A market assistant helps a buyer to offload his fresh produce into his vehicle at the Cape Town Market, one of the oldest and largest fresh produce markets in South Africa. Picture: Henk Kruger Independent Newspapers
The fresh produce sector has called for visible commitment to the implementation of the various recommendations by the Competition Commission’s inquiry into the fresh produce market value chain, but noted shortfalls in its haste towards publishing the explosive report that indicted players in the space.
In its provisional report launched on Tuesday, the commission cited major retailers SPAR, Woolworths, Food Lover’s Market, Shoprite; seed company Starke Ayres and JSE-listed entities African Rainbow Capital and agrochemicals giant Bayer South Africa.
The commission found these companies as all being separately and collectively implicit or responsible for price distortions, cartel behaviour, enforcing barriers to new entrants, and manipulation of the product gene pool among other indictments in South Africa’s more than R53 billion fresh produce industry.
Some industry insiders yesterday observed that a lot of what the report contained had long been talking points, though it had perhaps gained credence now that an entity of the Commission’s position was spelling it out.
“The set-asides are nothing new, but in any transformation, people will not give away something of value unless there is a regulatory or legislative framework pushing it,” said Mike Gcabo, CEO of the Black Agricultural Commodities Federation (BACF).
“So there is no choice either than to legislate or regulate for the set-asides.”
Gcabo was responding to Business Report’s enquiry on the recommendations of the commission that the financial and property sectors needed to apportion retail space for entrepreneurs and small-scale farmers.
He said there was no apparent change to the status quo, and more effort was required from the government so the inquiry would not fall through the cracks.
The commission’s Deputy Commissioner, Hardin Ratshisusu, recommended that the Department of Trade, Industry, and Competition (the dtic) set up a fund to help entrants into the market to challenge the established retailers.
Ratshisusu also called on property owners to reserve space in shopping malls and complexes for fresh produce entrants to balance out the monopoly.
Absa Group head of AgriBusiness, Abrie Rautenbach, yesterday said the bank had recognised the importance of entry-level aspirants into the sector to secure a foothold through access to land and funding, hence the collaboration it had with the Land Bank.
Rautenbach said Absa had recently committed to a blended finance agreement with the government before the commission’s recommendations.
Applicants qualifying through a set social criteria are awarded a grant by the Land Bank, which is then blended with Absa’s own products.
“That makes for equity for applicants who have bankable business ideas but did not have the required contribution,” Rautenbach said.
The SA Property Owners Association (Sapoa) – a representative body of the commercial and industrial real estate sector – is among entities that have been challenged to consider allocating space in commercial centres for new entrants in the fresh food market in a bid to leverage competition on the established retailers.
Sapoa CEO Neil Gopal yesterday said they were studying the report and would comment in due course.
Gopal said the context of engagement with the commission had resulted in the organisation not making an input into the report.
“Our first and only engagement with the Competition Commission only took place on Thursday, 30th May 2024, which was 24 hours prior to the release of the report,” Gopal said.
“We informed the Competition Commission that Sapoa has not had sufficient time or been provided adequate context about the inquiry, or background to the evidence that led to these findings, to comment meaningfully.
“Sapoa and its members have not participated in the Fresh Produce Market Inquiry (FPMI) thus far, and it is not clear what submissions have been made in respect of property matters, or what evidence the FPMI has relied on in making findings which potentially impact on Sapoa’s members, and property owners more generally.”
National Agricultural Marketing Council senior economist Thabile Nkunjana said it was critical to recognise that the commission was a regulatory agency whose job may not be popular, but the mandate required it to do so, and the state of national fresh produce markets was of concern.
“The inquiry report gives a fairly complete examination of the current scenario regarding national fresh produce markets (NFPMs), including both obstacles and prospects. The issue of ambiguity in regulating NFPMs is crucial since it addresses transformation difficulties,” Nkunjana said.
“Transformation is a major issue that affects not only South African farmers, especially small farmers, but also consumers who want to buy fresh, healthy food at a reasonable price.”
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