Presentation on the Status of Presentation on the Status of Transformation in Agricultural Transformation in Agricultural

Sector to Sector to Portfolio Committee on Agriculture, Portfolio Committee on Agriculture,

Forestry and FisheriesForestry and Fisheries

Presentation on the Status of Presentation on the Status of Transformation in Agricultural Transformation in Agricultural

Sector to Sector to Portfolio Committee on Agriculture, Portfolio Committee on Agriculture,

Forestry and FisheriesForestry and Fisheries

byDAFF & AgriBEE Charter Council

05 November 2013

22

CONTENTSCONTENTS

PurposePurpose Background - Major MilestonesBackground - Major Milestones What are the implications of the Section 9(1) AgriBEE Sector Code What are the implications of the Section 9(1) AgriBEE Sector Code How will AgriBEE Sector Code be enforced? (The Guiding Principles) How will AgriBEE Sector Code be enforced? (The Guiding Principles) What are the applicable Enforcement Measures for the AgriBEE Sector Code?What are the applicable Enforcement Measures for the AgriBEE Sector Code? How Permits are used to enforce the implementation of the AgriBEE How Permits are used to enforce the implementation of the AgriBEE

Sector Code Sector Code Important Principles applied during the allocation of Market Access QuotasImportant Principles applied during the allocation of Market Access Quotas How compliance to Code will be measured: Source of InformationHow compliance to Code will be measured: Source of Information Homepage of the AgriBEE IT Portal Status of Transformation in Agricultural SectorStatus of Transformation in Agricultural Sector Total Population of Commercial Agricultural Stakeholders and the Sampling

approach Estimated status of transformation & BEE compliance in agricultural sectorEstimated status of transformation & BEE compliance in agricultural sector Perceptions & viewpoints of agricultural enterprises on BEE & TransformationPerceptions & viewpoints of agricultural enterprises on BEE & Transformation Elements of Empowerment: Undertakings by Stakeholders DAFF’s contributions to the implementation of the AgriBEE Sector Code the AgriBEE Sector Code ConclusionsConclusions

PurposePurpose Background - Major MilestonesBackground - Major Milestones What are the implications of the Section 9(1) AgriBEE Sector Code What are the implications of the Section 9(1) AgriBEE Sector Code How will AgriBEE Sector Code be enforced? (The Guiding Principles) How will AgriBEE Sector Code be enforced? (The Guiding Principles) What are the applicable Enforcement Measures for the AgriBEE Sector Code?What are the applicable Enforcement Measures for the AgriBEE Sector Code? How Permits are used to enforce the implementation of the AgriBEE How Permits are used to enforce the implementation of the AgriBEE

Sector Code Sector Code Important Principles applied during the allocation of Market Access QuotasImportant Principles applied during the allocation of Market Access Quotas How compliance to Code will be measured: Source of InformationHow compliance to Code will be measured: Source of Information Homepage of the AgriBEE IT Portal Status of Transformation in Agricultural SectorStatus of Transformation in Agricultural Sector Total Population of Commercial Agricultural Stakeholders and the Sampling

approach Estimated status of transformation & BEE compliance in agricultural sectorEstimated status of transformation & BEE compliance in agricultural sector Perceptions & viewpoints of agricultural enterprises on BEE & TransformationPerceptions & viewpoints of agricultural enterprises on BEE & Transformation Elements of Empowerment: Undertakings by Stakeholders DAFF’s contributions to the implementation of the AgriBEE Sector Code the AgriBEE Sector Code ConclusionsConclusions

33

PurposePurposePurposePurpose

To brief the Portfolio Committee about the:

Status of the AgriBEE Charter and its implications.

Enforcement measures developed in order to fast-tract the implementation of the AgriBEE Charter.

Web-based system developed in order to facilitate the reports by the sector stakeholders’ BEE status.

Status of transformation in the agricultural sector.

DAFF’s contribution to the implementation of the AgriBEE Charter.

