Agricultural Research Council Annual Report 2003 - 2004

1. Agricultural Research CouncilAnnual Report 2003 - 2004 Presentation to the Parliamentary Portfolio Committee for Agriculture and Land Affairs 2nd November 2004

2. MISSION • Promote agricultural and related sectors through research, technology development and technology transfer • VISION • To be a nationally and internationally recognized center of excellence in agricultural science and innovation

3. OUR STRATEGY 2000-2003 • Sustainable use of natural resource base and environment • Competitive agricultural economy • Ensure high quality food • Informed society • Growth and development of South Africa

4. OUR STRATEGY 2004-2008 To form alliances within public-private partnership model; To broaden such alliances; and undertake to contribute to: • Enhance technologies support to sustainable use of natural resource base and environment • Enhance technologies support to sustaining competitive agricultural economy • Enhance technologies support to new agribusiness opportunities especially for resource poor groupings • Enhance technologies support for high quality food • Enhance information delivery to and adoption by our society • Enhance technologies that support national growth and development of South Africa

5. Our contributions for the year 2003/2004

6. Technologies to enhance sustainable use of natural resources. • The ARC has developed an integrated technology for land capability, use and monitoring that was piloted as management tool in the OR Tambo and Umkhanyakude nodes of the Integrated Sustainable Rural Development Strategy. These tool will be rolled out to other ISRDS nodes, and is provided as support for development planning by local and provincial government. • Two biological control agents for the control of alien invasive weeds (rooikrans and chromoleana) were approved for release this reporting year. • Our work on reduced tillage systems has resulted in the publication of guidelines for the production of small grains in the winter rainfall areas that provide firm recommendations on the use of this resource saving technology whilst maintaining yields. • New fertilizer guidelines for maize on specific soils, that employs new methods of taking soil samples have been published.

7. Technologies to enhance sustainable use of natural resources. • The collection of germplasm resources continues to be expanded, and a database of indigenous legumes has been established. This widens the source of material that can used to develop new crops and forages. • A new participatory impact monitoring tool empowers farmers to manage their natural resources and evaluate their Land Care projects with minimal external assistance

8. Technologies to sustain a competitive agricultural economy. Significant breakthroughs have been achieved by the ARC in enabling South African produce to compete on world markets, and these include: • The accreditation by the USDA of the reliability of a methodology to identify mealybug species that prohibit the importation of citrus products to the US market. • The release of a technology (Smartfresh™) to increase the shelf life of avocados for export. • The establishment of a dedicated laboratory to screen cattle for the presence of transmissible bovine spongiform encephalopathy (BSE or mad cow disease). This support enables the continued export of meat to the European Union and other countries that are concerned about the possible spread of BSE

9. Technologies to sustain a competitive agricultural economy. At a domestic level, the ARC continues to provide South African farmers with improved materials for primary production in the form of advanced food and forage crop varieties, advice on the superior breeding lines for livestock improvement programmes. In the year under review the ARC acquired 27 plant breeders rights for products developed under its programmes, and released 26 cultivars. The ARC continues to develop its capacity to utilize the techniques of modern biotechnology to provide rapid avenues for the resolution of technical challenges that conventional methods cannot match. We are active participants in the BRICS established by the DST, and contributed extensively to the Agricultural Biotechnology Strategy developed by the DoA during this reporting year.

10. Technologies to support new Agribusiness opportunities – especially amongst the resource poor. We have applied great effort to align the outputs of our programmes to the needs of resource poor farmers. Our primary focus has been the provision of support to the Integrated Rural Development Programme driven by local and provincial governments, and conducted through making data and information available to stakeholders. These activities include: • The provision of planning and monitoring information on the use of the resource base. • The enhancement of the technology transfer activities of the ARC in terms of interactions with farmers who were previously ignored by state funded R&D agricultural research programmes. • The delivery of products that take into account the constraints faced by emerging commercial farmers – but provides the base material for their growth and development

11. Technologies to support new Agribusiness opportunities – especially amongst the resource poor. Highlights of delivery 2003/4 • The Grain and Industrial Crops Division has experienced the first rewards of a conscious acceleration of the development of open pollinated maize varieties developed in an empowerment framework that recognizes and protects local knowledge, and adds the resources of globally funded public research knowledge. Through this action a group of rural women in Mbaella (Limpopo Province), have developed a maize variety (that out-performed their neighbours in a dry year), and the capacity to produce quality seed for the area. • The Public Support Services Division is providing technical support to the Government of the Limpopo Province for the re-habilitation and transfer of five state owned irrigation schemes to farmers from previously disadvantaged communities. • The Livestock Services Division is contributing to the implementation of an integrated livestock and crop production programme in the Eastern Cape that is recording significant advances in the quality of wool produced – through the application of relatively simple management actions.

12. Technologies to support new Agribusiness opportunities – especially amongst the resource poor. Highlights of delivery 2003/4 4. The Horticulture Division continues to provide this sector with supporting research, and materials that support the utilization of indigenous plants for commercial opportunities. In all of these endeavours, the management of the ARC works as team and has utilized the Sustainable Rural Livelihoods Division for the purpose of establishing and strengthening our contact with previously unheard stakeholders that require our input and support.

