RECAPITALISATION AND RECAPITALISATION AND DEVELOPMENT PROGRAMMEDEVELOPMENT PROGRAMME

PRESENTATION TO THE PRESENTATION TO THE PORTFOLIO COMMITTEE ON PORTFOLIO COMMITTEE ON RURAL DEVELOPMENT AND RURAL DEVELOPMENT AND

LAND REFORMLAND REFORM

5 NOVEMBER 20145 NOVEMBER 2014

In 2009, the Department undertook an evaluation of the implementation of the

Land Reform Programmes since their inception.

•It identified that many land reform projects were not successful and thus in

distress or lying fallow;

•There was a lack of adequate and appropriate post-settlement support; and

•Numerous properties acquired through various sub-programs (such as the Land

Redistribution for Agricultural Development (LRAD) were on the verge of being

auctioned or had been sold due the collapse of the project, resulting in a reversal

of the original objectives of land reform.

Background on Recapitalisation and Development Programme (RADP)

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• In order to address the above challenges, RECAP targets properties acquired

since 1996 through the Restitution and Redistribution programmes; and

• Aims to contribute to the transformation of the rural economy through

establishment of enterprise and industrial development in the various agricultural

value chains -

to ensure national and household food security, and

to promote job creation.

• Implemented correctly, RECAP would result in a significant reduction of the rural

– urban population and resource flow.

Background cont…..

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• The policy has three strategic objectives:

• That Land Reform farms are 100% productive;

• That the class of black fledgling commercial farmers which was destroyed by the

1913 Natives Land Act is rekindled; and

• That the rural-urban population flow is significantly reduced.

Objectives of the policy

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RADP program took cognizance of the following:

• Reversing the legacy of the 1913 Natives Land Act;

• The Constitution of the Republic: Section 25,26,27 and 36;

• The Comprehensive Rural Development Plan (CRDP); and

• Alignment with the National Development Plan(Chapter 6) and Medium Term Strategic Framework.

Alignment of RADP with Government Mandate

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The policy seeks to:

•Provide black emerging farmers with social and economic infrastructure and basic

resources required;

•Combat poverty, unemployment and income inequality;

•Reduce rural-urban migration; and

•Complement agricultural development programmes of the Department of Agriculture,

Forestry and Fisheries (DAFF).

The policy is not meant to:

•Substitute for, or compete with the agricultural development programmes of DAFF;

•Nor create a welfare program meant to provide support to so-called beneficiaries.

Intentions of the RADP Programme

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Overview Recapitalisation and Development Policy (key pillars of the policy)

1.Selection and targeting of beneficiaries

The Programme targets the following categories of properties requiring and deserving support::

1.Selected distressed land reform properties;

2.Selected properties under the administration of the Minister;

3.Selected sites within the former homelands and other communal areas; and•Selection of farms and properties for Recapitalisation and Development funding is guided by objectives of this Policy and other government development frameworks. The projects will be prioritized in accordance with the categories as outlined in the Agricultural Land Holding Policy and Lease and Disposal Policy.

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The policy seeks to create developmental pathways appropriate to different categories of farmers:

•Category 1: Households with no or limited individual access to land, even for subsistence production.

•Category 2 – Small-scale farmers who have been farming for subsistence purposes and selling part of their produce on local markets. This may be land in communal areas, on commercial farms, on municipal commonage or on church land.

•Category 3 – Medium-Scale commercial farmers who have already been farming commercially at a small scale and with aptitude to expand, but are constrained by land and other resources

•Category 4 – Large-scale commercial: Well established black commercial farmers who have been farming at a reasonable commercial scale, but are disadvantaged by location, size of land and other resources or circumstances, and with real potential to grow.

• In addition, the Department will select properties based on the commodity clustering approach by working together with sector departments (e.g. financial institutions, farmers, municipalities, and commodity organisations, social partners in the private and non-governmental sectors).

Overview Recapitalisation and Development Policy (key pillars of the policy) Cont...

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 1. District Land Acquisition and Recapitalization Committee 2. Provincial Land Acquisition and Recapitalization Committee 3. National Land and Recapitalization Technical Committee

4. National Land and Recapitalization Secretariat Committee

5. National Land and Recapitalization Committee

6. Inter- Ministerial Technical Committee

7. Ministers Co-ordinating Committee

Institutional and governance arrangements

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The Minister for Rural Development and Land Reform is duly authorised thereto by section 15 of the Land Reform: Provision of Land and Assistance Act, 1993 (Act No. 126 of 1993), to do land development in all acquired land reform properties. These powers have further been delegated to different officials within various line functions. (See the attached copy of Act 126 Delegations.)

Delegation framework

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Exit strategy  The model below demonstrates the tripartite collaboration between DRDLR, Strategic Partners (SPs) and Farmers or Entrepreneurs. The middle numbers (1-5) demonstrate the five-year involvement of DRDLR in the farm both financially and at project management level. The contribution of DRDLR will decrease from the first year to the fifth year whilst the contribution of both SPs and Farmers or Entrepreneurs will increase both financially and at project management level.

