The Budgetary Review and Recommendations
Report of the Portfolio Committee on Agriculture, Forestry and Fisheries, dated
23 October 2014.
The Portfolio Committee on Agriculture,
Forestry and Fisheries (hereinafter referred to as the Committee), having
considered the performance and submission to National Treasury for the medium
term period of the Department of Agriculture, Forestry and Fisheriesreports as
follows:
1. Introduction
1.1.
Mandate of
the Portfolio Committee on Agriculture, Forestry and Fisheries.
The
mandate of the Committee is to consider,
amend and/or initiate legislation that is specific to, or impacts on agriculture, forestry and fisheries; monitor
and oversee the activities and performance of the Ministry and the Department
of Agriculture, Forestry and Fisheries (hereinafter referred to as the
Department) and its entities, namely,
1.1.1
The Agricultural Research Council (ARC)
1.1.2
Onderstepoort Biological Products (OBP)
1.1.3
National Agricultural Marketing Council
(NAMC)
1.1.4
Perishable Products Export Control Board
(PPECB)
1.1.5
Marine Living Resources Fund (MLRF)
1.1.6
Ncera Farms (Pty) Ltd (hereinafter referred
to as Ncera)
1.1.7
The South African Veterinary Council (SAVC),
which is a non-profit entity and representative professional body for
veterinary and para-veterinary professions.
The
Committee’s mandate is to also consider and review the budget of the Department
and its entities; consider sector-related
international treaties and agreements; and provide a platform for the public to participate and present views on specific topics and/or legislation
in relation to the three sectors.
1.2.
Core
Functions of the Department of Agriculture, Forestry and Fisheries
The aim of the Department of Agriculture,
Forestry and Fisheries (hereinafter referred to as the Department) is to lead, support and promote agricultural,
forestry and fisheries resources growth and management through policies,
strategies and programmes that contribute to and embrace economic growth and
development; job creation; sustainable
use of natural resources; food security and rural development. The Department’s
legislative mandate is derived from Section 27(1)(b), as well as Section
24(b)(iii) of the Constitution of the Republic of South Africa.
During the 2013/14
financial year, the Department reviewed its strategic goals
andassociated objectives to address priorities that are identified in the
National Development Plan (NDP). Through the process, the Department reduced
its strategic goals from six in prior years (including 2013/14) to the
following four goals, effective from 2014/15:
Strategic Goal |
Strategic Objectives |
1: Effective and
efficient strategic leadership, governance and administration |
1.1 Strengthen the
culture of compliance with statutory requirements and good governance
practice. 1.2 Strengthen the
support, guidance and interaction with stakeholders in the sector 1.3
Strengthen institutional mechanisms for integrated policy and planning in the
sector |
2: Enhanced
production, employment and economic growth in the sector |
2.1 Advance APAP
through increased production and productivity in prioritised value chains 2.2 Effective
management of biosecurity and sector related risks 2.3 Ensure support for
market access and processing of agriculture, forestry and fisheries products |
3: Enabling
environment for food security and sector transformation |
3.1 Lead and
coordinate government food security initiatives 3.2 Enhance skills
capacity for efficient delivery in the sector 3.3 Strengthen
planning, implementation and monitoring of comprehensive support programmes |
4: Sustainable use of
naturalresources in the sector |
4.1 Ensure the
conservation, protection, rehabilitation and recovery of depleted and
degraded natural resources 4.2 Ensure appropriate
responses to climate change through the implementation of effective
prescribed frameworks |
The Department further contributes directly
to three of the national Government priority outcomes, namely:
·
Outcome 4:Decent employment through inclusive economic growth. Due to its
labour- intensiveness
and the ability to absorb unskilled and semi-skilled labour, agriculture
has
great potential to assist Government in the fight against poverty and
unemployment. Various job creation interventions that are specific to the
sector have been identified and outlined in other Government policy
instruments.
·
Outcome 7: Vibrant, equitable and
sustainable rural communities contributing towards
food security for all. Outcome 7, which
focuses on rural development, is chaired by the Department of Rural Development
and Land Reform (DRDLR), while DAFF is co-chairing, given its role in the
economic development of the rural poor. In addition, the Department is
responsible for the Agrarian Transformation pillar of the Comprehensive Rural
Development Programme (CRDP) of the DRDLR through which it must ensure food
security through agricultural production in rural areas. In this regard, the
two Departments are expected to work collaboratively to ensure accelerated
development and increased agricultural production in rural areas.
·
Outcome
10:
Protect and enhance environmental assets and natural resources. As agriculture,
forestry and fisheries sectors are all based on finite resources, the
Department is responsible for ensuring the sustainable use and management of
these resources including rehabilitation and/or restoration of degraded areas
where necessary.
The
following are six programmes of the Departmentthrough which it carries out its
mandate and addresses its strategic goals and Government outcomes:
Programme
1: Administration
Programme
2: Agricultural Production, Health and Food Safety
Programme
3: Food Security and Agrarian Reform
Programme
4: Economic Development, Trade and Marketing
Programme
5: Forestry and Natural Resources Management
Programme
6: Fisheries Management
1.3.
Purpose of
the Budgetary Review and Recommendation Report
The process for the
budgetary review and recommendation is set out in Section 5 of the Money Bills
Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009). The Act
sets out the process that allows Parliament’s National Assembly, through its
Committees, to make recommendations to the Minister of Finance to amend the
budget of a national department. In October each year, Committees reporting to
the National Assembly must submit a Budgetary Review and Recommendation Report
(BRRR) for each department that falls under its oversight responsibilities, in
this case, the Department of Agriculture, Forestry and Fisheries.The BRRReport:
·
must provide an assessment of the
Department’s service delivery performance given available resources;
·
must provide an assessment on the
effectiveness and efficiency of the Department’s use and forward allocation of
resources; and
·
may include recommendations on the forward
use of resources.
The BRR Report may
also act as a source documents for the Standing/Select Committees on
Appropriations/Finance when they make recommendations to the Houses of Parliament
on the Medium-term Budget Policy Statement (MTBPS).
1.4.
Preparation
for the BRR Report
In
preparation for the BRR Report and in compliance with its mandate as set out in
Section 5(1) of the Money Bills Amendment
Procedure and Related Matters Act, 2009 (Act No. 9 of 2009), the
Committee undertook the following activities in 2013/14:
1.4.1
Briefings by the Department on all four
quarterly performance and expenditure reports of the Department for the 2013/14
financial year and the first quarterly report for the 2014/15 financial year.
1.4.2
Oversight visits to:
a)
TheFree State Province in August 2013 to oversee
the implementation of the mechanisation and other infrastructure development
programmes including the utilisation of conditional grants.
b)
KwaZulu-Natal (KZN), Limpopo and North West
as part of the ad hoc Committee to
exercise coordinated oversight on the reversal of the legacy of the Natives
Land Act of 1913 between 06 August and 22 October 2013.
c)
Ncera in November 2013to meet with the stakeholders
of the entity to report back on the outcomes of the Committee engagements with
the Department regarding deregistration of the entity and associated future
plans.
d)
The ARC and OBPin February 2014 to oversee
progress in the establishment of the Foot-and-Mouth Disease (FMD) Facility at
the ARC and the modernising of vaccine manufacturing facilities at OBP; as well
as progress regarding previous Committee
recommendations that were made in relation to the two entities.
e)
Ncera in September 2014 to get a better
understanding of the situation that led to the previous Committee recommending
deregistration of the entity, to determine the Department’s progress on
deregistration and to meet and engage with stakeholders regarding the future of
Ncera.
1.4.3
Invited the Auditor-General (AG) to give
input on the relevance and alignmentof the Department’s Strategic Objectives
for the 2013/14 Annual Performance Plan (APP).
1.4.4
The Committee held briefings and considered
the Strategic Plan and Budget of the Department for the 2014/15 financial year,
including those of its entities, viz. ARC, OBP, NAMC, PPECB, MLRF and Ncera.
1.4.5
On 14 October 2014, the Auditor-General (AG),
the Financial and Fiscal Commission (FFC) and the Department of Planning, Monitoring
and Evaluation (DPME) were invited to give input on the Department and the
entities’ annual performanceand expenditure for the 2013/14 financial year.
1.4.6
Subsequently, on the 16th and 17th
October 2014, the Committee held briefings and considered the Annual Reports of
the Department and all its entities for the 2013/14 financial year.
The BRR Report also draws from other expert
presentations and inputs including assessment reports from the DPME.
1.5.
Outline of
the Contents of the Report
The Report reflects on Government key policy
areas including those of the Department as they relate to the national
Government Priority Outcomes including shortcomings and developments; an
overview of the Committee’s previous budgetary and service delivery performance
findings and recommendations; the Department’s financial and service delivery
performance for the 2013/14 financial year to date; and further observations
and recommendations including those from oversight visits. As funding for the
activities of most of the Department’s entities is encompassed within the
Department’s programmes, key issues relating to only those entities that
receive budgetary allocation from the Department are discussed under those
relevant programmes.
