyond the sector would be, seeing that the entity was proposing to re-examine its business model by considering expansion out of the agriculture sector.

Dr Moephuli said the proposal was about generating income streams. They were generating a lot of weather data for the agriculture industry and insurance companies. The entity was not shifting away from its mandate. They had recognised that the spread of clients in agriculture was not growing. The majority of the land reform beneficiaries were not paying the ARC. All had been paid through the Parliamentary grant. The farmers were getting a free service.

Mr Montwedi wanted to know what the role of the ARC was in the provision of seeds and fertilisers. It had to improve its capacity and distribute free seeds and fertilisers to farmers. He added that the budget cuts meant the great contribution agriculture was making to the gross domestic product (GDP) was not being taken seriously.

Dr Moephuli said the ARC was a research and development organisation. They were handing over research data to the producer. The entity was not in the business of conducting research on fertilizers, although they were conducting tests for the development of new fertilisers.

Ms Mahlatsi asked the ARC if it would be able to implement its programmes, despite the human capital challenges.

Dr Moephuli responded that the impact of the budget cuts was visible in the human capital area. They could not fill core business posts. Many staff members, from mid to senior management level, had not received salary increases, so many had left.

Ms Breedt enquired how financial constraints and inadequately managed assets were going to make it possible for targets to be achieved.

Dr Moephuli said it was the Department that could provide the answer for the financial constraints, because the constraints were not a decision of the ARC. The impact was that it was difficult to source external funding for doing further research and retaining skills in the organisation.

Ms Maureen Manyama, Chief Financial Officer (CFO): ARC, pointed out that the inadequately managed assets were the result of long outstanding debtors, and were mostly from the government. That was money owed to the ARC. 60% of the Parliamentary grant was going towards personnel costs. That was why they had to relook their business model. They were trying to recover money from staff debtors and other general debtors.

Ms Mbabama wanted to know when last the ARC was profitable so that the Committee could offer solutions going forward.

Dr Moephuli clarified that the 2015 financial year was the last period the ARC had seen a profit. The entity was now relooking its business model and reviewing the number of its staff.

The Chairperson asked the ARC to clarify the challenges it was facing, because they reflected poor leadership and no compliance with legislation.

Dr Moephuli responded that the challenges illustrated the organisation was coming from a period when it had had budget cuts for the past three years. The agriculture sector had not been expanding so that the entity could get more business while it was losing the Parliamentary grant. Audit improvement plans had been submitted to the previous Portfolio Committee.

Ms Manyama added that the audit outcomes had been negative for two years. As a result, many things within the organisation had been reviewed in order to improve controls and procurement. It was hoped the 2018 audit would show a better outcome.

Mr Mlengana said the Department had advised provinces to buy the products of the ARC, and had told the ARC to be competitive in its pricing. It was true the Department was owing the ARC money. The Department had done a cost-benefit analysis which indicated the ARC’s work was valuable to the country. It was cognisant of what was happening within the ARC, and would provide assistance to the entity.

Deliberations with OBP

Ms Breedt wanted to know if the targeted R234m was realistic for generating profit during the financial period, seeing that there was limited state funding.

Dr Dungu replied that the OBP was sustainable. It could sustain itself, but it needed to be more efficient and address its current challenges. Productivity had dropped because of technical challenges, but it was still profitable.

The Chairperson asked if the OBP was still able to survive on the sales of vaccines, and what the shortcomings of that were.

Dr Dungu explained that vaccines had been produced, but they had not been sold. They were kept in storage. The OBP could compete with any multinational on products and prices, but the problem was that it could not tender or bid for business.
 
Ms Steyn then made a suggestion to the Committee. After deliberating with these three entities, she proposed the Department should start looking at the restructuring of the entities, because separating them was not working. It would be a good idea for the Committee to engage with the Department to see if the entities were doing what they were supposed to be doing. Lots of entities had been split during the restructuring of the country, just like the departments. The entities were now costing the country lots of money.

Deliberations with Ingonyama Trust Board

Ms Steyn commented that the presentation had said nothing. It was hard to understand why the current board had indicated the budget was not quantifiable on the public-private partnership. She asked the entity to explain the tenure rights it was referring to, and enquired about the number of board members in the ITB.

Mr Justice Jerome Ngwenya, Chairperson: Ingonyama Trust Board, said neither the Board nor the Trust were generating income. The income was coming from the leases.

Mr Lucas Mkhwanazi, CEO: ITB, said the ITB included all the people employed by the Board to do the work, plus the eight members of the Board.

Ms Mbabama asked the entity to explain what it meant by a ‘phased-in approach’ when it came to vacancies.

Mr Ngwenya explained the budget they were getting from the Department was limiting them from filling the vacancies. They would start to fill the vacant posts as the money from the Department started to trickle in.

