2017 Budget Vote Speech by MEC Lebogang Maile

Gauteng MEC for Economic Development, Environment, Agriculture and Rural Development, Lebogang Maile’s Department of Agriculture and Rural Development’s Budget Vote (Vote 11).

Hon. Speaker

Hon. Premier

Deputy Speaker

Hon. Colleagues in the Executive

Chief-Whip of the majority party

Hon. Members of the Provincial Legislature

Distinguished Guests

Dumelang!

Sanibonani!

Avuxeni!

Ndi matsheloni!

Molweni!

Madam Speaker I will be presenting the GDARD budget vote on behalf of the Department. This speech is presented at the mid-term of this firth administration led by the oldest liberation movement in the continent, the African National Congress, and as honourable Premier David Makhura stated in his State of the Province address, it will be “about discerning the main trends and trajectory of successes and shortcomings of the ANC-led fifth administration in Gauteng”. This mid-term budget vote speech

1 will also look at what the Department will be doing in the next two and a half years that are left of this the 5th administration.

Reflections of the State of the Economy

Sub Saharan Africa Performance-Nigeria and South Africa are the two biggest economies in the Sub Saharan African region and are depended on the export of commodity products. Subdued economic growth experienced in these economies is partly as a result of lower commodities, in addition to other factors, including political conditions. Economic growth in sub-Saharan Africa is set to drop to its lowest level in more than 20 years, reflecting the adverse external environment, and a lackluster policy response in many countries. However, the aggregate picture is one of multispeed growth: while most of non-resource-intensive countries, half of the countries in the region continue to perform well as they benefit from lower oil prices, an improved business environment, and continued strong infrastructure investment, most commodity exporters are under severe economic strains. This is particularly the case for oil exporters whose near-term prospects have worsened significantly in recent months. Sub-Saharan Africa remains a region of immense economic potential, but policy adjustment in the hardest hit countries needs to be enacted promptly to allow for a growth rebound.

South African Performance-Over the past 19 years, the South African economic growth has averaged 2.8% peaking at 5.6% in 2006. The 2.8% average has been lower than the rate advocated by the country’s economic policies. In order to reach the desired level of socio-economic transformation, the country’s growth rate should be at least 5% annually on average for example; AsGisa adopted a two stage growth model where in the initial phase, an average annual growth rate of 4.5% or higher was required to achieve its mandate. In the second phase, an average growth rate of 6% was required. The NDP highlights that transforming the economy and creating sustainable jobs means that the rate of economic growth needs to exceed 5 percent a year on average. Reality is that on the fourth quarter of year 2016 (March 2017) GDP was a depressing -0.3%.

2 The Agricultural Sector- reflections on the yester year: Madam Speaker, the year 2016 was an extremely challenging year for the agribusiness environment and farmers. Not only did the prevailing drought of the previous year continue its devastation over much of the country, but a declining economy and resultant constrained consumers led to dampened demand and declining agricultural output.

Agricultural outlook 2017: Madam Speaker, South Africa is set to harvest the second biggest maize crop on record. This comes after the National Crop Estimate Committee revised up its forecast by 3% from the previous one of 13.981 to 14.32 million tons. Thus, making this season’s crop the second biggest after the 1980/81 bumper crop of 14.66 million tons. This means that South Africa will regain its status as a net exporter of maize this marketing season. Total maize exports could at least reach 2.5 million tons and generate about R6 Billion in foreign earnings. About 56% of this could be white maize, with 44% being yellow maize.

Maize is a key agricultural commodity because of its role as a staple food and as an input in the production of white and red meat and other animal products.

Inflation Data: South Africa, SADC and BRICS- Madam Speaker, South Africa’s overall inflation for April 2017 was 5.3 % with food inflation at 6.7 % during the same period. The food categories with the largest annual contribution to South African food inflation include sugar, sweets & desserts, meat and fish. The Zambian overall inflation rate for April 2017 was 6.7 %, while their food inflation rate drastically reduced to 1.6 %. Botswana’s overall inflation rate was 3.4 %, compared to their food inflation of 3.9 %, during April 2017. Turkey’s overall inflation rate for April 2017 increased to 11.9 %, compared to their food inflation rate of 15.6 %. Considering inflation of the BRIC countries, Brazil and Russia had the same overall inflation rate of 4.1 %, with food inflation rates of 3.5 % and 3.4 %, respectively. China recorded the lowest year-on-year inflation rate of 1.2 %, with a food inflation rate of -3.5 %.

