The official enquiry by the competition Commission (CC) of South Africa (SA), has today (13 Dec), released its findings into the fresh produce markets.
The enquiry began in March 2023, and has taken 22 months to complete. The the main objective of investigating any competition concerns or market distortions that may exist in the market for fresh produce in SA.
Enquiry’s Scope
The scope of the inquiry focused on five fruit crops, namely; apples, citrus (particularly oranges and soft citrus), bananas, pears and table grapes; and six vegetable crops being; potatoes, onions, carrots, cabbage, tomatoes and spinach.
The Inquiry conducted its assessment under three themes that cover the entire fresh produce value chain.
The Themes Assessed by the Enquiry are as Follows:
- Efficiency of the value chain, with an emphasis on the dynamics around fresh produce market facilities;
- Market dynamics of key inputs and its impact on producers; and
- Barriers to entry, expansion, and participation.
Opportunity for Growth
At a media briefing on Monday where the report was officially released. Deputy Commissioner and chair of the inquiry, Hardin Ratshisusu, noted that the fresh produce market – valued at some R53 billion annually, (excluding informal sales channels and exports) – presents “significant opportunity for growth and inclusion”
Ratshisusu outlined the following six concerns related to competition in the fresh produce sector:
- Inefficient municipal fresh produce markets
- Inefficiencies in the value chain
- The conduct of fresh produce market agent
- High input costs (particularly for certain fertilisers and seeds)
- Regulatory obstacles
- Systemic barriers to entry for small-scale Farmers
Retailer Pricing Structure to be Regulated
Ratshisusu explained that to resolve the challenges in the fresh produce market and related distortions to competition in the sector, the inquiry had identified a set of 31 “practical and reasonable remedies”
Some of the remedies includes the requirement for retailers to now standardise pricing of fresh produce. This will require that retailers all display a price per 100g for its fresh produce.
The inquiry had found that with regard to retailer pricing of certain fresh produce, supermarket sales and pricing revealed examples of high mark-ups of total revenue over what suppliers are paid for some of the selected products in the periods analysed.
The implementation, of the new pricing regulation, will need to be implemented within 12 months. This has been mandated after their investigation revealed that the majority of prices between retailers are not comparable for consumers.
Ratshisusu commented that the report reflects the need to address entrenched challenges and create a market that works for all, from the smallest farmer to the largest retailer, and ultimately for the consumer.