2.
Overview of the key relevant policy focus areas
In the medium term, the Department’s plans
are informed and aligned with government-wide planning and policy mandates. Its
initiatives are focused at fulfilling Outcomes 4, 7 and 10, which respectively relate
to job creation, food security and rural development and natural resources
management; New Growth Path (NGP); the National Development Plan (NDP); the Medium
Term Strategic Framework (MTSF) and the Industrial Policy Action Plan (IPAP). This section will also provide a brief
overview of the Department’s policy initiatives for the 2013/14 financial year
and the medium term period.
2.1 The New Growth Path (NGP)
The NGPwas adopted
by Government in 2010 as a framework for economic policy and a driver of the
country’s job strategy. The NGP identifies the agricultural value chain
(agroprocessing) as one the key job drivers. This
is linked to Outcome 4 of Government’s priority outcomes and it is therefore
expected that the Department’s performance trends will show progress towards
the achievement of this outcome.
The NGP’s aim for agriculture is to create 145 000
jobs from agro-processing by 2020; to place 300 000 households in smallholder
schemes by 2015 and to upgrade employment on commercial farms, which at the
time (2010/11), stood at approximately 660 000. In total, the NGP expected
creation of 500 000 jobs from the agricultural sector (includes forestry
and fisheries) by 2020, which is a period of 8 years from 2011/12 financial
year.
2.2 The
National Development Plan (NDP)
The NDP (Vision 2030) was adopted in September
2012 as the country’s roadmap to address continuing poverty, inequality and
unemployment that are negatively affecting the lives of many citizens. Its
overarching aim is to eliminate
poverty and reduce inequality by 2030. The
NDP recognises that agriculture is the primary economic activity in rural areas
and has set out specific objectives and milestones for the sector, viz:
o
Increased infrastructure investments for the
development of new irrigation systems in the Umzimvubu River Basin in the
Eastern Cape and the Makhathini Flats in KwaZulu-Natal (KZN).
o
Channelling public investment into research,
new agricultural technologies for commercial agriculture; as well as the
development of adaptation strategies and support services for smallscale and
rural farmers.
2.3 The
Industrial Policy Action Plan (IPAP): 2013/14 to 2015/16
The
IPAPis derived from the National Industrial Policy Framework that was adopted
by Government in 2007. It is one of the key pillars of the NGP and is also
informed by the NDP. The overarching goal of the IPAP is to prevent decline in
the country’s industries and to support growth and diversification of the
manufacturing sector, which can generate jobs in a range of primary and service
sector activities. Key areas of intervention include beneficiation,
infrastructure development, local procurement and supplier development,
regional economic development and industrial integration, new export markets
and participation in BRICS. In terms of
agriculture, forestry and fisheries, the IPAP 2013-2016 focuses on:
1. Development
of the organic food sector.
2. Supporting
public-private partnerships (PPP) for food security.
3. Promote
public and private investments in aquaculture.
4. An
integrated approach to fast-tracking the issuance of water licences and
accelerate forestry development.
5. Productivity
improvement and sustainable supply of raw material for the sawmilling industry.
2.4 Medium
Term Strategic Framework (MTSF): 2014-2019
The MTSF is the
Government’s strategic plan for the 2014 to 2019 electoral term that puts into
action the NDP objectives. It is essentially the first five-year implementation
phase of the NDP that is outcomes-based, and also takes into account the NGP,
IPAP and other Government policy foci. The two over-arching strategicthemes of
the MTSF are radical economic transformation and improving service delivery.The
MTSF’s aim is to ensure policy coherence, alignment and coordination across
Government Plans, as well as alignment with budgeting processes. It sets out
actions Government will take and targets to be achieved. In terms of
agriculture, forestry and fisheries, the main policy imperatives are:
1.
Improved food security
2.
Smallholder
farmer development and support (technical, financial and infrastructure) for
agrarian transformation
Some of the performance
targets that are set out in the MTSFand are informed by the NDP include:
Outcome 4:- implementation of the APAP.
-
Implementation of
the Comprehensive Africa Agriculture Development Programme (CAADP).
-
Implementation of the
Agricultural, Forestry and Fisheries Market and Trade Development Strategy.
-
Smallholder producer (agriculture,
forestry and fisheries) development and comprehensive support.
-
Infrastructure development for
economic development.
Outcome 7: - Implementation of the Food and
Nutrition Security Strategy
-
Development and implementation of
policies that promote the development and support of smallholder producers.
-
Provide necessary support to
smallholder producers to ensure production efficiencies.
-
Ensure that 1 million hectares of
underutilised communal land and land reform projects are under production
(Fetsa Tlala).
-
Expand land under irrigation.
Outcome 10: - combat land degradation in
forestry areas.
-
Produce scientific update of
resource status and recommendations for subsequent seasons’ sustainable catch
for abalone, West Coast Rock Lobster (WCRL) and deep-water hake.
-
Develop and implement climate
change sector adaptation strategies/plans for agriculture and marine fisheries.
2.5 The Department’s
Key Policy Developments
In
the 2013/14 financial year, the Department introduced new, and reviewed
existing, policies to realise the objectives of the key Government policy
priorities and outcomes. The following are some of the key policy developments:
a)
National
Food and Nutrition SecurityPolicy
In September 2013, Cabinet approved the National
Food and Nutrition Security Policy, which is a collaboration between the
Department and the Department of Social Development.The Policy seeks to ensure the availability, accessibility and
affordability of safe and nutritious food at national and household levels. To
further realise some of the policy objectives, the President subsequently
launched the Fetsa Tlala Food Production Initiative in October 2013 to address increasing
household food insecurity in the country. The aim of Fetsa Tlala is to put 1
million hectares of fallow land particularly in the former homelands, under
production by 2019. The programme also seeks to link smallholder producers to
government institutions for preferential procurement.
b)
Smallscale
Fisheries Policy
The
Smallscale Fisheries (SSF) Policy was adoptedby Cabinet in June 2012. It
provides legal recognition to smallscale fishers and aims to provide rights to
smallscale fishing communities and to ensure their equitable access to marine
resources. However, the policy could not be implemented before amending the
Marine Living Resources Act (MLRA), (Act No. 18 of 1998), a process that was
undertaken in 2013. The resultant Marine Living Resources Amendment Bill was
signed into law in 2014.TheDepartment needs to fast track the development of
the implementation plan for the policy.
c)
The
Integrated Growth and Development Policy (IGDP)
The IGDPwas developed in response
to the Government Priority Outcomes that relate to job creation, rural
development and food security, to which DAFF contributes, and to provide a long-term strategy for an integrated growth and
development of South Africa’s agriculture, forestry and fisheries sectors. It was
first published in 2012 but has since been revised to align with the IPAP
2013-16, NGP and NDP. Its primary purpose is to achieve the transformation and
restructuring of the agriculture, forestry and fisheries sectors that are
currently dominated by a small number of large companies, and to ensure that
constraints experienced in the areas of input supply, production and marketing
are addressed cost-effectively and in a timely manner. It also seeks to develop a common vision encompassing all three sectors, and
to develop an integrated implementation framework which allows common issues to
be addressed in unison, and specific issues to be addressed in separate
policies and strategies.
d)
The Agricultural
Policy Action Plan (APAP)
TheAPAP
is an implementation arm of the IGDP that was developed in 2013 and seeks to
translate the high-level responses offeredin the IGDP, into tangible, concrete
steps to promote food production and employment. It is based on the model of
the IPAP. It is a five-year plan that aligns itself with the NGP, NDP, IPAP and
the MTSF; and will be updated on an annual basis. Its encompassing objectives
are to promote labour absorption; broaden market participation; and strategic
interventions that are aimed at increasing value-chain efficiencies and
competitiveness focusing on selected subsectors and/or value chains.
3.
Summary of previous key financial and performance
recommendations
of Committee
3.1 2013/14 Budget Vote Report and BRRR Recommendations
The
following are some of the recommendations that were made by the previous Committee
for the attention of the Minister of
Agriculture, Forestry and Fisheries:
3.1.1 Provide
the Committee with a plan or strategy on how the Department plans to address
consistent vacancies in the Department, particularly at senior management
service (SMS) level as these impact on the ability of the Department to carry
out its mandate, on service delivery and effective utilisation of its budget. Lack
of skills associated with the high vacancy rate was also linked to the
continued use of consultants to carry out Departmental functions.The Committee considered use of consultants an ineffective
use of limited financial resources and an indication of poor accountability within
the Department. Although the vacancy
rate in 2013/14 has been reduced from 13per cent to 9.5per cent, the plan was
never submitted.
3.1.2
Strengthen the Departnet’s monitoring and
evaluation (M & E) system to ensure accountability; and consider
establishing an M & E team within the Department that will focus on
monitoring and evaluating the set targets against delivery specifically for the
conditional grants that are transferred to provinces (e.g. CASP, Ilima/letsema,
LandCare) including the Disaster Management Funds. The Department must report
on these to the Committee on a quarterly basis as a substantial portion
(approximately 40 per cent in 2013/14) of the Department’s budget is allocated
to conditional grants. The Department has
an M & E Chief Directorate but its activities have not been well
articulated or communicated to the Committee.The Department have recently
indicated the existence of an M & E Plan that is ineffective and need
review.
