Presentation to the Portfolio Committee

Mrs. N Msimang (Chairperson)Mr. TR Ramabulana (CEO)Mrs. S Muvhulawa (CFO)

Content

• PART 1: GENERAL INFORMATION• PART 2: ORGANISATIONAL OVERVIEW• PART 3: PERFORMANCE AGAINST PRE-DETERMINED

OBJECTIVES– MARKETS AND ECONMIC RESEARCH CENTER DIVISION– STATUTORY MEASURES DIVISION– AGRIBUSINESS DEVELOPMENT DIVISION– AGRICULTURAL TRUST DIVISION – HUMAN RESOURCE MANAGEMENT DIVISION

• PART 4: Expenditure trends for the year ended 31 March 2012

Part 1

General Information

Core Principles

• Vision (To be an effective and efficient main advisor to the Minister of the Agriculture, Forestry and Fisheries (DAFF) and Industry on the marketing of agricultural products).

• Mission (To advise the Minister of Agriculture, Forestry and Fisheries and directly affected groups on all agricultural marketing issues in the agriculture and food industry, taking into account the needs of stakeholders).

• Values (accountable, act with integrity, value individual performance, value personal respect and equal treatment, act in partnerships with directly affected groups).

Strategic Objectives

• Increasing market access for all market participants.

• Promotion of efficiency in the marketing of agricultural products.

• Optimisation of export earnings from agricultural products.

• Enhancement of the viability of the agricultural sector.

Part 2

Corporate Governance

Council Members

Council Members appointed in October 2011• Mrs NF Msimang Council Chairperson• Mr LD Maduna Council Vice Chairperson• Mr AM Cronje • Ms MM Gill• Dr LL Magingxa• Dr JL Purchase • Mr SC Symington• Mrs JM van der Merwe• Mr AD Young Council• Mrs TE Zimu

Council Members

Out going Council Members– Prof M Karaan (Vice-Chairperson)– Mrs M Mannya– Mrs C Molo– Mr D Montshwe– Mrs SE Moolman

Part 3

Performance against

Pre-Determined Objectives

MARKETS AND ECONOMIC RESEARCH CENTER

Dissemination of market information• Disseminate Food Price Monitoring reports, Food Cost Review, Input Cost

Monitor, TradeProbe and Fruit Flow reports through media• The target number of publications produced and distributed was met:• 4 Food Price Monitoring reports• 1 Food Cost Review• 6 Trade Probes• 6 Input Cost Monitoring reports 100 % Compliance

Trade analysis• The target number of 6 TradeProbe

publications was produced and distributed.

• The target number for trade profiles was 5, a total of 16 commodity and product specific trade profiles were completed and published in the TradeProbes.

• The target number for trade profiles was 5, a total of 10 market profiles were completed and published in the TradeProbes.

100 % Compliance

320 % Compliance

All the reports were published and distributed to the media and on the NAMC website.

200 % Compliance

Linking farmers to markets • The target was 2 reports, a total of 6 reports on issues pertaining to

market access to emerging farmers were released and distributed

300 % Compliance

The following reports were, amongst others, produced:•Case Studies of Emerging Farmers and Agribusiness in South Africa•Potato case study of a successful black farmer fuelled by potato passion•Moringa study – A tree giving life to rural communities

The following reports were, amongst others, produced:•Assessment of Agricultural Contracts For Market Access In South Africa: A Smallholder’s Perspective•Action based reports – Feasibility study reports for the Segalo lamb feedlot enterprise and Hlakanyane potato project were completed

Mapping, understanding and quantifying agro-food chains

(including section 7 reports)

• The target of 2 Agri-benchmark reports was met, the reports were published and information were dissemination.