44

The Background - Major MilestonesThe Background - Major MilestonesThe Background - Major MilestonesThe Background - Major Milestones

Gazette of the AgriBEE Transformation Charter in terms of Section 12 of the BBBEE Act 53 of 2003 – 20th March 2008

Inauguration of the AgriBEE Charter Council – 5th December 2008

Migration of section 12 AgriBEE Charter to section 9 AgriBEE Sector Code

Gazette of the Draft AgriBEE Sector Code in terms of Section 9 (5) of the BBBEE Act 53 of 2003 – 26th March 2012

Agricultural Sector stakeholders consultations during Draft AgriBEE Sector Code Public Comments 60-day period

Gazette of the AgriBEE Sector Code in terms of Section 9 (1) of the BBBEE Act 53 of 2003 – 28th December 2012

55

What are the implications of the Section 9(1) What are the implications of the Section 9(1) AgriBEE Sector Code AgriBEE Sector Code

What are the implications of the Section 9(1) What are the implications of the Section 9(1) AgriBEE Sector Code AgriBEE Sector Code

The Code has the same legal status as the Generic Codes of Good Practice (GoGP).

The Code is now fully implementable effective from that of publication, i.e. 28 December 2012.

The Code is now enforceable using government measures, i.e. licenses, incentives, etc.

Since the code is voluntary by nature, stakeholders have a right to choose whether to comply or not as they can not be prosecuted for not doing so.

66

How will AgriBEE Sector Code be enforced? How will AgriBEE Sector Code be enforced? The Guiding Principles The Guiding Principles

How will AgriBEE Sector Code be enforced? How will AgriBEE Sector Code be enforced? The Guiding Principles The Guiding Principles

The Constitution of the Republic South Africa1996

Section 217 (1); (2); and (3) of the Constitution of South Africa states that:

1.When an organ of the state in the national, provincial or local spheres of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost- effective.

2.Subsection (1) does not prevent the organs of the state or institutions referred to in that subsection from implementing a procurement policy providing for:

a.Categories of preference in the allocation of contracts; and

b.The protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.

c. National legislation must prescribe a framework within which the policy referred to subsection (2) may be implemented.

77

The BBBEE Act 53 of 2003: Section 10 of the Act provide for All Organs of State and Public Entities to apply any relevant Legislation and applicable relevant Sector Code of Good Practice issued in terms of the Act in: Determining qualification criteria for licenses, concessions (grants). Developing & implementing a preferential procurement policy. Determining qualification criteria for the sale of state-owned enterprises. Developing criteria for entering into partnerships with the Private Sector.

Rules of the Game Government must buy from entities that contribute much to BBBEE. (Higher

BEE Recognition Level).

The Higher an entity’s BEE Recognition Level, the higher is its contribution/compliance to BBBEE.(Seven Elements).

When this occurs, there is ensured increasing market access by black companies.

The Guiding Principles (Cont….)The Guiding Principles (Cont….)The Guiding Principles (Cont….)The Guiding Principles (Cont….)

88

What are the applicable Enforcement What are the applicable Enforcement Measures for the AgriBEE Sector Code?Measures for the AgriBEE Sector Code?What are the applicable Enforcement What are the applicable Enforcement Measures for the AgriBEE Sector Code?Measures for the AgriBEE Sector Code?

Preferential Procurement Policy Framework Act Through the Supply Chain Management policies of DAFF

Water Licenses DWA’s policy water use allocations include compliance to

the AgriBEE Sector Code as a requirement

Agricultural trade permit (already implemented) The policy for the allocation of trade permits for imports and

exports of agricultural products requires compliance to the AgriBEE Sector Code

Fresh Produce Market Agents’ certification The amendments of the Agricultural Produce Agents Act

have aligned the certification of market agents to the AgriBEE Sector Code

99

How Permits are used to enforce the How Permits are used to enforce the implementation of the AgriBEE Sector Code implementation of the AgriBEE Sector Code

How Permits are used to enforce the How Permits are used to enforce the implementation of the AgriBEE Sector Code implementation of the AgriBEE Sector Code

AgriBEE Status Number of PointsLevel One Contributor 22

Level Two Contributor 19

Level Three Contributor 17

Level Four Contributor 15

Level Five Contributor 12

Level Six Contributor 8

Level Seven Contributor 5

Level Eight Contributor 2

Non-Compliant Contributor 0

Total 100% or Points

1010

1. Black Economic Empowerment is the primary requirement for the allocation of marketing permits – i.e. First round.

2. After the points have been allocated in accordance with the point system in section 2 above, the surplus quota can therefore be allocated starting with companies on level 1 to 8 up to the limit of the average historical market share for each company – Second round

3. The average market share system will only apply after the BEE point system has been applied and the market share system will be applied in terms of section 3.2 above.