3.1.3
Address repeat findings by the
Auditor-General (AG) on annual financial statements of the Department, which
include lack of leadership, unreliability of information and weak internal
controls (risk management) due to absence of an internal audit unit and non-compliance
with legislation and regulations. In
this regard, the
Department must ensure that action is taken against transgressors in terms of
the Public Finance Management Act (PFMA) (Act No. 1 of 1999) and National
Treasury Regulations. This should apply to the Department, its entities and
provinces in terms of conditional grants. The
Minister was asked to table a report in Parliament with an action plan for
rectifying the repeat findings. While a
report was not submitted to the Committee, the Department and the AG have
reported on the progress that has been made to address some of the AG findings,
including the establishment of an Internal Audit Committee.
3.1.4
Ensure that during the MTEF period,
sufficient funding is set aside to implement new programmes and legislation
that has been and/or will be brought before Parliament. The Department reported that they continuously make submissions to the
National Treasury in this regard.
3.1.5
Provide a detailed report to the Committee by
March 2014, on mentorship programmes and strategic partnerships in agricultural
land reform projects that they are funding. The Committee has observed during
some of its oversight visits that some of the partnerships were benefiting the
mentors or strategic partners at the expense of land reform beneficiaries. The report has not been submitted to the
Committee.
The following are some of the recommendations
that were made by the previous Committee for the attention of the Minister of Finance:
3.1.6
Considers continued and significant budget
allocation to the Onderstepoort
Biological Products
(OBP), which is a National Key Point that plays a very important role in the
country’s food safety, the prevention and management of livestock diseases. Old
infrastructure and equipment inhibits the OBP’s ability to produce sufficient
quantities of vaccines for economically important livestock diseases. The Minister referred to the R492 million
that was allocated to the OBP for the MTEF period (2012/13 to 2015/16).
However, the MTEF allocation was specifically for infrastructure refurbishment,
not operational activities.
3.1.7
Consider a budgetary increase for Programmes
2 and 3 in 2014/15 going forward given the focus on subsistence and smallholder
producers and their needs, the implementation of the Fetsa Tlala Food
Production Initiative, the persistent challenges associated with diseases of
economic importance that have a negative impact on exports. The
2014/15 budget reflected increases in the two programmes but these were not
necessarily for Fetsa Tlala or addressing challenges associated with animal
diseases. Fetsa Tlala has since been funded through the CASP grant.
3.1.8
In the MTEF period, consider an additional
funding allocation for Working for Fisheries (WfF), the programme of the
Expanded Public Works Programme (EPWP) that is responsible for job creation in
the fisheries sector; to ensure that it specifically covers the entire South
African coastline in terms of job creation. From 2014, the Department must
report on progress in this programme along with other conditional grants on a
quarterly basis
In response to the 2013 BRRR recommendation
for additional funding for Programmes 2 and 3, the National Treasury did not
support the recommendation citing underspending averaging 6.5 per cent in the
medium term expenditure framework (MTEF) period on conditional grants that are
transferred through these programmes. In terms of addressing challenges
associated with animal diseases, Treasury referred to the R492 million that was
allocated to the OBP in the medium term from 2013/14 to 2015/16 for modernising
vaccine manufacturing facilities.
However, vaccines only address one aspect of
animal disease management (i.e. prevention and only when used appropriately and
timeously) and the rest is the responsibility of the Department including its
provincial counterparts. The Committee recommended additional funding in
particular for Programme 2 in light of the fact that the country has in the past
few years, been experiencing repeat outbreaks of diseases of economic
importance such as citrus black spot (CBS), Rift Valley fever (RVF), avian
influenza, foot-and-mouth disease (FMD), etc., and the management of these
requires sufficient resources and skills capacity. In addition, the Department
planned to implement Compulsory Community Service for veterinary professionals
from 2015/16, which will also require additional resources as these trainee
professionals are meant to be placed in rural and remote areas.
3.2
2014/15
Committee Strategic Plan and Budget Vote Report
During the 2014/15consideration of strategic
plans and budget process, the Committee made recommendations that the Minister
of Agriculture, Forestry and Fisheries should:
3.2.1
Enforce intergovernmental relations (IGR) to
avoid duplication of activities from limited financial resources and to ensure
optimal resource use for efficient service delivery and maximum impact. For
example, DAFF should be involved in collaborative activities with its entities
and other Departments such as Rural Development and Land Reform, Trade and
Industry, Environmental Affairs, Water and Sanitation, Public Works and others.
And the Minister should ensure that the
Department of Agriculture, Forestry and Fisheries (DAFF):
3.2.2
Develops a strong business case that will be
presented to the National Treasury for additional funding for DAFF that will
also include a plan that shows how the Department will work in a coordinated
and collaborative manner with its entities by the end of September 2014.
3.2.3
Provides an action plan to the Committee on
the implementation of the Integrated Growth and Development Plan (IGDP) and
Agricultural Policy Action Plan (APAP) before the end of the second quarter of
2014/15 (October 2014).
3.2.4
The NAMC submits a detailed report of
projects that are funded through the Strategic Integrated Infrastructure
Project 11 (SIP 11) that is aimed at improving investment in infrastructure to
support agricultural, forestry and fisheries production (including
aquaculture). The NAMC should also provide a full briefing to the Committee on
its role in SIP 11 during the second quarter of the 2014/15 financial year.
3.2.5
Provides the Committee with a report on
research that has been conducted on new fisheries within 30 days after the
adoption of the Budget Report by the National Assembly.
3.2.6
Works with the ARC to develop a Master Plan
that will inform how the ARC will incorporate Ncera Service Centre within its
livestock improvement programmes. The Plan must include an additional budget
allocation to the ARC that will assist the programme for the benefit of the
Eastern Cape Province.
4. OVERVIEW AND
ASSESSMENT OF FINANCIAL PERFORMANCE
4.1 Overview of Vote Allocation and Spending
(2010/11 - 2016/17)
The Department’s
budget allocation has been increasing exponentially across programmes in the
previous medium term expenditure framework (MTEF) period from 2010/11 to
2013/14 (see Table 1 on next page). However, a slower growth is observed in the
next MTEF period with the budget allocation slightly decreasing for some of the
programmes between 2015/16 and 2016/17. The total budget allocation to the
Department will decline by approximately R335 million in the MTEF period. This
is due to Cabinet approved reductions and an annual shifting of R22 million in
the MTEF to the Department of Environmental Affairs (DEA) in line with the
shift of the Knysna Indigenous Forest management function from DAFF to DEA.
Other reported reductions, which are not expected to impact service delivery,
will be on transfers and entities and goods and services across all programmes.
As in the previous
year and consistent with the key intervention areas of the Department and
Government policy initiatives, the largest allocation from the Department’s
budget is shared amongst three programmes, namely, Agricultural Production,
Health and Food Safety (Programme 2), Food Security and Agrarian Reform
(Programme 3) and Forestry and Natural Resources Management (Programme 5) – see
Table 1 on next page. During the 2013/14
financial year, approximately 78per cent of the Department’s budget was spent
among the three programmes. The three programmes are responsible for transfers
of conditional grants to provinces and some of the entities. They also
contribute to the Government priority outcomes as follows, Programmes 2 and 3
to Outcome 7 (food security and rural development), Programmes 3 and 5 to
Outcome 4 (job creation) and Programme 5 also contributes to Outcome 10
(natural resources management).
Programme 2, which received the largest share
of the total budget of the Department (approximately 32 per cent of
appropriation in 2013/14) is the Programme through which allocations to the
ARC, Ilima/letsema and the OBP’s funding for the refurbishment and
modernisation of vaccine manufacturing infrastructure are made.
Table 1. The Department’s spending trend per
programme (Estimates of National Expenditure, 2014)
Programme R Million |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
|
Audited Outcomes |
Audited Outcomes |
Audited Outcomes |
Adjusted Appropriation |
Audited Outcomes |
MTE Estimates |
MTE Estimates |
MTE Estimates |
|
Administration |
478.8 |
582.0 |
644.9 |
670.9 |
670.9 |
694.6 |
725.6 |
763.9 |
Agricultural
Production, Health and Food Safety |
1 234.4 |
1 644.9 |
1 874.8 |
2 036.5 |
2 036.5 |
2 199.8 |
2 252.7 |
2 089.4 |
Food Security and
Agrarian Reform |
1 050.9 |
1 251.6 |
1 405.2 |
1 599.3 |
1 599.3 |
1 711.1 |
1 718.8 |
1 768.7 |
Economic Development,
Trade and Marketing |
145.3 |
190.2 |
212.2 |
258.2 |
258.2 |
294.2 |
247.5 |
309.9 |
Forestry and Natural
Resources Management |
661.5 |
884.7 |
1 191.8 |
1 183.6 |
1 183.6 |
1 364.9 |
1 233.4 |
1 279.3 |
Fisheries Management |
259.1 |
352.0 |
484.3 |
433.7 |
433.7 |
427.8 |
443.3 |
462.9 |
Total |
3 830.0 |
4 905.3 |
5 8132.2 |
6 182.3 |
6 182.3 |
6 692.4 |
6 621.2 |
6 674.2 |
|
The
allocation to the OBP is for the medium term ending in 2015/16, hence the
observed decrease in Programme 2 allocation in 2016/17 (Table 1). Allocations
for CASP, which still constitute the largest share of the R2.1 billion (34per
cent of the total Department Vote appropriation) that goes to conditional
grants,are made through Programme 3 and Programme 5. Programme 3 is also
responsible for transfers to Ncera, Agricultural Colleges and a skills
development and training fund to the PPECB.The CASP allocation to Programme 5
is for the Disaster Relief Fund. Programme 5 is also responsible for the distribution
of LandCare grants.
