Competition commission to conduct inquiry into fresh produce market in SA

The Competition Commission announced on 14 February that it will conduct a market inquiry into the Fresh Produce Market of South Africa.

The commission explained that the purpose of the inquiry was to examine whether there were any features in the fresh produce value chain which hampered competition in the South African fresh produce market.

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The commission reported that it would conduct the inquiry over the next few weeks, and upon completing research, it would then publish a report of the inquiry in the Government Gazette and will also submit the report to the Minister of Trade, Industry and Competition.

An essential study

The commission stated that carrying out the inquiry was essential in order to understand the state of competition within the industry, the market features affecting price outcomes, and the challenges currently faced by farmers (especially small-scale and emerging farmers).

“More broadly, the importance of the sector to both the economy and employment, and the nutrition and welfare of its citizens gives further weight to the need for such an inquiry,” it said.

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The commission added that it was prioritising the food and agro-processing sector in its Prioritisation Framework as the sector is a source of staple food and has the potential to create significant employment opportunities, serving as a driver of inclusive growth in the South African economy.

“In the context of the Covid-19 pandemic, it was again demonstrated that nutrition and affordable healthy foods are important for household health as well as maintaining a country’s food security,” the commission said.

Types of produce

The types of fresh produce that the commission would be looking at for the purposes of the study will include the main fruits produced and consumed in South Africa which are apples, bananas, oranges (and other citrus), stone fruit, pears, avocados, grapes and nuts. The main vegetables include potatoes, onions, tomatoes, sweetcorn, carrots and cabbage.

These types of studies and investigations into the fresh produce industry has brought to the fore several notable revelations such as the fact that there was a 65% drop in the number of potato farmers between 1993 and 2008 and a gradual decline since then to 532 farmers in 2017, a trend that is consistent with the total decline in the number of farmers in the country. 

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The commission’s research into essential food prices also highlighted that the sharp decline in the number of commercial farms may indicate the difficulties smaller farmers face in reaching the necessary economies of scale to decrease costs and maintain profitability.

*Compiled by Devina Haripersad