Photo: Glenneis Kriel
Panellists at the Fresh Solutions event of the International Fresh Produce Marketing Association (IFPA), recently held near Somerset West in the Western Cape, shared their thoughts on the findings and recommendations of the FPMI report.
No recognition
Theo Boshoff, CEO of Agbiz, said that some positives came out of the report, including the recognition of barriers to entry in the primary sector, such as access to finance, property and water rights, inputs and in the impact of international prices on inputs.
However, he added that the report gave no recognition of the efforts of established companies to help transform the sector.
“The three biggest retailers spent R2,4 billion in supplier development last year, whilst the Department of Agriculture’s support budget was R1,2 billion,” he said.
He added that some of the findings and recommendations went beyond the scope of the Competition Commission, were not legally binding, were impractical and did not consider the cost of implementation.
As such, relevant players and government departments had to assess the recommendations and decide on a response.
Pushing the limits
Francois Knowles, register of the Agricultural Produce Agents Council (APAC), said that the report highlighted challenges that the industry was already aware of, and as such should be seen as a baseline document against which to work and measure future progress.
“We regard the report as a positive outcome. An industry can never become complacent, but should continuously push the limits to be better, as we have been doing even before the report was released.”
However, he added that what was already working in the industry should not be discarded in return for recommendations that have been untested.
No anti-competitive behaviour
Mirella Gastaldi, in-house legal counsel at the Food Lover’s Market, said the report reflected positively on retailers.
The commission found no evidence of anti-competitive behaviour or behaviour that perpetuated barriers to the retail space, despite South Africa’s industry being dominated by four major retailers. The playing field for supplier-retailer relationships was also found to be relatively level, with no evidence of excessive power over suppliers.
Gastaldi, however, was disappointed by some of the statements made, which she felt was not properly investigated. For one, the commission held the view that retailer distribution models were inefficient, resulting in higher costs being passed on to consumers.
“The commission did not take consumer demand into account. We live in a fast-paced world where consumers want constant convenience and supply. Retailers, therefore, have designed their distribution models to meet these demands. Retailers who fail to do this will become irrelevant.”
Barriers to entry
Jaco Oosthuizen, CEO of RSA Group, touched on the report’s recommendation to lower market standards to improve market entry for emerging producers.
“Lowering barriers to fresh produce markets would be counter-productive, as barriers are already low to non-existent. Anybody can bring their fruit and vegetables to the fresh produce market, where they will be registered as a producer and have access to a world-class trading system and multiple buyers.”
He said that it was more difficult for emerging farmers to access retail markets and overseas markets, but this was because of the higher food and quality standards imposed by these markets.
According to him, the main causes of barriers sat further back in the value chain, and included access to finance, inputs, the quality of road infrastructure and so forth.
