Impact of SONA & Budget on DALRRD Sector; with Deputy Minister

Meeting report

Opening remarks by the Chairperson
The Chairperson said that the State of the Nation Address (SONA) this year had been clouded by the ongoing energy crisis. The formal and informal agricultural sectors alike were being deeply affected at all stages of the agricultural value chain. President Cyril Ramaphosa said that the government would work to mitigate the impacts of the electricity crisis on farmers, small businesses, water infrastructure and transportation. In addition, the Presidential Employment Stimulus Initiative (PESI) has provided 140 000 small scale farmers with input vouchers and will provide 250 000 more in 2023. Another thing government would do was to address anomalies in hemp permits to allow larger operations. SONA 2023 also affirmed the government’s commitment to expediting the provision of title deeds for subsidised housing. The Department of Public Works and Infrastructure (DPWI) would transfer 14 000 hectares of state land for housing. The Chairperson said that the Portfolio Committee would not lose sight of some of the core functions of the Department of Agriculture, Land Reform and Rural Development (DALRRD) that were not specifically mentioned in the SONA, such as addressing the unequal ownership of land among small scale farmers.

Opening remarks by Deputy Minister Zoleka Capa
Deputy Minister Capa explained that the presentation would look at the planning involved to ensure that the Department hit the road running based on the President’s instructions in the SONA. The presentation would also indicate which direction the government was going. The Department has listened carefully.

Briefing by DALRRD on its responses to the SONA 2023 and Budget Vote 2023/24
Mr Mooketsa Ramasodi, Director-General (DG), DALRRD, took the Committee through the presentation.

Priority 1: Addressing loadshedding
A task team had been established to deal with loadshedding issues affecting the agricultural sector. The task team has met with Eskom and proposed short- and medium-long term solutions.

(See slides 6-7)

Priority 2: Comprehensive social compact
Mr Ramasodi shared progress on the Agriculture and Agro-processing Master Plan (AAMP), the Sugar Master Plan, the Poultry Master Plan and the Cannabis Master Plan.

(See slides 7-11)

Priority 3: Investment drives
Memorandums of understanding (MOUs) were signed with Saudi Arabia and Cuba to enhance agricultural development, cooperation, trade and investment. A trade and investment mission to target West African countries was planned, and South Africa would participate in the negotiation of trade agreements.

(See slides 12-13)

Priority 4: Economic structural reforms
In the ports and rail sector, there have been engagements with the Department of Transport (DoT) and Transnet around the upgrading of port infrastructure, the deciduous fruit industry had pledged financial support towards improving grain handling at ports, and efforts to shift fruit and vegetable cargo from road to rail continued. In the water sector, the Department had participated in the establishment of the Jozini and uMhlatuze Water Associations and had participated in the Committee for the transfer of the bulk infrastructure of the Makhathini Irrigation Scheme with the Department of Water Affairs.

(See slides 14-15)

Priority 5: Infrastructure investment
Various irrigation schemes were being undertaken across the country.

(See slides 16-18)

Priority 6: A substantial increase in local production and support to Small, Medium and Micro Enterprises (SMMEs)

(See slides 19-20)

Priority 7: Addressing unemployment, poverty and the rising cost of living
The Department would place 1 000 unemployed graduates on farms for two years for entrepreneurial development. A further 900 youth had been awarded bursaries through the Department’s external bursary scheme to pursue various careers in agriculture, land reform and rural development. The Department aimed to enrol 800 new students at agricultural training institutes in 2023/24. The requirement for work experience for young people seeking entry-level positions had been removed. The Department would continue to clear the backlog of title deeds, which currently stood at 1 million houses and it would work to reform the title deeds system to be more accessible.

(See slides 21-23)

Priority 8: Addressing poverty through providing quality education, skills and health
The Department was working with public and private sector partners to increase absorption into job and enterprise opportunities. 4500 youth would be trained through the National Rural Youth Service Corps (NARYSEC) programme starting in May 2023, in partnership with the South African National Defence Force (SANDF) and the National School of Government. A further 485 young people would be linked to job opportunities and 309 young people would be supported with business development.

(See slide 24)

Priority 9: Fight against crime
The Department had developed a rural safety strategy in conjunction with the South African Police Service (SAPS), the South African Local Government Association (SALGA) and other stakeholders with the aim of preventing crime and violence affecting rural communities.

