AGRICULTURAL RESEARCH
COUNCIL
BUSINESS PLAN FOR
2009 TO 2010
Dr Shadrack Moephuli
President & CEO
ARC TEAM
• Ms. Jean Davidson – Chairperson (farmer)
• Prof. Michael Kahn – Chair: R & D Committee
• Mr. Hamish McBain – Chair: F & I Committee
MANAGEMENT
• Dr. Shadrack Moephuli – CEO
• Ms. Anati Canca – Exec. Director: Tech. Trans.
• Prof. Mohammed Jeenah – Exec. Director: Research
• Mr. Gabriel Maluleke – Chief Financial Officer
• Mr. Michael Netsianda – Exec. Director: HR & Corp.
2
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
3
Policy Considerations (March 2009)
• Government’s National Priority
• Agriculture Programme of Action
• Strategic Plan for South African Agriculture (Sector
Plan)
• Land and Agriculture Reform Programme (LARP)
• National Research & Development Strategy
• Ten Year Plan for Science and Technology
• African Agenda (NEPAD)
– Consolidated Science and Technology Plan of Action
– Comprehensive African Agricultural Development Plan
4
COUNCIL STRATEGIC REVIEW
•
•
•
•
•
•
•
•
•
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
5
STRATEGIC CONSIDERATIONS
– Increased Focus on Basic/Fundamental
Research
– Applied & adaptive Research
– Human Capital Development
– Technology Development & Dissemination
– Organizational Performance
6
VISION & MISSION
• VISION:
– “Excellence in Agricultural Research and
Development”
• MISSION:
– “The ARC is a premier science institution that
conducts fundamental and applied research with
partners to generate new knowledge, develop human
capital and foster innovation in agriculture, through
technology development and dissemination, and
competitive commercialization of research results, in
support of developing a prosperous agricultural
sector”
7
Organisational
sustainability and
excellence (Internally and
externally)
Competitiveness of SA
Agriculture
Support for/ to resourcepoor farmers
1. Generate, develop and apply new
knowledge and technology
Transfer the ability to
utilise the new and
improved technologies
Strategic
Objectives
New and improved
agricultural technologies
Strategic
Thrusts
XXXX
XX
XX
XXX
X
XXX
XXX
XXX
XXX
X
3. Enhance nutrition, food security and
safety
XXX
XXX
XXX
XXX
X
4. Enhance the ability of the
agricultural sector to manage and
mitigate agricultural risk
XXX
XXX
XXX
XXX
X
5. Technology Transfer &
commercialisation
XXX
XX
XX
XXXX
X
X
X
X
X
X
2. Sustainable use of natural resources
6. Achieve organizational growth and
sustainability
8
VALUES
• Batho Pele principles
• Ons maak ‘n plan
• TARGET
– Truth
– Accountability
– Respect
– Growth
– Excellence
– Trust
9
ARC Mandate: To conduct research, development and technology transfer in order to:
•promote agriculture & industry;
•contribute to a better quality of life
•facilitate/ensure natural resource conservation
Vision:
Excellence in Agricultural
Research and Development
Generate, develop
and apply new
knowledge and
technology
Mission Statement:
The Agriculture Research Council is a premier science institution that conducts
fundamental and applied research with partners to generate new knowledge,
develop human capital and foster innovation in agriculture through
technology development and dissemination, and competitive
commercialisation of research results in support of developing a prosperous
agricultural sector.
Sustainable use and
management of
natural resources
Enhance Nutrition,
Food Security and
Safety
Achieve
organisational
growth and
sustainability
Technology Transfer & Commercialisation
Enhance the ability
of the agricultural
sector to manage
and mitigate
agricultural risks
10
MINISTER
COUNCIL (BOARD)
CHIEF EXECUTIVE OFFICER
COMPANY SECRETARY
CHIEF FINANCIAL
OFFICER
MR. MALULEKE
EXEC. DIR
HR & SUPPORT
MR. NETSIANDA
CHIEF RISK OFFICER
EXEC. DIR.
R&D
Dr. JEENAH
EXEC. DIR.
TECH. TRANSFER
MS. CANCA
11
ARC AREAS OF PRIORITY
Product Portfolio
Start with
Industries that deliver
growth now and/or are
Total Value Chain
positioned for further
GRAINS
Primary
Packaging
growth: collaborate & deAgricultura
Processing
/
Additional
bottleneck
LIVESTOCK
Primary
Packaging
l activity
Value add
Pri
 Industries that are
Agricultura
Processing
/
Additional
ma
VEGETABLES
l activity
Value add
Packaging
ryPrimary
important for desired
Packagin
Agricultura
Processing
/ Additional
Agr
outcomes but are not yet HORTICULTURE
g/
l activity
Value add
Processi
icul
Additiona
competitive: lead the way
ng
tur

