agricultural research council annual report for 2009/10 presentation to portfolio committee 15...

AGRICULTURAL RESEARCH COUNCIL

ANNUAL REPORT FOR 2009/10

PRESENTATION TO PORTFOLIO COMMITTEE

15 OCTOBER 2010

ARC TEAM – Council

• Mr. Jonathan Godden (Chairperson)

• Prof. Vil. Nkomo (Deputy Chair)

• Ms. Dudu Msomi (Chair: Finance)

• Prof. Michael Kahn (Chair: R & D + TT)

• Mr. Hamish McBain (Council + Audit)

• Mr. Andre Young (Council + HR)

ARC TEAM Management

• Dr. Shadrack Moephuli (President & CEO)

• Ms. Anati Canca (ED: Tech. Transfer)

• Dr. Mohammad Jeenah (ED: R & D)

• Mr. Michael Netsianda (ED: HR & Support)

• Mr. Gabriel Maluleke (CFO)

MANDATE (OBJECTS) OF THE ARC AS PER ACT

To CONDUCT RESEARCH, DEVELOPMENT, &, TECHNOLOGY TRANSFER, IN ORDER TO:

Promote agriculture & industry;Contribute to better quality of life;Facilitate/ensure natural resource conservation

BACKGROUND ISSUES

• 3rd year of the Strategic Plan 2007 – 2009/10 implementation

• Council mandate

• Business Plan & Strategic Objectives

• Government MTSF Priority Outcomes

• Council term ended 30 November 2009 and no new Council till June 2010.

COUNCIL STRATEGIC MANDATE

• Growth in agriculture – increased productivity• Growth in exports – innovation (products & processes) • Reduction in rural poverty – productivity improvements• Mitigation of agricultural risks• Business analysis – optimize performance & reduce

duplication• Synergy & collaboration• Ratio of scientists – critical mass & optimum

performance• Improve efficiency• Improve reporting controls

STRATEGIC OBJECTIVES 1. Generate, develop & apply new knowledge

and technology2. Sustainable use and management of natural

resources3. Enhance nutrition, food security and safety4. Enhance the ability of the agricultural sector

to manage and mitigate agricultural risks5. Technology transfer and commercialization6. Achieve Organizational growth and

sustainability

OVERVIEW OF PERFORMANCE 1. Succeeded to deliver on business plan and

client expectations despite poor economic conditions;

2. Contributed to competitiveness and sustainability of sector;

3. Contributed to agricultural growth;

4. Contributed towards decision support;

5. Provided support to government on disease management

OVERVIEW OF PERFORMANCE 6. Exceeded target on financial performance;7. Unqualified Audit;8. Matters of emphasis from 2008/09 addressed;9. Good employee relations – 4.9 % turnover;10. Successful wage negotiations within budget;11. NRF grant for 19 doctoral students;12.AgriSETA funding – staff improvement;13.Professional Development Programme – 90;14. Informal training – 795 employees

OVERVIEW OF R & D PERFORMANCE 1. Scientific Publications – exceeded target of

185 by 124% to 229– Improved quality of publications– Publications exceed number of PhDs in ARC– Balanced against all 4 strategic objectives– Due to recruitment and retention of skills

• Direct impact on MTSF priority outcomes (2, 7, 4 & 10)

OVERVIEW OF TT PERFORMANCE 1. Scientific innovation – effective management of

Intellectual Assets for competitiveness2. Training of black farmers – 300 through Kaonafatso

ya Dikgomo – Effect to raise saleability of animals by 20 %– Wealth for black farmers

3. Training at schools in N.West for Vitamin A rich potato & distributed 500 cuttings for planting

– Improving nutrition awareness– Training on garden production

• Direct impact on MTSF priority outcomes 2, 7 & 10

KEY CONSIDERATIONS 1. Collaborated with DAFF on disease

management– Rift Valley Fever– Foot and Mouth Disease (NT – R149m)

Collaborated with DST

• Collaborated with Dept Water Affairs

• Collaborated with NRF, WRC, SANBI

• Worked with Provincial Departments of Agriculture

SO1: Generate develop and apply new knowledge and technology

KRA Outcome

1.1 Accurate predication of risk (Drought/disease and pest)

7. Vibrant, equitable, sustainable rural communities contributing towards food security for all

10. Protect and enhance our environmental assets and natural resources

1.2 Increased agricultural productivity


4. Decent employment through inclusive economic growth

1.3 Improved food quality 7. Vibrant, equitable, sustainable rural communities contributing towards food security for all