(See slide 25)

Priority 10: Fight against gender-based violence and femicide
The National Strategic Plan on Gender-Based Violence and Femicide would be implemented by creating an enabling environment for women entrepreneurs, making it easier for them to participate in government procurement opportunities, for example.

(See slide 26)

Priority 11: Building a capable, ethical and developmental state
The Department would address the backlogs of disciplinary cases and training initiatives, fill vacant positions, train initiators and presiding officers, train managers and employees on labour relations processes, and partner with state law advisors in the appointment of law firms for complex cases.

(See slide 27)

Priority 12: A better Africa and world

(Please see slides 28 and 29 of the presentation for further details)

Discussion
Ms M Tlhape (ANC) raised concerns about the PESI. A few days ago, she had read that an investigation into the PESI had been announced, and she hoped that the Department would brief the Committee on PESI issues at some point. She was also concerned that the Department was constantly planning and changing its plans around Agriparks, so it never reached the implementation stage. The programme would not be implemented at this rate even in the next 15 years. She asked what the Department had done and was doing to increase access to blended finance for black farmers and businesses. She asked about the potential risks and benefits of new agricultural commodity export protocols with Asian and Middle Eastern countries, the United States of America (USA) and the African Continental Free Trade Area (AfCFTA). How did the Department intend to expand its trade with these countries? She asked the Department to take greater ownership of the Poultry and Sugar Cane Master Plans, which were officially the responsibility of the Department of Trade, Industry and Competition (DTIC) but were still related to DALRRD in the eyes of the intended beneficiaries. She hoped the Cannabis Master Plan would benefit farmers and women in rural areas, especially in the Eastern Cape. The Department had built a beautiful website but when people applied, there was no response. She observed that the Northern and Eastern Cape were conspicuously absent from the Department’s plans around infrastructure development and SMME support. She said that the Committee would look at whether the recommendations of the joint meeting with the Portfolio Committee on Employment and Labour regarding farm labourers and tenants would be implemented. She was happy that the DG had spoken about the issues of women, not only in the context of gender-based violence but discrimination. The policy adopted two or three years ago had not borne fruit. For example, many women were removed from land after their husbands had passed away. In general, the district development model should be used to deal with the challenges posed by the SONA. The Department should take stock of previous SONA commitments so that they are not forgotten, but rather incorporated as it moves forward, because promises made to people would never go away. For example, land redistribution targets had not been met. She suggested that the Committee take a stocktake of previous SONA commitments and how much the Department achieved.

Ms T Mbabama (DA) said that she had some connection issues. She also made some comments in Xhosa.

Mr N Masipa (DA) thanked the Department for the presentation and for all the hard work being done to resolve the energy crisis but noted that it was important for the Committee to know who would do what and when. Who was responsible for ensuring that excess energy produced by farmers was fed back into the grid, for example? Had Eskom agreed that agriculture was an essential service entitled to prioritised energy? He asked for information on the PESI, including data on how many jobs had been created and in which sectors. He recalled that oversight visits revealed that many rural households had received fertilisers and other items they did not need. What criteria were used to ensure that real farmers, not fake ones, received the input supplies and support that they needed? All the agriculture Master Plans were threatened by the energy crisis and the country’s recent greylisting. Were the implementation plans adjusted to reflect these challenges? He asked for an update on the budget reprioritisation that was being undertaken to implement the Master Plans. He welcomed the blended finance report despite being short and lacking detail. He suggested compiling a comprehensive report on all blended finance across the sector. It was important that the Committee receive feedback on the impact this blended finance had on the sector. He noted that the President had failed to cover bio-security in previous SONA’s and budget votes. What happened to the ministerial task team report on animal bio-security? He had brought this up numerous times, and the Committee is responsible for ensuring that it gets hold of this particular report. He supported Ms Tlhape’s suggestion to take stock of the Department’s previous SONA commitments. He asked the Department to take the Committee into its confidence on the progress of agricultural land reform. During the previous quarter, the Department failed to receive a clean audit, which was primarily tracked by land reform performance. He asked for more details about African trade and the high tariffs imposed on the wine industry in African countries. For example, Kenya, Nigeria, Uganda, Cameroon and Rwanda all imposed tariffs in excess of 20%. What progress had been made in negotiating these tariffs down? Preventing animals from roaming and spreading diseases was an important task, and rural communal farmers also needed windmill pumps and dams to address water shortages during droughts. He welcomed the NARYSEC programme but was also aware of corruption problems. He agreed with Ms Ntlhape that implementing the Agriparks programme was disastrous. Millions had been wasted. Was it really necessary to continue spending on this programme that has shown so little return?