Ms Breedt wanted to establish the staff component of the organogram, seeing that more money would be needed for salaries.

Mr Ngwenya said the previous organogram had reflected 80 people, while the current one was showing 50 people. Money was needed to fill these vacant posts.

Ms Mahlatsi said she did not want to engage with the ITB, because the presentation was a ‘mixed-masala’.

Mr Montwedi commented he was concerned about the separation of reporting of finances between the Trust and the Board. He found it difficult to comprehend why the entity was looking at developing new policies for the current financial year, yet these had been developed during the previous year. It was not clear what the ITB was doing with these policies. In fact, it was supposed to be guided by government policies and subscribe to them. He then wanted to know if the ITB was getting money from the KZN legislature, and wondered if the Funda Zulu Bursary was not excluding other people who were not Zulus.

Mr Ngwenya said the ITB was receiving no money from the provincial legislature. The Funda Zulu Bursary’s name was not discriminatory at all, because it had more than 252 different beneficiary clans.

Mr Capa asked if the entity was part of the Department.

Mr Ngwenya replied that the Department had to answer that question.

Ms P Tshwete (ANC) commented she was neither lost nor confused, but disappointed. The presentation had talked of the ITB as having only one programme -- administration. Then along the way, finance figures had just disappeared. The presentation had also not indicated the nature of the vacancies to be filled. She proposed the Committee be furnished with the actual APP of the entity, not what had been presented.

Ms N Mahlo (ANC) asked the Minister to look at the quality of management of the ITB and the Ingonyama Trust. The ITB should let the Committee know about the rural land it was developing. The entity had also failed to explain how the Traditional Council support was done. The Committee needed a fresh document, because the presentation focused more on the Board and Trust, but not on the Department sponsoring the entity.

Mr Mkhwanazi referred to rural land development, and explained the projects they undertook had been initiated by the communities, various Traditional Councils, and other locations. The list of the projects would be sent to the Committee. For example, the projects were about agro-processing, aquaponics, etc. Usually, they would identify a piece of land and ensure it was secured. They had plans for the development of infrastructure, and were also assisting in the implementation of these community projects.

Ms Tlhape observed that if the Department really believed the ITB was serving the interests of KZN, then it should duplicate what the ITB was doing in other provinces. It was not acceptable to have one Board for one province. She further pointed out there was no clarification provided on the public-private partnership, but only three companies’ names were provided.

The Chairperson commented that the ITB had been using taxpayers’ money since its inception. There were kings and queens that had been recognised in SA, but no support had been given to them. On the other hand, the ITB was being given support because of its association with King Zwelithini. The Committee was not against the king, but wanted to know more about how the taxpayers’ money was spent. Last year, the Committee had visited the ITB offices and been informed that from the money collected from each household, 10% went to the Board and the rest to the Traditional Council, but this was not reflected in the financial statements. He wanted to know what constituted ITB land, and asked for clarity on “ITB1” and “ITB2.”

Mr Ngwenya explained that ITB1 was an application one made when one wanted a formal tenure in order to get money from the bank. No money was required for completing an ITB1. ITB2 was just a confirmation of having tenure rights. No payment was required for an ITB2. He added that the Ingonyama-owned land comprised 252 traditional councils, and all their land was registered under the Ingonyama Trust.

He said the Board was administering the laws that had been passed by Parliament, especially the law that had created the Board. The reason why the ITB was in existence was because it was a national entity by virtue of owning the land. The entity had come into existence around 24 April 1994 even though it was not created by the government. After 1994, Parliament had rewritten the Act, section by section, and it had come into effect on 2 October 1998. The king was created as the sole trustee, with no Board. Then Parliament had created a Board with eight members, though it was not a Board of Trustees, appointed by the Minister after consulting with the Premier of KZN, King Zwelithini and the Provincial House of Traditional Leaders. When the Public Finance Management Act (PFMA) was passed, the ITB had become an entity of the Department. The ITB was following the principles and prescripts of the PFMA.

For the last financial year, the Department had given the ITB a budget of R20m. The Ingonyama Trust was owning the land on behalf of the people. Before 1994, the land owned by the ITB did not fall under the government. The ITB had been established in terms of the Act of 1994, and if Members were confused, they were free to change the laws.

Minister Didiza made it clear to the Committee that some of these matters needed to be revisited. The ITB was one of those legacy issues. The consolidation of land belonging to the communities had already been merged under the KZN government of the time, but this had been taken over by the new national government. Though that was the case, it was very important to consider if the Department still needed to support this instrument, because it was a carry-over. She understood why Members were asking to review this structure, which was the product of the country’s democracy. Members’ questions were on the governance and structure of the ITB, because there was the Board which dealt with administration, while the Trust tackled land tenure management. Concerns from Members were causing discomfort, especially when they had to answer to their constituencies. The Department would need to come back with solutions on this matter.