Primary
Agriculture
e
Processi
ng
l Value
Packaging
/
Value add add
the Foundation
CrossCutting
Issues





New & improved technologies
Technology Transfer
Support LARP
Competitiveness of SA Agric.
Organizational Sustainability






Fix the basics: scientific solutions
Research & Development
Human Capital Development
Knowledge Infrastructure
Mitigate agricultural risks
Enablers for Innovation
12
LARP Goals, Strategies & Objectives
Poverty
Eradication
Goals
Govt.
Policies
Job
Creation
Land Reform
Good
Governance
Access
&
Participation
Govt.
Policies
Profitability
&
Competitiveness
Sustainable Agricultural
Resource Use
Production
ARC Interventions
Goals
Economic
Growth
Exports
Agribusiness
Services &
Infrastructure
ARC Interventions
13
Strategic Objective 1
Generate, Develop and Apply new Knowledge and
Technology
RATIONALE:
•
Critical component of a knowledge based economy and
people;
•
Underpins generation of new (novel)
products/processes/ technologies;
•
Contributes towards excellence and scientific
knowledge;
•
Enables ARC to use best science to address
agricultural problems unique to RSA & Africa;
•
Generates intellectual property essential for economic
development
14
EXAMPLES FOR STRATEGIC OBJECTIVE 1
Generate, Develop and Apply New Knowledge and
Technology
KRA
PROGRAMME
SUBPROGRAMME
INDICATOR
Accurate Prediction
of Risks
Research &
application of earth
observation &
remote sensing for
risk prediction
Risk models &
systems to ensure
growth in a
changing
environment
• Publications
•Model (e.g.
DEWS)
•Information
dissemination
Increased
Agricultural
Productivity
Bio – prospecting
Bio – activity based
product innovation
(medicinal plants,
insecticides etc)
•Publications
•Insecticides
•Pest risk analyses
•Information
dissemination
15
Strategic Objective 2
Sustainable use and management of natural resources
RATIONALE:
• Improve efficient use of agricultural
natural resources for food production;
• Ensure sustainable use and management;
• Reduce poverty and increase wealth;
• Competitiveness of industries dependent
on natural resource – based agriculture
16
EXAMPLES FOR STRATEGIC OBJECTIVE 2
Sustainable use and management of natural
resources
KRA
PROGRAMME
SUBPROGRAMME
INDICATOR
Characterization of
natural resources
and ecological
systems
Characterization
and quantification
•Rainwater
harvesting
•Land degradation
•Water use
efficiency
• Publications
•Information
dissemination
•Services rendered
•Products
Maintenance and
use of national
assets
Maintenance of
national assets (e.g
databases,
collections,
genebanks etc)
Utilization of
national collections
•Publications
•Pest risk analyses
•Collections
•Information
dissemination
17
Strategic Objective 3
Enhance Nutrition Food security and Safety
RATIONALE:
•
Increase access and availability of nutritious food;
•
Broadening the food base to enhance food security and
nutrition;
•
Improving the inherent nutritional quality of food at
source;
•
Broadening participation in the value chain and
reducing waste;
•
Integrated approaches to optimize impact and adoption
of new technologies.
18
EXAMPLES FOR STRATEGIC OBJECTIVE 3
Enhance Nutrition Food Security and Safety
KRA
PROGRAMME
SUBPROGRAMME
INDICATOR
Increased access
and availability of
quality and safe
nutritious food
Crop Improvement
•Cultivars, lines
hybrids
•Production
practices/systems
•Bio – fortification
• Publications
•Methods
•Products
•Germplasm
collections
Animal
Improvement
•New breeds
•Disease control
•Alternative feed
•Services rendered
•Information
dissemination
Agriculture value
chain improvement
•Shelf – life
•Nutritive value of
food/feed
•Publications
•Products
•Methods
•Information
dissemination
Improved Preharvest, harvesting
and post harvest
technologies
19
Strategic Objective 4
Manage and mitigate agricultural risk
RATIONALE:
• Reduce vulnerability to climate change;
• Solutions and management of pests,
diseases, weeds and alien invasives;
• Management of natural disasters in
agriculture;
• Manage risks to increased agricultural
productivity and trade
20
EXAMPLES FOR STRATEGIC OBJECTIVE 4
Enhance the ability to Manage & Mitigate Agric. Risks
KRA
PROGRAMME
Reduced vulnerability Natural resources
of agricultural sector information and
to climate change
decision support
systems
Natural resource
monitoring, auditing
and impact
assessment
Solutions to predict & Agriculture value
manage pests,
chain improvement
diseases, weeds &
alien invasives
SUB-PROGRAMME
INDICATOR
•AGIS
• Publications
•Remote sensing
•Methods
models for agriculture •Products
•Information
dissemination
•Rangeland condition •Publications
assessment and
•Services rendered
monitoring
•Information
dissemination
•Shelf – life
•Nutritive value of
food/feed
•Publications
•Products
•Methods
•Information
dissemination
21
Technology Transfer
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
22
EXAMPLES FOR STRATEGIC OBJECTIVE 5
Technology Transfer and Commercialization
KRA
PROGRAMME
SUBPROGRAMME
INDICATOR
23
Human Resources
ARC’s Intellectual Asset
The HR division’s mandate is:







