AGRICULTURE RESEARCH COUNCIL BUSINESS PLAN 2014/15

AGRICULTURE RESEARCH COUNCIL

BUSINESS PLAN

2014/15

OUTLINE OF PRESENTATION FOR BUSINESS PLAN 1. ARC COUNCIL MEMBERS

2. EXECUTIVE MANAGEMENT TEAM

3. ARC MANDATE, VISION & MISSION

4. REVIEW OF KEY ORGANISATIONAL PERFORMANCE

5. ARC ALIGNED TO NATIONAL PRIORITIES AND POLICIES

6. OUTCOME ORIENTED STRATEGIC GOALS

a) Goal 1: TO IMPROVE PRODUCTIVITY, PRODUCTION, COMPETITIVENESS & SUSTAINABILITY OF CROPS

b) Goal 2: TO IMPROVE PRODUCTIVITY, PRODUCTION, COMPETITIVENESS & SUSTAINABILITY OF LIVESTOCK

c) Goal 3: TO ENHANCE THE PRODUCTIVE USE AND CONSERVATION OF NATURAL RESOURCES

d) Goal 4: TO TRANSLATE RESEARCH RESULTS TO SUPPORT AGRARIAN TRANSFORMATION …

e) Goal 5: TO ACHIEVE GOOD GOVERNANCE, FINANCIAL SUSTAINABILITY & HIGH PERFORMANCE

7. MANAGING RESOURCES (FINANCE & HUMAN RESOURCES)

8. CRITICAL SUCCCESS FACTORS2

ARC COUNCIL (BOARD) MEMBERS 1. MR. JONATHAN GODDEN – CHAIRPERSON

2. PROF. SIBUSISO VIL-NKOMO – DEPUTY CHAIRPERSON

3. MS. DUDU MSOMI – CHAIR: FINANCE & INVESTMENT COMMITTEE

4. PROF. MICHAEL KAHN – CHAIR: RESEARCH & DEVELOPMENT COMMITTEE

5. PROF. FRANS SWANEPOEL – CHAIR: HUMAN RESOURCE COMMITTEE

6. DR. JOYCE CHITJA

7. MS. DORA NDABA

8. MR. CLIVE KNEALE

9. MR. NICK NICOLLS

10. MR. ALAN BISHOP

11. MS. JOYCE MASITENG

12. MR. ISMAIL MOTALA

13. DR. WILNA VAN RIJSEN

14. MR. MZOLISI DYASI

15. GERARD MARTIN

16. PROF. LOUW HOFFMAN 3

ARC EXECUTIVE MANAGEMENT TEAM

1. DR. SHADRACK R. MOEPHULI – CHIEF EXECUTIVE OFFICER

2. MS. MAKGOMO UMLAW – SENIOR MANAGER: HUMAN RESOURCES

3. MR. FRANS MONKWE – CHIEF INFORMATION OFFICER

4. DR. MOHAMMED JEENAH – ACTING GROUP EXECUTIVE: CROP SCIENCES

5. DR. ANDREW MAGADLELA – ACTING GROUP EXECUTIVE: ANIMAL SCIENCES

6. MR. GABRIEL MALULEKE – CHIEF FINANCIAL OFFICER

7. DR. LITHA MAGINGXA – GROUP EXECUTIVE: AGRI-ECONOMICS & CAPACITY

DEVELOPMENT

8. DR. JASPER REES – GROUP EXECUTIVE: RESEARCH INNOVATION SYSTEMS

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ORGANOGRAM Second Level

MANDATE AS PER ACT

OBJECTS OF THE ACT: TO CONDUCT RESEARCH, DRIVE RESEARCH AND DEVELOPMENT, DRIVE TECHNOLOGY DEVELOPMENT AND

TRANSFER (DISSEMINATION), INCLUDING INFORMATION IN ORDER TO:

a)PROMOTE AGRICULTURE AND INDUSTRY;

b)CONTRIBUTE TO BETTER QUALITY OF LIFE; AND,

c)FACILITATE/ENSURE NATURAL RESOURCE CONSERVATION

VISION: EXCELLENCE IN AGRICULTURAL RESEARCH AND DEVELOPMENT

MISSION:

THE AGRICULTURAL RESEARCH COUNCIL IS A PREMIER SCIENCE INSTITUTION THAT CONDUCTS RESEARCH WITH PARTNERS, DEVELOPS HUMAN CAPITAL

AND FOSTERS INNOVATION TO SUPPORT AND DEVELOP THE AGRICULTURAL SECTOR

ARC ALIGNED TO NATIONAL PRIORITIES AND POLICIES

a) National Development Plan, Vision 2030

b) Medium Term Strategic Framework Outcomes (4, 7, 10) and (2, 5, & 6)

c) Contribution to employment and job creation

d) Contribution to increasing agricultural production and productivity

e) Contribution to food and nutrition security

f) Contributing to bio–security

g) Optimal technology platforms for agricultural production

h) Enabling the country to respond and adapt to climate change concerns

i) Contributing towards South Africa’s Global and Regional positioning and integration

j) Ensuring an optimal and sustainable organisation

8

OUTCOMES INDICATORS FOR ARC

SCIENCE COUNCILInnovation in scienceBasic/fundamental researchApplied research (technologies)Intellectual assetsSkilled scientists & engineersVolume & quality publicationsScientist ratingsNumber of PhDsNumber of doctoral fellowsNumber of postdoc fellowsScientific awards

AGRIC. DEVELOPMENToEconomic link to InnovationoApplied researchoTechnology Transfer/disseminationoIntellectual Asset UseoAgricultural Production & productivityoFood Security – hunger oEnvironmental SustainabilityoImport SubstitutionoExport PromotionoAgrarian TransformationoNew products (vaccines, cultivars etc)

9

REVIEW OF KEY ORGANISATIONAL PERFORMANCE

Research and Development Examples

a)Improving the science through publications:

b)Registered 30 new cultivars to improve yields & mitigate effects of pests and diseases

c)Released to the farmers at least 21 new cultivars to enable competitiveness, sustainable

production, resistance to pests & diseases and mitigate effects of climate change

10

REVIEW OF KEY ORGANISATIONAL PERFORMANCE

Research and Development Examples continued

d)Kaonafatso ya Dikgomo (KyD) Scheme aimed at accelerating participation of small scale

livestock farmers into mainstream industries, increased to more than 7000 farmers, who

together own more than 60 000 cattle. Implication is that they improve the quality of their

animals, thereby obtain higher market prices – sustainable income generation. Employed at

least 36 graduates at ARC.

e)Provided diagnostic and analytical services – contributed towards ensuring South Africa

regains its status as an FMD disease-free zone – good achievement for meat trade;

f)Process Development for new methods for producing the FMD vaccine & training,

g)Introduced natural enemies of alien invasive species (weeds) through biological control

11

REVIEW OF KEY ORGANISATIONAL PERFORMANCE(continued)

Examples of Successful Dissemination of Scientific Solutions

a)Training -- at least 800 smallholder farmers trained on cotton production

b)Extension Services – Trained at least 350 officials for functional innovation platforms

c)Introduced the use of text (sms) messages on cell phones to guide farmers on production in

both English and Sesotho – improvements for farmers in decision making

d)Distributed more than 8000 copies of the Maize Information Guide and conducted workshops

for best use of the guidelines in production systems

e)Expanded roll-out of rainwater harvesting methods in the Limpopo River Basin as part of the

Global Challenge Programme on Water and Food – affecting more than 15 villages in four

countries – Botswana, Mozambique, Zimbabwe and South Africa.

12

REVIEW OF KEY ORGANISATIONAL PERFORMANCE(continued)

Managing Finances for Sustainable Success

a)Regular, unqualified external audit reports by the Auditor General more than 5 years.

b)Improved financial management processes throughout ARC resulted in the reduction in the

cash shortfall of R163m in 2009 towards R20m at end of 2012/13.

c)Continued to contain unnecessary costs, improved ARC balance sheet in last 4 years.

d)Financial management practices have improved confidence in the ARC contributing to

increased external revenue.

e)Development of an ideal funding model, biased towards external revenue generation, is

considered critical for implementation going forward.