Deliberations with the Commission on Restitution of Land Rights

Ms Tlhape commented the Department should get value for money for investing in these entities in order to deliver land claims, because access to land was very important.

Ms Mahlo wanted to find out what would happen to the land which had not yet been given to people, even though it still belonged to the government. The land was being leased to the people, but the money was not going to the government.

Ms Ntloko-Gobodo said this matter was being handled by the Land Reform Programme. The DRDLR could answer that question.

Mr Capa commented that the challenges and financial constraints of the entity were caused by the lack of funding, which should be highlighted. He said one could see there was a willingness to do the work, but budget cuts were the problem.

Ms Breedt enquired what the current backlog was in terms of land claims.

Ms Ntloko-Gobodo responded that in 2016, the Commission received 216 000 land claims. In 2018, Parliament had asked the Concourt for an extension. During March 2019, the Concourt had denied Parliament the opportunity to consider new order claims. It said the old order claims should be finished and settled first. The old order claims were about 80 000. The Commission had problems with statistics, and application forms in some instances had been duplicated, so the statistics were being reviewed. The Commission had now been left with 5 000 claims to be settled. It was careful about the settlement agreements it had to offer per year, as that was also dependent on the reports it was getting from the OVG.

Ms Steyn asked how many court cases the Commission was dealing, and what their nature was.

Ms Ntloko-Gobodo said the land rights management facility was the unit dealing with litigation and disputes between parties. Currently, the facility was handling 348 cases.

The Chairperson remarked he could not figure out why there was a cut off date for lobbying for land distribution claims, because the land problem had started many years ago and had been legislated in 1913. He asked for an update on the informal settlement upgrade (ISU) reports on allegations of corruption by some officials. How far was the Commission in concluding outstanding land claims? What was the capacity of the Land Claims Court in respect of judges and researchers?

Ms Ntloko-Gobodo replied that they had not received any reports implicating some staff members in land claims misdemeanours. There had been no direct feedback on investigations affecting senior members of the Commission. She said that in the past few years, they had reduced land claims. There were backlogs, though there was progress. Land could not be handed over to fighting communities. Finally, she pointed out there had been an assumption the Commission would run for five years, hence there were no permanent judges. Now the Judicial Services Commission was considering the matter of appointing permanent judges.

Deliberations with the Office of the Valuer General

Ms Mahlo said that the evaluation of the land should not take a long time, because people were sitting on a time-bomb, and the OVG should ensure the dreams of the President were realised.

Ms Tshwete observed there was a huge leap from the 2018/19 budget of R13m, to the 2019/20 budget of R20m, especially on compensation of employees. The number of surveys to be carried out during the current financial year was indicating staff shortages.

Mr Capa enquired if the 50 days to get evaluation reports was optimum or too short.

Mr Motsoeneng replied that 30 days were usually given to land owners to respond when the OVG had concluded its work, to exhaust all the issues. The other 20 days were for making offers. He pointed out their valuations were two-fold: when they were determining equitable valuations for land reforms, and when conducting market valuations for the government department to acquire or dispose of property.

Ms Mahlatsi commented the reason why the OVG had been separated from the DRDLR was to deal with a conflict of interests, so that the Department would not be the referee and player at the same time. The Department and its entities should sit down and thrash out issues that could hinder them from meeting the targets. She then wanted to find out if there were any action plans in place to ensure there was capacity in the OVG so that it could meet its targets.

Mr Motsoeneng replied there were two acting roles – his own (Chief Operating Officer) and that of the Valuer-General. The rest were permanent. Their targets were low because they wanted to focus on the core business and support land reform. The major challenge was a lack of capacity.

Ms T Mbabama (DA) said that the OVG’s office had to be capacitated or closed down if there was no budget for it. The people who were manning the entity were doing a great job under the circumstances, though they were in need of support.

Ms Steyn asked if there were any court cases the OVG was dealing with.

Mr Motsoeneng replied that in most court cases, they were not cited as the OVG. They became the small battle in the fight for the acquisition of land. They had never been sued directly as the OVG.

The Chairperson remarked it appeared there was a lack of common procedures and guidelines in the way the OVG was doing its work.

Mr Motsoeneng disagreed, saying there were procedures and guidelines they were following in the work they were doing. All was included in the regulations.

Deliberations with the DRDLR

Ms Tlhape said she was happy with the merger of the two departments to speed up service delivery, align resources and avoid duplication. The only thing that needed to be accelerated was the water licensing for smallholder farmers. She indicated it would be prudent to look at the structural dynamics of the CPAs instead of focusing on compliance with legislation only, because they were in courts every day. She added the presentation had said nothing about Comprehensive Rural Development Programmes (CRDPs).