Mr S Matiase (EFF) argued that the Department’s report and the SONA itself were both essentially sophistry: clever but false arguments intending to deceive. The Department was high on diagnosing problems but very low on providing practical solutions. In this respect, it was consistent with the regime of the ANC as a whole. The Department was hiding behind a disclaimer of a President who did not seem to know what he was doing. The country had known for almost 25 years that Eskom’s capacity to provide electricity would be exceeded at some point. He agreed with the Chairperson that loadshedding was making farming much more expensive. Farmers now had to absorb increased capital outlays for generators and extra costs in addition to already high costs of things like fertilisers and shipping. The energy crisis was disrupting the lives of millions of people. The crisis should galvanise South Africans to join a planned protest on 20 March. The problem in South Africa was not a problem of resources but a problem of leadership. For example, in 2021, the Minister had denied that the country would face food shortages in the foreseeable future, but the country was now facing imminent food shortages and had become a net importer of agricultural products. Everything in the presentation related to plans to deal with food insecurity was aimed at deceiving the Committee and the country into believing that people were working on solutions. The country had to take a bold stand on investing in the agricultural sector. It should impose serious tariffs and non-tariff measures on imported food products.

Meanwhile, the agricultural sector should be subsidised, especially small scale farmers, and a culture of using every available piece of land for food production should be promoted. There was land near Bloemfontein, for example, that was not being used productively. In the next meeting, the Department should bring practical solutions to the problems and what it intends to do around the AfCFTA, rather than cheap talk.

Ms B Tshwete (ANC) was excited to see that some of the Committee’s input had been incorporated into priority eight. She acknowledged the intake of NARYSEC and the new youth development and empowerment programme. She applauded the Department for increasing the number of young people trained through NARYSEC. She asked what steps were being taken to address the political tensions in promoting international cooperation through multilateral forums such as the Group of 20 (G20) and Brazil, Russia, India, China and South Africa (BRICS). She asked the Department to share information on access roads that it had built. Was there a partnership with the Department of Public Works and Infrastructure (DPWI) or the DoT? She shared concerns about the absence of certain provinces from the Department’s infrastructure development plans. What was the reason for it? What measures would be taken to address potential threats to the proposed solutions to resolve the electricity crisis? She welcomed the provision of vouchers but wanted to know how the Department planned to close loopholes in obtaining them. How were the Department’s vouchers different from PESI vouchers? She welcomed the use of blended finance to address historical imbalances but was also concerned about the selection policy. She asked whether the Department had been engaging with other departments on the Cannabis Master Plan to remove the red tape that was preventing the granting of licenses.

Ms T Breedt (FF+) said that the Auditor-General of South Africa (AGSA) had raised a number of challenges around the PESI. The Department should specify how they had addressed these challenges. For example, it had been unable to prove that the rightful farmers received the vouchers or even that the voucher had indeed been received at all. The Department has spoken a lot about the loadshedding scheme and their plans with Eskom. This was welcome as the country could not afford to lose another 50 000 chickens due to irregular electricity supply, as had happened recently at a farm in the North West. But how were these plans going to be financed? A study should be done on the impact of loadshedding on the agricultural sector. She observed that a lot had been said about the farmer production support units (FPSU) and Agriparks, but she would have preferred to know time frames for things like building fences and roads. She asked if there were service level agreements with departments such as the Department of Water and Sanitation (DWS) and Cooperative Governance and Traditional Affairs (COGTA) about infrastructure projects, and if not, why not? There is a lot of discussion around title deeds and lands being commissioned for housing purposes. She asked whether the Department had a target for transferring land for agricultural purposes, and whether it expected to meet such a target. She noted that phase one of the electronic deeds registration system programme for housing title deeds had not been achieved and asked whether this problem had since been fixed. She asked what funding was in place for fencing and dipping tanks, what the time frames for these projects were and who would actually be implementing them. She asked what business development plans the Department was assisting with in the agricultural value chain. She pointed out that although the NARYSEC programme aimed to train 4500 youth, the number of job opportunities created was less than 500. Could the Department be sure that the skills being taught in the programme were the skills needed in the job market? 