Develop, review, update and implement comprehensive and
dynamic HR policies, procedures and protocols aligned to
the core business of the ARC.
Attraction & retention of critical and scarce skills
Human Capital Development.
Implementation of a robust Performance Management
System
Maintain sound labour relations with organised labour (OL).
Strive to ensure that ARC is legally compliant with relevant
labour laws.
Change Management & Transformation
24
Strategic Objective 6
Achieve Organisational Growth and Sustainability
1.
Human Capital Utilisation

2.
Organizational Development & Design


3.
Fully implemented Organizational structure
All new posts established, profiled, graded and budgeted.
Aligned and improved organisational performance




4.
Effective talent management framework implementation
Implementation of Performance Management System
All employees have quality performance agreements and development plans
Establish performance moderation framework and process
Performance reviews
Attracting, developing and retaining Human Capital

Develop and implement a retention strategy and an incentive scheme

Development and implementation of a succession planning model

Implementation of remuneration policy and recruitment strategy
25
Strategic Objective 6
Achieve Organisational Growth and Sustainability
(cont.)
5.
Human Capital Development



6.
Development and conducting training needs analysis
Develop 100% of personal development plans for staff
Conduct skills audit
Occupational Health & Safety

7.
Conducting Health & Safety audits
Management of transformation & Diversity

8.
Diversity and change management training
Employment Equity program


Develop Institute EE Plan with Targets
Training of EE Committees
26
SCIENTIFIC CAPACITY PER RACE
30/06/2009
African
278
32.21%
Coloured
Indian
White
541
62.69%
31
3.59%
13
1.51%
27
DISTRIBUTION OF SALARY BILL
30/06/2009
17%
36%
47%
Management
Sientific staff
Rest of staff complement
28
% SCIENTIFIC CAPACITY AGAINST TOTAL STAFF
36%
Scientific staff
Rest of Staff
64%
29
Finance overview
•
•
•
•
•
•
•
Analysis of Expenditure
Analysis of Income
Budget Assumptions
Budget Scenarios
Recommended Budget
Medium Term Actions
Risks in the Budget
30
ANALYSIS OF EXTERNAL INCOME
Q4
R 88.74
(32%)
External Income 2008/09
R'm
Q4
R 97.94
(29%)
Q1
R 39.61
(14%)
Q3
R 91.29
(32%)
Q2
R 61.82
(22%)
Q3
R 84.51
(25%)
External Income 2009/10
R'm
Q1
R 82.41
(24%)
Q2
R 73.12
(22%)
31
ANALYSIS OF EXPENDITURE
Expenditures 2009/10
R'm
Expenditures 2008/09
R'm
Operational
expenses
R 333.17
(40%)
Depreciation
R 18.67
(2%)
Operational
expenses
R 328.94
(37%)
Personnel