3 Looking ahead – we foresee a slowing trend for most food products inflation in 2017 due to an expected recovery in crop production on the back of favorable weather conditions. However, this is with the exception of meat which is likely to maintain the upward trend over the coming months due to expected decline in slaughtering rate.

South African Agricultural Performance –The Total Gross Value of Agricultural Production (Total production during the production season valued at the average basic prices received by producers) for 2015/16 is estimated at R247 098 000 000(Two hundred and forty seven billion and ninety eight million Rands)

The Gross value of Animal products, Horticultural products and Field crops contributed 47.2%, 28.5% and 24.3% respectively to the total gross value of agricultural production.

The poultry meat industry made the largest contribution with 15.6%, followed by cattle and calves slaughtered with 12.3% and Maize with 10.9%.

Madam Speaker, looking at the subsectors in relation to the gross value, Animal products contributed R116 Billion, Horticulture R70.4 Billion and Field crops at R60 Billion. The total gross value of agricultural production of R247 098 Million was an increment of 9.1% in comparison with R226 531 Million of the previous year, 2014/15. This increase can be attributed mainly to an increase in the value of horticultural products

Agricultural performance in Gauteng Province- Madam speaker, while the relative importance of the agriculture sector differs across provinces, in terms of contribution towards the economy, it remains a key component of government’s plan to see poverty alleviated in the short- and medium-term. Each province has the responsibility to harness the potential of its agriculture sector to the fullest extent and potential in a bid to secure both commercial and specifically, subsistence farming across South Africa. As identified within the National Development Plan, Agriculture remains critical for employment and food security.

Agriculture sub-sector plays a vital role when it comes to food security, rural development and skills development. These factors are essential to the achievement of

4 South Africa’s Sustainable Development Goals (SDGs), which focus to a large extent on ensuring food security for the poor, fighting hunger and poverty, and effectively addressing rural development.

In 2016, agriculture constituted 2.5% of South Africa’s total Gross Domestic Product (GDP). In terms of Gauteng, however, 0.5% of total economic activity was ascribed to the agriculture sector; we want to make agriculture more viable to improve this. Also - agriculture in Gauteng accounted for 6.0% of total agriculture activities in the country.

Gross Added Value (GVA – Gauteng) The Gauteng Agricultural GVA was recorded at R5.9 Billion in 2016, of this figure, Agriculture & hunting made R5.1 billion, Forestry & logging contributed R376 088 Million and Fishing & operation of fish farms contribute R409 554 Million to the overall GVA.

Employment in Gauteng: Madam Speaker, the agriculture sector is labor-intensive and typically provides employment opportunities to semi-skilled and particularly unskilled employees. In 2016 the agriculture sector in Gauteng sustained a total of 44 825 employment opportunities. This number accounted for 1.07% of the total employees across all sectors in the Province, as well as 5.5% of all agriculture employees across the country.

Employment in Agro-processing in Gauteng: the overall trend in the agro processing employment shows that there has been an improvement in employment in agro- processing. In 2005, there were about 62, 595 employment opportunities. During 2016 there were about 87 771 employment opportunities. Between 2005 and 2016, employment in the agro-processing industry of Gauteng grew by an annual average growth of 3.35 percent. This again reaffirms the potential of agro-processing sector as a job driver within the province and hence the importance of the Agro-processing Strategy.

5 Reflections on the Mid-Term

Sun Tzu teaches us the importance of strategic planning and rational analysis Madam Speaker, and in this juncture we owe it to the people we serve and ourselves to rationally and critically analyse what we have done up to this point, being the mid-term. Premier David Makhura on the 23rd of May 2017 presented the Mid-Term performance review where he reflected on the strides made by the 5th administration and the challenges that we faced in carrying out our duties as mandated by the African National Congress.

As the 5th administration we have repositioned agriculture in Gauteng as a key economic sector. We analysed the potential of the sector, the point however, was to change it, although the task is still underway, let us reflect on the strides that have been made towards this.

Madam Speaker over the past two and a half years we have come up with the agro- processing strategy as the province, this strategy is also in line with The Revitalisation of the Agriculture and Agro-processing value chain, namely RAAVC, which was announced by Minister Zokwane in his 2017/18 Budget speech, these are aimed at releasing our full potential as an agro-processing province and also to realize the job creation potential of these sectors. We have in line and guided by this strategy and by the TMR, supported and completed the following projects; we have completed the sunflower crushing plant in Cullen, phase 2 of the construction of The Vereeniging Fresh Produce Market is underway, we also concluded the Randfontein Milling Plant. These Madam Speaker are aimed at supporting black smallholder farmers and potential commercial famers in tapping into the agro-processing value chain that is currently characterized as oligopolistic, with a few companies dominating the sector, and these companies are white owned.

