Issued by:
Ministry For Agriculture and Land Affairs
15 May 2001
Madame Speaker
Honourable Members
Ladies and Gentlemen
I stand before you today to introduce the agricultural budget - Vote 24 for the 2001/2002 financial year within the context that was set in the President's - State of the Nation Address as well as the Budget speech of the Minister of Finance a few months ago. As government we have succeeded over the last year to improve on the synergy between various departments in the economic and social clusters - and have emerged with cross cutting programmes.
The Integrated Framework for Economic Growth set by Cabinet seeks to achieve among others - black economic empowerment, jobs, competitiveness, economic growth and the development of successful small and medium scale enterprises. Agriculture was identified key sector that requires special attention because of its potential to contribute especially to the objectives of higher economic growth. Within this framework the specific challenges for the agricultural sector are to:-
This is a complex, but exciting task, which requires the focused energies of the collective. The Department has already been actively engaged in a process with the farmers' organisations and commodity sector groups such as grain, dairy, red meat and deciduous fruit, with the intention to reach consensus on the key elements and responsibilities of the different stakeholders in the implementation of a growth inducing sector strategy.
The approach of government reflects a deeper understanding of the complexities that face South Africa as a country in the fight against poverty and inherited inequality, characterized along racial lines - which need to be dealt with at the same time that we have rapid technology changes and increased global mobility of resources, information and opportunity. This challenge implies that work will be done to continuously review, improve and expand on the scope of government programmes necessary to ensure an improved quality of life for all South Africans.
Agriculture contributes simultaneously to household food security and economic growth. It also has the potential to safeguard the quality of our natural resources. The challenge therefore is to deepen our understanding of the constraints that face us as a sector and invest wisely in accordance with that. Given our divided past pattern of investment in the sector it will be important to find solutions that move beyond the sub-sector interests of a particular constituency at the expense of another.
This morning, as we engage on the subject of agriculture and in the afternoon, when we continue with the debate on the land issues, I hope we will develop a consensus on the tactical issues and necessary steps that we need to take if indeed we are to ensure food security, economic growth and sustainability.
Overview of Vote 24
Honourable members, let me now give an overview of the vote that is before you for consideration, as a way of opening up the debate on future options for the agriculture budget.
Madam Speaker the institutional changes brought about by the new political dispensation, redefined the national Department's role as responsible for policy, regulatory, monitoring and co-ordination activities. The aim is for the department to create a policy environment within which opportunities for economic growth and rural development can occur. Implementation of policy is done in collaboration with the provincial departments of agriculture.
The key strategic objectives of agricultural policy are therefore: - to guide and support equitable access to resources for agricultural development; enhance global competitiveness of the sector; ensure sustainable natural resources use; promote black entrants in agriculture; and ensure consumer confidence in agricultural products in order to achieve sustained agricultural economic growth, equity and social development.
These objectives at the national level are addressed through four essential programmes - agricultural support and development, agricultural resources management and use, agricultural production, and trade and economic policy analysis. In the past two years as we have worked to build on the foundations laid in the first five years of our democracy - a question that we have continuously posed is - are the current functional and institutional responsibilities and linked resource allocation processes - adequate for the transformation of the South African agricultural sector.
Our answer has been a resounding no. Clearly there is room for national led programs, which will intervene in areas where provincial budgets alone will be inadequate to deal with the enormous task that we face. The implementation of the Land Care program as national initiative is a case in point. Our budget therefore this year will reflect some of the national programs that will be done in conjunction with the provinces on the same principles as the land care.
In dealing with each of the programmes for the department -starting with the line function programmes - I will reflect on some of achievements of the last financial year and the observations and lessons that arise from that experience. It is my hope that you will agree with me that whilst the current budgetary allocation for the department reflects a welcome improvement - it does not go far enough in facilitating fundamental transformation and support of the sector.
Programme Two - Agricultural Support and Development
The allocation for this Programme this year is - R89 101 000. This represents an increase from the previous year. The key activities here are targeted at promoting access for historically disadvantaged groups and individuals and include - farmer settlement, agri-business and institutional support [including food security, disaster management and co-operatives support] human resources support [education and training] and agricultural communication.