• The target was 4 agro-food chain reports, 8 reports were finalised and 3 working papers were finalised

100 % Compliance

200 % Compliance

The following reports were, amongst others, produced:

•Revitalising cotton production on the Makhatini Flats

•Value chain study of the South African fertiliser Industry

•South African Paprika Value Chain Study

•South African Sugar Industry study: Lessons, Justifications and Challenges

•The Seychelles Broiler Value Chain Analysis: A Competitive and Comparative Study

Capacity Building The target of 4 academic research

support programmes was met

The target was 8 seminars per year, a total of 15 seminars were presented by agricultural experts

100 % Compliance

187 % Compliance

Statutory Measures

The MAP Act makes provision for the introduction of four statutory measures, namely –– Statutory levies (section 15)– Control of exports (section 16)– Records and returns (section 18), and– Registration (section 19)

Statutory measures must promote the objectives of the MAP Act, which are as follows –– Increase market access for all market participants– Promote the efficiency of the marketing of agricultural products– Optimize export earnings for agric products, and– Enhance the viability of the agricultural sector

Levies collected past 11 years

FUNCTIONS FINANCED THROUGH STATUTORY LEVIES2011 survey

Functions Amount spentR

Percentage of total levy

expenditure%

Administration 19 392 734 6

Transformation 79 842 022 23

Research 91 811 308 27

Local promotions 40 615 282 12

Export Promotions 50 913 157 15

Information 34 220 159 10

Quality control 15 200 307 4

Plant improvement 7 448 390 2

Production development 2 773 883 1

TOTAL 342 217 242 100

Summary of statutory measures applicable in South Africa2012

INDUSTRY Administrating body Statutory Measures

Levy Registration Records & Returns

Citrus (export only) Citrus Growers Association

Cotton Cotton SA

Dairy Milk SA

Deciduous fruit (pome & stone) HORTGRO Services

Dried fruit Dried Fruit Technical Services

Fynbos (proteas) HORTGRO Services

Grains (Maize, Oilseeds, Sorghum, and Winter Cereals)

The South African Grains and Information Services (SAGIS)

Lucerne Lucerne Seed Organisation

Mangoes Subtrop

Milk Milk Producers’ Organisation

Mohair Mohair SA

Olives SA Olive

Pecan nuts SA Pecan Producers’ Association

Pork SA Pork Producers’ Organisation

Potatoes Potatoes SA

Poultry and eggs Southern African Poultry Association

Red meat Red Meat Levy Admin

INDUSTRY Administrating body Statutory Measures

Levy Registration Records & Returns

Sorghum Sorghum Trust

Table Grapes exported

SA Table Grape Industry

Wine SAWIS, WIDA, Winetech and WOSA

Winter Cereals Winter Cereal Trust

Wool Cape Wools SA

Summary of statutory measures applicable in South Africa (cont...)

Levies collected per commodity - 2011 survey

Product Total value at first point of sale

R

Levy income

R

Levy income as % of the value

of the product %

Levy collection rate

%

Citrus (exported) 5 000 000 000 43 724 911 0.87 99

Cotton lint 92 000 000 1 683 411 1.83 114

Dairy products 8 378 627 222 29 292 893 0.35 96

Deciduous fruit 1 476 879 891 49 709 574 3.37 96

Dried fruit 478 842 000 1 891 342 0.39 97

Mangoes 65 589 060 1 093 151 1.67 85

Pork 3 063 400 000 16 774 658 0.55 104

Potatoes 5 746 720 817 24 557 928 0.43 103

Poultry and eggs 3 596 000 000 26 797 820 0.75 99

Red meat 18 946 000 000 21 592 522 0.11 113

Sorghum 215 000 000 1 672 287 0.78 69

Table grapes 2 945 298 984 17 462 504 0.60 97

Wine 3 619 400 000 65 840 238 1.82 98

Winter cereal 3 733 929 000 39 587 939 1.06 87

TOTAL 57 357 686 974 341 681 178 0.60

Performance againstPre-determined objectives

2011/12 financial year

Target Performance Achievement

Statutory measure investigations 30 38 127%

Statutory measures gazetted 20 29 145%

Report: Status of statutory measures 1 1 100%

Crop Estimated Liaison Committee

meetings 2 2 100%

Updating of Register for Directly Affected

Groups 1 1 100%

NAMC’s monitoring functions

(4 aspects)