Also in line with the agro-processing strategy, we have provided famers with pack house facilities to the tune of 50 for vegetable processing. Most of these pack houses are fitted with machinery and equipment which contributes immensely to their operational efficiency and economies of scale.

6 We have successfully completed and supported 5 agri-parks since the 5th administration took over, Madam Speaker; these are Soshanguve, Rooiwal, Watville, Overwatch and the Westonaria agri-park; which is a blueprint project for the country with high tech hydroponics structures. The Agriparks feed into the production of the different commodities and they give access to potential famer’s by giving them space to plant into the agri-parks. These agri-parks are also equipped with pack houses and training rooms to holistically support them.

Madam Speaker, the transformation of the economy remains critical as we had emphasized it the TMR programme of action, and we in the Department have made this very central as we go about our work. In the mid-term we have supported around 300 black famers with agricultural infrastructure, this is to assist them to be competitive and productive. The support of these famers is also intended to help them commercialize. We continue with training farmers and giving agricultural advice, we have trained more than 600 famers in the mid-term on different agricultural skills.

The Nguni project is a livestock improvement programme targeted at small scale beef farmers with the aim to re-introduce them into the black farming communities with the view of commercializing them. This involves the loaning of 30 pregnant Nguni heifers and one Nguni bull. This project has been a success and 6 famers have been part of this project.

Madam Speaker we continued our fight against poverty, we were able to support around 25000 food gardens in this mid-term.

The centrality of the state in the economy cannot be under estimated as mainstream economics suggests, that is why we always aim at improving the work we do in order to create an environment that is friendly for investment and where there is ease when doing business with the state.

We targeted the processing of EIA’s to 90 days which is lesser than the normal 107 days, and we were able to process an average of 91% of the EIA’s in the 90days over the mid-term. We have also been looking at lessening the process to 60days; however there will be no short cuts and compromises to the quality of the process.

7 Madam Speaker, The World Health Orgainization report (WHO) on air pollution suggests that in 2012 around 7 million people died- one in eight of total global deaths as a result of air pollution exposure. This finding more than doubles previous estimates and confirms that air pollution is now the world’s largest single environmental health risk. In response to such a growing problem, we have established 27 air quality stations in Gauteng to monitor ambient air quality. This infrastructure provides us with a reliable air quality data that is important for planning for developments such as housing, and location of industries.

Industry has without doubt has become essential in modern society and waste production is an inevitable outcome of the developmental activities, the Department in response to this has the Gauteng Waste Management Information System (GWIS), which is intended at providing the public, industry and government at large with access to information on the management of waste within the province by capturing routine data on the tonnes of waste transported, treated, landfilled and recycled.

We launched the Botho ke Bontle clean-up campaign in Alexander in 2015 and subsequently launched it in other townships around the City Region which was aimed at raising awareness on cleanliness, safe and healthy living environments. The municipalities have taken the clean-up campaign with great positivity and they continue to run the campaign. Ekurhuleni continues to implement the Clean City Campaign through clean-up Fridays. In Sedibeng, the Emfuleni local Municipality implemented their Mayoral clean-up campaign which mainly involves the clearing of illegal dumping sites in townships. City of Johannesburg pikitup continued to clean in regions through community clean-up campaign.

Challenges

Madam Speaker the work done up till now has been met with a lot of successes but equally we have faced challenges. Like George Orwell once asserted we also do believe that “...Telling the truth is a revolutionary act”. It us thus for us important to reflect truthfully in regards to the challenges faced.

8 The decreasing fiscal has a lot of implications on the work we do. We are faced with bigger challenges but a decreasing budget. We have a population that is growing at exorbitant rates than other provinces. The demand for provision of food is thus higher, our food security initiatives are thus constrained and do not speak to the demands.

Due to a constrained budget, the Department had challenges implementing the Infrastructure Delivery Management System holistically (IDMS) as this system requires a lot of expert knowledge in the built environment which had to be hired into the Department. As a result of this we could not implement some of our key infrastructural projects in the 2016/17 financial year.