 

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The following are key factors on RADP execution of Exit Strategy

1. Viability and Sustainability of the projects

2. Farm Assessment

3. Financial standing at the time of exit

4. Skills Development on : • Farm management , • Record Keeping ,• Financial skills Development , • Market related relationship and linkages

• 4. Future Business plan • 5. Commitment and Performance Report for Strategic Planning and DRDLR M& E report

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RADP Beneficiaries Analysis to date (Farms)PSSC Irrigation

SchemeCommonages Restitution Redistribution

LRAD project (Loan Financed emerging

Farmers)

Total Amount Disbursed

EC 3 2 4 179 9 449 541 381FS 0 0 2 180  3 387 842 220GP 0 0 0 115  7 206 311 481KZN 2 0 12 198  15 553 855 527LP 1 4 5 186  1 344 718 338MP 3 2 9 192  1 522 736 657NC 0 0 2 79  11 201 028 744NW 0 2 24 189  46 426 572 762WC 0 0 0 64  5 135 627 819Totals 9 10 58 1 382 99 3 228 234 929

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Implementation Progress Report

PSSC

RADP STATISTICS INCEPTION (2009) - 31 MARCH 2014

Farms Hectares MentorsStrategic Partner

OthersCost Of Recap

EC 188 111,591 44 41 103 449 541 381FS 182 134,587 34 44 82 387 842 220GP 115 19,916 20 11 84 206 311 481

KZN 212 131,619 38 66 109 553 855 527LP 196 79,143 61 6 138 344 718 338MP 206 165,726 55 33 132 522 736 657NC 81 464,914 28 22 30 201 028 744NW 215 225,571 13 80 121 426 572 762WC 64 47,714 5 11 48 135 627 819

Totals 1,459 1,380,781 298 314 847 3 228 234 929

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Number of Farms Redistributed vs. number of Farms under Recap

PSSC Number of Farms Redistributed/Restored vs Number of Farms under Recap since 2009 – March 2014

Redistributed Restored (Restitution) Farms Under Recapitalisation

Farms Hectares Claims Hectares Farms Hectares

EC 211 193 355 378 35 070 188 111 591

FS 154 114 858 17 6 870 182 134 587

GP 95 16 050 162 7 629 115 19 916

KZN 244 136 805 112 135 068 212 131 619

LP 139 56 086 304 106 696 196 79 143

MP 183 144 507 87 99 133 206 165 726

NC 80 449 174 21 62 932 81 464 914

NW 164 129 164 32 122 240 215 225 571

WC 49 34 641 687 128 64 47 714

Totals 1 319 1 274 639 1 800 575 766 1 459 1 380 781

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Total budget Spend of Recap Fund Annually as at March 2014

PSSC

Total Budget Spend R”000 of the Recap Fund Annually till March 2014

2009/2010 2010/2011 2011/2012 Total

Expendi ture

2012/2013Total

Expenditure

2013/2014 Total Expenditure

Overall Total

Expenditure

HH Grants PLAS HH Grants PLAS HH Grants PLAS HH Grants AVMP PLAS HH Grants AVMP

EC 3,5342 13,154 6,828 11,772 55,551 90,839 71,182 68,161 10,167 149,510 64,331 61,346 83,516 209,193 449,541

FS 3,218 52,086 6,783 37,219 29,868 129,174 78,691 56,941 19,670 155,302 57,975 32,622 12,769 103,366 387,842

GP 427 7,499 2,301 16,832 3,833 30,892 68,000 22,426 1,094 91,519 51,830 26,605 5,466 83,901 206,311

KZN 2,163 23,036 26,653 36,623 57,970 146,445 51,868 52,778 33,202 137,849 42,630 111,909 115,023 269,562 553,856

LP 2,294 4,691 61,050 11,164 29,027 108,226 52,927 87,103 17,202 157,232 34,011 45,249 0 79,261 344,718

MP 6,856 9,631 25,847 56,372 60,163 158,868 111,575 115,597 22,773 249,945 79,711 21,863 12,349 113,923 522,737

NC 713 12,174 2,127 31,765 15,232 62,011 22,208 54,350 2,712 79,270 31,135 27,734 879 59,748 201,029

NW 5,321 36,814 20,427 7,888 138,316 208,766 57,295 36,190 13,635 107,120 49,573 52,348 8,766 110,687 426,573

WC 5,893 1,670 21,769 26,446 4,379 60,158 21,553 851 877 23,281 33,176 11,568 7,444 52,188 135,628

TOTALS 30,421 160,755 173,785 236,079 394,339 995,379 535,298 494,398 121,332 1,151,028 444,371 391,243 246,213 1,081,828 3,228,235

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Number of Farms expected to exit the five year incremental funding by end of 2016

Number of Farms likely to Exit the Five year by end of 2016

PSSC Number of Farms

EC 2

FS 36

GP 6

KZN 0

LP 0

MP 17

NC 0

NW 1

WC 2

Total 64

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Training and Capacity Building to Farmers in the Recapitalisation and Development Programme

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PSSC

Farmers Trained under Recap and type of training providedFarmers trained

 Types of Trainings

EC 125

Communication and filing of tax, financial planning and management,

bookkeeping, understanding project management, life skills and

anger/conflict management, tractor driving and maintenance, lucerne

cultivation, identification of tick-borne disease, computer training, fencing,

stock control, water improvement, vermin control etc

FS 67

Farm business management and administration, financial management,

personnel and management principles, livestock and crop farming. Efficient

application of electricity and people and process skills

GP 0  

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.