A long and health life for all South Africans

1.4 New and improved systems for sustainable use of natural resources


SO:2 Sustainable use and management of natural resources

2.1 Characterisation of the natural resources and ecological systems



2.2 Maintenance and Use of natural resources


SO3: Enhance Nutrition and food Security

3.1 Increase access and availability of quality and safe nutritious Food


4. Decent employment through inclusive economic growth


2. A long and health life for all South Africans

3.2 Improved pre-harvest, harvesting and post-harvest technologies


STRATEGIC OBJECTIVE 1

Generate, Develop and Apply New Knowledge and Technology

KRA INDICATOR TARGET ACTUAL

Accurate Prediction of Risks

Increased Agricultural Productivity

Improved Food Quality

New and Improved Systems for Sustainable use of natural Resources

Scientific publications

Methods developed

New and improved products

Germplasm collections

Services rendered

Information disseminated

IP generated

40

60

20

1800

1000

65

20

44

66

11

1490

14

256

0


Sustainable use and management of natural resources


Characterization of the natural resources

Maintenance and use of national assets


Methods developed



Services rendered


IP generated

35

1

10

26070

80

120

2

56

6

15

48753

16350

325

0


Enhance Nutrition, Food Security and Safety


Increased Access and availability of Quality, Safe and Nutritious Food

Improved Pre-harvest, harvesting and post-harvest Technologies


Methods developed



Services rendered


IP generated

Beneficiaries

40

230

160

28050

3570

385

25

700

44

32

21

11375

61543

752

27

2216


Enhance the Ability of Agriculture sector to manage and Mitigate Agricultural Risk


Reduced vulnerability of the agricultural sector to climate change

Solutions for predication and management of pest and diseases, weeds and alien invasives


Methods developed



Services rendered


IP generated

Beneficiaries

70

25

10

9300

9000

200

4

3

54

19

1

7333

167116

389

0

4

Greater Exports: New Blush Pear

• Early Blush Pears for Europe

• Confirmed Tree orders– 206813 trees in 2010– 180490 trees in 2011– Estimate to be 37% of blush peers in 2012– Potential to earn R354m/yr– Secure 3611 farm jobs

Improved Nutrition: Sweet Potato

• Elsenburg, Fort Cox and Roodeplaat• Improved yield up to 10 tons /hr• Higher dry matter (>22%) and acceptable taste• Food security for communities and resource

poor farmers• Improved Nutrition• 400 cuttings were distributed to 50 schools in

NWest province• Cotlands nutrition in Eastern Cape have added

Sweet potato in their nutrition and Health plan

SO3: Novel insecticide applicator

• Clearwing Moth major pest affecting Rooibos

• Novel applicator designed by engineering

• Achieved 80% control

• New device and newly generated knowledge will enhance greater productivity

SO1: New Rift Valley Fever Vaccine

• Developed a more effective system to deliver the vaccine

• Protect against RVFV and poxvirus which threaten livestock industry

• Phase II trials in Mali funded by BMG foundation

• In 2009 had an outbreak of RVF in Eastern Cape

SO 2: Poverty Elevation: Increase grazing land

• Utilization of Dry legume pastures to rehabilitate old arable grazing land

• Investment in this sector- significant increase in livestock production

• In moderate to high rainfall areas in Eastern Coast

Strategic Objective 5Technology Transfer and Commercialisation

RATIONALE• Creation of value through Agricultural R&D• Transfer ability to utilize new & improved technologies• Contribute to growth in agricultural sector through Tech

Transfer and adoption programmes

• Contribute to increase in exports through the dissemination

of technological innovations

• Contribute to the reduction of rural poverty through

formulation and execution of programmes to address access

and improved quality of life

Strategic Objective 5Technology Transfer and Commercialisation

• Strategic Framework describes six programs– Commercialization– IP Protection– Training and Advisory

Services– Economic Services and

Biometry– Business Generation– Knowledge Management

• Primary legislative framework– ARC Act (1990)– IPRPFR Act (2010)

• Office of Technology Transfer• Interaction with public sector

– DAFF– DST– DRDLR– Provinces

Linkages to Government Priorities

Outcome (abbreviated)

ARC TT Response

Decent employment

Economic infrastructure network

Rural communities and food security

Natural resource conservation

•License agreements in the agriculture sector - competitiveness

•IP Portfolio management•Agro information hubs•Joint venture platforms•Incubators and SMME Development

•Training and advisory services in community program context•Agro information hubs•Provision of training and information •Training and advisory service, incl support to extension services

