Parliamentary Portfolio Committee on Agriculture...

Parliamentary Portfolio Committee Parliamentary Portfolio Committee on Agriculture, Fisheries & Forestry on Agriculture, Fisheries & Forestry

PresentationPresentation01 July 200901 July 2009

Elaine AlexanderElaine AlexanderChairpersonChairperson

PERISHABLE PRODUCTS EXPORT CONTROL PERISHABLE PRODUCTS EXPORT CONTROL BOARDBOARD

STRATEGIC PLAN 2009_13STRATEGIC PLAN 2009_13

PRESENTATION OUTLINEPRESENTATION OUTLINE

BackGround

Strategy In Detail

Employment Equity, Transformation &Skills Development

Finance & Budgets

BACKGROUNDBACKGROUND

PPECBPPECB’’S ROLE I.T.O LEGISLATIVE S ROLE I.T.O LEGISLATIVE MANDATEMANDATE

Act 9 of 1983 – PPECB ACT (supply/cold chain supply/cold chain logisticslogistics)

establishes and mandates PPECBprovides for control & management of orderly of South African perishable products exports

Act 119 of 1990 – APS ACT (export certification)Appoints PPECB as assignee/public service provider (1991)ensures export food safety and quality standards of regulated agricultural products are complied with.

Act 1 of 1999 – PFMA ACT (corporate governance)regulates financial management and good governance in government and public entitiesreports to government

Export legislative EnvironmentExport legislative Environment……

100 % CONSIGNMENTS ARE INSPECTED100 % CONSIGNMENTS ARE INSPECTED100 % CONSIGNMENTS ARE INSPECTED

APS Act 119 of 1990

PPECB Act 9 of 1983

Ag. Pest Act 36 of

1983

Temp instruction

letter

ACTS

Quality

MRL

Food safety Traceability

Temperature & Cold

treatment management

Equipment certification

Phytosanitary requirements

Bilateral agreements

Export certificate

Phyto certificate

PPECB

Ministry

EU 1580/2007 APPROVAL STATUTORY ORGANISATION

Plant & Plant Products Policy vs Implementation Current Scenario

Phytosanitary

Policy DAFF DOH

Implementation DAFF, PPECB DOH

Product QualityPolicy DAFF DAFF

Implementation PPECB DAFF, (PROKON??)

Food Safety

Policy DAFF DAFF?? DOH??

DOH

Implementation PPECB DOH? DOH (PG)

Cold Chain

Policy PPECB

Implementation PPECB

EXPORT LOCAL IMPORT

CURRENT PPECB ENVIRONMENTCURRENT PPECB ENVIRONMENTAPS – product quality and food safety for regulated

fruit and vegetable products

Inland Phytosanitary Inspections for Non-Cold Treatment Markets (EU)

Cold chain – perishable products

Cold chain - special market protocols (phytosanitary) (Japan; IRAN; USA; etc)

Value added services – services that enhance the competitiveness of industry

Capacity building – AETP & PPECB Training Academy

CAADP (Namibia; Tanzania; Kenya; Swaziland; Mozambique)

PPECB Operating Environment

Offices 42

Number of listed product groups 315

Inspection points 1350

Inland loading points 380

Vessels at port 395

Active client accounts 1 611

Supplier accounts 1 764

Employees 365

S &T man days 17 427

Computer workstations 207

Billable hours 378 608

Kilometres traveled 3,5 million

PPECB STRATEGY IN DETAILPPECB STRATEGY IN DETAIL2009_20132009_2013

Government Priorities for the Next 5 YearsGovernment Priorities for the Next 5 Years

1. Creating decent work & sustainable livelihoods;

2. Education;3. Health;4. Rural Development, food security &

Land Reform;5. Fight against crime & Corruption.

Strategic Context:Strategic Context:

Medium Term Strategic Framework 2009Medium Term Strategic Framework 2009

Strategic ContextStrategic Context…………

Speeding up growth transforming economy create decent work sustainable livelihoods;

Social & Economic Infrastructure;

Rural Development linked to Land Reform;

Investment in Skills & Human Resource base;

Improving Nations health profile;

Fight against crime and corruption;

Develop Cohesive and sustainable Communities;

Improve International Cooperation;

Implement sustainable natural resource management;

Democratic developmental State.