Madam Speaker - this year within this programme we have decided to allocate an amount of R13 million for Pilot Projects on Food Security with the hope that this amount can increase in subsequently years. This national Programme is a critical contribution to poverty eradication and rural development. Priority for implementation will be the thirteen nodal areas mentioned in the President's Speech. In addition within the context of the social cluster we have also reached agreement on strengthening this programme by ensuring all the related departments such as social development, health, housing and local government are involved in the implementation of a comprehensive programme.
A second major programme we have had to implement from a national perspective is the Integrated Programme for Land Reform and Agricultural Development. We have identified in collaboration with the provinces - the state land that will be disposed of in the course of this financial year for agricultural development. It is approximately 669 000 hectares. The process of settlement has also started with the disposal of state agricultural land led by Land Affairs. The Provincial departments of Agriculture will render production support in settlement areas. The National department of agriculture will support key national programmes in areas of training, marketing development, while some support on infrastructure will be done in collaboration with Public Works.
During the MinMec held last week there were deliberations with regard to support in communal area. At issue is to what extent can government adequately and commercialisation in this areas given the different patterns of land use and administration that currently exist and the land needs that is so acute. The National department was tasked to augment the work that the provinces have started doing in these areas.
Programme Three - Agricultural Resources Management and Use
The thrust of this programme is enforcement of legislation aimed at conserving our natural agricultural resource base. In addition, sub-programmes to ensure sustainable management and use of the genetic, and natural resources as well as investments in research and the development of new and improved technology are included in this programme. The overall allocation for this programme is R 403 791 000 which includes a transfer of R 271 246 000 to the Agricultural Research Council.
This programme reflects an increase on previous years largely because we have included the transfer of funds to the Agricultural Research Council to support the critical public investment in research and technology transfer. Honourable members, we have previously in this house - been grappling with the challenge of declining resources being allocated to the ARC and recently held a stakeholder consultative workshop with the sector to discuss the imperatives of a financing strategy. The output of that workshop has confirmed the need for a National Agricultural Research System. We have now tabled a draft discussion on this concept and are looking to having active engagement in the next few weeks.
At this point I wish to announce that in line with our understanding of the importance of agricultural research in the development of the sector we declare this week of May 21 - 26th an AGRICULTURAL RESEARCH WEEK - the launches of this week will take place as of today in three cities - Pretoria, Durban and Cape Town.
At the same time I also wish to welcome to South Africa the delegates to the 2001 Mid-term Meeting of the Consultative Group on International Agricultural Research which starts in Durban next week. The significance Madam Speaker of this meeting is that it will bring to South Africa, top agricultural scientists and policy advisors from over sixteen international research institutes and one hundred national research systems. The CGIAR is a family of public and private members that works to mobilize cutting edge science to reduce hunger and poverty, improve human nutrition and health and protect the environment. South Africa became a member in 1998 and pays for it's membership from this vote. At the CGIAR meeting two important themes will be the impact of climate change on agriculture and the challenges facing African Agricultural Research Systems.
Honourable members - in September 2002 - South Africa will be the venue for what is now known as the Johannesburg Earth Summit discussing the experience of and recommitting to world sustainable development. Agricultural resources are a critical part of that dialogue both from a point of view of levels of public investment to ensure long-term sustainability as well as efficacy of the use of land, water and genetic resources.
In the department we have demonstrated through our investment in the Land Care Programme over the past four years that it is possible, if not necessary, for government to spend resources to mitigate against the effects of degradation of natural resources. The success of the programme has been due to the fact that through a nationally financed programme we have been able to implement awareness programmes, build institutional capacity and invest in technology to enhance soil fertility. The Department of Agriculture has implemented and expanded the LandCare programme, to encompass soil, water and bush care, and introduce a greater emphasis on income generation. This year a total of R25 million has been allocated to land Care projects. We will continue to strive for an increase in the level of allocation of funds for this programme and actively seek partnerships to ensure its long-term sustainability.
Programme Four - Agricultural Production
Norms and standards necessary for effective agricultural production, animal, and plant health, agricultural inputs and product quality are developed and implemented under this programme.
In addition risk management associated with the containment of plant and animal disease is monitored at the national level in line with international norms and developments.