•Conservation agriculture solutions to municipalities

STRATEGIC OBJECTIVE 5Technology Transfer and Commercialization

• Organizational development associated with strategic plan implementation– Office of Technology Transfer established– Training and Economic Services programs established, resulting in

focused execution • Training of subject advisors for DoE improved scholar pass rates• Community engagement re-focused and initiated with communities • International Collective Innovation symposium

– in support of building capacity for innovation in the sector


Technology Transfer and Commercialization

KRA 5.1 & 5.2

PROGRAMME INDICATOR ACTUALS

Business Generation

Public sector, private and international business opportunities

External income generated, as % under the 3 categories

New contracts secured (MoA’s & MoU’s)

Targets for private and international income exceeded, not met for public sector – focused on relationship building

MoU with Eastern Cape government agency – ASGISA (EC)

MoA’s with ICRA (Netherlands), OBP and eGoliBio

Contract concluded with the DST for sustainable livelihoods linked work

Commercialisation

License Management

Incubation and SMME Development

Royalties – R10,5 million

Number of incubators negotiated, initiated and supported

R 9,9 million – negotiation of license agreement on three new citrus cultivars complicated

Two new negotiated (cotton and juice making)

Timbali and MMI supported



KRA 5.3 & 5.4


Training and Information Dissemination

Training:

Training courses presented

Income generated

250 training events

Marketing tools developed

149, more effort spent on development of marketing materials

Estimated R1,7 million income

3 different brochures developed

Information Dissemination

Six information platforms used

Information dissemination tools developed and implemented

All used, e.g.

342 Farmer days

11 000 pamphlets on vegetable production were distributed

IP Management IP Awareness interventions

100% exposure of personnel

Four IP workshops held

New IP filings and registrations

50 29 new plant breeders’ rights (PBR)

3 new PBR applications filed

One US patent application (new vaccine)

Target not met – had not taken account of the rate of disclosures from institutes



KRA 5.5 and 5.6


Economic Services and Biometry

Business environment analysis and business support services

2 Economic outlook reports

2 Impact assessment studies

2 economic outlook reports produced

One IA study initiated – lack of capacity for the targeted 2

14 decision support reports produced

Biometry 600 internal and external consultation

External income generated

About 880 consultations

Approximately R 400 000 generated from external clients

Knowledge management and Library Services

Knowledge management (KM)

Library and Information Services

KM strategy completed

Library user satisfaction survey

KM strategy not initiated – budget constraints led to lack of capacity

Survey completed

Major Challenges and Some Solutions

• HR capacity remains a major challenge, linked to budget constraint challenge– 47% vacancy for TT positions at 31 March 2010– Long recruitment processes (this is a scarce skills area in the

country, exacerbated by all institutions recruiting for the implementation of the IPRPFR Act)

• Solution – build capacity from within the organization in light of budget constraints– Will work but will take time

• Changing business environment, e.g. DAFF revisiting approach to agricultural colleges leading to ARC work in this regard stalled

• Solution – intensified relationship building with the public sector to share information and inform business planning at ARC

• Agricultural Industry interactions, lack of alignment to new legislative environment re management of IP– Has led to delays in concluding key license agreements

• Solution – intense engagement is required to raise awareness and improve understanding

Strategic responsibility for effective service support and planning to other Divisions to meet ARC’s vision.

Lead and manage a multi-disciplinary senior management team that provides services to the rest of ARC in the areas of:

- Human Resources - ICT

- Marketing & Communication - Legal Services - Security & Logistics - Facilities Management and overall business

improvement

HUMAN RESOURCES & SUPPORT

SERVICES

KRA 1 Effective management of human capital capacity & development (HRD)

KRA 2 Human Capital Utilisation

KRA 3Ensure compliance with statutory requirements, standards, policies & procedures

KRA 4 Optimization of financial resources , sound financial management, co-responsibility for overall financial performance of ARC

KEY RESULTS AREAS 2009/2010

KRA 5 Effective management of ICT services to ensure interoperability of systems, cost effectiveness & improved service delivery

KRA 6 Establishment and effective maintenance of Security & Logistics function

KRA 7 Implement Marketing & Communication strategy to improve ARC image & culture

KRA 8 Ensure that infrastructure, facilities & equipments are maintained in an effective manner

KRA 9 Oversee all activities of the legal service unit to ensure compliance and effective legal practice within ARC

KEY RESULTS AREAS 2009/2010

PROJECT/ACTIVITY KPI’s ACHIEVEMENTS •Conduct skills audit

•Development & Implementation of dual career path model•Development of Post-doc programme