1. Level of statutory levies

• Section 15 of the MAP Act stipulates that statutory levies should not be more than 5% of the price of an agricultural product at the first point of sale

• Evaluation over a period not longer than three years

• Currently it is 0.6%

2. Administration costs

• The NAMC guidelines say that less that 10% of levy income be used for admin cost

• The NAMC has other guidelines stipulating what should be regarded as admin cost

• Currently, total admin cost is app 6% of total levy income

3. Transformation costs

• NAMC guidelines stipulate that app 20% of levy income be spent on transformation

• We also have a transformation policy indicating what should be regarded as transformation activities

• Currently, 23% of total levy income is used for transformation activities

4. Status of statutory measures report

• In terms of section of the MAP Act, the NAMC has to monitor the application of statutory measures

• Shall evaluate and review such measures at least every two years

• We decided to do it annually• Reports to be released by July every year

Agribusiness Development

Agribusiness Development• During the 2011/2012 financial year the NAMC through its

Agribusiness Development Division collaborated with various institutions in the public and private sectors to – increase market access, – encourage new market development, and– build capacity of the developing producers

• Apart from our agricultural industry partners, the NAMC collaborated with other institutions to support emerging producers, for example– Provincial Governments; – Land Bank; PPECB; DTI and its agencies– International Trade Centre of the United Nations (ITC)

29

Development Schemes• The NAMC continued developing and implementing schemes

with its industry partners and other public and private institutions.

• The main purpose of the schemes are– to encourage the integration of black producers into the commercial

mainstream

• During the year under review the NAMC continued facilitating the implementation of the Vineyard scheme in collaboration with the Northern Cape department of Agriculture

• Over 400 beneficiaries are benefiting from this scheme• Over 100 on-farm jobs have been created through this

scheme

Development Schemes continues.....• The NAMC collaborated with the Land Bank in facilitating the

implementation of the Sunflower scheme in the North West

• Initially there were 27 farmers targeted, but due to the unavailability of funds only 9 participated

• The producers planted sunflower on 1200 ha• • An off-take agreement was secured from an oilseed trader

• Efforts are being made to include more farmers this coming planting season

Training

• During the 2011/2012 financial year the NAMC supported close to 225 emerging producers on various training programmes

• One of the training courses is tailor-made for women entrepreneurs

• Below are some of the highlights• Agribusiness Training course for Women

– The NAMC hosted a three day training course for 32 women entrepreneurs– The objective of the course was to capacitate women entrepreneurs through

marketing, financial and strategic management to assist them to built successful and thriving businesses.

– The NAMC collaborated with provincial department, Land Bank, SAWEN, Cornell University and Buhle Farmers Academy

Training continues...

• Making Markets Matter Training Course– The NAMC in collaboration with its industry partners supported 20

agribusinesses to attend an intensive 5 day business development training workshop, which was also attended by other African agribusinesses,

– The workshop is an intensive business development training workshop that prepares black agribusinesses from all over the African continent to operate their businesses successfully

– The workshop was hosted by the NAMC in collaboration with Cornell University from the USA

– The NAMC collaborated with Agri MEGA Empowerment Solutions, Hortgro,South African Pork Producers’ Organisation and Mpumalanga Economic Growth Agency to financially support the emerging producers to attend the training workshop

Training continues...