Last year with the outbreak of the Foot and Mouth Disease - we again realised the fragility of our risk management system in terms of the blur of responsibility between the national and provincial spheres of government and took steps to correct the situation. A 15% increase in the allocation of resources to recruit and retain veterinarians and animal health technicians in government - has been made in this year's budget. We have further decided to rehabilitate the government dipping services particularly in the ex-homeland areas our preliminary estimate is that we need up to R48 million over three years to deal with the 4 700 odd dipping tanks. An amount from this programme this year will be allocated to the three Provinces that were affected by the foot and mouth disease.
We realise that at the crux of our challenge is the need to have a national system that can anticipate as well as respond to effective disease controls. The reality is and I will continue to make the point that diseases know no boundaries. It follows therefore that, as we develop our implementation plan for the reform of the veterinary services we shall require the support of parliament to resolve the institutional constraints facing the system.
Part of the solution is in greater vigilance in the monitoring the movement of goods that have the potential to transmit disease across our borders. In this year's budget, we have allocated R6 million to increasing our presence at the ports of entry. We shall pilot a comprehensive system of controls in collaboration with the Airports Company aimed at enforcing our regulatory system.
Programme Five - Trade and Economic Analysis
This year reflects a significant increase in the programme on trade and economic analysis. The main activities undertaken here in support of economic policy analysis include collation and analysis of agricultural statistics and trends, analysis of market and international trade trends impact assessments and the provision of economic and trade advise to the department and the provincial departments of agriculture. The increase is largely due to targeted increases in the strategic economic analysis capacity in the national department.
Once again in our effort to proactively engage on trade opportunity discussion, we realised that the provincialisation process in the post 1994 era - fragmented the resources available to undertake the strategic task of economic analysis. To address this we will augment the current resources in the Economics Unit of the Western Cape Department of Agriculture and develop a national economic and research analysis capacity for use by all of the provinces and agencies. This coupled with the strengthening of intergovernmental relations should help us quantify the returns on the public investments in agriculture supported by this house.
Let me conclude the overview by summarizing the two support programmes - one and six.
Programme One and Six - Administration and Auxiliary and Associated Services
This programme finances the overall management and corporate support services for the department. Policy formulation and coordination services that are the key components of the work of the national department of agriculture are the major outputs. In the past year we had to act decisively in order to stem out corruption within the system. Consequently, we are undertaking a risk assessment audit, which will form the basis of a critical review of our corporate services with a view to strengthening our intergovernmental coordination, aligning those capacities with our information and communication services and modernizing the delivery of corporate services.
Madam Speaker, honorable members we have outlined what this years budget contain in terms of resource allocation, however it is important to share with this house some of the achievements in this sector which followed the resources that were voted by this august house.
Economic performance
Gross farm income from all agricultural products amounted to R43 381 million for the year that ended on 31 December 2000 which is 2,9 % lower than the previous year. Of this, the relative contribution of the different sub sector was as follows: - 44% from the livestock sector, 29,4 % from the field crops and the horticultural sector contributed 26,2 %. Increases in income were observed largely in the animal products [8,3%] and a slight increase in field crops [0,5%]. The horticultural sector experienced a decrease in income of almost 2,7 %.
Major issues for concern include the fact that the trend seems to be that the prices that farmers are paying for their inputs are rising more rapidly than the prices the farmers are receiving for their goods.
Female Farmer Competition
One of the great events of the past year was the Female Farmer of the Year Competition, with the theme "A millennium free of hunger-women's role in promoting food security". The aim of the competition, which is held annually over the past three years, is to raise the profile of female farmers and to recognise their role in feeding the nation and building the economy.
This year we are happy to announce a new programme partner in this venture, namely South African Breweries, who will bring to the table the experience and capacity that supported the Women in Rural Areas Programme. It follows therefore that when the event is held this year, it will be accompanied by the establishment of the Association of Business Women in Agriculture.
Disease Control - Fence Repairs
Large sections of the veterinary fence bordering the Kruger Park along the southern bank of the Crocodile River from Kaapmuiden to Komatipoort were damaged during floods in The Department of Agriculture regularly makes available resources to repair the fence, the main purpose of which is to prevent the spread of foot-and-mouth disease, tuberculosis and other diseases from the park.
In the light of increasing investments by the tourism sector, in wild life farming, the Department in collaboration with the Department of Environmental Affairs and Tourism, National Parks Board will look at sustainable systems for fence management.