13

OUTCOME ORIENTED STRATEGIC GOALS

GOAL 1: To improve the productivity, production, competitiveness and sustainability of crop based

agriculture;

GOAL 2: To improve the productivity, production, competitiveness and sustainability of livestock based agriculture;

GOAL 3: To enhance the productive use and conservation of natural resources;

GOAL 4: To translate research results to support agrarian transformation and the efficiency and competitiveness of the sector;

GOAL 5: To achieve good governance, financial sustainability and a high performing and visible organisation.

14

GOAL 1: To Improve the productivity, production, competitiveness & sustainability of crop based agriculture (examples)

ARC

PROGRAMMEOUTPUTS RESEARCH

PROJECTDERIVEDBENEFITS

Prog 1: Crop production, improvement & protection

• Generation of knowledge through research

• Development of new technologies

• Scientific Services Rendered

• Water efficient maize for Africa (WEMA)

• Improved maize for African soils (IMAS)

• Biocontrol of weeds using pathogens

Increased yields under drought & in poor soils

Yields under low nitrogen soils

Increased availability of land for production

Biodiversity conservation

Prog 5: Agro-processing, food technology and safety



• Scientific services rendered

• Greener postharvest technologies

• Indigenous fruit products

(e.g. beverages, jam etc)

Increased shelf life New products for market

access Improved nutrition

Prog 6: Smallholder Agriculture Development



• Organic insecticides & nematicides for SHF farmers

Increased yield Improved soil health Higher quality crops

15

GOAL 2: To improve the productivity, production, competitiveness &

sustainability of livestock based agriculture (examples)

ARCPROGRAMME

OUTPUTS RESEARCH PROJECT DERIVEDBENEFITS

Prog 2: Animal health, production and improvement




• Development of animal vaccines (e.g. FMD, ASF, AHS, Heartwater etc)

• New animal feeds for improved feed efficiency

Ensuring animal health for market access

New feeds that enhance animal productivity

Prog 5: Agro-processing, food technology and safety



• Meat safety and quality analysis of poultry injected with brine

• Analysis of meat and dairy products for quality assurance & breeding

Food safety & improved shelf life

Breeding information for farmers




• Accelerated animal breeding through Assisted Reproductive Technologies

• Kaonafatso ya dikgomo

Increased animal production

Healthy animals Increased value of

livestock from breeding

16

GOAL 3: To enhance the productive use and conservation of natural resources (examples)

ARCPROGRAMME

OUTPUTS RESEARCH PROJECT

DERIVEDBENEFITS

Prog 3: Natural Resource Management




• Climate Smart Agriculture Systems

• Climate Monitoring• AMESD Drought

Monitoring System

Improved water use Conservation of water Improved agricultural

productivity Early warning system

for sustainable production

Prog 4: Mechanisation and Engineering




Development of small scale farming harvesting equipment

Enhanced mechanised farming

Improved yields by smallholder farmers

Increased farmer productivity

17

GOAL 4:To translate research results to support agrarian transformation & efficiency & competitiveness of the sector (examples)

ARCPROGRAMME

OUTPUTS RESEARCH PROJECT

DERIVEDBENEFITS


•Scientific Services Rendered

• Animal breeding through Kaonafatso ya Dikgomo

• Farming Systems research

Improved quality of animals

New production practices for increased yields

Prog 7: Agricultural Economics and Commercialisation

• ARC developed technologies exploited

• Economic impact analysis of investments in research and development to specific projects

• Commercialization of ARC intellectual assets

Return on investment information for decision making

Enhanced competitiveness of sector from utilizing ARC technologies

Prog 8: Training and Extension

• Dissemination of Agricultural R & D information

• Agricultural skills and capacity development

• Implementation of Conservation Agriculture technologies

• Tropical and subtropical crop production- E Cape

Sustainable use of natural resources

Increased yields Expertise in tropical

and sub-tropical crop production

18

GOAL 5: To achieve good governance, financial sustainability and a high performing and visible organisation (examples)

ARCPROGRAMME

OUTPUTSKEY FOCUS

AREASINDICATOR

Prog 9: Administration and Corporate Affairs

Funding and Revenue generation

Finance

• Rand value of external income

• Rand Value of royalty income

Human Capital Management and Development

Human Resources

• Total size of SET base employed

• No of staff employed with Masters degrees

• No of staff employed with Doctoral degrees

• Training spend as % of total salary bill

• No. of postgraduate students who graduate

Sound Corporate Governance

Corporate Governance ARC BBBEE Certification

19

Sustainable Financial Management

Trend AnalysisKey Budget AssumptionsBudget 2014/15Key strategic issuesChallengesKey Focus Areas