PPECBPPECB’’s Expression in the Medium Term s Expression in the Medium Term Strategic FrameworkStrategic Framework

Strategic ContextStrategic Context…………

SP-1 -> Speeding up growth transforming economy create decent work sustainable livelihoods;

SP-3 -> Rural Development linked to Land Reform;

SP-4 -> Investment in Skills & Human Resource base;

Strategic Context………Sector Plan for SA Agriculture;

+ Global Competitiveness & Competitive Business Intelligence;

WTO (SPS, TBT);

+ Growth in Industry Competitiveness;

Migration from Conventional to Containerized Shipping;

Policy/Implementation Gap Food Safety and Product Quality.

THE PERISHABLE PRODUCTS THE PERISHABLE PRODUCTS EXPORT CONTROL BOARDEXPORT CONTROL BOARD

WHY THE PPECB? (REASON FOR EXISTENCE)

Legislative Imperative (PPECB Act & APS Act)

Supportive System to a Developmental State;

CLIENT/STAKEHOLDERS.

INSTITUTIONAL GOVERNANCE INSTITUTIONAL GOVERNANCE MODELMODEL

Board of Directors

CEO &

Executive Management

Minister of Agriculture Forestry & Fisheries

16

To build competitive capacity in our people & systems in Industries we serve in order to

instill world-wide confidence in South African Perishable Products

A Partner in Global Competitiveness of South African Perishable Products

Our visionOur vision……

Our missionOur mission……

PROFESSIONALISM

ACCOUNTABILITY

PASSION

INTEGRITY

CONFIDENCE

VALUESVALUES

Enhancing the credibility of the South African Export Certificate

Supporting the export competitiveness of the South African perishable products industries

Strengthening PPECB’s capacity as a credible source of strategic information for serving industries and stakeholders

Supporting Government in ensuring confidence in the quality assurance and food safety systems for local perishable product markets

Supporting Government in building systems to ensure compliance to South African quality and food safety standards for imported perishable products

Strategic objectivesStrategic objectives……

PPECB Business ModelPPECB Business Model

Statutory Service Development

Service

Value added

21

Quality Inspections

Training & Advice

Cold Chain Management

Research &

Developm ent

Food Safety Audits

Industry Statistics

Inland Phyto

Inspection s

Private Certification

Services

PPECB Value Chain AnalysisInspection

InspectionInspection

Inspection

Inspection

Orchard Packhouse Coldstore

Ship Import port Discharge

DepotSupermarketConsumer

Inland Depot

Loading

Export port

Coldstore

Coldstore

Statutory Levies

Statutory Fees

“User Pays”

Sourced Funding

Funding sourcesFunding sources……

Cape Townh

George h

h Port Elizabeth

h East London

hDurban

hMaputo (seasonal)