R 471.65
(58%)
Depreciation
R 28.06
(3%)
Personnel
R 522.41
(60%)
32
Baseline Allocation (excl capex and ringfenced
projects) vs Personnel Costs
700,000
600,000
Baseline
Allocation
Personnel
Costs
400,000
300,000
200,000
100,000
Year
/1
2
20
11
/1
1
20
10
/1
0
20
09
/0
9
08
20
07
/0
8
-
20
R'000
500,000
Budget Assumptions For 2009/10
1. PG increase 2%
2. External Income Neutral 0% (Risk)
3. Personnel Cost Increase 7 % (Risk)
a) Vacancies & salary adjustments
b) Cost of living adjustment (inflation)
4. Roll over capital (FMD facility) R44m
5. Forecasted deficit 08/09 (R23m)
34
ARC 2009/10 Budget Scenario 1
Expenditure
Personnel: (R522m)
Operating: (R328m)
Depr:
(R28m)
Total
(R879m)
ADD
Depreciation: R28m
Cash at Beginning
WC Movement: R3m
Of Year
Total
R31m
R9m
Revenue
PG:
R503m
External:
R338m
Other:
R23m
Total
R864m
(Deficit)
(R15m)
Cash
Ex Ops
R16m
Net
Cash for Year
(R85m)
Cash
end of Year
(R78m)
Capex
FMD: (R44m)
Other: (R57m)
Total (R101m)
35
Action Items 2009/10
Clear long outstanding debtors
Offer salary increases average of 7%
Delay filling of vacancies
Saving in operating cost as a result of delay in vacancies
Potential Saving
(R’000)
10.00
4.00
15.00
4.50
Discontinue the Animal Improvement Scheme
24.00
Potential saving during 2009/10
57.50
ARC 2009/10 Budget Scenario 2
Expenditure
Personnel: (R487m)
Oper:
(R317m)
Depr:
(R28m)
Total
(R832m)
ADD
Depreciation: R28m
Cash at Beginning
WC Movement: R13m
Of Year
Total
R41m
R9m
Revenue
PG:
R503m
External:
R338m
Other:
R23m
Total
R864m
Surplus
R32m
Cash
Ex Ops
R73m
Net
Cash for Year
(R28m)
Cash
end of Year
(R19m)
Capex
FMD: (R44m)
Other: (R57m)
Total (R101m)
37
ARC 2009/10 Budget Scenario 4 Approved
Expenditure
Personnel: (R500m)
Admin:
(R281m)
Depr:
(R21m)
Total
(R802m)
ADD
Depreciation:
R21m
Cash at Beginning
WC Movement:R17m
Of Year
Total
R38m
R9m
Revenue
PG:
R503m
External:
R294m
Other:
R16m
Total
R813m
Surplus
R11m
Cash
Ex Ops
R49m
Net
Cash for Year
R7m
Cash
end of Year
R16m
Capex
FMD: (R22m)
Other: (R20m)
Total (R42m)
38
BUDGET PER STRATEGIC OBJECTIVE
STRATEGIC OBJECTIVE
PERCENT R’000
Generate, develop and apply new knowledge
and technology
14.4 %
124,880
Sustainable use and management of natural
resources
20 %
174,831
Enhance Nutrition, Food Security and Safety
19.2 %
166,506
Enhance the ability of the agricultural sector to
manage and mitigate agricultural risks
20 %
174,832
Technology Transfer and Commercialization
13 %
112,601
Achieve Organizational growth and
sustainability
13 %
114,082
39
Medium Term Management Actions (3- 5 YRS)
1. Rent out unused facilities
2. Establish a unit to focus on sale of ARC