4.2 Financial Performance in 2013/14
The Department of Agriculture, Forestry and
Fisheries (DAFF) was appropriated a total amount of R6.18 billion in the
2013/14 financial year, a slight increase (1.3 per cent in real terms) from theR5.86
billion that was appropriated in the 2012/13 financial year (see Table 2). In
the reporting year, the Department spent 98.9 per cent of its total
appropriation.Approximately 59 per cent of the Department’s appropriation for
2013/14 went to transfers and subsidies, which consist of conditional grants
and transfers to entities. The ARC received 69 per cent (950 million) of the
total transfers to entities and CASP received approximately 80 per cent (R1.6
million) of the total transfers for conditional grants. The increase in CASP
funding in the MTEF is due to the implementation of the Fetsa Tlala Food
Production Initiative.
Underexpenditure in the reporting year
(2013/14) is approximately R70 million, which is approximately R15 million more
than in 2012/13 (see Table 2). More than 64 per cent of the unspent amount was
in goods and services (R45.3 million). Only two programmes, namely, Programmes
4 (Economic Development, Trade and Marketing) and 6 (Fisheries Management)
spent 100per cent of their allocated budgets. However, Programme 4 only
completed 83per cent of the planned targets. Poorly performing Programmes in
terms of completion of planned targets, were Programme 5, which completed 64per
cent of targets but spent 98per cent of the budget; Programme 3 completed 75per
cent of planned targets but spent 99per cent of the budget; Programme 1
(Administration) completed 76per cent of targets but spent 96.7per cent of its
budget and Programme 2 completed 83per cent of planned targets but spent 99.5per
cent of its budget.
Lack of accountability on the utilisation of
conditional grants by provinces, which is attributed to the Department’s poor
monitoring of the grants and skills capacity and poor planning in provinces,
remains a challenge. This is evident in the performance of Programmes 3 and 5,
which are both responsible for disbursing the grants. Usefulness and reliability
of information for verification of targets completed in these grants
particularly in Programme 5, is a persistent challenge that has been
consistently highlighted by the AG as a repeat finding. The AG attributed this
to lack of regular physical oversight visits (ideally, on a monthly basis) by
the Department, which relies on written reports for monitoring the grants.
Table
2. Programme Budget and Expenditure
Programme |
2013/14 |
2012/13 |
||||
Final
appropriation R’000 |
Actual
expenditure R’000 |
Under
expenditure R’000 |
Final
appropriation R’000 |
Actual
expenditure R’000 |
Under
expenditure R’000 |
|
Administration |
704
671 |
681
583 |
23
088 |
660 453 |
647 240 |
13 213 |
Agricultural
Production, Health & Food Safety |
2 010
320 |
2 000
946 |
9
374 |
1 875 189 |
1 874 832 |
357 |
Food
Security & Agrarian Reform |
1 604
592 |
1 590
101 |
14
491 |
1 415 482 |
1 402 877 |
12 605 |
Economic
Development, Trade & Marketing |
256
452 |
256
334 |
118 |
212 506 |
212 169 |
337 |
Forestry
& Natural Resources Management |
1 168
579 |
1 144
699 |
23
880 |
1 220 945 |
1 191 785 |
29 160 |
Fisheries
Management |
437
668 |
437
650 |
18 |
484
352 |
484
330 |
22 |
Total |
6 182 282 |
6 111 313 |
70 969 |
5 868 927 |
5 813 233 |
55
694 |
Source: Annual Report (DAFF), 2014
4.3 Report of the Auditor-General and Other
Oversight Institutions
4.3.1 The
Auditor-General of South Africa
In terms of financial statements, the
Department received an unqualified audit opinion from the Auditor-General (AG)
for the 2013/14 financial year. Without qualifying the opinion, the AG drew
attention to the following matters, which were mostly repeat findings:
·
Internal auditing and risk management – no
internal audit reports were submitted in 2013/14 as the Internal Audit
Committee only had one member as others have resigned earlier in the year.
·
Deficiencies in internal controls.
·
Usefulness and reliability of reported
information including indicators that are not verifiable.
·
Non-compliance with National Treasury
Regulations and PFMA reporting requirements.
Notwithstanding the repeat findings, which
were also attributed to instability in the Department’s senior management
service level (the Accounting Officer was appointed on 01 October 2013) in
2013/14, the AG commended the Department’s willingness to rectify the
weaknesses that are linked to the audit findings. In this regard the AG
highlighted some of the progress that has been made to address past findings
and indicated that the Department’s Accounting Officer and the Finance
Directorate interact with the AG on a regular basis; and have also solicited the
assistance of the National Treasury for some of the finance related matters. Some
of the issues that have been addressed include the establishment in March 2014,
of an Internal Audit Committee and a Risk Management Committee.
In response to the AG’s findings, the Department
also presented corrective measures to the Committee to address the findings
during the current financial year. These include inter alia:
·
Compilation of the audit matrix for the
2013/14 audit findings to ensure compliance before the AG’s interim audit in
November 2014.
·
Made it compulsory for all Deputy-Director
Generals (DDGs) to attend the Audit Steering Committee meetings for the 2014/15
audit period and sign-off on al findings.
·
With effect from the 2014/15 Second Quarter,
Departmental Branches to report to the Executive Committee on a monthly basis
and Departmental performance reviews at the end of each quarter.
·
Revised templates for Quarterly Performance
to strengthen accountability and address audit findings.
·
Existing Operational Planning as well as
Monitoring, Evaluation and Reporting Guidelines reviewed on an annual basis
4.3.2
The
Financial and Fiscal Commission (FFC)
The FFC analysed the Department’s spending
trend from 2011/12 to 2016/17 and also included comments on the MTEF budget
allocation. While giving an overview of the performance of conditional grants they
highlighted the long history of poor performance by conditional grants. In this
regard, they emphasised the need for regular oversight visits to projectsby
Parliament and holding provincial Accounting Officers accountable for
conditional grants as they bid for them. The FFC recommended that due to poor
performance and overlapping objectives, current conditional grants should be consolidated
into a comprehensive agricultural and rural development finance programme that
will preferably be administered by one Department. The FFC reported that this
is an old recommendation from as far back as 2007/08 financial year, which unfortunately
was not supported by Government. The FFC indicated that they feel strongly
about the recommendation as it will minimise administrative burden on provinces
and improve efficiency of spending of conditional grants. It was however,
mentioned that the Department is in discussion regarding the consolidation of
conditional grants.
4.3.3 The Department of Planning, Monitoring and
Evaluation (DPME)
The DPME presentation focused on Outcome 7
(rural development and food security) and to some extent, Outcome 4. The DPME’s
management performance assessment tool (MPAT) for 2013/14 was consistent with
the AG findings. In terms of the MPAT Scorecard for the Department, the
Department scored poorly in addressing matters associated with recruitment and
retention; internal audit, risk management and fraud prevention; and management
structure and diversity. The Department’s intervention programmes were found
not to have a significant impact on food security (13 million households
vulnerable to hunger) and rural development; sector transformation through new
entrants; and increased contribution to GDP growth. Some of the underlying
factors that need to be addressed were high vacancy levels at SMS level, weak
relationships between the Department and the industry, and lack of coordination
between the Department and DRDLR. In terms of employment (Outcome 4), reports
from conditional grants were found to be contradictory. In addition, different
data sources have been used for the baseline, and targets and performance
measurements on rural employment were not comparable.Interventions were
suggested to strengthen collaborations with the established commercial sector;
use of Government procurement to create opportunities for black commercial
farmers and to review and accelerate initiatives to strengthen agricultural
support to black commercial farmers.