• Collaboration with Agricultural Colleges• Fort Cox College• Sixteen (16) fruit growers attended the course which was facilitated

by Perishable Product Export Control Board (PPECB). • The objective of the training course was to equip fruit growers that

are exporting through agents and those with potential to export with the necessary knowledge on – food quality and – safety standards

• In order to comply with the importing countries’ procurement requirements

Training continues...• Madzivhandila Agricultural College• Fifteen (15) emerging producers from Limpopo Province were

capacitated on GlobalGap issues. • The training was facilitated by PPECB, and Madzivhandila• College provided the logistics. • The objective of the workshop was to introduce farmers in fruit

production to the importance and technicalities of GlobalGap.• Glen College• Sixty-nine (69) producers from around the Free State• Province were capacitated during this collaboration.

Export Programme • During the 2011/2012 financial year, the NAMC collaborated with

its industry partners and international organisations to support emerging producers with their endeavours to export

Below are some of the highlights• The NAMC in collaboration with Western Cape department of

agriculture are collaborating on a Flemish funded government to support 15 emerging producers to export their products

• The NAMC signed four (4) strategic agreements with exporters and industry associations to support the emerging producers

• The collaboration will continue in the next financial• Fifteen (15) land reform projects with an average of 20 beneficiaries were

identified for support.

Agricultural Trusts

Objectives of the Agricultural Trust Division• The Agricultural Trust division was established to manage and coordinate

the communication process between the Minister for Agriculture, Forestry and Fisheries and Agricultural Industry Trusts.

• The Industry Trusts are bodies that were established after the disbandment of the control boards in the 70’s, the assets were then transferred into the 13 Agricultural Trusts.

• To date, the assets of the Industry Trusts amount to R1,7 billion that are managed by board of trustees, in which the Minister is represented.

• The 26 ministerial trustees are entrusted to ensure that the Industry

Trusts carry out the objectives in the Trust deeds, by aligning them to government transformation mandate.

26 Ministerial Trustees

Industry Trust Administrators Ministerial TrusteeCitrus Trust Ms Elsa Taylor Mr Godfrey Rathogwa

Ms Phindi KemaMr Tieho Mafeo

Cotton SA Trust Mr Koot Louw Mr Sipho Ngxongo

Deciduous Fruit Industry Development Trust

Mr Anton Rabe Mr Mxoli PotoMr Trevor Abrahams Ms Shulay ErasmusMs Malmsey Rangaka

National Lucerne Trust

Mr Derrick Engelbrecht Ms Mina Gill

Maize TrustMr Leon Du Plessis Mr Karabo Peele

Dr Thamsanqa Hewu Ms Penny Daly

26 Ministerial Trustees Cont…

Industry Trust Administrators Ministerial Trustee

Meat Industry TrustMs Alet du Plessis Dr Steven Cornelius

Dr Vuyelwa Penxa Dr Ziyanda Majokweni

Mohair Trust Mr Deon Saayman Ms Sarah LouwOil and Protein Seeds Development Trust

Mr Gerhard Keun Mr Derrick Montshwe

Potato Industry Development Trust

Ms Elsabe Els Ms Nonie Mokose

Sorghum Trust Mr Leon Du Plessis Ms Dudu Mashile

26 Ministerial Trustees

Industry Trustm Administrators Ministerial TrusteeSorghum Trust Mr Leon Du Plessis Ms Dudu Mashile

Winter Cereal TrustMr Awie Coetzee Mr Katlego Gaoraelwe

Mr Tato MakeDr J le RouxMs Mmaphefo MabeDr Phindile Lukhele-OlorunjuMr Maseli Augustinus Letuka

S. A. Wine Industry Trust

Mr Charles Erasmus Ms Sharron Marco-ThyseMr Willem WilliamsMr Barry StemmertMs Fatima ShabodienProf. Diale Rangaka

Wool Trust Mr Andre Van de Venter Mr Zandisile Wapi

Capacity Building • Induction of new ministerial trustees

– Four (4) new ministerial trustees went through an induction programme, were they were orientated on background of the NAMC, the objectives of the respective Trusts, their role in the respective trusts and their responsibility to the NAMC as well as the Minister.