New Crop Estimates Committee
The establishment of a new crop estimates committee, in response to unacceptable variability in the crop estimates of 1999, resulted in an immediate improvement in the quality of data. The 2000 annual farm survey was undertaken and information available on the emerging farming sector will be made available for the first time this year.
Marketing and Trade Development
Export quotas for South African entrepreneurs under the SA/EU agreement were allocated timeously and utilisation of quotas is monitored on an ongoing basis.
Through the National Agricultural Marketing Council a Market Access Committee has now been established for facilitating new initiatives that are required to open up access to markets. In the course of this financial year we expect to consider options for market opportunity in the grain and the horticultural sector.
Collaboration and finance were secured from the FAO in developing marketing skills at provincial level. The training of officials will be completed this year and transfer of skills to farmers accelerated.
Sustainable Resources Use - Land Care
In the past financial year - approximately 800 ha potential agricultural land were rehabilitated through Soil Care projects in the Eastern Cape, Mpumalanga and KwaZulu-Natal, whereby approximately 1 786 jobs were created.
Altogether 25 LandCare projects were implemented in the North West Province, resulting in the rehabilitation of about 10 000 ha of agricultural land and the creation of 640 temporary jobs. Junior LandCare projects were established in various provincial departments.
A number of databases were incorporated in AGIS (Agricultural Geographic Information System) in order to enhance the scope and quality of the information system. AGIS will also be used as a tool for information dissemination and decision support mechanism in the Integrated Rural Development Strategy.
A total of 1 610 new applications for subdivision of agricultural land and 409 applications for rezoning were dealt with while 1 501 consents were issued.
We have now compiled a pamphlet and distributed it to inform and educate the general public about problem plants and their detrimental effect on the natural resources of the country. Control operations involved approximately 249 ha of Nassella and 8 250 ha of Queen of the night infestations. These are declared alien invasive species.
Water Management and Use
In addition in this year we are working closely with the Departments of Water Affairs and Forestry and Department of Environmental Affairs and Tourism to reorient the Working For Water Programmes to take in a more comprehensive approach to land and water resources management and conservation.
Altogether 750 boreholes were drilled successfully to provide water for household purposes and livestock. Regulations and guidelines for the Genetically Modified Organisms Act, 1997, were finalised and the GMO Council is fully operational. Our implementation experience is serving as a basis for improving on the quality.
Partnerships were established with among others AVCASA, and Trees for Africa, which have resulted in participation in Edu-Plant in linking LandCare to Food Security.
The policy, procedures, norms and standards for transfer and development of a revitalisation plan for the rehabilitation of 103 irrigation schemes in the Northern Province have also been finalised. In this financial year 11 projects have been identified for attention. This is in addition to the eight areas where work started in previous years.
These achievements are encouraging milestones of progress towards the improvement in the quality of life of our people. However -more remains to be done.
Strategic Policy Issues in Agriculture
In her opening remarks to the Global Coalition for Africa -Economic Committee meeting at the beginning of May - our Speaker of Parliament correctly pointed out that agriculture was one of two vital aspects of the growth and development agenda that is not adequately prioritized on our continent and I quote - " Advancing agriculture requires massive investment "yet current investment in this field is low in most African countries. It is estimated that agriculture receives less than 10 % of public investment and yet accounts for between 30 - 80 % of gross domestic product." End quote.
Even in South Africa - where we have a fairly well established and thriving agricultural economy - the reality is that over the past few years - the agricultural budget - the instrument of public investment - in real terms has been declining. From the 2001 Budget Review - you will see that the consolidated [national and provincial] budget allocation to Agriculture is a mere 1.8% of the overall budget. Notwithstanding the fact that investments in other sectors such as transportation and communication can have a positive effect on improving the efficiency of the sector - this level of investment in a country where an estimated 14 million people are still food insecure is cause for serious concern.
Following on the dialogue at the Global Coalition for Africa meeting - I was encouraged by the proposal that Parliamentarians also need to be empowered to take on the issues affecting poverty and particularly take a lead in articulating and supporting the allocation of resources in a manner that can increase the returns on public investment.
What is encouraging is that there is indeed growing political attention being paid to the issue of agricultural investment and concrete initiatives are being fostered at various levels internationally regionally and nationally. We need to continue to engage at the different levels because of the complex character of the needs of the agricultural sector and the increasingly difficult tactical choices that need to be made in the interest of long-term sustainability.
