Fresh produce: Competition Commission says action will ‘address distortions’

The Competition Commission had reason to believe that the Johannesburg Fresh Produce Market was beset with inordinate and inequitable accumulation and initiated an inquiry to look into these matters last year.

It also believed there were behaviours and practices emanating from this that were detrimental to competition.

The commission had noted that the participation of black farmers and black market agents in what is now known as the Joburg Market – whose value is estimated to exceed R53 billion – was “negligible”.

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The scope of the inquiry into the market was dedicated “to five fruits – apples, citrus (particularly oranges and soft citrus), bananas, pears and table grapes; and six vegetables – potatoes, onions, carrots, cabbage, tomatoes and spinach”.

The commission’s provisional report, released last month, “identified 29 practical and reasonable provisional remedial actions and recommendations that could address distortions in the fresh produce market”.

With the release of its preliminary findings, the commission has opened up the process for “further and wider engagements with stakeholders”.

It is against this background that the Black Agricultural Commodities Federation (BACF), among which are participant communities and producers of many of the fruit and vegetables on which the inquiry was focused, makes this submission.

Black communities are no longer self-sufficient and food-secure. Not only are they trapped in food dependency, those among them who have an affinity with the soil and depend on it for their livelihood, are structurally elbowed out of the food market by brutal and inhuman monopolies and oligopolies.

So the most critical question to ponder, given “the 29 practical and reasonable provisional remedial actions and recommendations” of the commission, is if they are enough to “address distortions in the fresh produce market”.

The commission is aware of the context of the woes of black producers. It paints the picture of a regulatory framework for the marketing of agricultural products before 1994 that “was highly interventionist”.

It notes that the Agricultural Marketing Act 26 of 1937 introduced organised marketing of agricultural produce through establishing control boards that were given powers such as the monopoly buying of farm produce, the setting of prices, single-channel exporting and quantitative controls over imports by the state.

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The results of this had morally defendable effects, to the degree that “this effectively stabilised the agricultural sector by reducing the gap between producer and consumer prices”.

From the fresh produce market study conducted by the University of Pretoria, whose results were published in 2008, Prof André Louw and his co-authors observed that: “The role of the fresh produce market was [and still is] to provide facilities to compensate for and cover the growing gap in the market that was emerging.

“The provision of these fresh produce markets was to allow for equal trade opportunities for large-scale, commercialised producers and smallholder farmers producing small quantities of produce.

“The implementation of these markets started as a government Act. They are legally bound to allow anyone to engage in trade without discrimination based on size, colour or origin.”

It is against this background, that the BACF’s responses to the commission’s findings and recommendations ought to be understood.

Black townships, as observed by KasiNomics, with no less than R750 billion circulating in them annually, are a significant market that should no longer be ignored by the state.

Farmers have to speak with a collective voice to attract the attention of government and society and be recognised as a significant role player in food security.

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Government recognises the many challenges faced by smallholders and black fresh produce market agents across South Africa, their continued and deepening participation in the government policymaking process will make a difference in resolving many of their production and market constraints that have been widely canvassed in the commission’s findings.

The sustainable solution to the de-democratisation of society that is so well pronounced in SA’s fresh produce market lies in the state gathering the will to play the interventionist role in the market. That is its moral responsibility.

It must amass the requisite courage to put in place the pillars of a just society.

Consensus has long been reached and the reminder was provided after the 2008 market failures, that it is important for government to keep a watchful, vigilant eye, and regulate the market. Left on its own, it has the propensity to hurt society.

• Dr Swartz is the CEO of the Black Agricultural Commodities Federation and a former deputy director-general in the department of rural development and land reform