•Development of joint appointment guidelines

•Accelerate & intensify PDP programme•Retention strategy developed & implemented

•Competency framework developed & implemented

•Skills database developed

•Dual career path model implemented

•Post-doc programme developed but not yet implemented•Joint appointment guidelines approved

•PDP statistical report & its impact•Retention strategy developed but not yet approved•Competency Framework developed & implemented

•Skills database developed and approved by Council( facilitate targeted recruitment)•Dual career path model implemented offering career mobility & retention of core staff•Post-doc programme developed but not yet implemented- hinders capacity development•Joint appointment guidelines approved (UWC)- reduction in recruitment costs and enhance capacity •PDP statistical report & its impact – minimal impact•Retention strategy developed but not yet approved- skills attrition

•Competency Framework developed & implemented- targeted recruitment

KRA 1: Effective management of human capital capacity & development (HRD)

PROJECT/ACTIVITY KPIs ACHIEVEMENTS

•Fully functional performance management system applied to all staff•Quality assurance of all performance contracts & assessment•Development of fully effective talent management strategy•Final implementation of OD process

•Performance management strategy implemented•100% performance contracting

•Talent management strategy developed & implemented•OD process conclude successfully

•Performance Management strategy implemented- instilling culture of performance•100% performance contracting- clearly defined deliverables with targets

•Talent management strategy developed & implemented- not achieved•OD process concluded successfully- alignment of resources to business strategy

KRA 2: Human Capital Utilisation

PROJECT/ACTIVITY

KPI’s ACHIEVEMENTS

•Legislative & regulatory scanning and interpretation•Comprehensive quarterly risk assessment •Reduction in disciplinary hearings and grievances•Review and report compliance including audit & PFMA compliance

•Legislative Compliance Assessement conducted•Management risk implementation plan•10% reduction•Clean audit report

•Reduced litigation and disputes- two litigation matters finalised•Management risk implementation plan in place- risk mitigation•10% reduction- productivity levels and stability•Clean audit report- reputation and shareholder confidence enhanced

KRA 3: Ensure compliance with statutory requirements, policies &

procedures

PROJECT/ACTIVITY KPI’s ACHIEVEMENTS

•Optimization of ICT- reflected in ICT service delivery

•ICT infrastructure development- VPN roll-out•Implementation of Disaster Recovery Infrastructure•Development of ICT policies, standards and policies

•Client satisfaction index

•VPN roll-out completed on 31/03/2010•DRP commissioned & implemented

•ICT policies, standards & procedures developed

•Client satisfaction index- not achieved but performance standards were not satisfactory•VPN roll-out completed on 31/03/2010- responsive network•DRP commissioned & implemented- not achieved due to financial constraints•ICT policies, standards & procedures developed- well-informed staff and compliance

KRA 4: Effective Management of ICT

PROJECT/ACTIVITY KPI’s ACHIEVEMENTS•Implementation of an integrated physical & ICT security system

•Implementation of document classification system

•Ensure development and implementation of security management policies, guidelines and procedures•Implementation of integrated security awareness programme

•Integrated physical & ICT security system implemented

•Approved document classification system implemented

•Security management procedures developed & implemented

•Awareness programme implemented

•Integrated physical & ICT security system implemented- complaince to Minimum Information Security Standards•Approved document classification system implemented- reduction in security breaches•Security management procedures developed & implemented- three security procedures developed and implemented

•Awareness programme implemented- fraud and security awareness achieved

KRA 5: Establishment and effective maintenance of security & logistics

function


•Conduct employee satisfaction survey•Conduct Customer satisfaction survey•Development of communication strategy•Effective customer relations management•Development of marketing campaigns

•ESS index

•CSS index

•Communication strategy developed and implemented•CRM implemented

•Marketing Campaigns developed

•ESS index- not achieved and no baseline•CSS index- not achieved and no baseline•Communication strategy developed and implemented- draft but not approved•CRM implemented- not achieved•Marketing Campaigns developed- met requirements (see list of campaigns

KRA 6: Implement Marketing & Communication strategy


•Implementation of Asset Management Strategy

•Provision of flexible, professional and cost-effective facility management•Farm Management

•Maintenance of building

•Facilitate the maintenance contracts

•Asset Management Strategy implemented

•Service delivery model implemented

•Ongoing farm management•Coordinated maintenance activities

•Cost effective maintenance

•Asset Management Strategy developed and partially implemented - refocused facilities management and restructuring•Service delivery model implemented-service desk statistics•Ongoing farm management - sustainability of research projects•Coordinated maintenance activities - consolidated maintenance contract•Cost effective maintenance - reduction in maintenance cost