Recently the United Nations Economic and Social Committee also held a debate on Agriculture and Food Security as part of the preparations for higher-level meetings underpinning the Millennium Recovery Programme. During that debate there was recognition that agricultural investment and development are important if not central to both economic and social development on the African continent. At the same time there was a reiteration of the need to - in the process of global trade reform seize the opportunity for ensuring that the agricultural sector enhances economic development in developing countries by fostering improved market access conditions.
These international debates are critical to our own interrogation of policy options in the agricultural sector. As part of the process of consideration of the programmes that are budgeted for in Vote - 24 - we need to test the extent to which we are adequately and effectively positioned to meet the overarching strategic sectoral objectives to:-
Whilst the national allocation for this year of almost R775 million goes some way towards meeting these objectives - my colleagues -the Provincial MEC's, the Deputy Minister and I are convinced that without a holistic approach to the agricultural budget for the country we will fall short of meeting our constitutional mandates for agricultural development and food security.
Agriculture as a stimulus to sustainable development and food security
Tody's debate requires us to articulate the building blocks for sustainable food security in Africa and identify the role that agriculture can play. For agriculture to fulfill its role of economic development, it must be supported in the direction of increased investment in infrastructure, adequate financing instruments, research and institutional and human development in order to ensure and increase in productivity and promotion of market activity. Our national policies must therefore deal with issues of access, control and use of natural resources, risk management as well as the issues of equity and efficiency. I would like to conclude my input by making some pertinent points on three priority areas, which I believe should receive attention in the next budget.
Infrastructure
Infrastructure has been identified as a major limiting factor in agricultural development. At the farm level the ANC is convinced that there is a case for government support to the farmers to ensure that this long-term investment that also facilitates access to improved technologies is made. Whilst in the past these investments, were made for white farmers the problem is that both as a consequence of deregulation as well as the reduction in resources available for farmer support many of the provincial departments of agriculture have not undertaken this approach. It therefore leaves the best of our black farmers perpetually on the periphery of the mainstream agricultural economy. We will explore options in the course of this year and within the context of the black economic empowerment programme of government. It goes without saying that there is a need for governments to invest in supportive public infrastructure such as dams, roads, transportation and communication infrastructure as a prerequisite to sustained agricultural growth.
This issue needs to be resolved both in term of the principle for support as well as in reaching agreement on the appropriate mechanisms that can facilitate financial investment.
Access to Finance
Access to finance, to support production processes and entrepreurial activity is another area that has received much attention at a debate level - however more needs to be done in practice. Diversifying the forms of collateral use in extending credit, creating new innovative financing products and expanding the operations of the private sector into rural areas are probably the greatest challenges yet to face us. Indeed, micro finance has been promoted for a longtime in support of agricultural and rural enterprise development through the continuing implementation of the village banks.
At another level there is still room for a redesign of the wholesale fina!ncing mechanism in the developing world and the establishment of locally based institutions, which can act as financial intermediaries. Our focus this year is on the finalization of the Co-operatives Bill - a subject that has generated a lot of grassroots interest. In addition our focus will be on the reform of the Land Bank - to become a Land and Agricultural Development Bank - the drafting process has started and I am pleased to say is moving at a comfortable rate.
The need for global trade reform
Trade barriers particularly between developed and developing countries are becoming more sophisticated. Some of the artificial barriers include an abuse of sanitary and phytosanitary measures on the pretext that these are based on rational consumer preferences. While raising these concerns we accept that managing risks associated with the movement of diseases and pests across borders is a government responsibility. The world trade instruments have been developed in order to regulate the norms standards that should apply across countries.
The other important element of this debate on agricultural trade is linked to strategies and support to rural development. Our interpretation is that developed economies in order to support their rural development objectives need to keep farmers on the land even if they have no competitive edge. We are of the view that unless we recognize that agriculture as a sector has a contribution to make to economic growth and food security for time to come and make efforts to increase markets for such products in developed countries we are merely paying lip service to supporting poverty eradication and in the long term an - African recovery.
It is my hope Madam speaker that with these few comments - we have set the tone of what should be a constructive debate to support the passing of the agricultural vote - vote 24.
I thank you for your attention.