4. If after the first and the second round there is still a surplus (i.e. surplus of surplus), the Third round would be to take the surplus of surplus and divide it by the number of all non-compliant companies.

Important Principles applied during the Important Principles applied during the allocation of Market Access Quotasallocation of Market Access Quotas

Important Principles applied during the Important Principles applied during the allocation of Market Access Quotasallocation of Market Access Quotas

1111

How compliance to Code will be measured: How compliance to Code will be measured: Source of InformationSource of Information

How compliance to Code will be measured: How compliance to Code will be measured: Source of InformationSource of Information

DAFF has developed the AgriBEE IT Portal, which is a web-based information system to be used by sector stakeholders when reporting their BEE status.

Training on the AgriBEE IT Portal was rolled out to all 9 Provincial Departments of Agriculture (PDAs) officials to assist farmers and agribusinesses to upload their valid BEE Certificates & Scorecard information into portal

DAFF and the AgriBEE Charter Council will utilise the information from the Portal to write annual reports on the actual status of transformation in the sector.

The Portal was tested in consultation with Agricultural Sector Stakeholders and is functional, URL: http://webapps.daff.gov.za/agribee/

1212

Homepage of the AgriBEE IT PortalHomepage of the AgriBEE IT PortalHomepage of the AgriBEE IT PortalHomepage of the AgriBEE IT Portal

1313

Status of Transformation in Agricultural SectorStatus of Transformation in Agricultural SectorStatus of Transformation in Agricultural SectorStatus of Transformation in Agricultural Sector

Currently, there is no actual information on the status of transformation in Agricultural Sector.

This is because reliable source, DTI BEE IT Portal, is no longer functional.

However, DAFF has commissioned a study through NAMC that has provided:

An estimated information on the status of transformation in Agricultural Sector.

Perceptions & viewpoints from agricultural enterprises regarding BEE and transformation

Obstacles and challenges to the implementation of AgriBEE

1414

Total Population of Commercial Agricultural Total Population of Commercial Agricultural Stakeholders and the Sampling approachStakeholders and the Sampling approach

Total Population of Commercial Agricultural Total Population of Commercial Agricultural Stakeholders and the Sampling approachStakeholders and the Sampling approach

14

Agro-ecological

zones

Sub-sector (across value chain) Subtota

l

Agri-

businesse

s

RESPONSE

SField

crops

Animal

products

Horticultur

e

Mixed

farming

Cape Fold Region

(WC, KZN) Sample size

RESPONSES

2,722

100

33

4,138

153

91

1,825

68

354

1,297

48

128

9,982

369

606

151

(151)

131737

Interior Region

(FS,EC)

Sample size

RESPONSES

1,762

57

10

7,621

248

266

1,181

40

47

839

27

51

11,404

372

374

98

(98)

32406

High Veld Region

(Gauteng) Sample size

RESPONSES

671

125

7

259

48

16

450

84

4

319

59

10

1,699

316

37

37

(37)

1855

Kalahari Limpopo

(Lim, NW) Sample size

RESPONSES

1,552

77

58

4,069

201

34

1,040

51

44

739

37

43

7,400

366

179

86

(86)

20199

Eastern Plateau

(Mpu)

Sample size

RESPONSES

1,062

103

12

1,285

125

29

712

69

27

506

49

17

3,566

346

85

59

(59)

388

Nama Karoo (NC)

Sample size

RESPONSES

496

33

16

4,302

286

89

333

22

14

236

16

7

5,367

357

126

28

(28)

21147

Total population 8,265 21,674 5,541 3,936 39,417 458

Total sample size 495 1061 334 236 2,126 (458) 2584

136 525 490 256 1407 225 1632

1515

Estimated status of transformation & BEE Estimated status of transformation & BEE compliance in agricultural sectorcompliance in agricultural sector

