trends in intergovernmental finances: 2000/01 – 2006/07
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Trends in Intergovernmental Finances: 2000/01 – 2006/07. Agriculture & Land Aditi Maheshwari National Treasury 06 October 2004. Overview. Introduction to the agricultural sector Institutional framework Expenditure and budget trends Agricultural programmes and expenditure - PowerPoint PPT PresentationTRANSCRIPT
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Trends in Intergovernmental Finances: 2000/01 – 2006/07
Agriculture & Land
Aditi Maheshwari
National Treasury
06 October 2004
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Overview
Introduction to the agricultural sector Institutional framework Expenditure and budget trends Agricultural programmes and expenditure Land programmes: expenditure and service
delivery Key challenges and initiatives
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Agricultural Sector
Contributions through GDP, employment, rural development & food security 3,5% to GDP in 2002 Forward and backward linkages
2 segments: commercial farming & subsistence and emerging farmers 10,3% of employment
Accounts for 81% of land use (17% for cash crops) ~10% of total exports (R28 billion p.a.) – 55% are processed
agricultural products Citrus fruit, wine, sugar, deciduous fruit and grapes
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Institutional Framework
Agriculture – concurrent function shared National Department of Agriculture – formulates
government policy Provincial departments of agriculture –
implement national policies State Agencies provide services to provincial
departments and farmers Land – national function only
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Agriculture Expenditure Trends
Combined national and provincial budgets rise from R3,0 bn to R4,4 bn between 2000/01 to 2003/04 Rising to R5,5 bn in 2006/07 Annual average increase 10,6% over 7 years
Provinces receive 78% of combined budget (2004/05) – increase from 73% in 2003/04
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Provincial Budgets (1)
Increase of 11,7% p.a. from 2000/01 – 2003/04 to R3,2 bn
16,9% increase to R3,7 bn in 2004/05, rising to R4,2 bn in 2006/07
Budgets include transfers from NDA in the form of conditional grants Comprehensive Agricultural Support Programme
R200m in 2004/05, R300m in 2006/07 Land care
R18,1m in 2000/01 – R44,5m in 2006/07, 16,3% increase p.a.
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Provincial Budgets (2)
Expenditure growth rates over MTEF vary amongst provinces Average growth rate 9,5%
Agriculture budgets account for ~ 1,9% of total provincial budgets in 2003/04
75,4% of total provincial spending on agriculture in 2003/04 was in 4 provinces: Eastern Cape (23,5%), Limpopo (24,6%), KwaZulu-
Natal (17,2%), North West (10,2%)
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Compensation of Employees
Continues to increase from R1,9bn to R2,4bn over MTEF BUT declines as proportion of total agricultural spending, from
60,4% to 56,7% Provinces with largest agriculture budgets spend the most
on personnel (2003/04): Eastern Cape – 59,3% Limpopo – 75,6% North West – 59,6%
Challenge to reduce personnel expenditure whilst expanding skills base in order to fund and support agricultural activities
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Non-Compensation of Employees
Rises from R1,3bn in 2003/04 to R1,8bn in 2006/07 Increases from 28,1% (2000/01) to 43,3% (2006/07) as
proportion of total agriculture expenditure Increased allocation for farmer support programmes Spending on agriculture infrastructure increases from
R230m (2003/04) to R510m (2004/05) 2/3 for construction projects, remainder for maintenance
and rehabilitation Funding directed towards key support services and
start-up capital for resource poor farmers
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Agricultural Programmes
Largest budget: Farmer Support & Development (46,5% in 2003/04) Main spenders: EC, KZN & LMP Followed by:
administration (23,0%) - EC technology research and development services (9,6%) veterinary services (9,5%) – EC, KZN, MPG, NW
Reporting system not standardised, therefore unable to compare productivity across provinces
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National Agricultural Programmes
Farmer support & development accounts for 23,3% of budget in 2003/04 Followed by regulatory services (16,0%) and
administration (12,3%) Sustainable resources management and use deals with
land care projects Other programmes include agricultural trade & business
development; economic research & analysis; agricultural production & programme planning, and monitoring & evaluation
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Land Affairs Budget
Includes funding for redistribution & restitution programmes
Land redistribution grants increase from R156,6m in 2000/01 to R614,4m in 2006/07
Funding for restitution increases from R265,1m in 2000/01 to R1,4bn in 2006/07 Annual average increase of 31,5 percent Target to finalize restitution claims by December 2005
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Land Reform
Target to redistribute 30% of agricultural land (24,7m ha) & finalise restitution in 2005
3,3m ha transferred over last 10 years Redistribution – 1,5m ha (47,0%) Restitution – 810 292 ha (24,8%) State land – 773 000 ha (23,7%), driven by NDA
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Restitution
48 463 (60,8%) claims settled by February 2004 at a total cost of R2,7bn 64% of outstanding claims are in urban areas
Cape Town and eThekwini metros
Sharp increase in expenditure from R839,1m (2003/04) to R1,4bn (2006/07) – 17,8% p.a.
Funded until 2006/07 allowing for cash outflow beyond December 2005
Amendment to Restitution of Land Rights Act in 2004 enhancing expropriation powers
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Redistribution
LRAD is primary mechanism for redistribution 1,7m ha transferred through redistribution & tenure
reform programmes 487 180 ha transferred through LRAD since 2001
Amount of land being transferred & number of benefiting households varies across provinces Determined by size and potential of land for farming Most land is redistributed in predominantly rural
provinces
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Future Challenges
Tackling bottlenecks in speed of delivery and development impact of LRAD such as functioning of land market Need clear guidelines for subdivision of land
Improved co-ordination is needed between ARC and provincial extension services to ensure better dissemination of technology
Expanding access to retail and wholesale financial services for farmers through commercial retail banks
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Conclusion
Balance between supporting HDIs and sustaining commercial sector essential for transformation and maintaining secure food supply
CASP signifies need for increased co-operation between different departments & spheres of government
Provincial expenditure needs to be redirected away from compensation of low-skilled staff to enhancing their skills base & increasing delivery
Need effective monitoring & evaluation, and standardised reporting systems
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Thank You!