products (e.g. milk, eggs, fruits, etc)
3. Review all non-value adding Projects
4. Negotiate Prepayments & Progress payments on
contracts
5. Closure of non- required facilities
Risks in the 2009/10 budget
Risks
Action item
1 There is a cash shortfall of about
R100m to date
Reduce costs & waste
New business unit product sales
2 The target of R56m or 20% more
external income may not be
reached
Engage stakeholders, look for new
business & prepayments
Review target along economy
Efficient management of resources
3 The funding of R24m for Animal
Improvement Schemes may not be
resolved on time.
Engage Minister, DoA and
Treasury on urgency of funding
Increase fees for participants
4 Additional funding of R190m for
the FMD facility may not be
resolved on time
Engage Minister, DoA, DST &
Treasury on strategic nature of
facility – review costs of project
5 Failure to fill vacancies may
hamper delivery on contracts and
mandate
Fill critical replacements on
priority basis
Contract linked posts to continue
AGRICULTURE RESEARCH COUNCIL
TEN YEAR REVIEW
2006/07
2005/06
2004/05
2003/04
R'm
R'm
R'm
R'm
2008/09
R'm
2007/08
R'm
747.21
448.74
298.47
784.45
467.04
317.41
8.57
-28.68
717.60
451.77
265.83
721.41
416.08
305.33
12.35
8.55
692.07
434.18
257.90
695.61
415.97
279.64
11.69
8.16
654.15
457.19
196.97
657.05
395.97
261.09
11.18
12.91
545.22
320.71
224.51
552.18
315.85
236.32
12.76
6.07
488.39
276.14
212.25
495.98
284.23
211.76
13.96
6.36
507.07
267.55
239.51
473.67
263.63
210.04
9.57
36.89
BALANCE SHEET
Property, plant and equipment
Other Assets
Current assets (excluding cash)
Cash resources (net of bank overdraft)
Total Assets
650.48
2.12
81.23
34.97
768.80
548.83
2.23
94.76
59.10
704.92
523.25
2.23
77.18
96.66
699.31
396.96
1.24
128.74
152.82
679.76
381.00
0.85
73.39
152.41
607.66
375.68
0.85
67.48
102.68
546.68
Capital and Reserves
Other Liabilities
Current Liabilities
Total Equity and Liabilities
244.23
344.32
180.23
768.78
214.18
326.45
164.29
704.92
205.63
309.34
184.34
699.31
197.47
230.30
251.98
679.75
184.56
288.90
134.19
607.66
38.13
-62.26
59.10
34.97
4.77
-42.32
96.66
59.10
6.62
-62.79
152.82
96.66
31.64
-31.23
152.41
152.82
72.01
-22.27
102.68
152.41
INCOME STATEMENT
Total Income
Parliamentary Grant
External Income
Total Expenditure
Total Remuneration Cost
Other Expenditure
Investment Income
Net Surplus\(Deficit)
CASH FLOWS
Net cash flow from operating activities
Net cash flow from investing activities
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
RATIO ANALYSIS
Profitability and asset management
Asset Turnover
Return on net assets (%)
Current Ratio
Operating margin (%)
Performance