Ms Mnukwa replied that there was a huge opportunity to explore interdepartmental arrangements for water licences. The timelines from the Water Department were usually at 120 days. She agreed with the idea that the work of the Fifth Parliament should be considered when looking at the functional dynamics of the CPAs. The Cabinet had resolved that they should look at the poultry and beef value-chain in the CRDPs.

Ms Tshwete wanted to establish what the plan was for attending to non-acceptance of offers by land owners, because the country had passed the stage of willing buyer-willing seller.

Ms Mnukwa said when it came to that, they were working with the Department of Public Works (DPW), because it was the custodian of the Expropriation Act.

Mr Capa remarked that rural development ought to be a way to address urban bias, but this bias was linked with land reform. This indicated the reconfiguration process was important and urgent. During oversight visits, it had become clear there was a conflict between land reform, land distribution and agriculture. It was hoped this would be a thing of the past. Social relations on the farms had not been addressed, and there were still slave and master issues. Workers were still not protected and this had to be linked within rural development. He pointed out the presentation had not indicated the locations of the enterprises supported. They had seen people being given land, but there was no infrastructure development, such as water and electricity.

Ms Mnukwa said there had been a reduction in the number of hectares acquired. The Department had taken part of the budget for land acquisition and used it for farmer development, hence there were farms that would be assisted with land development to ensure their maximum capacity.

Mr Montwedi said he wanted to demystify the narrative that blacks could not farm. There were successful black farmers in his area. The problem was that the government was allocating land to people who did not have cattle or trading stock. In some instances, land was given to a farmer with a trading stock, but the infrastructure was bad or non-existent at all. Now, most time was spent on improving the infrastructure. When a person was given a farm, the Department had to ensure the infrastructure had been evaluated. He further stated that the National Rural Youth Service Corps (NARYSEC) was a good programme, but people on it did not have permanent employment and were in need of training. He suggested when a person gets or buys a farm, the Department had to implement the business model the previous farmer was operating on. The business model should not be changed if it was working. The Department must not give people farms and set them up for failure.

Ms Mnukwa said the Department was busy reviewing the policy around the NARYSEC programme so as to achieve youth development initiatives. They were looking at hindrances like Treasury regulations, so that the programme yielded the desired results.

Ms Mahlatsi pointed out the presentation was not clear on youth development programmes, and there was no such a thing as young people not wanting to farm. NARYSEC was the vehicle to give opportunities to young people who wanted to farm.

Ms Breedt wanted to know how far the Department was with the amalgamation of the two departments of Agriculture and Rural Development and Land Reform.

Ms Mnukwa replied they had started to look at overlapping functions in terms of human resources and finances, to avoid duplication. The matter had also been discussed with the Department of Public Service and Administration.

Ms Mbabama remarked she could not see what informed the figures for the targets. She was supporting the view that the Committee and Department should consider what the Fifth Parliament had done with regard to CPAs, because a lot had been researched and written about them, but there were still problems. Oversight visits to leased farms should be done, because that would help to develop trust with the Department instead of being told that A and B had been done. Lastly, she commented that the finance presentation had been silent on achievements.

Ms Mnukwa indicated achievements would be provided and discussed in detail when the Department presented its annual report.

The Chairperson suggested the Department should implement consequence management, because the ISU reports were talking about the mismanagement of funds. By not prosecuting people, the Department was putting the government in a bad light. He pointed out that pilot projects that were started should not be abandoned because there was money invested in those projects for the benefit of the communities. He asked the Department to provide an update on AgriParks.

Ms Mnukwa said a comprehensive report on AgriParks would be made available to the Committee.

Minister’s comments

Minister Didiza said there was a need to verify some of the things that had come out during the discussion. She admitted there was a lot of duplication in farmer development, hectare acquisition, etc. What had emerged clearly during the discussion was the lack of land management. On selection methods for farmers who needed farms, it was important to consider those who were farming already but wanted expansion and had a passion for it. The success rate would then be better than it was now. The selection methods needed to be reviewed.

She further indicated the Department needed to expand the training provided on NARYSEC. The focus should be more on basic farming techniques and farm management. Support measures from the Department needed to be reviewed to ensure farmer support was working, instead of giving a farmer implements for farming, only to discover there was no infrastructure in place.

About CPAs, the Department needed to deal with institutional arrangements, because it could deal with the legislation compliance matters.

Lastly, she pointed out the Department had to seriously look into consequence management, because it was still going to be given the ISU reports. It should study them to see what could be done, and report back to the Committee.

She said the engagement with the Committee had left them wiser than when they came to the meeting.

The meeting was adjourned.