4.4 Vacancy Rate and Skills Capacity
The Department did considerably well in
decreasing its overall vacancy rate from 13 per cent in 2012/13 to 9.5 per cent
in 2013/14 (1.5 per cent less than the targeted 11 per cent). However, the
Department still has relatively high number of vacancies at the SMS level (12.5
per cent) and the highly skilled supervision level (16.5 per cent), as well as
in Programme 3 (11.8 per cent) and Programme 4 (14.1 per cent).The Department
has not met the 2 per cent equity target aimed at enhancing employment
opportunities for people with disabilities (only 1.1 per cent has been achieved
as in 2012/13) and is still below 50 per cent in terms of female representation
in SMS positions. The vacancy rate at the end of Quarter 1 in 2014/15 (June
2014) was at 10 per cent. The AG also highlighted that the Department still
struggles to fill SMS vacancies within six months. The Department stated that
this is due to delays in the prescribed personnel suitability checks conducted
by the State Security Agency (SSA) and the South African Qualifications
Authority (SAQA); and the unavailability of members to sit on shortlistings and
interview panels. In this regard, the Department
Currently, the
Department has 3 vacancies for DDGs and these include that of the Forestry
Branch, which became vacant when the previous DDG’s contract expired in July.
This however, was not an emergency and could have been planned for in advance
considering that Forestry has been underperforming and consistently utilising
consultants due to skills shortages. The vacancy, if not filled within the next
few months, may impact the Branch’s performance in the end of this financial
year particularly the repeat findings related to CASP and LandCare grant
allocations.
Other important DDG
vacancies are that of Agricultural Production, Heath and Food Safety which
became vacant when the DDG was transferred to Fisheries and the one for Policy,Planning,
Monitoring and Evaluation Branch due to the previous DDG being deployed to
Brazil as an Agricultural Attaché. The latter position was advertised in
September and it is hoped that an appointment will be made soon given that the
Department is still challenged in respect of policy development, planning and M
& E. As the AG highlighted lack of physical monitoring in respect of
conditional grants, the Branch plays a key role in ensuring that the
Department’s ineffective M & E Plan is reviewed for efficient and
results-driven monitoring and evaluation of the implementation of policies and
plans. In addition, the Branch should ensure that M & E practitioners are
capacitated and well-resourced to carry out physical monitoring of all funded
projects.
4.5 Quarterly Financial Performance
4.5.1 First
Quarter 2013/14 and 2014/15
For the first quarter of 2013/14, the
Department spent R1.3 billion, which is equivalent to 21.1 per cent of the budget,
far less than the expected 25 per cent of the total budget. Worst performances
were in Programmes 3 (12.2 per cent) and 5 (19 per cent). Programme 4 overspent
in the 2013/14 First Quarter (38.4 per cent) due to a once-off transfer to the
NAMC.
For the First Quarter of the current year,
2014/15, the Department spentapproximately R1.7 billion, which is equivalent to
24.8 per cent of the budget. However, out
of 55 targets planned for the Quarter, the Department completed 25 (45 per
cent). The Department was confident that this will not affect the annual
performance as some of the targets are in progress and continuous. None of the
programmes achieved 100 per cent spend in Quarter 1. Programme 2 was close with
90 per cent spend.
In both financial years, the First Quarter
overall variation from the financial plans in the Department was mainly under
transfers and subsidies (public entities and conditional grants to provinces)
and goods and services for some of the Programmes. These are matters that need
to be closely monitored.
The Department normally underspends in
Quarters 1 to 3 due to delays in signing of memorandum of understanding and
compliance certificates in respect of conditional grants transfers. Despite the
Department’s assurance to the contrary in the 2014/15 Quarter 1 briefing, these
spending and performance trends will subsequently have an impact on the annual
spending of the grants by some of the provinces. The Eastern Cape and the North
West provinces were consistently underspending in the medium term.
4.6 Discussion
on Financial Performance
Although there has been a significant
improvement compared to prior years, the Department still has a challenge with effectively
and efficiently spending its budget as planned and on planned targets, to
ensure service delivery. Underspending and non-achievement of targets is
largely through conditional grants to provinces, where service delivery needs
to take place. This is still a challenge
which has also been raised by the FFC. Any suggested additional budget
allocation must be accompanied by an Action Plan that addresses previous
challenges while clearly outlining how the additional budget is going to be effectively
and efficiently used.
The Department is commended for the
corrective measures that are put in place to address repeat findings from the
AG, which are at the centre of most of its performance challenges. However,
greater attention still needs to be paid on filling vacancies at SMS and highly
skilled levels and addressing equity particularly for people with disabilities.
The Department must prioritise monitoring and evaluation of internal processes
and conditional grants in provinces as underspending negatively impacts service
delivery; and must further tighten internal controls and address lack of
capacity in provinces. The Department has indicated that an M & E Plan is
in place but has not been effective and needs to be reviewed. In terms of intergovernmental relations
(IGR), the Department indicated that they are working collaboratively with the DRDLR
and have agreements that will be realised through the implementation of the
APAP.
5. Overview and
assessment of service delivery performance
5.1 Service Delivery Performance for 2013/14
In its 2013/14 Annual Performance Plan (APP),
the Department set itself 52 targets for the year on which the budget was to be
spent. It managed to spend 98.9 per cent of the budget but achieved only 41
targets (79 per cent) out of the 52. The proportion of targets that were
achieved is conservative as some of the targets were partially completed and
some were in progress. These included the conservation of animal genetic
resources (Programme 2), implementation of an International Relations Strategy
(Programme 4) and over reporting of the number of hectares that are
rehabilitated (Programme 5). Due to some of these anomalies, the Financial and
Fiscal Commission (FFC) place the number of achieved targets at 39 (75 per cent).
While the Department’s expenditure is expected to be aligned with achievements,
the 75 per cent achievement of targets is an improvement from the 2012/13
financial year where the Department spent 99 per cent of the budget but only
achieved less than 50 per cent of the planned targets.
5.1.1 Programme
Performance and Expenditure
In previous years, the biggest challenge in
reviewing the Department’s programme performance and associated expenditure has
been the intermittent changes in the presentation of performance targets in the
Annual Report versus those that are in the Strategic Plan or Annual Performance
Plan.This has been addressed and improved significantly in the 2013/14 Annual
Report, with the exception of some errors and omissions. Whilst there is still a
few anomalies in reporting, there is a significant improvement in the manner in
which information is presented and the kind of information that has been
included in the 2013/14 Annual Report.
The challenge still remains with assessing service delivery performance
that is linked to conditional grants within Programmes as programme expenditure
is presented separately from performance targets. In addition, whilst the
Department’s activities are informed by the key Government policies initiatives
such as the NDP, IPAP and the MTSF, when reporting, the Department does not
always align its activities and Programmes including reporting, to these
initiatives.Another challenge is the ambiguous targets that eventually reflect
as duplication across Programmes, a case in point being the increase in the
number of hectares under irrigation (250 hectares at Vaalharts Irrigation
Scheme under Forestry Programme) and number of infrastructure anchor projects
established (Vaalharts Irrigation Scheme under Food Security Programme). This
has been reported and counted as an achievement under both Programmes as will
be indicated below under Programmes.
Programme
1:Administration
The Administration programme spent 96.7per
cent of its budget in 2013/14, slightly less than the 98 per cent spend in 2012/13.
Out of 15targets that were supposed to be achieved under this programme, only 11
(73 per cent) were achieved.
The Department did not reach 100 per cent
compliance to the Performance
Management and Development System (PMDS) by its personnel. It achieved 92 per
cent in 2013/14, which is slightly more than the 89 per cent that was achieved
in 2012/13. Notwithstanding the importance of, and the Committee emphasis on M
& E, the Department’s spending on the Policy Planning, Monitoring and Evaluation sub-programme has been decreasing in the last MTEF,
from R101 million in 2011/12, R72 million in 2012/13 and R67 million in
2013/14.
Programme
2: Agricultural Production, Health and Food Safety
This programme has been consistently
utilising almost 100 per cent of its budget allocation (99.9 per cent in
2012/13 and 99.5 per cent in 2013/14). It underspent under goods and services
(R9.1 million) in the Animal Production and Health sub-programme. The programme
had 6 targets for the 2013/14 financial year and5 of these were achieved (83
per cent), a marked improvement from the previous year where it achieved 60 per
cent of planned targets. Under this programme, the Department has managed to
reach the set targets for the number of producers that are benefiting from
animal improvement schemes (Kaonafatso ya Dikgomo (1 200) and the pig
improvement scheme (100)) for the 2013/14 financial year. The Department did
not fully achieve the target for conservation of indigenous animal species
(Afrikaner cattle in North West and Zulu sheep in KwaZulu-Natal (KZN)), citing
misalignment of activities with the breeding seasons and subsequently, the
gestation period for each species. The reasons given highlight poor planning
and possibly, lack of capacity as any animal scientist will take the cited
reasons into account when planning for breeding purposes before a service
provider is appointed.