KRA 7: Ensure maintenance of the infrastructure, facilities &

equipment

CAPACITY BUIDLING:NRF/DST Professional

Development program (Cont.)Study Program Male Female Total

Post Doc 7 0 7

PhD 10 10 20

MSc 0 0 0

CAPACITY BUILDING (…cont)Current participants in the Professional

Development Mentoring programPDP PROGRAM

Study Program

Male Female Total

PhD 55 88 1313

MSc 1010 1212 2222

MTech 22 77 99

BSc Hons 11 22 33

BTech 22 44 66

BSc 11 22 33

TOTAL 21 35 56

Professional Development Mentoring Program (PDP)

Year Number of Participants

2007/2008 68

2008/2009 97

2009/2010 72

SCIENTIFIC CAPACITY – PAST 5 YEARS

928 950 901874

822811

700

750

800

850

900

950

Total Research Grouping

2005/2006

2006/2007

2007/2008

2008/2009

2009/2010

Current

Turnover Rates – Past 5 years

4.40%4.60%

5.50%

4%

4.90%

0%

1%

2%

3%

4%

5%

6%

% Turnover rate

2005/06

2006/07

2007/08

2008/09

2009/10

Industrial Relations Statistics

Disciplinary Actions 2007 2008 2009 2010

Number of cases handled 10 8 8 3

Number of cased concluded

6 5 5 3

Number of cases not concluded

0 0 3 0

Acquittals 0 0 0 0

Warnings 1 1 3 1

Dismissals/(Fraud/Theft) 5 2 2 2

Industrial Relations Statistics (Cont.)

Grievances 2007 2008 2009 2010

Number of grievances handled 5 2 13 3

Number of grievances finalized 0 6 6 3

Number of grievances at 4th stage 0 6 6 0

Number of grievances at 3rd stage 0 0 0 0

Number of grievances at 2nd stage 0 0 0 0

Number of grievances at 1st stage 0 1 1 0

Measures to Address Equity in the Workplace

• Action to bring about gender and disability equity in the workplace while managing the scourge of HIV/AIDS

• Increase the number of women across different employment categories

• To explore ways in which ARC can create an enabling work environment for women; people with disabilities and people infected with and affected by HIV Virus

• To promote diversity management initiatives to make the work environment sensitive to the needs and aspirations of women, people with disabilities and those affected by and infected with the HIV

• To explore measures that can be implemented to develop and improve the capacity to manage diversity at all levels within the ARC

• Improve entry into the science field by women by increasing the pool of women entering science system

Policies/Programs to Address Equity in the Workplace

Diversity Management

Recruitment/ Selection

PerformanceManagement

CPPDRetention Strategy

ODInitiatives

Challenges and Future Plans:

A strategy that seeks to attract qualified women and the people with disabilities to the ARC. Included under the rubric of Recruitment and

Selection are:

Recruitment and Selection:• An engendered Recruitment Policy• Non-discriminatory Selection practices• Recruitment and Selection Procedures that are sensitive to the issues

of gender and disability and HIV?AIDS

Performance Management Includes:• Existence of performance management system that is sensitive to the

circumstances of women and people with disabilities• Linking of gender and disability equity issues and diversity

management into the performance agreements of all line managers• Grooming of good performers who are either women or have

disabilities

Challenges and Future Plans (…cont)

Continuous Personal and Professional Development (CPPD)

This includes all training and development initiatives e.g.

1. Acquisition of Formal Qualifications2. Short courses3. Personal Development initiatives e.g. workshops4. Job rotation5. Secondments6. Observational learning7. Coaching / mentoring

Challenges and Future Plans (…cont)

Retention Strategy:• Pay parity• Conditions of employment that are sensitive to the needs of

people with disability and women• Turnover analysis and interventions to address identified

problems• Continuous review of service benefits with the aim of keeping

service benefits market related• Retraining and retaining employees who become disabled• Keeping HIV positive employees in productive employment for

as long as they are medically fit to do so

Ageing scientific workforce.Ageing infrastructure Limited ICT infrastructure

Outreach Programs/ Projects to ensure Sustainability of the system over time (Future

Plans)Pipeline Development:

Activity/Initiative Current Projected

Research Programs that may benefit the development of women and previously disadvantaged groups

DST/NRF Professional Development Program

Improve the qualifications of our scientific capacity

Capacity building initiatives aimed at previously disadvantaged groups

Professional Development Programme

Create a pool of young scientists

Capacity building initiatives aimed at Specialized fields

Post-doctoral Program

Increase scientific outputs. Research outputs that leads to the amelioration of conditions of women

Finance Table of Contents.Finance Table of Contents.

