South Africa’s fresh produce market faces key reforms following inquiry
SOUTH AFRICA – The South African Competition Commission has released its final report on the Fresh Produce Market Inquiry, identifying key issues that hinder competition in the fresh produce market.
The inquiry, which began in March 2023, examines the market structure and examines how inefficiencies, barriers to entry, and historical inequalities impact growth and participation, particularly for small and emerging farmers.
According to the inquiry, South Africa’s fresh produce market is valued at about R53 billion annually, excluding informal sales and exports.
However, the participation of historically disadvantaged farmers in this market remains minimal, revealing deep-rooted challenges tied to the country’s economic history.
“While the market holds vast potential for growth, it has long been limited by imbalances that restrict access for many farmers,” said Hardin Ratshisusu, Deputy Commissioner and chair of the inquiry.
“This underrepresentation highlights the need for stronger inclusion efforts, particularly for farmers who have historically faced barriers.”
The inquiry focused on a select range of fresh produce, including apples, citrus, bananas, pears, and grapes, alongside staple vegetables such as potatoes, tomatoes, and carrots.
It found that the inefficiency of municipal fresh produce markets, high input costs, and the conduct of market agents remain major obstacles for fair competition.
Furthermore, regulatory challenges and systemic barriers prevent smaller, disadvantaged farmers from gaining a foothold in the formal retail sector.
Ratshisusu emphasized the importance of diversifying retail models to increase competition, particularly by supporting small, historically disadvantaged retailers.
“We need to encourage new, cost-effective retail options that enable greater access to National Fresh Produce Markets (NFPMs), which will lead to fairer pricing and stronger competition.”
One significant issue highlighted by the inquiry is the pricing strategies of large supermarket chains. The report found that supermarkets frequently impose high mark-ups on fresh produce, making it difficult for farmers to benefit from fair prices.
Despite the high retail prices, supermarkets are left with slim margins after covering their operational costs, pointing to inefficiencies in the supply chain.
“Supermarkets are not efficiently transmitting prices obtained from farmers to consumers. This suggests the formal retailing of fresh produce could function more effectively,” Ratshisusu noted.
Moving forward, the Competition Commission has proposed a set of 31 reforms aimed at promoting a more competitive and inclusive fresh produce market.
These recommendations call for policy reforms, market restructuring, and targeted support for small-scale farmers to create a fairer value chain.
Ratshisusu concluded, “This report is not just about the facts. It is about finding practical solutions to the challenges that hold back many farmers, particularly those from historically disadvantaged backgrounds.”
In related news, the Competition Commission has also recommended that African Rainbow Capital (ARC) divest from its interests in South Africa’s fresh produce market.
ARC, which holds significant stakes in RSA Group and Subtropico, controls up to 90% of key fresh produce markets in the country.
This move follows concerns over market concentration and fairness, which have led the commission to advise the Competition Tribunal to act within six months if ARC does not voluntarily comply.
The findings and recommendations are now available to the public on the Competition Commission’s website, providing a roadmap for reform aimed at achieving greater fairness and equity in South Africa’s fresh produce sector.
South Africa’s fresh produce market faces key reforms following inquiry
SOUTH AFRICA – The South African Competition Commission has released its final report on the Fresh Produce Market Inquiry, identifying key issues that hinder competition in the fresh produce market.
The inquiry, which began in March 2023, examines the market structure and examines how inefficiencies, barriers to entry, and historical inequalities impact growth and participation, particularly for small and emerging farmers.
According to the inquiry, South Africa’s fresh produce market is valued at about R53 billion annually, excluding informal sales and exports.
However, the participation of historically disadvantaged farmers in this market remains minimal, revealing deep-rooted challenges tied to the country’s economic history.
“While the market holds vast potential for growth, it has long been limited by imbalances that restrict access for many farmers,” said Hardin Ratshisusu, Deputy Commissioner and chair of the inquiry.
“This underrepresentation highlights the need for stronger inclusion efforts, particularly for farmers who have historically faced barriers.”
The inquiry focused on a select range of fresh produce, including apples, citrus, bananas, pears, and grapes, alongside staple vegetables such as potatoes, tomatoes, and carrots.
It found that the inefficiency of municipal fresh produce markets, high input costs, and the conduct of market agents remain major obstacles for fair competition.
Furthermore, regulatory challenges and systemic barriers prevent smaller, disadvantaged farmers from gaining a foothold in the formal retail sector.
Ratshisusu emphasized the importance of diversifying retail models to increase competition, particularly by supporting small, historically disadvantaged retailers.
“We need to encourage new, cost-effective retail options that enable greater access to National Fresh Produce Markets (NFPMs), which will lead to fairer pricing and stronger competition.”
One significant issue highlighted by the inquiry is the pricing strategies of large supermarket chains. The report found that supermarkets frequently impose high mark-ups on fresh produce, making it difficult for farmers to benefit from fair prices.
Despite the high retail prices, supermarkets are left with slim margins after covering their operational costs, pointing to inefficiencies in the supply chain.
“Supermarkets are not efficiently transmitting prices obtained from farmers to consumers. This suggests the formal retailing of fresh produce could function more effectively,” Ratshisusu noted.
Moving forward, the Competition Commission has proposed a set of 31 reforms aimed at promoting a more competitive and inclusive fresh produce market.
These recommendations call for policy reforms, market restructuring, and targeted support for small-scale farmers to create a fairer value chain.
Ratshisusu concluded, “This report is not just about the facts. It is about finding practical solutions to the challenges that hold back many farmers, particularly those from historically disadvantaged backgrounds.”
In related news, the Competition Commission has also recommended that African Rainbow Capital (ARC) divest from its interests in South Africa’s fresh produce market.
ARC, which holds significant stakes in RSA Group and Subtropico, controls up to 90% of key fresh produce markets in the country.
This move follows concerns over market concentration and fairness, which have led the commission to advise the Competition Tribunal to act within six months if ARC does not voluntarily comply.
The findings and recommendations are now available to the public on the Competition Commission’s website, providing a roadmap for reform aimed at achieving greater fairness and equity in South Africa’s fresh produce sector.