Ms N Mahlo (ANC) asked what measures would be taken to address potential threats to the proposed solutions to the electricity crisis. How would the solutions be monitored and evaluated? How would the proposed installation of micro-grids and battery containers for critical periods such as harvesting and irrigation? What additional solutions should the ministerial task team consider to address pressure points that affect the agricultural sector? She asked how the Department could ensure that the AAMP promoted inclusiveness and addressed historical imbalances in these sectors. How would the Department work with traditional leaders and communities to effectively bring land back into production? She asked whether the Agriparks programme was sustainable and whether it would expand to support farmer production and commodity corridors. She said there was a need to review the blended finance module to ensure it accommodated black producers and small businesses seeking finance.

Mr H Kruger (DA) said loadshedding was a major crisis for farmers. He asked whether farmers registered as sole proprietors rather than as businesses would qualify for tax deductions related to electricity production. What provisions, if any, were in place for farmers who might want to form a cooperative to generate electricity for themselves and the community? He recalled that the President had formed a red tape reduction unit in the 2022 SONA but had said very little about it this year. Prior to that, two private members’ bills had been introduced and rejected. Red tape reform would never take place without a policy framework.

Mr N Capa (ANC) said that the Committee needed a report on how much of the Cannabis Master Plan had been implemented and the current challenges and problems. He was concerned that no provision for existing producers of cannabis and hemp was being made, because this suggested that the main beneficiaries would be established American drug companies. What were the plans concerning existing producers and cultivars? He agreed with members who argued that the Agriparks were impractical and did not achieve what they were intended to. He asked whether free range poultry farming had been considered as a way of reducing dependence on the electricity supply. He suggested that the persistence of race-based violence in the agricultural sector and in rural areas more generally should be looked into, alongside gender-based violence. He was worried that the Department’s performance metrics were not based on what society regarded as important. He suspected that the technocrats and bureaucrats in the Department were only concerned about performance on paper.

Mr M Montwedi (EFF) said that the 2023 SONA did not actually speak to the issues of the restoration and the return of the land. It reminded the people once more that the ANC government had sold them out on this issue. It was clear that the issue of land redistribution was not a priority in 2023. Did this imply that the hunger of small scale farmers had been satisfied? How many hectares of land had been redistributed in 2022? How would these new priorities in 2023 affect the priorities of earlier years, especially on land reform? He asked why land that DPWI was sitting on had not been mentioned in the presentation. He welcomed the mention of the revitalisation of water infrastructure, which was a longstanding issue and had been mentioned in 2014 by then-President Jacob Zuma. He called for the Department to provide the Committee with more details on this. He said he had written a letter to the Department about an agreement to assist farmers in a certain area with bulk water.

Ms Mbabama was uncertain whether the Department would be able to satisfy all 12 priorities in this financial year. She welcomed the cooperation with other departments. She doubted whether the goal of moving fruit and vegetable cargo from road to rail was realistic, given the deterioration of the rail network over the last 30 years. She asked whether any irrigation schemes were planned for Ncorha in the Eastern Cape. She argued that the lack of title deeds among emerging farmers was an ongoing crisis. Did the Department have plans for granting title deeds for lessees of government land? This was important and had to be resolved. She was concerned that the President had not spoken about land redistribution, restitution or even tenure reform in the SONA 2023. What was the Department planning to do on land reform? She drew attention to reports of irregularity in the appointment of officials in the NARYSEC programme. Could the Department clarify what the situation was? She asked the Department to tell the Committee when goals or priorities were completed so that it could do more effective oversight.

Responses
Mr Ramasodi appreciated the Committee’s input and said that the Department’s annual performance plans would dig deeper into the issues it had raised. Rather than sophistry, the view had always been to have an honest discussion and reflection on the issues currently plaguing the country, and then devise solutions. He asked the different officials of the Department to address the specific issues.