• Financial Performance Trend AnalysisFinancial Performance Trend Analysis

• Financial OverviewFinancial Overview

• Overview of the Audit ReportOverview of the Audit Report

• Supply Chain ManagementSupply Chain Management

• Funding Requirements of the ARCFunding Requirements of the ARC

Revenue

590 533470 452 434 463

326 281 273 326 283

291293

256 266235 197

219212 233

201168

7

8101413

12341236

614

-

100

200

300

400

500

600

700

800

900

1,000

10/11Forecast

09/10 08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01

Financial Year

R'm

Parliamentary Grant External Income Other Income

Total Operating Expenses

505 490 467416 416 396

316 284 264 290 285

305265 297

289 269241

219199 195 169 149

25

22

18 14

13 1120

1718

21 24

-

100

200

300

400

500

600

700

800

900

10/11Forecast

09/10 08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01

Financial Year

R'm

Personnel Costs Other Operating Costs Depreciation

Cashflow vs Capex

0

20

40

60

80

100

120

140

160

180

10/11Forecast

09/10 08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01

Financial Year

R'm

s

Cash from Operating Activities Capex Cash and cash Equivalents

SUMMARY FINANCIAL PERFORMANCE

2009/10 % Change 2008/09

R'm R'm

Total Income 831.05 9% 760.60

Parliamentary Grant 532.85 13% 469.99

External Income 292.52 14% 255.73

Other Income 5.68 (84%) 34.88

Total Expenditure 772.77 1% 777.76

Personnel Costs 490.22 (5%) 467.04

Operating Expenditure 264.76 11% 296.47

Depreciation 17.79 (25%) 14.25

Gain/(Loss) on sale of PPE (0.01) 1.08

Net Surplus\(Deficit) 58.27 462% (16.08)

Cashflow from Operating Activities 56.11 55% 36.11

Capital Expenditure 17.72 (71%) 62.10

NET ASSETS 559.45 12% 501.54

SUMMARY FINANCIAL PERFORMANCE

Actuals2009/10 % Change

Budget2009/10

R'm R'm

Total Income 831.05 2% 812.11

Parliamentary Grant 532.85 6% 502.95

External Income 292.52 (1%) 295.96

Other Income 5.68 (6%) 13.20

Total Expenditure 772.77 3% 796.67

Personnel Costs 490.22 1% 494.90

Operating Expenditure 264.76 12% 274.89

Depreciation 17.79 3% 26.87

Gain/(Loss) on sale of PPE (0.01)

Net Surplus\(Deficit) 58.27 277% 15.44

Cashflow from Operating Activities 56.11 15% 48.92

Capital Expenditure 17.72 (56%) 41.18

NET ASSETS 559.45 6% 526.02

Budget Actual Variance Variance Actual Actual Variance VarianceMar 2010 Mar 2010 Mar 2010 % Mar 2010 Mar 2009 Mar 2010 %

503 533 30 6% Parliamentary Grant 533 470 63 13%

296 293 (18) (6%) External Income 293 256 37 14%

13 6 4 27% Other Income 6 35 (29) (84%)

812 831 16 2% Total Revenue 831 761 71 9%

797 770 27 3% Expenses 773 777 4 1%495 490 5 1% Personnel 490 467 (23) (5%)275 265 10 4% Administrative and other expenses 265 296 32 11%

27 18 9 34% Depreciation 18 14 (4) (25%)1 0 1 100% Finance Costs 0 0 0 96%0 0 0 Gains/(Losses) on sale of property 0 (1) (1) 99%

15 58 43 278% Surplus/(Deficit) for the year 58 (16) 74 (462%)


STATEMENT OF FINANCIAL PERFORMANCE for the year 2009/2010

Budget Actual Variance Actual Actual VarianceMar 2010 Mar 2010 Mar 2010 Mar 2010 Mar 2009 Mar 2010

ASSETS124 167 43 Current Assets 167 117 50

43 73 31 Cash and cash equivalents 73 35 3864 80 16 Receivables 80 64 1617 13 (4) Inventories 13 18 (5)

668 651 (17) Non-current Assets 651 652 (0)2 2 (0) Investments 2 2 (0)

183 168 (15) Equipment 168 177 (9)482 481 (1) Land and Buildings 481 472 9.02

792 818 26 Total Assets 818 768 49

LIABILITIES177 188 (11) Current Liabilities 188 175 (13)135 128 7 Payables 128 131 2