Programme
3: Food Security and Agrarian Reform
In this Programme,the Department spent 99 per
cent of its allocated budget (similar to the previous year) but only achieved 75
per cent of its planned targets (3 out of 4). Achievements under this programme
include the accreditation of Tsolo and Potchefstroom Agricultural Colleges by
the Department of Higher Education and Training (DHET); establishment of anchor
projects in Taung/Vaalharts (265 hectares) and Makhathini Irrigation Schemes
and support of 16 000 smallholder producers with training, advisory
services and infrastructure support. The Department also planned to support
130 000 subsistence farmers in the year under review (2013/14) with
production inputs, training and advisory services. The Department only managed
to assist 40 000 subsistence farmers as verification documents for
90 000 were disqualified. Although the programme was not planned for, but
introduced by the President in October 2013, the Department reported an
achievement of 104 000 hectares of fallow land that was brought into
production of maize and dry beans under Fetsa Tlala Production Initiative
through CASP funding.
A continuing challenge is underspending of
the grants, which in the 2013/14 financial year amounted to R14.5 million due
to transfers and subsidies in the Food Security Sub-Programme and current
payments in the Sector Capacity Development sub-programme.That underspending
was in these two subprogrammes is a serious concern given increasing household
food insecurity particularly in rural areas, lack of skills capacity and the
extension service that is not responsive to the needs of developing farmers.
Programme
4: Economic Development, Trade and Marketing
Programme 4 significantly improved its budget
spending to 100 per cent in the year under review compared to 99.8 per cent in
2012/13. Despite spending almost all of its budget, the Programme managed to
fully achieve only 3 out of its 6 planned targets for the 2013/14 financial
year. The fourth target, implementation of South-South Cooperation Agreements
with a focus on BRICS, was partially achieved. In this regard, as agreements
with Russia, Cuba and Turkey are reportedly in progress. The Programme regressed
in terms of achievement of targets from the previous financial year where it
achieved 61.5 per cent of the planned targets.The Department could not
implement CAADP but only managed to finalise consultations with provinces and
other stakeholders, a process through which a draft CAADP Country Compact was
reportedly developed.
Under this Programme, the Department
facilitated the identification of and provision of support to two
agroprocessing enterprises. However, these were not funded by the Department
but through provincial equitable shares citing rigorous appraisal process for
accessing AgriBEE Funds from the Land Bank. The Department has for the last few
years been unable to deliver on sector transformation through the AgriBEE Fund,
citing Land Bank processes. However, an amount of approximately R231 million
AgriBEE Fund was returned to National Treasury in the last MTEF due to poor
performance of the Fund. To ensure the
realisation of radical transformation of the sector, this should be one of the
focus areas under this Programme. It is unacceptable that much-needed funds
have to be returned to Treasury due to poor intergovernmental relations (IGR)
and lack of planning and vision on the part of the Department.
Programme
5: Forestry and Natural Resources Management
The Forestry and Natural Resources Management
Programme spent 98 per cent of its budget, which is slightly more than the 97.6
per cent spend in 2012/13. Approximately R23 million was unspent in this
Programme, which includes R11 million under goods and services, R9 million
under compensation of employees and R3 million in respect of LandCare
allocation for the Eastern Cape that was withheld due to underspending. The
Department has set itself 14 targets under this Programme but on the Annual
Report, some of these were merged and it ended up with 7 targets, making
assessment of the actual achievement difficult. However, the Department
reported that 9 out of 14 targets (64 per cent) were achieved under the
Programme. Some of the achievements include the approval of climate change
adaptation and mitigation programmes, and 265 hectares that were revitalised at
Vaalharts Irrigation Scheme. The implementation of DAFF Plantation Growthand small,
medium and macro enterprises (SMME) Strategies was not achieved. In this
regard, the Department only managed to develop guidelines for SMMEs and a
progress report on the state of the State Plantation Growth Strategy.
Programme
6: Fisheries Management
The Fisheries Management programme has
consistently spent almost 100 per cent of its budget for the past two financial
years and has done the same in the year under review (2013/14). The Department, under this Programme, reportedly
achieved all of its set targets and exceeded some. A notable and commended achievement
being in the aquaculture sector where more than 200 per cent achievement was received
through supporting 23 fish farms against the set target of 10 farms. It is
reported that this was achieved through aquaculture campaigns and partnerships
with other Government departments, which increased investment in the sector. Some
of the notable achievements that were not in the Annual Performance Plan (APP)
is the finalisation and gazetting of the National Aquaculture Policy Framework
and its implementation plan; green status (sustainable fish farming practise)
of farmed dusky kob, and the review of various laws that govern aquaculture and
are not under the Ministry of Agriculture, Forestry and Fisheries. The plan is
to develop a single aquaculture legislation. These are commendable initiatives
as aquaculture development is also central to the realisation of key Government
Policy Initiatives and Outcomes (job creation, food security).
5.1.2 Performance
of Conditional Grants in 2013/14
The Department is commended for providing
information on conditional grants although there is still room for improvement regarding
consistency in reporting and the alignment of the grant activities and
budgetary spending, with the Programmes and Priority Outcomes. As a result,
trying to link achievements and grant performance within and among Programmes
becomes cumbersome and result in anomalies, and possibly, double counting. As
an example, CASP budget allocation is disbursed through Programme 3 (Food
Security) and Programme 5 (Forestry), thus contributing to all 3 Outcomes that
the Department contributes to.
1. CASP: the conditional
grant received approximately R1.6 billion, all of which was transferred to
provinces. An amount of R846 million of the allocation (53 per cent) was spent
on infrastructure, mechanisation and production input support; 21 per cent
(R340 million) was spent on the Extension Recovery Plan/Programme (ERP) and 19
per cent (R301 million) was spent on repair of flood damaged infrastructure
including support to affected farmers. The remaining R115 million was used on
farmer training andcapacity building; and revitalisation of Agricultural Colleges.In
the year under review, the Department received rollovers from Treasury
amounting to R307.3 million, thus increasing available budget to R1.9 billion.
A 99.5 per cent expenditure was realised on CASP.
A total of
39 194 farmers were reportedly supported though CASP in 2013/14 (smallholder:
20 154; subsistence: 17 193 and black commercial 1 847). In
addition, 35 994 people indirectly benefitted from CASP and of these
indirect beneficiaries, 63 per cent were male, 37 per cent were female, 12 per
cent were youth and only 0.2 per cent were people with disabilities. The total
number of jobs that was created in the year under review was 9 932. Of
these jobs, 2 085 were permanent and the rest was temporary or seasonal.
2. Ilima/letsema: R438 million was
transferred to provinces for this programme and an additional R16 million was
approved in rollovers resulting in a total budget of R454.5 million. Provinces
spent R424 million (93 per cent of the allocation). Under this grant,
63 448 farmers were supported and 34 146 of these were subsistence
(54 per cent), 25 539 smallholders (40 per cent) and 3 763 black
commercial (6 per cent). A total of 16 948 jobs were reportedly created
through Ilima/letsema; 7 951 (47 per cent) of these were permanent and 8 997
were temporary or seasonal. In terms of gender, 46 per cent of the jobs went to
males while the rest went to females. A total of 147 990 people indirectly
benefitted from Ilima/letsema as follows: 126 246 adults (63 166
males and 63 080 females), 21 744 youth and 236 people with
disabilities (148 males and 88 females).
3. LandCare: R108.9 million was
allocated and R105.8 million was transferred to provinces. Of the allocated
amount, R3.1 million was withheld by Treasury on request from the Department
due to unsatisfactory project reporting from the Eastern Cape and North West.
The provinces spent 96 per cent of the transferred funds (R102 million). LandCare
implemented 176 projects, 167 of these were job-creation projects and the other
9 projects were awareness campaigns by DAFF and provincial officials. A total
of 42 163 people benefitted, namely, 10 821 males, 18 426
females, 287 people with disabilities and 12 916 youth (JuniorCare).
LandCare created 4 973 work opportunities; and 50 941 hectares were
rehabilitated.
4. Extension Recovery Plan (ERP): A total
of R339.9 million was transferred. The significant allocations under this
programme was for recruitment and extension personnel (37 per cent), provision
of ICT infrastructure (28 per cent) and visibility and accountability (16 per
cent). The provinces only managed to appoint 84 extension officers out of the
targeted 324. These appointments were only in Eastern Cape (14), Mpumalanga
(21) and North West (49).
The Department has previously indicated that
CASP was specifically for smallholder producers and Ilima/letsema for
subsistence producers, yet the figures above tell a different story. Given the
disparities in how the grants were used and possible duplication of activities
amongst the first three grants, there is a need for an improvement in the
coordination and integration of the conditional grants while looking into FFC
recommendations regarding the grants.
The conditional grants are still largely
focused on agriculture, and to some extent, forestry and have therefore, not
been able to accommodate fisheries. In previous recommendation to the
Committee, the FFC have also highlighted that the grants are narrowly focused
on certain agricultural activities while more employment opportunities may be
generated in complementary sectors that are outside the grant requirements such
as agritourism and agroprocessing.
5.2 An Overview of the Performance of the
Department’s Entities
With the exception of the PPECB, all the
Department’s entities received financially unqualified audit reports with
findings from the AG for the 2013/14 financial year.