Lesotho

h

Upington(seasonal) hKimberley

h Bloemfontein

h Johannesburg

Zimbabwe

Mozambique

Namibia

PPECB officesPPECB offices……

Tzaneen

Nelspruit

Citrusdal

Ceres Worcester

Grabouw

Paarl 24

Cape Townh

George h

hPort Elizabeth

hEast London

hDurban

hMaputo

Lesotho

hUpingtonhKimberley

hBloemfontein

hJohannesburg

Zimbabwe

Mozambique

Namibia

pomepomestonestone

subsub--tropicaltropical

citruscitrus

grapesgrapes

otherother

Production regionsProduction regions……

h

25

PPECB in the supply chainPPECB in the supply chain……

PPECB in the supply chainPPECB in the supply chain……

PPECB in the supply chainPPECB in the supply chain……

PPECB in the supply chainPPECB in the supply chain……

EMPLOYMENT EQUITY, EMPLOYMENT EQUITY, TRANSFORMATION & SKILLS TRANSFORMATION & SKILLS

DEVELOPMENTDEVELOPMENT

PEOPLE DEVELOPMENT AND TRANSFORMATION

Vision on People

Mission about People

PEOPLE STRATEGIC OBJECTIVES OUTPUTS PERFORMANCE INDICATORS

INTEGRATED TALENT PIPELINE MANAGEMENT

CREATION OF PEOPLE CAPACITY TO DELIVER ON BUSINESS STRATEGY

APPLICATION OF BEST PEOPLE PRACTICES

CREATING INTRINSIC VALUE FOR STAKEHOLDERS

• CAREER PATH• AETP• PERFORMANCE MANAGEMENT• KEY SKILLS RETENTION• PEOPLE DEVELOPMENT

• BENCH MARKS• POLICY REVIEWS

• MEASURE ORGANISATION EFFECTIVENESS

• LEVERAGE TECHNOLOGY FOR OPTIMAL

PEOPLE MANAGEMENT• EFFECTIVE CONSULTATION STRUCTURES

• 32 PROMOTION • 103 AETP STUDENTS ENROLLED • 48 GRADUATED AT NQF LEVEL 5• 85% OF STAFF EXCEEDED STANDARDS

MARKET POSITIONING DECISIONS

• EMPLOYEE PERCEPTION SURVEYS• EFFECTIVE REPORTING

ENTRENCHMENT OF EMPLOYEE WELLNESS

FULLY INTERGRATED EMPLOYEE WELLNESS PROGRAMME

EMPLOYEES WELL BEING REPORTS

• INTERGRATED SKILLS DEVELOPMENT PLAN• CREATION OF SPECIALISTS POSITIONS• HARMONISATION PROGRAMME• LEADERSHIP DEVELOPMENT• ASSISTED STUDY SCHEME

• TRAINING SPENT 5.6% OF COST OF EMPLOYMENT

• LEGAL COMPLIANCE • ACCELERATED SKILLS TRANSFER • 11 PDI’s ON NEW MANAGEMENT

DEVELOPMENT PROGRAMME

Workforce Profile: May 2009

Changes

April 2008 April 2009African Male 47African Female 18

African Male 77African Female 40

Coloured Male 45Coloured Female 26

Coloured Male 53Coloured Female 25

White Male 103White Female 37

White Male 88White Female 34

Indian Male 13Indian Female 1

Indian Male 12Indian Female 3

FINANCE & BUDGETSFINANCE & BUDGETS

PPECBPPECB’’s Programmess Programmes

Current realitiesCurrent realitiesReality Business requirement Strategic & budget response

Market & economic conditions

Reduced volumesHigh inflation basket, i.e. accommodation, travelling, label printing

Project on alternative methodologiesProject on electronic information sharingProjects on research & development of cold chain practicesEmploy technologyProcurement practices

PPECB is a regulatory operatorWho needs to fulfill legislative requirements

ComplianceResource intensiveSpecific skillsHigh level of judgmentConsistency in application

Legislative reviewProject on alternative methodologiesProject on electronic data interchangeProgramme: Harmonisation, training & developmentRecruitment to fill vacancies

Diverse stakeholder needs & operating practices

Decentralised operationsReduced waste & logistics costHigh responsivenessResource intensiveActivity intensive

Project on alternative methodologiesProject: CCQI on clod chain managementProject on electronic data interchangeDelivery of value added servicesHarmonisation, training & developmentValue added services

Responsibility of Public Entity to respond to SA’s social needs & APEX priorities

Transfer skills and knowledge

Training & developmentPPECB Training AcademyAETPAlliances with partnersExternal funding

Fulfill PFMA, supply chain and governance requirements

Formalise structuresMaintain effective systems & controlsGovernance reporting

Employ technology to enhance controlsSecurity of assets, informationTraining & developmentInternal & external audits

Current realities contCurrent realities cont……Reality Current business impact Strategic & budget response

Cold chain temperature management risks

CC Research and developmentTransfer of knowledgeInformation management

Industry capacity buildingProject: Alternative methodologies CCQIStakeholder workgroupsR&D Programmes

Activity points are geographically widely spread

Resource intensiveIndependent judgmentHarmonisation in applicationActivity intensiveCommunicationTechnology

Project on alternative methodologiesProject on electronic data interchangeProgramme: Harmonisation, training & developmentEmpower management in decentralised regionsEngage in teams & establish work groupsRelatively high accommodation & relief duty costs

Highly seasonal activities

Resource intensiveActivity intensiveFlexible planning & coordination systemMulti-skilling & taskingFlexible work pool

Project on alternative methodologiesRecruitmentHigh activity costMulti-skillingAccelerated Skills Transfer

High people turnover (14.8%)

Align remuneration practicesTransfer knowledge and skillsInstitute growth & learning practicesRevisit expense allowance reimbursements

Adjustment to salariesSkills gap analysisTraining & development programmesISO 17020Succession planningAdjustment to subsistence, travelling and accommodation allowances

Budget 2010Budget 2010

23 %

6.3 %

R144.9 m

Business activitiesBusiness activities

Based on audited results for 2008-09

Expenditure budget 2009Expenditure budget 2009--1010

∆

R16.8m∆

-R0.8m

∆

22.2m

∆

R6.2m

Expense changes & fundingExpense changes & funding

Year-on-year % Funding requirement %

Employment CostEmployment CostEmployees R’000 % of 2009

Salary Budget 2009 339 R79 095

Assume vacancy rate of 6% (R5 623) (7.1%)