Revenue per employee (Rands)
Net surplus\(Deficit) per employee
Remuneration as a % of PG
Remuneration as a percentage of total
expenditure %
External revenue as a % of total income
Number of employees
2002/03
R'm
2001/02
R'm
2000/01
R'm
1999/00
R'm
1998/99
R'm
528.72
267.68
261.04
496.52
289.80
266.56
6.29
-21.35
444.19
276.28
167.92
450.33
284.59
165.74
6.17
33.00
432.43
274.52
157.91
440.69
285.40
155.30
8.31
47.00
416.13
286.41
129.72
474.86
295.30
179.56
13.82
-44.91
385.44
0.18
75.41
80.51
541.54
395.21
0.19
65.86
65.54
526.80
544.45
0.19
66.26
20.16
631.06
545.24
0.13
47.13
25.68
618.18
547.57
0.10
35.85
57.65
641.17
382.00
30.64
134.04
546.68
380.35
55.78
105.41
541.54
350.21
71.00
105.59
526.80
494.79
64.17
72.10
631.06
494.76
52.50
70.92
618.18
494.18
49.93
97.06
641.17
32.45
-10.28
80.51
102.68
27.05
-12.08
65.54
80.51
58.55
-13.17
20.16
65.54
9.88
-15.41
25.68
20.16
-20.26
-11.71
57.65
25.68
-30.96
-29.54
118.15
57.65
1.3
-5.2%
0.5
-3.8%
1.3
1.8%
0.6
1.2%
1.3
1.9%
0.4
1.2%
1.5
4.7%
0.5
2.0%
1.2
1.9%
0.5
1.1%
1.2
2.1%
0.5
1.3%
1.2
10.4%
0.7
7.3%
1.3
-6.0%
0.6
-4.0%
0.8
6.1%
0.9
7.4%
0.8
9.0%
0.7
10.9%
0.8
-9.2%
0.4
-10.8%
0.302
-0.012
104%
0.292
0.003
92%
0.258
0.003
96%
0.242
0.005
87%
0.206
0.002
98%
0.193
0.003
103%
0.191
0.014
99%
0.184
-0.007
108%
0.145
0.011
103%
0.132
0.014
104%
0.122
-0.013
103%
60%
58%
60%
60%
57%
57%
56%
58%
63%
65%
62%
40%
37%
37%
30%
41%
43%
47%
49%
38%
37%
31%
2475
2457
2686
2698
2,643
2,525
2,652
2,872
3,057
3,281
3,404
Ratio definitions
Net Assets
Asset turnover
42
PARLIMENTARY GRANTS FOR PERIODS 2008/09-2011/12
2008/09 % Incr
R'000
DAFF ALLOCATION
Baseline Allocation
-operating
-capital
Baseline- Allocation
Baseline-adjustment
Baseline- Inflation adjust
Ringfenced projects
Vat
DST ALLOCATION
Total Allocation excluding VAT
VAT on DST
TOTAL DST ALLOCATION
Total Grant Including VAT
394
334
60
60
7%
9%
-4%
-8%
2009/10 % Incr 2010/11 % Incr
R'000
R'000
420
363
57
55
17%
6%
86%
6%
2
2011/12
R'000
93%
490
384
106
58
44
5
15%
6%
46%
6%
100%
28%
562
407
155
61
88
6
63
57
515
-30%
6%
2%
44
61
525
6%
16%
16%
47
71
608
5%
14%
14%
49
81
692
38
5
43
11%
20%
12%
42
6
48
7%
0%
6%
45
6
51
4%
17%
6%
47
7
54
558
3%
573
15%
659
13%
746
43
RINGFENCED PROJECTS
2008/09 % Incr 2009/10 % Incr 2010/11 % Incr 2011/12
R'm
R'm
R'm
R'm
Climate Monitoring
1
0%
1
0%
1
0%
1
SADC acitivites (ringfenced)
3
0%
3
0%
3
0%
3
National public goods assets
11
9%
12
0%
12
8%
13
Upgrade of FMD building
21 -100%
Intergis
2
0%
2
0%
2
0%
2
Crop forecasting
5
60%
8
0%
8
13%
9
Diagnostic Services (OVI)
14
7%
15
7%
16
0%
16
57 -28%
41
2%
42
5%
44
44
THANK YOU
COMMENTS/QUESTIONS