42 60 (18) Provisions 60 44 (16)

87 71 17 Non-current Liabilities 71 92 2229 27 2 Employee Benefits 27 29 259 43 15 Deferred Income: Revenue Grants 43 63 20

264 258 6 Total Liabilities 258 267 8

528 559 32 Net Assets 559 502 58

NET ASSETS109 109 0.00 Capital Fund 109 109 0.00

3 3 (1) Insurance Reserve 3 3 (1)415 448 33 Accumulated Surpluses 448 389 59

528 559 32 Total Net Assets 559 502 58

AGRICULTURAL RESEARCH COUNCILSTATEMENT OF FINANCIAL POSITION

Budget Actual Variance CASH FLOW STATEMENT Actual Actual Variance

March 2010 March 2010 March 2010 March 2010 Mar 2009 March 2010

827 789 (37) Receipts 789 759 30312 271 (41) Sales of goods and services 271 280 (10)503 513 10 Grants 513 470 4312 6 (6) Interest received 6 8 (3)

0 0 (0) Dividends received 0 0 0

(778) -733 45 Payments (733) (723) (10)(489) (490) (1) Employee Costs (490) (467) (23)(288) (243) 45 Suppliers (243) (256) 13

0 (0) 0 Interest paid 0 0 049 56.11 7 Net Cash flow from operating activities 56 36 20

(41) (18) 23 Purchase of property plant and equipment (18) (62) 440 0.10 0 Proceeds from sale of property and equipment 0 2 (2)

0 Change in Investments 0(41) (18) 24 Net cash flow from Investing activities (18) (60) 43

8 38 31 Net increase/(decrease) in cash and cash equivalents 38 (24) 6335 35 0 Cash and cash equivalents at the beginning of the period 35 59 (24)43 73 31 Cash and cash equivalents at the end of the period 73 35 38

Agriculture Research Council

Cost ItemMarch 2010

ActualsMarch 2010

BudgetMarch 2010 Variance

March 2009 Actuals

2009/2010 Variance

R'000s R'000s R'000s R'000s R'000s

ARC Fleet Vehicle Costs 423 770 347 821 399Audit Fees 5,049 6,687 1,639 3,923 (1,125)Bad debts (80) 80 (889) (809)Bank charges 1,369 842 (527) 937 (432)Board and Committees Costs 354 773 419 527 173Cleaning Services 4,749 5,116 367 4,853 104Communication Costs 14,880 18,596 3,715 15,691 811Computer Costs 13,181 15,776 2,595 9,083 (4,098)Constultancy Costs 3,693 10,532 6,839 23,750 20,057Consumables 60,165 57,683 (2,482) 63,860 3,695Contract Services 21,070 6,220 (14,850) 9,339 (11,731)Depreciation 17,780 26,875 9,094 11,169 (6,612)Diagnostics Services 4,519 5,142 623 5,457 939Entertainment 1,618 1,937 319 1,576 (42)Finance Costs 7 25 18 171 165Financial Services 281 830 549 1,657 1,376Fleet Management Costs 17,053 16,547 (506) 21,484 4,432Insurance Costs 4,307 3,219 (1,087) 5,599 1,292Legal Fees 2,213 3,841 1,628 1,903 (310)Library Services 3,431 4,384 953 6,121 2,690Maintenance Costs 17,130 18,862 1,732 22,353 5,223Marketing expense 2,958 3,709 751 2,467 (491)Other Costs 572 572 24 23Personnel 490,215 494,905 4,690 467,039 (23,175)Printing and Stationery 6,383 6,612 229 13,449 7,065Profit /loss foreign exchange (237) 237 138 375Rental Costs 15,427 19,079 3,652 14,997 (430)Security Services 8,072 8,093 21 8,225 153Services 53 53 1 1Shows and Exhibitions 70 10 (60) 385 315Tax 31 (31) 24 (07)Training and Development 5,445 8,580 3,135 5,773 328Travel and Accommodation 20,182 24,329 4,146 28,704 8,521Utilties 31,030 26,075 (4,955) 27,144 (3,886)Total Operating Expenses 772,768 796,672 23,904 777,756 4,988

