The terms of reference for a broad market investigation into the South African fresh produce market, including pricing, have been gazetted by the Department of Trade and Industry and Competition.
The Competition Commission will begin an investigation into market conditions all throughout the country’s fresh produce supply chain, looking for signs of anticompetitive behaviour or price fixing.
The procedure will begin 20 days after the gazette is issued, or at the beginning of March 2023.
According to the commission, the Fresh Produce Market Inquiry (FPMI) will look at whether there are any detrimental consequences in the fresh produce value chain caused by any feature or combination of features that impedes, limits, or distorts competition.
Concerns about the fresh produce market were raised during the Covid-19 epidemic, according to the research, with different complaints and conclusions of uncompetitive and unjust pricing in the industry.
A study produced by the commission in 2021 also discovered concerning patterns regarding farmer concentration and involvement in the South African economy, raising warning flags.
“According to studies, there appears to be broad concern over price levels and volatility of pricing for fresh produce in South Africa. The studies show that high prices of fresh produce have a disproportionate effect on the poor and low-income earners who have to spend a greater portion of their income to purchase essential products,” the commission said.
“A fuller understanding of the main drivers of the apparent high prices of fresh produce in South Africa is a critical area that this inquiry may address.”
According to the commission’s data, 713 of the 1,254 excessive pricing inquiries conducted during Covid-19 were connected to basic food and fresh products.
“This shows the importance of fresh produce, but in the same breath, may show the potential for abusive conduct relating to essential food items where market circumstances change suddenly,” it said.
According to the commission, the FPMI is critical for understanding the condition of competition in the industry, particularly as it relates to pricing results.
The role of merchants in the process will also be considered, albeit to keep the investigation short, only particular fresh produce items will be studied.
Fresh produce comprises goods such as fruit and vegetables, whether processed or not, for the purposes of the FPMI.
Apples, bananas, oranges and other citrus fruits, stone fruit, pears, avocados, grapes, and nuts are the most common fruits grown and consumed in South Africa. Potatoes, onions, tomatoes, sweet corn, carrots, and cabbage are the principal vegetables.
While the commission’s terms of reference embrace more than simply the shelf price of products, the study will include a look at retailer margins, markups, and pricing decisions.
Unless the minister in charge grants an extension, the final report is scheduled to be issued within 18 months of the inquiry’s beginning.