Fairer future for farmers in fresh produce sector

In what is set to drastically transform the country’s fresh produce sector, the Competition Commission yesterday released its far-reaching final report, aimed at bringing on board small and emerging farmers.

Hailing it as “an important milestone towards building a more inclusive, competitive economy”, Trade, Industry and Competition Minister Parks Tau said it addressed historical inequalities.

The sector is valued at over R53 billion annually in the domestic market alone.

Inquiry chair Hardin Ratshisusu cited “barriers to competition across the chain and market features that distort or restrict competition”.

Concerns pertained to:

• Inefficient municipal fresh produce markets;
• Value chain inefficiencies;
• Conduct of market agents; and
• High input costs.

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Regulatory obstacles

The inquiry highlighted the limited access of small and emerging farmers to formal retail channels, fresh produce markets and “concerns of slow transformation among fresh produce market agents”.

“Supermarket sales and pricing revealed instances of high mark-ups of total revenue over what suppliers are paid for some of the selected products. Net margins – after the high costs of supermarket chain operations are accounted for – are slim.”

This indicated “high rents may be extracted at the supermarket level”. “The implication is that supermarket chains are not efficiently transmitting prices obtained from farmers to consumers.”

Recommendations include:

• Urging municipalities to ringfence profits from the market they own or operate.
• That the department of agriculture, land reform and rural development introduce measures to increase sales of small-scale and historically disadvantaged farmers through produce markets.
• Municipalities, within three years, harmonise the bylaws on trading hours, rules for fresh produce market agents and use of cold storage and ripening facilities.
• The department review the make-up of the Agricultural Produce Agents Council to minimise conflicts and amend agents’ commission.

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