AGRICULTURAL RESEARCH COUNCIL:- OPERATING EXPENSES

Audit Report

•Unqualified audit

•Irregular expenditure = R3.2m

•Performance information system – weaknesses

IRREGULAR EXPENSES

REASON R

No Tax Clearance 313,315.26

National Database not Checked 789,364.90

Insufficient Quotation 7,562.71

No deviation 111,688.19

Expired Contract 945,264.90

Legal fees 1,017,509.37

Receiving Extra Goods 1,702.94

Expenditure Transaction with inadequate documents

21,799.80

Verbal Quotation not recorded 2379.91

TOTAL 3,210,587.98

Supply Chain Management

PROCUREMENT EXPENDITURE 2009/10

2009/2010 % Change 2008/2009

R’000 R’000

TOTAL SPENT 174,469 72% 243,698

BEE PROPORTION

57,429 10% 54,966

BEE PROPORTION

33% 11% 22%

TARGET INCREASE IN BEE SPENT

15%

Variance (4%)

CHALLENGES

SCM capacity Lack of automated systemsResistance to changeFew HDI suppliers for scientific

commoditiesTurn around time

WAYFORWARD

Include BEE spent targets in the performance contracts of Managers

Explore the possibility of implementing automated SCM Systems.

Increase BEE companies in the supplier database.

Funding Requirements of the ARC

Funding Challenges

•Current Levels of Parliamentary Grant Vs Costs

•Cash Shortage

•Funding Requirements:- Internal Analysis

•Funding Requirements:- Treasury TAU

•Funding Issues and Needs

Total Expenditure Vs Parlimentary Grant

-

100

200

300

400

500

600

700

800

900

10/11Forecast

09/10 08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01

Financial Year

R'm

s

Personnel Costs Other Operating Costs Parliamentary Grant(Excl Capex)


Analysis of Cash Shortage Period 2006/07 to 2010/11

Cash and Cash equivalents is made up of: 2010/2011 2009/2010 2008/2009 2007/2008 2006/2007R'm R'm R'm R'm R'm

Short term deposit 93 55 16 18 88Bank and Cash 18 19 19 41 9Total 110 73 35 59 97

Cash commitment R'm R'm R'm R'm R'mCash and cash equivalents 110 73 35 59 97Add Net trade accounts receivables 75 80 64 80 61

185 153 99 139 158Less: (267) (258) (267) (241) (244)Non-current liabilities (25) (27) (29) (27) (30)Deferred Income:Revenue Grants (31) (43) (63) (51) (34)Current liabilities (211) (188) (175) (162) (179)

Surplus cash/(Cash shortage) (82) (105) (168) (101) (86)

R'm R'm R'm R'm R'mNet inflow from operating activities 125 56 36 5 7Net outflow from investing activities (additions to PPE) (89) (18) (60) (42) (63)Net increase in cash and cash equivalents 37 38 (24) (38) (56)

ARC Personnel Requirements

Organisation

Rm Contribution %

2000 2007 2000 2007

Agricultural Research Council (ARC)

391.6 695.6 66.8% 49.9%

Higher Education Institutions 96.1 159.8 16.4% 11.5%

Other public institutions (provincial government and other e.g. CSIR)

43.2 208.7 7.4% 15.0%

Private (profit and non-profit) 55.3 329.5 9.4% 23.6%

Total 586.2 1 393.6 100.0% 100.%

Treasury’s TAU Analysis of Funding trends since 2000

2011/12 2012/13 2013/14 2014/15 2015/16

Operational funding (R ‘000)

R 850 000 R 950 000 1 050 000 1 150 000 1 250 000

Maintenance funding provisions (R ‘000)

Annual maintenance provision

R 28 000 R 32 250 R 37 650 R 42 730 R 46 480

Maintenance backlog provision

R 16 000 R16 000 R16 000

Capital funding provisions (R’000)

R 154 000* R 200 000* R 187 000* R150 000 R 150 0000

Total R1048 000 R 1 198 250 R 1 290 650 R 1 342 730 R 1 446 480

TAU’s Funding Recommendations

Under funding of the ARC has resulted in:

• The inability to give full effect to components of its mandate• The inability to grow and maintain critical skills and the

staffing of the organisation, particularly in terms of technical and specialist research resources e.g.:– Numerous examples of scientists being lost to both the

private sector and university research entities• Influenced the allocation of resources towards income

generating research and related opportunities, in preference to non-income generating components of its mandate

Risks of under-funding

• Under expenditure on maintenance of both fixed assets and equipment:– Resulting in a major backlog and in some cases

condition has deteriorated to the extent rehabilitation and/or replacement has been necessitated

– Inability to renew and/or invest in appropriate equipment to keep abreast with industry and research technologies’,

– Eroding the ARC research capability and ability to retain specialist scientific capacity

• Loss of “work” and resources to specialist university research units

Risks of under-funding

agricultural research council annual report for 2009/10 presentation to portfolio committee 15...

Documents

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arc team council

strategic plan

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