Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN) Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN)

Limpopo Department of Agriculture Budget Speech 2008/09
28 May 2008
Dikeledi Magadzi

Honourable Speaker, the African Congress (ANC) resolved during the Polokwane Conference in December 2007 that "there must be adequate support services for farmers in the form of inputs, that is tractors, fertilizers, chemicals and seeds; financing for agribusinesses and quality extension advisory services". In both the State of the Nation and the State of the Province Addresses the State President and the Premier re-iterated the need to increase the level of support for agriculture. The challenges of investment in the second economy require a holistic approach to ensure that the one transformation agenda is implemented. Agriculture remains a business that should be accorded the respect and attention it deserves, that will ensure that our communities can participate and derive economic benefits that avail themselves.

Agricultural Black Economic Empowerment (AgriBEE) is now law and involvement of willing and committed Agricultural (Agri) entrepreneurs is set. The key thrust of this framework is to assist the government to fight poverty and joblessness through sustainable business oriented and profit-based mechanism. The launch of AgriBEE coincides with such rough and tough times as we currently experience some of the high consumer food prices. The world-over, nations and governments are grappling with the cost of food.

At a glance, it may seem that the agricultural sector is culpable. However, it is a known fact that farmers are price takers within the value-chain. The current world food crop shortages are as a result of many inter-dependent factors such as: increased food demand in China and India; sharp increases in world's oil and energy costs; competition of food crops; high and increasing agricultural commodity prices; changing lifestyles and rapid urbanisation in most countries.

Increasing commodity prices are a welcome act for farmers. High and increasing food prices spells doom for all consumers. High and increasing energy and oil costs as well as high interest rates are a bad combination that when there are no sustainable social-safety-nets, the most vulnerable become desperate. Poverty is a result of lack of capacity and lack of access to any set of resources, being productive ones or cash to enable one to acquire goods.

It should be noted that neither farmers nor consumers are directly responsible for the current high food price conditions. Response to high commodity prices by farmers can only lead to lower commodity prices in the medium to long term. The law of supply and demand always seeks to correct short-term market imperfections. This suggest that investigations must be targeted at processors, manufacturers, retailers and wholesalers to get to understand the cost structure that leads to such alarming food price increases. We support the pronouncement made by the ANC at the Polokwane Conference that more support for farmers will assist in minimizing the food shortage issue and thus bringing food crop prices to reasonable levels.

A brief review of key agricultural indicators suggests that the sector is still not in good condition. Beside the good rains for the greater part of the year, farm investments in the country are reported to have declined significantly since 1996.This situation can be attributed to the settlement of land claims for most commercial white farmers. New farmers are however, not assisted to purchase working tools and working capital to sustain or even increase the productivity of the properties they inherit. This is an unintended outcome of policy. It is now being reviewed to enable the Land Affairs Department to purchase properties as going concerns. The situation will certainly be reversed over a shorter period.

The involvement of the Land Bank and the Industrial Development Corporation (IDC) in the agribusiness value chain is in greater demand than it used to be in order to build the much needed capital and production base with sound business standards.

As a department, we support the Tripartite Alliance's concern about the devastating impact of rising food prices on our people. We furthermore support the Alliance's call for urgent consideration of the following measures, namely:

  • removing value added tax (VAT) on a wider range of basic food,
  • revamping and increasing financial allocations to the school feeding schemes, and
  • subsidies to cushion the effect of price rise on the poor in a manner that does not enrich food manufacturers.
Land and agrarian reform programmes must be radically speeded up, so that more land can be made available for food production to ensure food security. This must however, be matched by commensurate capacity of the Departments of Agriculture and their development agents to deliver appropriate services. We also support the calling of a summit on high food prices and the rising cost of living on South Africans for proposed date of 17 May 2008.

Within the province, we have embarked on a campaign against ignorance of food safety, nutrition and household production. These measures will ensure that our people take the responsibility to produce basic food in their backyard gardens and food plots or community gardens to lessen the impact of high food prices. The Departments of Health and Social Development, Agriculture, Local Government and Education are intensely working on the Campaign Plan.

Honourable Speaker, as in the previous years, I wish to register our achievements and performance for the 2007/08 budget.

Compared to the past four years, our budget performance for the 2007/08 has only done better that the 2006/07 which was at 90,40 percent. For the 2007/08 the department could only manage an overall expenditure of 91,40 percent. A mere one comma four percent more than the 2006/07 budget.

We are still extremely exposed and challenged on the technical planning capacity in engineering, natural resource management, agricultural statistics, agricultural economics and veterinary areas.

Honourable Speaker, for the year ending as at 30 March 2008, the performance of specific programmes is as follows:

  • Administration has spent about 96,50 percent of its allocation.
  • Sustainable resource management spent 89,1 percent of its allocation.
  • Production technical support services realised 89,1 percent expenditure.
  • Veterinary services spent 95,0 percent of their budget.
  • Technology research and development spent 87,8 percent of their budget.
  • Agribusiness has realised a 105,3 percent spending.
  • Structured agricultural training spent 101,8 percent.
These programmes collectively constitute the achieved 91,4 percent spending of the department. Budget cuts in order to manage the province's overdraft and subsequent austerity measures adopted by the Executive Council had a negative effect on the performance of our budget.

For the 2008/09 financial, the department provided R5,8 million for bursaries in agricultural related courses for 119 students. At the same time, the department hired 175 interns in both district and head offices as part of the Department of Public Service and Administration (DPSA) compliance. We have also placed thirty six (36) students in experiential training since January 2008.

Since the appointment of 26 Local Agricultural Municipality Managers in February 2006, planning and integration of agricultural projects with the Integrated Development Plan (IDP)/Local Economic Development (LED) processes have since improved.

The department has further re-structured its organogram to address the capacity and numerical challenges faced in service delivery. The municipality focus has been taken a step further by re-aligning the district offices and reducing them to an equivalent of a Local Municipality. This was done to remove the "post-office" role so vividly played by the administrative District Offices. Our delivery tactic of focusing on Local Municipalities compelled us to improve and enhance Local Municipalities who are now the spending core areas of the department's budget with all projects anchored in each Local Municipality. Various officials either as senior manager, middle managers are managing a cluster of local municipalities to ensure better service delivery.

There are two District General Managers who are overseeing two regional clusters, namely, Eastern (Mopani, and Vhembe) and Western Cluster (Sekhukhune, Waterberg and Capricorn). It is the Department's view that this re-configuration will deliver better and faster for our clients. This is intended to improve our capacity to plan and respond to the farmers needs taking into account the principles of Batho Pele.

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