Estimated status of transformation & BEE Estimated status of transformation & BEE compliance in agricultural sectorcompliance in agricultural sector

1616

Perceptions & viewpoints of agricultural Perceptions & viewpoints of agricultural enterprises on BEE & Transformationenterprises on BEE & Transformation

Perceptions & viewpoints of agricultural Perceptions & viewpoints of agricultural enterprises on BEE & Transformationenterprises on BEE & Transformation

I am not considering a BEE strategy I am not considering a BEE strategy for my businessfor my business

I first want to “test waters” and “see I first want to “test waters” and “see where things are heading” before where things are heading” before committing myself to a BEE strategycommitting myself to a BEE strategy

I first want to “test waters” and “see I first want to “test waters” and “see where things are heading” before where things are heading” before committing myself to a BEE strategycommitting myself to a BEE strategy

I am considering the implementation I am considering the implementation of a BEE strategy as soon as possibleof a BEE strategy as soon as possibleI am considering the implementation I am considering the implementation of a BEE strategy as soon as possibleof a BEE strategy as soon as possible

491(30%)

775 (47%)

157 (10%)

209 (13%)

I have already developed a detailed I have already developed a detailed BEE strategy and have to implement it BEE strategy and have to implement it in my core businessin my core business

I have already developed a detailed I have already developed a detailed BEE strategy and have to implement it BEE strategy and have to implement it in my core businessin my core business

1717

Obstacles & challenges to the implementation of Obstacles & challenges to the implementation of AgriBEE Sector CodeAgriBEE Sector Code

Obstacles & challenges to the implementation of Obstacles & challenges to the implementation of AgriBEE Sector CodeAgriBEE Sector Code

Nu

mb

er

of

res

po

ns

es

1818

Pages Element Agri-IndustryUndertakings

GovernmentUndertakings

12-16 Ownership (Land and Equity)

Sell equity to black peopleMake land available for sale or lease

Fund black people to buy equity in enterprisesImplement land reform

16 Management Control Promote black people to board and management positions

Enforce the Implementation of the Employment Equity Act

14 Employment Equity Employ black people at management positions

Enforce the Implementation of the Employment Equity Act

14-20 Skills Development Spend 85% of total skills spend on core, critical & scarce skills

Enforce the Implementation of the Skill Development Act

20-21 Preferential Procurement Procure goods & services from BEE companies

Enforce the Implementation of the Preferential Procurement Policy Framework Act

21-24 Enterprise Development Spend 3% of NPAT on ED Fund ED initiatives using CASP, MAFISA, etc

24-26 Rural Development, Poverty Alleviation and CSI

Spend 3% of NPAT on SED Support SED initiatives

Elements of Empowerment: Elements of Empowerment: Undertakings by Stakeholders Undertakings by Stakeholders

Elements of Empowerment: Elements of Empowerment: Undertakings by Stakeholders Undertakings by Stakeholders

1919

DAFF’s ContributionsDAFF’s ContributionsDAFF’s ContributionsDAFF’s Contributions

Implementing the AgriBEE Fund to support Black ownership of equity in the commercial enterprises.

Implementing CASP Fund to support enterprise development for Black people.

Piloting an incubation project in Limpopo were 50 smallholder women tomato farmers are undergoing through the mentoring programme.

This incubation pilot project is the collaboration of DAFF, LDA and SEDA (Timbali Incubator).

2020

ConclusionsConclusionsConclusionsConclusions

The AgriBEE Sector Code is the law and has the same status as GoGP.

The AgriBEE Sector Code has the “teeth” which are aligned to the Constitution and the BBBEE Act 53 of 2003.

AgriBEE IT Portal is fuctional and the sector stakeholders can now report their BEE status.

Estimated status of transformation suggest that the agricultural sector is on level 4.

The Department is currently implementing:

CASP to improve enterprise development in the sector. AgriBEE Fund to improve equity ownership on Black people in

the entire agricultural value chain. Skills development in Limpopo through incubation of farmers.