An official from the Department said that the Agriparks programme was implemented differently in different provinces. She acknowledged that the Department had focussed on just one leg of the programme, the FPSUs, at the expense of the other two (agri-hubs and market centres). Going forward, the building of FPSUs would be handed to contractors who would be able to complete construction much more quickly than in the past. The Department would also work with National Treasury and the Development Bank to fund the development of agri-hubs and market centres and would ensure partnerships between farmers and the public and private sectors. Not much had been done in previous years to ensure that there was somewhere where farmers could sell their produce in rural areas. DALRRD also worked with the Department of Small Business Development to upgrade market centres. She said that what was included in the presentation was just a summary of the Department’s plans. Infrastructure projects were planned in all nine provinces, including the Eastern Cape (seven projects) and the North West (eight projects). This was reflected in the draft of the annual performance plan. She said that the access road mentioned in the presentation was the one the Committee had picked up on when it did oversight. The Department was looking at fencing, dipping tanks and boreholes. There have been challenges such as escalating prices above the market rate. She said that no implementing agents would be used. In the current financial year, there were 69 infrastructure projects up for completion. In the next financial year, there would be 83. She said that no service level agreements had been signed yet but a programme of action was being put in place. This matter would be attended to.

Meanwhile, work on access roads was ongoing. The South African National Roads Agency Limited (SANRAL) had agreed to allow the Department to use its app to enable communities in rural areas to report on these roads. The DoT would lead this work. The Department struggled to ensure that every youth trained through NARYSEC was linked to a job. It had been working with the youth employment service team in the Department of Employment and Labour (DEL) to ensure that the private sector was able to commit to taking up some of the trainees. There have been engagements with various stakeholders. She asked the Committee to be ambassadors of this project to the private sector where possible. Although agriculture remained the driver of rural development, the Department was not only looking at agricultural skills but also construction, hospitality, digitisation and information and communications technology and all other critical skills identified by the DEL. The draft annual performance plan would include details on the specific districts and municipalities the Department was working on.

Mr Nasele Mehlomakulu, Deputy Director-General (DDG): Food Security and Agrarian Reform, DALRRD, offered to share a progress report from September 2022 on the blended finance scheme with the Committee. It included information on beneficiaries per province, the type of commodity they were involved in, and the amount that had been advanced to them. He said that the scheme was attracting and crowding in private sector investment. R352m had been dispersed through Industrial Development Corporation (IDC), to which the private sector had added over R600m, and R18m through the Land Bank, to which the private sector had added over R18m. A detailed presentation could be made around the selection criteria, but he noted that the scheme focused on black-owned and managed commercially viable farming enterprises, while prioritising AAMP commodities, aquaculture and forestry. Enterprises with a certain percentage of ownership by designated groups were also prioritised, and the Department also considered the issue of food security. He explained that the intention of the PESI was not to create jobs but to enable people to use small pieces of land that they already owned more productively. The AGSA findings were being addressed. In particular, the issue of verifying the recipients of production inputs was being addressed. The Department had implemented a much more streamlined delivery mechanism at the delivery points, so that farmers would sign for and receive their production inputs and this information would be captured immediately.

Ms Kwena Komape, DDG: Economic Development, Trade and Marketing, DALRRD, responded to questions on international trade negotiations. South Africa had participated in AfCFTA negotiations as part of the Southern African Customs Union (SACU) alongside Botswana, Lesotho, and Namibia. The country did also hold its own negotiation positions though. Tariffs were divided into three categories according to their sensitivity. SACU’s position on tariffs for the least sensitive 90% of commodities had been harmonised and was presently being considered by the AfCFTA secretariat. It was expected that tariff reductions on these commodities would reduce over ten years. Tariffs for more sensitive commodities (amounting to 7%) would reduce over 13 years, while negotiations around the remaining 3%, which included very sensitive commodities such as ammunition, would be set aside until a later date. She said there may be many reasons that the European Union (EU) was not lowering its tariff barrier to South African products and was unwilling to speculate. However, she noted that it had been suggested that it was to protect the member states that were producing the same products as South Africa. She noted that in 2022, the export value of agricultural exports had increased by 4% to about $12.8bn, of which 37% was with Africa.