Reduced provision for performance incentive (R2 268) (2.9%)

Annual increase 9% R7 118 10.0%

Statutory levies and contributions R1 385 1.7%

New positions 26 R4 616 5.8%

Promotions R1 112 1.4%

Total 365 R85 435 12.8%

Programme ExpenditureProgramme ExpenditureProgramme

2010Budget

R’000

2008-09Budget

R’000%

Statutory Operations R28 135 R20 079 45%

Value Added Services R2 719 R2 779 (3%)

Development R6 402 R1 634 4%

Governance R4 506 R4 018 12%

Corporate Services R12 918 R9 653 34%

Total R54 680 R38 163

Major expenditure 2009Major expenditure 2009--1010% of total

Budget2009-10R’000

% of total

BudgetPrior year

R’000∆

%

Employment cost 59% R85 575 65% R80 087 7%Activity cost 23% R33 109 20% R24 042 38%Training expenses 6% R8 746 3% R3 276 167%Computer expenses 3% R4 992 4% R4 545 10%Office accommodation 2% R3 253 2% R2 875 13%Telephone & stationary 2% R2 972 2% R2 900 2%Administration 2% R2 456 2% R2 222 11%Depreciation 1% R1 089 1% R811 34%License & affiliation fees 1% R973 0% R612 59%Corporate ID 1% R920 1% R756 22%Consultant fees 1% R834 0% R555 50%Total expenditure 100% R144 923 100% R122 686 18%

Funding positionFunding position• Volumes

– Reduced volumes on actual 2009

• Financial impact– Reduced statutory income by R1.9m (1.7%)– Reduced certification services R266k (5.5%)– Reduced MAP services R577k (11.4%)

• Funding requirements– Total funding requirement R144.9m– Budgeted volumes at current fees & levies & other income

R136.3m– Shortfall R8.6m (6.3%)

Fees and leviesFees and levies• Official CPIX indicator: December 2008 10.3%• Statutory services

– Additional funds R8.6 million– APS Inspection Fees 7.8%– APS Citrus Fees 8.7%– APS Food Safety Fees 8.0%

– PPECB Levies 9.6%• Introduce inland container levy of R305 - 23 pallets equivalence

• Value Added Services– Certification services & MAP 11.0%

SA Statistics Annual inflationSA Statistics Annual inflation

Source: SA Statistics: http://www.statssa.gov.za/publications/statstable

Fees and levies: Long term Fees and levies: Long term trendstrends

Entity Unit Levy Annualised ∆

CGA 15 kg 2001: 21c2012: 41c 6.27%

DFPT / SATGI kg 2001: 5c2012: 8c 4.37%

PPECB Citrus Inland Inspection Carton 2001: 25.5c

2009: 36.1c 4.44%

PPECB Grapes Inland Inspection 5 kg Carton 2001: 22.2c

2009: 36.2c 6.30%

PPECB Sea Export Conventional Pallet 2001: R5.45

2009: R8.66 6.32%

PPECB Sea Export Inland Container Citrus

Pallet equivalence

2001: R8.452009: R12.86 5.96%

PPECB Sea Export Inland Container Avocado Pallet 2001: R14.00

2009: R12.86 -1.06%

PPECB Container inspection Container 2001: R6.60

2009: R10.90 6.47%

CAPEX 2010CAPEX 2010Capital Items R’000

Information Technology• Server capacity area network – 14 regions - R1.2m• Server replacement R350k R1 772

Equipment• HPLC laboratory equipment R520k• HPLC Fluorescence detector R280k R820

Furniture• Head office R102k• Regions R1 078k R1 180

Total R3 772

In ConclusionIn Conclusion• PPECB presents a break-even budget

– All other fees and levies 7.8 – 8.0%– Citrus 8.7% - reduced volume and below 3-year minimum

• PPECB’s levy increase– Increased by 9.6%– below CPI (6.09%) and PPI index (7.68%)– Aligned with industry organisations with similar levy structures

• Increase in expenditure due to:– Capacitate PPECB to deliver on legislative mandate– PPECB Training Academy– Harmonisation programme– Under recovery due to decreased volumes on citrus and PPECB

services

Creating WorldCreating World--Wide Confidence in Wide Confidence in South African Perishable Export South African Perishable Export

ProductsProducts

Thank YouThank You