13. Technologies to support the availability of high quality food. The globalization of the supply of food has brought about concerns related to the safety and nutritional value of the food consumed by our people – from the perspective of direct imports and from the perspective of enabling the proper storage of locally produced surpluses that need to be stored. The ARC has – within the year being reported on – been proactively engaged with, and delivered on the following: • Developed appropriate technologies to reduce the moisture content of grain crops stored in traditional drying huts used by farmers in the Lusikisiki district of the Eastern Cape Province. This technology reduces the opportunities for the development of fungal growths on the grain that may have a causal effect on the development of various cancers that are prevalent in that part of the country • The further development of tests that detect the presence of viral/bacterial pathogens in meat and milk products – that can ultimately infect human beings.

14. Technologies to support the availability of high quality food. Apart from the prevention of infective diseases that can affect human beings, the ARC is actively involved in projects that are aimed at improving the nutritional quality of available food, and expanding the base of affordable foods available to our people. Delivered products include: • The availing of “clean” - yellow fleshed sweet potato varieties that contain significantly enhanced levels of vitamin A and iron in their leaves – that can be used as a nutritional supplement for pregnant and/or lactating mothers. • Nutritional supplements that improve the ability of the human gut to absorb basic food substances that have been “denatured” through processes of refinement to meet taste and/or preparation requirements. Developments in the pipeline include a contribution to the implementation of the traceability, and the labeling of food products.

15. Technologies to support the availability of high quality food. Apart from the prevention of infective diseases that can affect human beings, the ARC is actively involved in projects that are aimed at improving the nutritional quality of available food, and expanding the base of affordable foods available to our people. Delivered products include: • The availing of “clean” - yellow fleshed sweet potato varieties that contain significantly enhanced levels of vitamin A and iron in their leaves – that can be used as a nutritional supplement for pregnant and/or lactating mothers. • Nutritional supplements that improve the ability of the human gut to absorb basic food substances that have been “denatured” through processes of refinement to meet taste and/or preparation requirements. Developments in the pipeline include a contribution to the implementation of the traceability, and the labeling of food products.

16. Technologies to support national growth and development. We in the ARC see our future as being inextricably linked with the broader development of inter-regional trade within the continent of Africa, and the maintenance of the ability of this continent to deal with artificial barriers to extended trade. • It is for this reason that we continue to maintain a capacity for, and a commitment to research and technology development capacity that enables South Africa’s agricultural sector to deal with outbreaks of new diseases – or new variants thereof – that are not endemic to South Africa, but can affect the ability of the agricultural sector to provide a platform for economic growth. • We work towards this objective in concert with the DST and the DoA, towards the achievement of this objective, and have been pro-active in establishing the necessary, dedicated capacity within the ARC to build future income streams for the organization, that will enable the ARC to do more. • The newly established - Business Development and International Relations Division – has been instrumental in the development of formal contracts and/or memoranda that ensure that the business of the ARC is protected

17. Technologies to support national growth and development. Within the reporting period – reviewed – this Division has enabled the conclusion of Memoranda of Agreement between the ARC and the Development Bank of South Africa, and the Provincial Department of Agriculture – Limpopo Province, that establishes the nature of future interactions between the ARC and its stakeholders

18. The contribution of the support services –, Human Resources and Development • Organizational Architecture • The ARC transformed their business into eight Business Divisions. • ARC commenced with a process to align its organizational design to this newly formed Business Division. • Involved processes of consultation and communication with clients, internal staff and organized labour. • A strong focus in 2003/4 was the conclusion of the various management layers in the Business Division.

19. The contribution of the support services –, Human Resources and Development • Employment Equity • Marginal progress towards positioning the ARC as a truly South African organization, due to financial constraints and limited opportunities to capitalize on diversity. • Primary challenges still remain, Middle-management and core-business levels (Researchers/Technicians). • ARC succeeded in maintaining positive appointment patterns with 75% appointments black and 60% female. • The Dept. of Labour have also Gazetted the ARC as an organization who submitted and complied with Employment Equity Legislation.

20. Agricultural Research Council <logo> An Overview of Financial Performance

21. Highlights Debtors Collection period: The debtors collection period has remained stable and is reasonable for the agricultural industry which is seasonal. Current ratio: This is an indication of the ARC liquidity, and shows that our current assets cover the current liabilities 1.11 (2003: 1.48) times.

22. Report of the Auditor-Generalfor the year ended 31 March 2004 • Audit Opinion • Audit of financial statements – Unqualified • Audit of performance information – Qualified - the measure of performance against predetermined objectives. The Balanced Scorecard was finalised too late in the financial year to be audited. (extract attached)

23. Balanced Scorecard Extract

24. Income

25. Expenses

26. Income Sources

27. Parliamentary grant vs External earnings 2004

28. Parliamentary grant vs External earnings 2003

29. Balance Sheet

30. Assets The ARC Asset base consists of: Land and Buildings R354 790 827 Plant and Equipment R17 683 800 Motor vehicles R633 880 Computer Equipment R2 574 711 The limitation of funds has unfortunately had a negative impact on our capital expenditure planning with a result that the majority of our assets are past their useful lives and the maintenance costs are putting our maintenance planning under strain.

31. Application of Financial Resourcesto the ARC goals

32. Total Income vs Infrastructure The relationship between income and infrastructure shows how the infrastructure invested has not shown any growth and is steadily declining as the infrastructure is aging. This poses a problem as it is becoming progressively more difficult to utilise the old infrastructure to generate and grow our income.

33. Audit Report Performance

34. Thank You <logo>