• Training workshop on Corporate Governance– All ministerial trustees attended a workshop on King III: Corporate

Governance. The purpose of the workshop was educate trustees on good governance in business environment, as well as roles and responsibilities of being a Trustee

• Agricultural Trust Workshop– On the 8 March 2012, the Agricultural Industry role players, has an

opportunity to be addressed by the Minister. The Minister further stressed the need of working together to grow the sector.

– Industry Trusts were also given the opportunity to present their transformation initiatives for the year.

National Red Meat Development Programme (NRMDP)

• Also house within the Agricultural Trust Division, is the National Red Meat Development Programme.

• The programme is aimed at providing markets for the rural livestock farmers. Although presently based in EC, the programme will be expanding KZN, NW and MP in the coming financial year.

• Custom Feeding Programme• The NRMDP maintained the operations of the 3 Custom Feeding

Programmes in Nchora, Mount Frere and Fort Cox College of Agriculture. Part of the intake of animals, 180 farmers were educated on animal health, husbandry and markets for livestock.

• Three (3) additional herdmen were employed for the Nchora CFP. A intern in animal production was also employed to manage the 2 CFP’s.

• Auctions• The programme has been a pioneer in the re-establishment of

auctions in the Province, in particular amongst the communal areas. In total, a gross income of R7 577 840 has been injected into the NRMDP activity areas of the Eastern Cape, with 1 978 cattle going through the formal market and the income directly into the rural economy.

• Pre-slaughter Agreements

• The programme has made tremendous strides to securing a market for the animals with the large retail chains. Further negotiations still pending.

Beef Cattle Farming Indaba ‘Prosperity Through Livestock Farming’.

• The NAMC went on an aggressive fundraising drive for the programme by hosting the Beef Cattle Farming Indaba on 27 October 2011 at the Fort Cox College of Agriculture.

• Beside fundraising the event was also an education tool to farmers in the areas to educate farmers of the the wealth they have of livestock and opportunities available.

• The event was graced by all role players within the Red Meat Industry as well as government

Human Resources Management

To develop workforce plans and strategies that seeks toattract; develop and retain talent

• The HR developed the terms of reference to review the Human Resource Plan.

• The service provider was identified. • Three positions were created on the

structure:Information Technology Manager Technical AssistantPost Doctorate Fellowship

Attract; develop and retain talent Conti…

• The following positions were advertised and filled:

• Communication Officer• Trust Officer• Economist• Receptionist• Administrator • Internships for the Red Meat Project

Attract; develop and retain talent Conti…

• Five (05) employees tendered their resignations and exist interviews were conducted:

• Senior Researcher• Economist:• Finance Clerk:• Administrator and• Internship

Learning & Development

• As part of skills development sixteen (16) employees registered for various Degrees.

• Sixteen (16) employees were sent for various training.

• A workshop on the Disciplinary hearing was conducted and (09) employees attended the workshop.

To invest in Human Capital to improveeffectiveness in the workplace workforce

• The Employee Wellness Strategy was developed and approved. Through the Wellness Plan, the Men and Women Diversity Forums were undertaken as part of the Change Management.

• The World Aids Day was commemorated in December and staff members visited the Orphanage Centre to learn about people living with HIV/AIDS and cancer.

To review align and benchmarkHR policies and systems

• The following policies were developed and approved:Employee Wellness Strategy Occupational Health & Safety policyFarewell PolicyFuneral Policy The Employee Self Service was updated to monitor the

leave utilisation.

Performance Management andDevelopment

• HR coordinated the Performance evaluation for the financial year.

• The finalisation of the performance was conducted in March 2012.

• Eligible employees were rewarded with bonuses.

5454

Part 4

Expenditure trends for the year ended 31 March 2012

Financial Overview:

• The NAMC received funding of R 36 049 million during the 2011/12 financial year from the Department of Agriculture, Forestry & Fisheries as the annual grant. Other and Sponsorship income amounted to R 555 thousand. The net interest generated from investments amounted to R 937 thousand.