An official of the Department said that discussions on the decriminalisation of cannabis were ongoing. In the case of hemp, the only outstanding matter was around tetrahydrocannabinol (THC) levels. The Department would be meeting with the South African Health Products Regulatory Authority (SAHPRA) on this matter within a week. In the case of marijuana, discussions were still taking place. DALRRD would push for decriminalisation but the matter fell within the competency of other departments. He said that cannabis permit applications were sometimes not processed because the applicant had a criminal record or because there were land ownership issues. He said the EU was no longer a favourite export market, as it had been in the past. In December 2022, new regulations for Amarula were introduced, while the country was still battling with the new citrus regulations. The Department suspected that the regulations were not science-led but that some other driving force was behind them. It was hoping for a political solution. He pointed out that the Department did not determine what the markets should demand for free-range chicken.

Ms Carlize Knoesen, Chief Registrar: Deeds, DALRRD, acknowledged that the Department would miss its target for completing phase one of the electronic deeds registration system. One challenge was that it was obliged to use the State Information Technology Agency (SITA) as its developer due to legislation. A clause in the service level agreement with SITA would be activated that provided for experts to be brought in if it did not meet the terms of the agreement. Phase one was the most critical. In the next financial year, phase two would introduce electronic preparation of deeds and documents and electronic document logging. Systems were being tested already and there had been delays but there was an emphasis on quality. Phases three and four would focus on electronic registration and electronic delivery of the deeds and documents. She assured the Committee that backlogs were taken seriously. There was an action plan to catch up with the targets. She was unable to comment on questions about emerging farmers and leases as this fell within the mandate of other departments such as the Department of Human Settlements, even though DALRRD provided assistance where it could.

Mr Ramasodi recalled that an initial investigation into the PESI had been done by the Special Investigations Unit (SIU) and the current investigation was an extension of that one. A preliminary report had been given to the Department and the investigation would continue. The details would be shared when they became available. Criminal issues and gaps would be addressed. There was currently one disciplinary case that had been referred to the province concerned. He said that the Department should take on more leadership of the Poultry and Sugar Master Plans. They were joint projects of DALRRD on the side of production and DTIC on the side of tariffs and protection. He confirmed that infrastructure development was taking place in all provinces. He disputed the perception in the media that South Africa was a net importer of agricultural goods. It was in fact a net exporter. He said he would welcome evidence to the contrary. He said he had recently spent time in Thaba ’Nchu outside Bloemfontein, looking at the issues there, including the productive use of communal land, as there was growth potential in communal areas. He said that engagement at ministerial level between DALRRD and DTIC on EU trade would assist with moving forward because the technical and scientific discussions on citrus had come to a standstill. International trade could always be affected by external, possibly political factors, but DALRRD focused on the frameworks and avenues that it was given. He said he would report back on the issue of cannabis decriminalisation. Meetings around handling existing producers were the subject of high-level inter-departmental discussion. The issue was being taken very seriously. Existing producers had to be dealt with equitably. He said the Department had already identified areas where red tape could be removed. The speed of processing land applications, for example, should be increased. The Department was currently working on policy to ensure that land intended for agricultural purposes was actually provided to farmers and that they received title deeds. He agreed that there were complex interactions between gender- and race-based violence, and that performance indicators should reflect the actual impact of the Department’s work on the lives of South Africans. He acknowledged that SONA 2023 had not touched on land reform issues. However, the Department’s budget still provided for this issue. For example, in 2023/24, it is expected to redistribute as much as 40 000ha of land, 50% to women, 40% to youth and 6% to people with disabilities. Work on tenure reform was also ongoing. The potential of irrigation projects in areas like  Ncorha was recognised, although land revitalisation was done more on a kilometre-by-kilometre basis, rather than by revamping whole schemes. The issue of corruption in NARYSEC appointments was being dealt with. If any malfeasance was discovered, there would be consequence management. He welcomed the suggestion to inform the Committee when projects were completed so that oversight could be done. He said an updated report on blended finance scheme would be resubmitted to the Committee and a report on the Micro Agricultural Finance Institutions of South Africa (MAFISA). He also suggested that the Land Bank present to the Committee to explain its way of doing business.

Closing remarks by the Chairperson
The Chairperson thanked Members for identifying areas of concern and the Department for its well-articulated responses. He agreed with the suggestion to take stock of the Department’s achievements against previous SONA commitments.

The meeting was adjourned.