1. MECHANISATION SUPPORT POLICY FRAMEWORK
PRESENTATION TO THE PORTFOLIO COMMITTEE ON AGRICULTURE, FORESTRY AND FISHERIES
DIRECTOR GENERAL EDITH V. VRIES
21 OCTOBER 2014

2. Presentation Outline Background Problem Statement
Objectives of the Policy
Guiding Principles of the Policy
Legislative Mandate
Proposed Policy Framework (Options)
Monitoring and Evaluation
Conclusion

3. Background
The Freedom Charter (1955) states, “The state shall help the peasants with implements, seed, tractors and dams to save the soil and assist the tillers”
The conscious decision to make tractors and implements available to people with access to land is recognised
The provisioning of tractors and implements created unintentional problems in the way it was implemented
The proposed policy addresses the problems and provide solutions for the large number of people that require support
The use of local SMME’s address a critical developmental issue
Mechanisation support is a critical pillar of Fetsa Tlala Integrated Food Production Initiative .

4. Problem Statement Challenges experienced in provinces:
Unavailability of mechanisation support to producers when required
Majority of producers can’t afford mechanisation – due to economies of scale and high operation and maintenance costs
There are few or no financial institutions to facilitate credit requirements of mechanisation
Provinces have indicated at the workshop held at (12/08/2014) that about 50% of the tractors available is functional and that the tractors available addresses about 5% of the demand

5. Problem Statement cont….
Local supply chains are poorly scattered that limit availability of services and parts
There is a lack of technical skills and other human capacity. There are inadequate mechanisation training facilities
The size of the South African market limit the number of role players that can successfully penetrate it
There is an uncoordinated approach to mechanisation support
Government operated mechanisation support does not work due to inherent supply systemic constraints (timeliness and appropriateness)

6. Present Policies implemented by ProvincesEC FS GP
KZN LP MP NC NW WC
Support individuals x
Support Cooperatives
Use SMME’s
Credit facility but not implemented
Implement support by province
Use Implementing agency X
(LM)

7. Problem statement - Mechanisation costs
Average mechanisation cost per hectare serviced (excluding other inputs such as seed and fertilizer)
Includes fuel, operation and maintenance but excludes the initial purchasing cost
State run mechanisation fleet R 6 800/ha
(average yields 1,5 tons/ha)
Operational inefficiencies, travelling distances, variable soil types
Private farmers 2700/ha
(average yields 4 tons/ha)

8. Government equipment

9. Government equipment

10. Government equipment

11. Objectives of the Policy
To ensure the provision of an affordable mechanisation service to producers with access to viable natural resources
To unlock the potential of underutilized agricultural resources and increase food production and reduce poverty and under-development
To enable full access to and utilization of available equipment
To support the provision of holistic support aimed at producer growth and development
To promote local economic beneficiation

12. Guiding Principles of the Policy
Co-operative governance
Participatory approach
Sustainable natural resource management
Equity
Competitiveness
Sustainability and self-sufficiency
Capacity building

13. Legislative Mandate
Constitution of the Republic of South Africa (Act 108 of 1996)
Public Finance Management Act 1 of 1999
National Environmental Management Act 107 of 1998
Marketing of Agricultural Products Act 47 of 1996
Conservation of Agricultural Resources Act 43 of 1983
Plant Improvement (Act 53 of 1976)
National Veld and Forest Fire Act (Act 101 of 1998)
Agricultural Pest Act, 1983 (Act 36 of 1983)
Perishable Products Exports Act (Act 9 of 1983)
Fertilizers, Farm Feeds, Agricultural Remedies and Stock Remedies Act (Act 36 of 1947)
Plant Breeder’s Right Act (Act 15 of 1976)
National Environmental Management: Biodiversity Act (Act 10 of 2004)
Occupation Health & Safety Act (Act 85 of 1999)
Skills Development Act