We experienced the drought two years ago, and as we were just recovering, we were hit by the fall army worm, which devastated a lot of farmers. Many had their crops rendered useless, this meant that their productivity levels were not at anticipated levels and the Department had to step in to mitigate this problem. Madam speaker predicting such natural risks remains tricky and the Department often has to divert money into such problems as they occur and thus compromise on other deliverables.

One of the continued challenges that the Department faces is so far as our compliance and enforcement is concerned is a lack of availability of holding facilities for animals that are seized due to illegal possession. We are working with the national department and other provinces to find workable solutions to this nationwide challenge. We are also in constant discussions with Zoo’s and habitation facilities for a short term keeping arrangement.

The lack of compliance of developers with conditions of Environmental Assessments issued continues to be worrisome.

Madam Speaker, Most industries are still using old technology for air pollution control although they were compliant to permits by DEA during the time of old air pollution act (Atmospheric Pollution Prevention Act 45 of 1965).On average 60% of industries comply with the set National Emissions Standards as per new Air Quality Act .Most Gauteng municipalities responsible to regulate industrial air pollution do not have capacity in a form of staff and technical skills to effectively perform the air quality work,

9 therefore most of industries do not report incidents of air pollution immediately when they happen in terms of section 30 of NEMA but report after they resolved the problems. This makes it hard for the Department to hold them accountable and act accordingly.

Suikerboos rand remains one of our main concerns, we have not been able to holistically implement the turnaround strategy, the money required to turn things around at this reserve is a large amount. We are however still looking for other models that could work to get this reserve running to its optimum potential.

The Future of Agriculture in Gauteng

Madam Speaker, the history of agriculture is the story of man's progress in controlling for his own advantage the plants that make products useful to him by applying his knowledge. The ecological dimensions of the new agricultural technology need to be carefully evaluated and thus a revolution in agricultural technology is a need of the times. Although agricultural productivity is vital, environmental protection is equally important.

Additionally technology must be both affordable by, and geared to the needs of the poor and under nourished people. As a factor in farm and rural development, infusion of two apparently disparate technologies i.e. agricultural biotechnology and information technology is expected to catalyse programme changes. Agricultural biotech and InfoTech together are helping to create new tools to attack the problem of poverty, generate employment of farm productivity and production, improvement of quality and explore marketing and income generating opportunities in newer days.

The most remarkable achievement of the new technologies in the substantial increase in the production and productivity of food grains.

Madam Speaker, it is thus only rational that we as the Department align our work with the global trends and modernise our work in line with the TMR.

We will be looking at launching what we call e-agriculture; this will be a Gauteng Agriculture Information System. This system will contain information of all the farmers

10 we support and have supported as the Department, their farm business DNA. The intention of the project is to effectively provide a platform for data collection, synthesis and dissemination of information, particularly for the smallholder and emerging farmers/producers. Further, it is to provide access to the financial and insurance services which are often out of reach and link them to commodity and key intermediaries like producer organizations.

Madam speaker in the same vision, we will be launching an online EIA Review System, we are the first province to launch this, and Germany the only other known country to have something similar. This is in line with our commitment of the ease of doing business in Gauteng. This will cut a lot of time where developers have to come to our offices and wait in line for application. They will now simply do their application in their own time at the comfort of their space.

Madam speaker, also aligned to the ease of doing business in the province we are busy with the initiation of an integrated on line permit system that we be used for the application for wildlife permits. This will cut down the time and red tape. We have also engaged the Minister of Environment Affairs to reconsider the amount we charge for issuing permits. The current amounts do not make economic sense considering the value of this sector.

Research is important in the area of work we do as we must keep up with what is happening in the industry and also find new ways of adapting to changes. We are currently looking at biogas generation, we are now operating two biogas powered plants in Devon and Zuurbekom, and we plan to roll out another two in this financial year and more in the outer years.

We also understand how water has become a scarce resource and the importance of saving water cannot be over emphasized, we are thus busy with the grey water project where we will be looking at possible areas where the same water can be used for different activities in so far as small holder farming is concerned.

The department will be calling for expression of interest with regard to stakeholders to propose areas of agricultural innovation and technology that would propel the Agrifood

11 sector in Gauteng moving forward. This would entail exploring the concept and potential implementation of “A farm of the future”. The Department will furthermore expand implementations of technologies such as vertical hydroponics.