20

BUDGET ASSUMPTIONSa) R120m cut in Operational PG over the

MTEF period

b) 7.5% increase in personnel expense

c) 5.4% increase in operating expenses

d) 6-10% increase in External Income

e) Inflation 5.4% (Treasury guideline)

f) R171m ECSP allocation for 2014/15

g) Last year of ECSP allocation

21

MTEFForecast

22

Forecast 2013/14

GrowthBudget 2014/15

R’m % R’mOperational PG growth 698 1.20% 707 - PG Baseline 597 0.50% 600 - Climate monitoring 2 6.00% 2 - SADC activities 3 6.00% 4 - National public good assets 15 6.00% 15 - Intergis 2 6.00% 2 - Crop forecasting 10 6.00% 11 - Diagnostic services 18 6.00% 19 - Operational PG (DST) 51 5.00% 54

ECSP 137 25.30% 171Capex PG 75 6.00% 79

Total PG Funding 2013/14

909 5.20% 957

Personnel Costs 690 7.00% 739Other Operating Costs 478 4.00% 497Depreciation 32 4.50% 34

KEY BUDGET ASSUMPTIONS

Budget Item

23

24

25

2012/13 2013/14 2014/15 2015/16 2016/17R'm R'm R'm R'm R'm

Total Income 1 104 1 278 1 348 1 244 1 310 Parliamentary Grant 747 909 957 829 875 Baseline - Operational 677 835 878 747 788 Baseline - Capital 71 75 79 83 87

External Income 333 344 365 387 410 Investment Income 23 24 26 28 26 Other Income - - - - Total Expenditure 1 015 1 201 1 269 1 161 1 223

Personnel Costs 612 690 739 720 767 Operating Expenditure 351 478 497 406 419 Depreciation 24 32 34 35 37 Impairment of fixed property 29 - - - - Net Surplus\(Deficit) 89 77 79 83 87

MTEF

STATEMENT OF FINANCIAL PERFORMANCE

26

2012/13 2013/14 2014/15 2015/16 2016/17R'm R'm R'm R'm R'm

Property, plant and equipment 784 875 992 1 064 1 129 Investments 4 2 2 2 2 Current assets (excluding cash) 87 100 108 113 119 Cash resources (net of bank overdraft) 497 450 402 386 393 Total Assets 1 372 1 427 1 503 1 566 1 643

Capital and Reserves 832 909 988 1 070 1 157 Non Current Liabilities 193 193 193 193 193 Current Liabilities 348 325 323 303 293 Total Equity and Liabilities 1 372 1 427 1 503 1 566 1 643

Net cash flow from operating activities 150 63 102 93 110Net cash flow from investing activities (110) (109) (150) (109) (103)Cash and cash equivalents at beginning of year 457 497 450 402 386 Cash and cash equivalents at end of year 497 450 402 386 393

MTEF

STATEMENT OF FINANCIAL POSITION

CASH FLOWS

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Key Strategic Issues (Financial)

1. External Income Growth

2. Cost Containment (Other Operating Costs)

3. Replacement and upgrading of infrastructure

4. Improving organizational processes to eliminate adverse audit findings.

28

Key Challenges for ARC

External Income growth.Limited funding for capex.Limited funding to fill the required number of

critical vacancies.ARC competitiveness for skills

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CRITICAL SUCCESS FACTORS

a) Implementation of new organisational design and related business processesb) Design and implementation of an ideal funding model

i. Development of an ARC competitive value proposition for increasing external revenue

ii. Optimal utilisation of ARC’s assets iii. Development of a marketing, communications and stakeholder management

planc) Development of an international relations strategy for ARCd) Business tactics to adopt the latest science and technologies aligned to market

trendse) Enhanced commitment to centres of collaboration with universitiesf) Implementation of a Disease Priority Matrixg) Ensure ARC’s role in the APAP and Bioeconomy strategyh) New ARC student model

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COMMENTS/QUESTIONS Re a leboha

Re a leboga

Siyabulela

Siyabonga

Siyathokoza

Ha khensa

Ria livhuwa

Baie dankie

Thank you31

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