1. RECAPITALISATION AND DEVELOPMENT PROGRAMME PRESENTATION TO THE PORTFOLIO COMMITTEE ON RURAL DEVELOPMENT AND LAND REFORM 5 NOVEMBER 2014

2. 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) 2

3. 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….. 3

4. 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 4

5. 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 5

6. 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 6

7. Overview Recapitalisation and Development Policy (key pillars of the policy) 1.Selection and targeting of beneficiaries The Programme targets the following categories of propertiesrequiring and deserving support::  Selected distressed land reform properties;  Selected properties under the administration of the Minister;  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. 7

8. 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... 8

9. 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 9

10. 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 10

11. 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. 11

12. 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 12

13. RADP Beneficiaries Analysis to date (Farms) PSSC Irrigation Scheme CommonagesRestitutionRedistribution LRAD project (Loan Financed emerging Farmers) Total Amount Disbursed EC 324179 9 449 541 381 FS 002180 3 387 842 220 GP 000115 7 206 311 481 KZN 2012198 15 553 855 527 LP 145186 1 344 718 338 MP 329192 1 522 736 657 NC 00279 11 201 028 744 NW 0224189 46 426 572 762 WC 00064 5 135 627 819 Totals 910581 382993 228 234 929 13

14. Implementation Progress Report PSSC RADP STATISTICS INCEPTION (2009) - 31 MARCH 2014 FarmsHectaresMentors Strategic Partner Others Cost Of Recap EC188111,5914441103449 541 381 FS182134,587344482387 842 220 GP11519,916201184206 311 481 KZN212131,6193866109553 855 527 LP19679,143616138344 718 338 MP206165,7265533132522 736 657 NC81464,914282230201 028 744 NW215225,5711380121426 572 762 WC6447,71451148135 627 819 Totals1,4591,380,7812983148473 228 234 929 14

15. Number of Farms Redistributed vs. number of Farms under Recap PSSCNumber of Farms Redistributed/Restored vs Number of Farms under Recap since 2009 – March 2014 RedistributedRestored (Restitution)Farms Under Recapitalisation FarmsHectaresClaimsHectaresFarmsHectares EC 211193 355 37835 070 188111 591 FS 154114 858 176 870 182134 587 GP 9516 050 1627 629 11519 916 KZN 244136 805 112135 068 212131 619 LP 13956 086 304106 696 19679 143 MP 183144 507 8799 133 206165 726 NC 80449 174 2162 932 81464 914 NW 164129 164 32122 240 215225 571 WC 4934 641 687128 6447 714 Totals 1 3191 274 639 1 800575 766 1 4591 380 781 15

16. 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 2010/20112011/2012 Total Expendi ture 2012/2013 Total Expenditure 2013/2014 Total Expen diture Overall Total Expen diture HH Grants PLASHH GrantsPLASHH GrantsPLASHH GrantsAVMPPLASHH GrantsAVMP EC 3,534213,1546,82811,77255,55190,83971,18268,16110,167149,51064,33161,34683,516 209,193449,541 FS 3,21852,0866,78337,21929,868129,17478,69156,94119,670155,30257,97532,62212,769 103,366387,842 GP 4277,4992,30116,8323,83330,89268,00022,4261,09491,51951,83026,6055,466 83,901206,311 KZN 2,16323,03626,65336,62357,970146,44551,86852,77833,202137,84942,630111,909115,023 269,562553,856 LP 2,2944,69161,05011,16429,027108,22652,92787,10317,202157,23234,01145,2490 79,261344,718 MP 6,8569,63125,84756,37260,163158,868111,575115,59722,773249,94579,71121,86312,349 113,923522,737 NC 71312,1742,12731,76515,23262,01122,20854,3502,71279,27031,13527,734879 59,748201,029 NW 5,32136,81420,4277,888138,316208,76657,29536,19013,635107,12049,57352,3488,766 110,687426,573 WC 5,8931,67021,76926,4464,37960,15821,55385187723,28133,17611,5687,444 52,188135,628 TOTALS 30,421160,755173,785236,079394,339995,379535,298494,398121,3321,151,028444,371391,243246,2131,081,8283,228,235 16

17. 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 PSSCNumber of Farms EC2 FS36 GP6 KZN0 LP0 MP17 NC0 NW1 WC2 Total64 17

18. Training and Capacity Building to Farmers in the Recapitalisation and Development Programme. PSS C Farmers Trained under Recap and type of training provided Farmers 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 FS67 Farm business management and administration, financial management, personnel and management principles, livestock and crop farming. Efficient application of electricity and people and process skills GP0 18

19. . PSSC Farmers Trained under Recap and type of training provided Farmers trained Type of Training KZN493 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 LP197 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 MP215 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 19

20. NC109 Supplementary feeding of livestock, profitable Boer goat farming, basic fire fighting, financial management, debushing, NW69 General farm work management and production WC614 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 TOTALS1,889 PSSC Farmers Trained under Recap and type of training provided Farmers trained Type of Training 20

21. 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. 21

22. 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 22

23. 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. 23

24. Strengths 1.Farmers can procure their required goods on time 2.Farmers’ financial creditability will improve as they procure their services 3.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 Plan 2.Farmers unilaterally remove Strategic Partners as co-signataries to the account. 3.No proper accountability on money spent 4.Lack of control and investment on the profit received Strengths and Weaknesses of Financial Controls 24

25. Plans to improve on the weaknesses 1.Improve the contracts of all forms of partnership 2.Use the procurement cards without withdrawing cash from the bank 3.Direct linkage of suppliers with the procurement cards 4.Money paid direct to suppliers through internet banking controlled by Strategic Partners 5.Payment to be informed by the signed and agreed invoice between the farmer and the strategic partners 6.Monthly monitoring of joint account transactions by finance team from provincial offices 7.All deliveries of goods and services must be verified and signed off by project office before payment can be done, 25

26. 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. 26

27. Thank you 27