The GCR Economic Plan identified key sectors in the province that have a potential for growth and subsequently job creation. Agro-processing was one of these sectors. While work has been done in so far as agro-processing is concerned, we will intensify this work in line with the Economic Plan by expanding the Vereeniging Fresh Produce Market. Also in line with both the Economic Plan and the West Rand Economic Summit, we will start with the building of a market for small farmers in the West Rand District and surrounding areas. Additionally we will also be looking at developing an agro-processing hub in the West Rand.

Madam Speaker, the planning for 5 major agri parks will be undertaken this financial year. These agri parks will have the hydroponics vertical growth chambers.

The National Department of Agriculture has prioritised commercialisation of famers; in line with this sector priority, we will support 50 famers with the intention to make them commercial. Our support to small holder farmer with infrastructure also remains a priority.

Franz Fanon once said “For a colonized people the most essential value, because the most concrete, is first and foremost the land: the land which will bring them bread, and above all, dignity.” We cannot agree with him more, as we understand the dignity that owning land brings. While the acquisition of land is not a function of the Department, we found it befitting to understand the patterns of land ownership in the province.

We have therefore started with the Phase 1 of the Land Audit which was intended at revealing the extent of land which is available and can be utilised for agricultural purposes and who owns this agricultural land. This phase revealed that 19.8% of the land covered by the land audit while the private sector owns 70.8%, the remaining 9.4% was unaccounted for. Further investigations will be conducted in phase 2 to determine the ownership of land.

12 The ownership of Agricultural holdings show that the majority of land parcels (83.2% - 58 536 ha) are privately owned while the state owns 3 343 land parcels (11.8% - 8 513 ha), 5% of the land area are unaccounted for, 73% or 245 529 ha of High Potential Land (as per the GAPA IV) is privately owned while the state owns 61 003 ha or 8.53% of high potential land.

Phase 2 will take place this financial year, and will determine the extent and utilization of land that remains unaccounted for. We also want to see which land was acquired through land claims and how this land is being utilised.

The Nguni Cattle project will still continue with three more famers having profiled and passed in this financial year.

Madam Speaker, transformation of the biodiversity economy is essential like the transformation of many other sectors. In line with this the Department has begun with a feasibility study on the Gauteng Biodiversity Economy, to develop a Strategy and an Implementation Plan for the Province. The intentions of the Feasibility Study would be to uncover potential areas for promotion of the Biodiversity Economy in Gauteng. The intention of the Strategy will be to provide strategic direction in this process and to ensure that the historically disadvantaged people participate while the Implementation plan will provide well researched, realistic and sound commercial business based, costed and time bound information for implementation.

We plan to conclude the GCR Climate Change Strategy; the intention of this strategy is to map out a road for the GCR climate smartness and resilience. Vulnerability maps and dlong term adaption scenarios for the GCR, especially for the health, water, biodiversity, human settlements and agricultural sectors will be developed. Madam Speaker this is in line with the Paris Agreement which says we must take measures to reduce our greenhouse emissions.

Added to that, we will also conclude the “State of Environment Report” which will also assist in planning for the province. There might be areas that were earmarked for housing development for example which might that be an agriculture area, and therefore the report will provide that guideline.

13 Madam Speaker, before the end of June 2017, the Department will officially launch the integration of waste pickers into mainstream waste economy, the aim of this project is to integrate waste cooperatives and SSME’s into the mainstream waste economy, this will also increase waste recycling efforts in the province and divert waste from landfill sites into recyclable and reusable materials, and importantly give dignity to these waste pickers.

We will also review the 2009 Gauteng Air Quality Management Plan to establish the current status of air quality within Gauteng and to also develop objectives that will ensure prevention and improvement in air quality in Gauteng.

Madam speaker our environmental inspection work will carry on as per our mandate, we will also continue with our veterinary services and dealing with diseases and out breaks.

The next two and a half years remaining in the term will be defined by accelerated service delivery. We have understood what needs to be done and the point is now to implement and deliver.

Honourable Members

Our Budget allocation is R916million. R487, 848million of our allocation will go to Agriculture and Rural Development Programme, R239, 736million will go to Environmental Affairs and the R189,016million to the departments operational needs.

I wish to thank the Hon Premier David Makhura for his continued support and guidance, I would like to also thank my esteemed colleagues in cabinet, Chairperson of the Portfolio Committee on Economic Development, Environment, Agriculture and Rural Development Hon. Errol Magerman, the Head of department Ms. Thandeka Mbassa, the senior management in the department and all the servants in the department who are always ready and willing to go the extra mile.

I now table the Department of Agriculture and Rural Development budget on behalf of the department for consideration by this August House.

I thank you all!