Presentation on the Status of Transformation in Agricultural Sector to Portfolio Committee on Agriculture, Forestry and Fisheries

1
Presentation on the Status of Transformation in
Agricultural Sector to Portfolio Committee on
Agriculture, Forestry and Fisheries

• by
• DAFF AgriBEE Charter Council
• 05 November 2013

2
CONTENTS

• Purpose
• Background - Major Milestones
• What are the implications of the Section 9(1)
  AgriBEE Sector Code
• How will AgriBEE Sector Code be enforced? (The
  Guiding Principles)
• What are the applicable Enforcement Measures for
  the AgriBEE Sector Code?
• How Permits are used to enforce the
  implementation of the AgriBEE
• Sector Code
• Important Principles applied during the
  allocation of Market Access Quotas
• How compliance to Code will be measured Source
  of Information
• Homepage of the AgriBEE IT Portal
• Status of Transformation in Agricultural Sector
• Total Population of Commercial Agricultural
  Stakeholders and the Sampling approach
• Estimated status of transformation BEE
  compliance in agricultural sector
• Perceptions viewpoints of agricultural
  enterprises on BEE Transformation
• Elements of Empowerment Undertakings by
  Stakeholders
• DAFFs contributions to the implementation of the
  AgriBEE Sector Code
• Conclusions

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Purpose

• 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.
• DAFFs contribution to the implementation of the
  AgriBEE Charter.

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The 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

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What are the implications of the Section 9(1)
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.

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How will AgriBEE Sector Code be enforced? The
Guiding Principles

• The Constitution of the Republic South
  Africa1996
• Section 217 (1) (2) and (3) of the Constitution
  of South Africa states that
• 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.
• Subsection (1) does not prevent the organs of the
  state or institutions referred to in that
  subsection from implementing a procurement policy
  providing for
• Categories of preference in the allocation of
  contracts and
• The protection or advancement of persons, or
  categories of persons, disadvantaged by unfair
  discrimination.
• National legislation must prescribe a framework
  within which the policy referred to subsection
  (2) may be implemented.

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The Guiding Principles (Cont.)

• 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 entitys 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.

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

• Preferential Procurement Policy Framework Act
• Through the Supply Chain Management policies of
  DAFF
• Water Licenses
• DWAs 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

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How Permits are used to enforce the
implementation of the AgriBEE Sector Code
AgriBEE Status Number of Points
Level 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
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Important Principles applied during the
allocation of Market Access Quotas

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

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How compliance to Code will be measured Source
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/agribe
  e/

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Homepage of the AgriBEE IT Portal
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Status 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

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Total Population of Commercial Agricultural
Stakeholders and the Sampling approach

Agro-ecological zones Sub-sector (across value chain) Sub-sector (across value chain) Sub-sector (across value chain) Sub-sector (across value chain) Subtotal Agri- businesses RESPONSES
Agro-ecological zones Field crops Animal products Horticulture Mixed farming Subtotal Agri- businesses RESPONSES
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) 131 737
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) 32 406
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) 18 55
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) 20 199
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) 3 88
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) 21 147
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
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Estimated status of transformation BEE
compliance in agricultural sector
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Perceptions viewpoints of agricultural
enterprises on BEE Transformation
I am not considering a BEE strategy for my
business
209 (13)
157 (10)
I first want to test waters and see where
things are heading before committing myself to
a BEE strategy
775 (47)
491(30)
I am considering the implementation of a BEE
strategy as soon as possible
I have already developed a detailed BEE strategy
and have to implement it in my core business
17
Obstacles challenges to the implementation of
AgriBEE Sector Code
Number of responses
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Elements of Empowerment Undertakings by
Stakeholders
Pages Element Agri-Industry Undertakings Government Undertakings
12-16 Ownership (Land and Equity) Sell equity to black people Make land available for sale or lease Fund black people to buy equity in enterprises Implement 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
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DAFFs 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).

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Conclusions

• 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.