• Therefore, the total income for the year was R 37 541 million.

• Total expenditure amounted to R 36 577 million.

• This resulted in surplus funding of R 956 thousand.(This figure included non-cash flow expenditure such as depreciation and finance charges)

Statement of Financial Performance for the year 31 March 2012:

2010/11 2011/12 % Change

R’000 R’000Revenue 33,667 37,541 11.5%

Non- Exchange revenue 32,645 36,604 12.1%

Exchange revenue 1,022 937 -8.3%

Expenses 34,683 36,577 5.5%

Administrative Expenses 3,070 2,999 -2.3%

Personnel Expenditure 20,917 22,848 9.2%

Operating Expenditure 10,140 10,232 1%

Depreciation & Amortisation 532 458 -14%

Finance cost 24 40 66.7%

Profit/(Loss) on disposal of asset 18 (8) -144%

Surplus / (Deficit) for year (998) 956

Expenditure Categories: 31 March 2012:

2010/11 2011/12 % Change

Expenditure Categories: R’000 R’000Personnel 20,917 22,848 9%

Operating 3,302 4,050 23%

Rental: Office space 939 944 1%

Research, workshops & investigations

5,899 5,238 -11%

Other administrative 3,608 3,505 3%

Total 34,665 36,585 6%

Baseline Allocation 31,194 36,049 15%

Donor funds 1,451 555 -62%

Expenditure Categories: 31 March 2012: Cont’

Expenditure trends per programme:

Name of Programme

Actual expend

iture2010/1

1R’000

Actual expendit

ure2011/12

R’000

Variance

R’000

Reasons for variances

Finance & Admin

7,782 7,632 (150) Variance of 1.9%.

Human Resources

2,998 3,398 400 Variance of 13%. This is a result of annual salary increases. This amount includes training & development as well as communications & promotions.

Agribusiness Development

3,619 3,158 (461) Variance of 13%. The decrease is directly related to the cut in MTEF budget allocation.

Agricultural Trust

3,951 4,042 91 Variance 2%. National Red Meat Development Programme. Project expenses include direct costs such as feed, transport of animals, medicines and vetinary expenses; as well as indirect expenditure such as salaries, office rent, flights, accommodation, conferences, training etc.

Expenditure trends per programme Cont…

Name of Programme

Actual expendit

ure2010/11

R’000

Actual expendit

ure2011/12

R’000

Variance

R’000

Reasons for variances

Statutory Measures

1,468 2,091 623 Variance of 42%. Increase in expenditure due to appointment of new economist. This lead to increase in overall increase in division’s expenditure: travelling, S&T, telephone etc.

MERC 10,740 11,251 511 Variance of 4.8%. Increase in number of Section 7 and workgroup investigations

Increase in operational expenditure: flights, accommodation, conferences etc.

Council 1,120 1,269 149 Variance of 13%. The provision made for Council was under budgeted and adjusted during the virement process.

CEO 2,987 3,744 757 Variance of 20%. %. Increase in expenditure due to appointment of Compliance and Risk Officer and Administration secretary.

Total 34,665 36,585 1,920

Statement of Financial Position:2010/11: 2011/12: % change

Reserves 1,542 2,498 62%

Non-current assets 1,458 1,500 3%

Receivables 262 662 153%

Cash & Inventories 1,644 1,957 19%

Liabilities 1,822 1,621 -11%

Statement of Financial Position: Cont’

Outcome of the audit 2011/12:

• Unqualified audit opinion with no emphasis of matter.

Baseline allocation: 2011/12 – 2015/16:

2011/12: 2012/13: 2013/14: 2014/15 2015/16

R’000 R’000 R’000 R’000 R’000

36 049 30 115 32 764 34 332 35 545

END OF

PRESENTATION