PSSC

Farmers Trained under Recap and type of training provided

Farmers trained

 Type of Training

KZN 493

Health & safety, emergency first aid, responsible use of agricultural remedies and

personal protection, crop management of green beans, peppers, cane yield

estimating, cane cutting, business orientation, disease identification, implement

setting, tractor care and safe handling of chemicals, fertilizer application, workshop

on economic outlook, bell loader and cane quality

LP 197

Vegetable and sweet potato production, record keeping, livestock and poultry

farming, supplementary feeding of livestock, handling of chemicals, move, set and

connect pivot for use

MP 215

Mixed farming systems, crop rotation, weed control & Irrigation, sheep shearing,

herbicide applicators, dipping, vaccination and dehorning, health and safety, basic

office administration and house keeping, diamond, weld and field mesh fence,

agricultural barbed wire, livestock handling and management

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NC 109 Supplementary feeding of livestock, profitable Boer goat farming, basic fire

fighting, financial management, debushing,

NW 69  General farm work management and production

WC 614

Farm manager productivity, health & safety, Shoot binding, harvest control,

application of chemicals, Fire drill, shortening of branch, shouldering & pointing, leaf

clearing in bunch zone, leaves removal and farming budget

TOTALS 1,889  

PSSC

Farmers Trained under Recap and type of training provided

Farmers trained

 Type of Training

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Successes and Challenges with training of farmers

• Successes

Training provided by strategic partners in different provinces under the RADP

included cane husbandry, cane cutting, boom sprayer operator, livestock farming,

crop management, concrete mixing & brick laying to erect farm houses/ storages,

financial management, Supplementary feeding of livestock, feedlot, soil sampling,

stock control, tractor learner driving, tractor operations and safety, basic business

training, bell loader, chainsaw & brush cutter maintenance, committee training,

cooperative governance, breeding of livestock, record keeping, health and safety,

debushing, implement setting, vineyard monitoring etc.

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• Challenges Key challenges included:

Lack of dedicated strategic partners, as they are not willing to invest in the programme

and share the risk with farmers.

Lack of alignment with other departments providing support to farmers in the sector.

• Steps taken to address challenges Recap and development manual is being finalized to provide guidelines for the proper

implementation of the programme.

Commodity based support will be adopted to maximize support given to farmers under

land reform and this will be aligned with the Agricultural Policy Action Plan (APAP).

Collaboration of AgriSeta to assist with training

Improvement of legal contracts of Strategic Partners

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Financial Management of the Recap Fund• Disbursement of funds

All Recapitalisation and Development funding will be disbursed into joint project business accounts in terms of the approved Business Plan. Accounts should be registered in the name of the newly formed project’s legal entity or the new farm business account. Both the Strategic Partner and farmer/s should have co-signing rights on the joint account during the contractual period.

• Monitoring compliance and financial controls (PFMA and Treasury Regulations) The farmer/s may not unilaterally remove the Strategic Partner as a co-signatory without the

written consent of the Department. Procurement of goods and services must be approved by the project adjudication committee

and signed by all parties to the agreement including the Department. The PLAS Trading Account in the office of the Chief Financial Officer will monitor the

management of the funds with financial institutions where the joint account is opened or was opened on financial control terms agreed upon by these entities.

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Strengths

1.Farmers can procure their required goods on time2.Farmers’ financial creditability will improve as they procure their services3.Improvement in their financial management skills

Weakness

1.Farmers deviate from the business plan by procuring assets which are not in line with approved Business Plan2.Farmers unilaterally remove Strategic Partners as co-signataries to the account.3.No proper accountability on money spent4.Lack of control and investment on the profit received

Strengths and Weaknesses of Financial Controls

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Plans to improve on the weaknesses

1.Improve the contracts of all forms of partnership2.Use the procurement cards without withdrawing cash from the bank3.Direct linkage of suppliers with the procurement cards4.Money paid direct to suppliers through internet banking controlled by Strategic Partners5.Payment to be informed by the signed and agreed invoice between the farmer and the strategic partners6.Monthly monitoring of joint account transactions by finance team from provincial offices7.All deliveries of goods and services must be verified and signed off by project office before payment can be done,

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Highlights of the RADP to date

What is the rate of success of projects under RADP?:NB: RADP has different kinds of Strategic partnerships, namely Co-management, Contract farming, Share Equity and Mentorship.

1. Mentorship•298 projects under mentorship and they are doing very well

2. Other Partnerships (Contract Farming, Co-management and Farm Equity •314 projects under other Partnerships which are also doing well.

NB:

a) Most projects are only now starting to realize profitability because in the first three years the concentration was on infrastructure to make the farms farmable.

b) the Chief Directorate through its Institutional Partnership unit is doing contract management wherein they are identifying all non compliant projects and deal with them in line with the non- compliance clauses in the contract.

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Thank you

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