5.2.1
Agricultural Research Council (ARC)
The ARC set itself 85 targets to achieve
during the 2013/14 financial year and managed to achieve 66 (approximately 78
per cent) targets, which is an improvement from the 2012/13 financial year,
where it achieved 59.9 per cent. Non-achievement of targets was attributed to
budget constraints and a shortage of technical expertise to finalise research
projects. In all its research areas, the ARC has managed to support smallscale
farmers through improved technologies and innovations.These are commendable
interventions given the many external challenges to the sector that are not
exclusive to smallscale farmers but generally impact them the most. However,
the entity could not implement the target for establishing one Agricultural
Development Centre (ADC) in the Eastern Cape Province as planned. ADCs are
aimed at providing services of technology transfer that prioritises support to
smallholder and emerging farmers, albeit aligned to the main agricultural
activities in a particular area, district, or region.
For the 2013/14 financial year, the ARC had a
budget of approximately R1.63 billion, which comprised the Parliamentary Grant
of R866 million from DAFF (Operational and Capital expenditure), National
Treasury (Economic Competitiveness and Support Packages projects) and the
Department of Science and Technology (DST) (operational expenditure); as well
as R466 million from self-generated revenue. This represents an increase in
allocation of over 38 per cent (R527 million). In the year under review, the
ARC used approximately 91per cent of its budget and had a surplus of R158
million. The ARCreceived an unqualified audit opinion with findings on predetermined
objectives and deficiencies in internal controls that led to an increase in
irregular expenditure.
5.2.2
Onderstepoort Biological Products (OBP)
The OBP planned for 102 targets in the 201314
financial year and only achieved 52 of the planned targets (approximately 51
per cent). Some of the OBP’s targets were not specific or
measurable, and hence, it
was difficult to quantify those that have been achieved. In many instances, the
reasons
for the variance and non-achievement were attributed to financial and capacity constraints,
operational
inefficiencies due to ongoing refurbishments and equipment breakdown. The
entity experienced a drop in overall sales, both in the domestic market and
export markets and has lost market share both within the total animal health
market and the vaccine market segment. The OBP has an unusually high staff
turnover of 18 per cent (almost double the 9.5 per cent from 2012/13), which
further limit its ability to carry out its mandate. The entity needs to
evaluate and address the reasons for staff to leave the entity at such an
alarming rate.
The entity has recorded a net revenue of
R87million in the year under review, which represents a decline of about 2.2
per cent (R1.9 million) compared to the 2012/13 financial year (R88 million).
The entity also incurred an operating loss of R27 million, which was mainly due
to lower sales than anticipated.The OBP does
not receive a Government grant but funds all its operations from its self-generated revenue (mostly from sale of vaccines). The OBP’sfinancial performance improved from a qualified audit opinion in
2012/13 to an unqualified audit opinion in the year under review. However, the
AG highlighted some findings in respect of measurability and reliability of
performance targets, deficiencies in internal controls and non-compliance with
Treasury Regulations.
Certain
vaccines that are associated with the prevention of diseases of economic
importance are only manufactured by OBP locally. These include vaccines for
Rift Valley Fever (RVF), Bluetongue, Brucellosis Strain 19 (currently in short
supply) and African Horse Sickness. It was reported that upgrading of the
vaccine manufacturing plant is impacting on the entity’s production capacity,
and subsequently its generated revenue, where some sections have to be closed
(e.g. Virology). Challenges were reported with the release of vaccines for
Chlamydia; and back orders have been closed for Brucella and African Horse
Sickness (AHS).
5.2.3
National Agricultural Marketing Council (NAMC)
Out of 152 targets, the NAMC achieved 67 per
cent (104 targets), far less than the 89 per cent it achieved in the 2012/13
financial year. In the 2013/14 financial year, the NAMC received a Government
grant of R33.8 million (almost R2 million less than the previous year),
sponsorship for R26.6 million and generated an interest (from Trusts levies) of
R872 000. The total expenditure for the year was R59.9 million and the
NAMC realised a surplus of R1.4 million in the reporting year. The entity
incurred irregular expenditure worth R73 000 due to non-submission of a
tax clearance certificate by a supplier. The NAMC received an unqualified audit
opinion but could not receive a clean audit due to AG findings related to predetermined
objectives. The NAMC is also the Programme Management Unit (coordinating
function) for Fetsa Tlala Food Production Initiative. In this regard, the NAMC
has drafted a business plan for the Fetsa Tlala Initiative outlining land to be
targeted, hectares to be planted and the costs.
5.2.4
Perishable Products Export Control Board (PPECB)
The PPECB for the fifth consecutive year,
received a financially clean audit (financially unqualified with no findings).
The Committee congratulated the PPECB for the clean audits. The PPECB does not
receive a Government grant but in the 2013/14 financial year, it received
R600 000 in respect of farmer capacity building and training from the
Department. The entity spent all the allocated funding.
5.3
Service
Delivery Performance Observations/Findings
5.3.1 Lack
of collaboration and integrated activities between the Department and its
entities, amongst the entities and between the Department and the DRDLR have
been found to negatively impact service delivery in general, and in most land
reform and rural development projects that were visited under the Comprehensive
Rural Development Programme (CRDP), which is linked to both Outcomes 4 and 7.
While the Department has alluded to better cooperation for example, between
DAFF and DRDLR, some of the proposed policies from both Departments, do not
reflect this.
5.3.2
The Department does not always monitor and
evaluate the impact of provincial projects that it funds, including those that
are funded from conditional grants. In most cases, the Department relies on
reports from provinces, which are not always a true reflection of what is
happening on the ground.
5.3.3
Lack of awareness of the Department’s funding
programmes such as Mafisa and its funding criteria by developing farmers, most
of whom do not meet credit criteria in commercial institutions.
5.3.4
Lack of access by developing producers and
new entrants into the agricultural and fisheries value chains, which are
largely monopolised by a few big players. The few small producers that are in
the industry are operating as contractors for the big commercial companies. The
Department needs to assist the small producers with the required infrastructure
and training to enable them to be independent.
5.3.5
Unbalanced relationships between land reform
beneficiaries and strategic partners or
Mentors,
where in most cases there are no skills that are transferred from Mentors or
strategic partners to beneficiaries. In some instances, beneficiaries end up
being employees in their own farm while the strategic partner runs the
business. In some cases, the partners leave the business defunct and
beneficiaries indebted.
5.4 Discussion on Service Delivery
Performance
While the Department tends to overemphasise a
financially unqualified or clean audit as an achievement, it should be noted
that this is only an indication of good financial governance and is not related
to service delivery or achievements of outcomes as is shown by spending 98.9
per cent of the budget when two thirds of the planned targets were achieved.
Across all programmes, the Department seems to make plans and set targets
without linking them to its budget and personnel availability to ensure
effective service delivery.
During the 2013 and 2014 State of the Nation
Addresses (SONA), President Jacob Zuma emphasised the implementation of the NDP
through theMTSF. He stressed that Departments must align their activities with
these plans. The NDP expects that by 2030, a third of food surplus in the
country should be produced by smallscale farmers or households. While the
Department’s Programmes and resource allocation were previously not clearly reflective
of how the objectives of the NDP and the MTSF will be implemented on an annual
basis leading up to 2019, the development of the APAPis commended and its
implementation is of utmost importance.
Some progress has
been achieved through the Department’s Programmes for Outcomes 7 and 10. During 2013/14 financial year, the Department
managed to put 104 000 hectares of fallow land under maize and dry bean
production under the Fetsa Tlala Initiative. However, unsatisfactory
and little progress in some cases has been achieved in Outcome 4 (job
creation). This then puts an emphasis on the effective implementation of the
APAP, which is one of the Departmental targets that are set out in the MTSF
towards the realisation of the NDP objectives. Over the past five years,
exports of high-value and labour-intensive products, some of which are
agricultural products, have been found to be decreasing. This has a negative
impact on sector performance and employment.The APAP, which is an
implementation arm of the IGDP, has a great role to play in the realisation of
Outcome 4. The IGDP seeks to close thepolicy vacuum that existed within the
Department since 2009 due to a lack of a comprehensive and coherent
agricultural, forestry and fisheries policy to address the current challenges
and to ensure the development and transformation of the sector.
Revitalisation of irrigation infrastructure
has been highlighted as a focus area by Government since 2007. Given the advent
of climate change and the general lack ofaccess to water by smallscale farmers,
irrigation for most areas is a necessity. In addition, irrigation
infrastructure development can also have a positive multiplier effect on the
development of forestry and fisheries (aquaculture) enterprises in rural areas
while also addressing job creation. The revitalisation of the Taung (North
West)/Vaalharts (Northern Cape) and Makhathini Flats (KZN) Irrigation Schemes
are welcome interventions. The Department however, needs to ensure that
previous challenges associated with the Schemes management and maintenance, as well as water licensing are addressed.
A lot has been said about conditional grants
and how allocated financial resources are not effectively and efficiently
addressing service delivery needs. To ensure IGR and to further address
challenges associated with provincial utilisation of the grants, the Minister
has however, reported to the Committee that he holds regularconsultations with
provincial MECs and Departmental Heads to ensure accelerated and effective
service delivery particularly regarding the use of conditional grants.