14. Proposed Policy Framework (options)
Budget for mechanisation cannot be separated from that of other inputs required for production
An optimised mechanisation plan is required for each enterprise
Government must avoid ownership and operation of tractors and equipment. Therefore the policy advocates for the disposal of such equipment
Government should create an enabling environment through support that provides stimulus for agricultural production.
Promotion of cooperatives where feasible is encourage to optimise use of land and equipment

15. Proposed Policy Framework (options)…
Three OPTIONS are proposed.
Option A – Transfer of government owned tractors and equipment to cooperatives
Option B – Utilisation of local SMME Contractors/ Service providers
Option C – Establishment of a Credit Facility
Implementation not prescriptive

16. Transfer of Government Equipment
Identify appropriate equipment in government pool for transfer
Valuate the equipment and linking it to the financial lending institution. Redistribute to producers at 80% grant and 20% repayment.*
Identify cooperatives with institutional, management and financial skills
Develop mechanisation solution with cooperative
Portion of solution not available from pool should be obtained by cooperative through credit facility

17. Utilisation of local SMME/Service Providers
Provide mechanisation services on a cost recovery basis. This facility already exist in some if not all provinces.
Provide services cooperatives or individual producers
Opportunity for entrepreneurs and employment and promotion of local empowerment.
Standard rates should be developed (approved by provincial Treasury)
Rates across provinces where possible should be standardized

18. Establishment of a credit facility
Affordable loans through a credit revolving fund created through Land Bank.
Support to cooperatives, individual producers and Land Reform beneficiaries (RECAP)
Grant of 50% and 66% of purchase price for conventional conservation agriculture equipment respectively.
Maximum amount of grant R 2,5 million
Repayment over 5 years at preferential interest rates

19. Guidelines for Mechanisation support
It is the prerogative of each province to set standards and criterion for the mechanisation support program. These should include consideration of the following:
To ensure that value on investment is derived through selection of cost effective, viable and sustainable mechanisation strategies
To channel comprehensive support to producers in addressing the gaps in the broad spectrum of needs for these producers
To strengthen institutional arrangements (partnerships, restructuring, funding, establish new entity/ties) for the effective delivery of services

20. General Conditions of Support
To guide the support that should be provided to producer Indigent producers/farmers, Smallholder producers/farmers and Commercial producers/farmers
All beneficiaries assisted may not dispose of equipment within 5 years
Contravening above – blacklisted for 5 years
Threatened/ imminent repossessions must be reported
Unannounced visits to monitor and evaluate equipment
Record keeping by all service providers and beneficiaries

21. Monitoring and Evaluation
Provinces will be expected to report progress on a quarterly and annual basis on the following performance indicators:
The area (ha) serviced per household
The area (ha) serviced per agriculture cooperative
The area (ha) serviced per district
The area (ha) serviced per province
The average cost (R/ha) of providing the services per district
Furthermore data should be collected on the following:
Project/ beneficiary information (i.e. name, contact details, ID numbers, etc)
A GIS database with the position and size of each beneficiary/ project land mapped.
Support provided to each individual/cooperative

22. Implementation cost 2015/16 R’ mil 2016/17 2017/18 2018/19 2019/20
Transfer of existing equipment 35 30
Use SMME’s to cultivate ha
450
472
496
521
547
50% grant to support mechanisation acquirement on ha of additional land yearly
1 800
1 890
1 984
2 084
2 188
Total
2 285
2 392
2 480
2 605
2 735

23. Conclusion/ Wayforward
ACTIVITY
DATE
Consultation with provinces
12 August 2014 (took place –awaiting feedback)
Portfolio Committee
4 September 2014 (presentation was not made but was available at the meeting)
Consultation with other departments/entities (DRDLR, NT, dti, Land Bank)
Proposed for 12 September 2014
Final consultation with all stakeholders
20 September 2014
ASRDC/STC
30 September 2014
EXCO
7 October 2014
MINTEC
11 September 2014
MINMEC
26 September 2014
Cluster
To be determined
IMC
CABINET