The evaluation impacts of the conditional grants
that are commissioned by DPME are a welcome development. In this regard, the
Committee need to request the Report of the Impact Evaluation of CASP, which
has been receiving the largest allocation of the grants. The evaluation was
commissioned in 2013/14. In the current financial year, the DPME has
commissioned Impact Evaluations of Ilima/letsema, Mafisa and smallholder farmer
support. Impact Evaluation of LandCare will be carried out during the 2015/16
financial year. However, the Department reported that with additional support
from DAFF, Impact Evaluation of Mafisa was carried out in 2013/14 and a final
report is being compiled along with the CASP report. The Department also
indicated that Impact Evaluation of the Extension Recovery Programme (ERP) will
also be carried out in 2015/16.
6.
COMMITTEE findings and OBSERVATIONS
Governance
and operational issues
6.1
The Committee congratulated the Department
for the unqualified audit opinion for the fifth consecutive year. However, it
raised concerns regarding continuing vacancies at SMS level as they impact on accountability,
as well as equity in terms of females and people with disabilities at this
level.
6.2
The slow pace of the fullintegration of the Fisheries
Management Branch into the Department to minimise duplication of roles, reduce
administrative costs and ensure accountability as the Branch in some respects,operates
as a separate entity.
6.3
The policies (e.g. extension, mechanisation,
aquaculture, smallholder development, etc.) that are important for the
efficient execution of the Department’s mandate and responsibilities, as well
as efficient use of financial resources, have been in the development stage for
the past three years. Hence, resulting in inadequate progress in priority areas
and essentially no transformation in the sector.
6.4
The generally slow pace of transformation
across all three sectors, which is also linked to the inability of the
Department to implement the Sector Transformation Charters and to ensure
effective utilisation of the AgriBEE Fund.
Service
delivery and financial performance
6.5
The Department is commended for reducing the
vacancy rate but the Committee is still concerned with the vacancies at SMS
level and use of consultants due to lack of certain skills within the
Department.
6.6
In addition, the Department’s repeat findings
from the AG due to the poor M & E and internal auditing functions, which werealso
attributed to lack of skills capacity within the Department. The Committee
however, recognises that the Department now has a functioning Internal Audit
Committee and is addressing other audit matters.
6.7 Unavailability
or invisibility of extension officers in some areas where they are needed the
most. The Committee requested for the review of extension services and an
evaluation of the impact of the Extension Recovery Programme. In the 2013/14
financial year, the majority of provinces failed to appoint required extension
officers.
6.8 Most
of the budget of the Department to address job creation, rural development and
food security is allocated
to conditional grants but their spending in provinces is unsatisfactory and the
Committee observed in its oversight visits that the financial investments made have
not always yielded expected service delivery and sustainable benefits to
beneficiaries on the ground.
7.
COMMITTEE Recommendations
The Committee recommends to the National
Assembly that the Minister of Financeshould
consider the following recommendations:
7.1
Whilst the Committee recognises the medium
term (2012/13 to 2015/16) allocation to the OBP for the refurbishment and
modernisation of the vaccine manufacturing facility, the allocation is not
sufficient as the OBP operates on very old infrastructure and equipment, which
constrain its ability to produce large quantities of animal vaccines for
diseases of economic importance as and when required. Therefore, afurther
increase in the budget allocation for the OBP’s infrastructure upgrades will be
required from the 2015/16 financial year.
7.2
Notwithstanding the allocation for the
refurbishment and modernisation of the vaccine manufacturing facility, the OBP,
which does not receive a Government grant, is a National Key Point that plays a
vital role in the prevention and management of livestock diseases and therefore,
food safety. A funding allocationfor operational activitiesis therefore
proposedin 2015/16 going forward, for the establishment of a vaccine reserve to
ensure the availability of vaccines in sufficient quantities to address animal
disease outbreaks, and for manufacturing public good vaccines (orphan
vaccines), which are unprofitable for the OBP to produce but are of national
importance in animal disease prevention and management.
7.3 The
Committee endorses and support the FFC recommendation to consider the
consolidation of budget allocations for the Department’s conditional grants
into one comprehensive fundthat will be administered by one Department to
minimise administrative costs, to ensure spending efficiency and maximum value
for money and better management and accountability for the funds.
Performance
Related Recommendations
The Committee recommends to the National
Assembly that theMinister of Agriculture, Forestry and Fisheries should
consider the following recommendations:
7.4
Reconsider the recommendations of the
Committee in the 2013 BRRR and concerns raised during Committee
oversightsvisits as some of the pertinent issues have not been appropriately
addressed by the Department, with a particular emphasis on the filling of
critical vacancies with the appropriate skills. The Department should provide a
report on these to the Committee by the end of February 2015.
7.5
In collaboration with the Minister of
Environmental Affairs,consider certain provisions of the National Environmental
Management Act (NEMA) (Act No. 107 of 1998) and the Marine Living Resources Act
(Act No. 18 of 1998), which are administered by the Minister of Environmental
Affairs that restrict the development of aquaculture and small-scale fisheries;andfurther
from NEMA, a requirement for veterinarians to obtain permits for rendering
services to Threatened and Protected Species such as rhinos.
7.6
Provide the Committee with responses to the
2014/15 Committee Strategic Plan and Budget Vote Report recommendations by the
end of November 2014.
7.7
Prioritise and finalise all pieces of
legislation that have been reportedly reviewed in 2013/14; and fast track those
that negatively impact on how the Department and its entities fulfil their
mandates. The Minister should also ensure that before the end of the MTSF
period, the Department finalises and tables in Parliament, all other pieces of
legislation that needs to be reviewed including other new pieces of legislation
that are required for the Department to fulfil its mandate. Progress report and
a legislative programme in this regard should be submittedbyFebruary 2015.
7.8
Develop a comprehensive plan that consolidates
the conditional grants into a comprehensive one-stop-shop funding facility for
presentation to the National Treasuryas has previously been recommended by the Committee
and the FFC. The plan must include support for subsistence and smallholder
producers in Forestry and Fisheries.
7.9
Provide an update and brief the Committee, before
the end of this year, on the status of the IGDP and APAP (including APAP
implementation), which are essential for the realisation of the MTSF objectives
and targets. Briefing must also include progress on CAADP investment plans.
7.10 Provide an update and briefthe Committee
on thefinalisation of the National Policy
on
Extension and Advisory Services and the implementation plan for the Smallscale
Fisheries Policy before the end of this year.
7.11Ensure
that entities under his administration develop restraint oftrade policies
specifically with
respect to the ARC, OBP and Fisheries research, to protect intellectual
property and prevent loss of critical expertise. A draft report in this regardshould
be submitted to Parliament by April 2015.
7.12Submit to the Committee before the end of
November 2014, the report on the Spatial Analysis of Agriculture, Forestry and
Fisheries, which is important for identifying high potential agricultural land,
potential areas for forestry plantations and fisheries resources. And further
ensure the protection of high value agricultural land and other related
resources from industrial and urban development.
7.13Provide
a detailed report to the Committeeby the end of February 2015, on mentorship programmes
and strategic partnerships in agricultural land reform and other mentorship projects
that are funded by DAFF.
7.14Provide a status update on the
implementation of the Agriculture and ForestryTransformation Charters by
February 2015 and the development of the Fisheries Transformation Charter by
April 2015.
7.15 Fast track the process to fully
integrate some of the administrative functions of the
Fisheries
Branch into the National Department by the end of August 2015/16.
7.16
Submit to Parliament by April 2015, a detailed plan on the management and
maintenance
offisheries vessels to address some of the supply chain management (SCM)
irregularities that have been raised by the AG on the financial statements of
the Marine Living Resources Fund.
7.17
Develop a preferential procurement plan for local agricultural products and encourageprovinces
and local governments to procure such products from developing farmers and
animal vaccines from OBP. The plan should be submitted to the Committee by
April 2015.
7.18 Fast track the filling of vacancies at
senior management level and for critical skills; and align the process with the
review of the Department’s organogram. The Department should report on progress
every quarter.
7.19 By the end of November 2014, submit to
the Committee, a plan on the alignment of activities between the Department,
its entities and provinces in respect of the implementation of Fetsa Tlala
Production Initiative to ensure that 1 million hectares of fallow land is put
under production by 2019.
7.20 Submit a comprehensive progress report
on the revitalisation of irrigation schemes and Agricultural Colleges to the
Committee by February 2015.
7.21 Collaborate with the Ministries of
Higher Education and Training and Science and Technology to ensure that the
critical research skills needed for agriculture, forestry and fisheries are
addressed. This should include a national skills needs assessment across all
three sectors and all sectoral disciplines and report to the Committee by July
2015.
7.22 Coordinate and align agricultural
research activities and initiatives among its entities and also between the
entities and the provincial research stations. The Department should report on
this to the Committee by April 2015.
Report to be considered.