South Africa has a globally competitive agribusiness sector and a highly developed value chain with well-established economic institutions and techniques. The country is also lauded the world over as a pioneer with regard coordination of commercial exchange of horticultural produce. The accolade is due in large part to having solid institutions with tested systems such as National Fresh Produce Markets, also known as FOOD MARKETS, which are the pivot of the country’s distribution network of perishable products, and are operated under fixed policy and regulated by legislation to ensure food security and sustainability of the sector.
Fittingly, FOOD MARKETS are meant to enable for equitable access to markets for farmer produce irrespective of the scale of production, leading to price stability, product affordability, wider variety and consistency, and thus a vibrant agriculture sector.
Amongst FOOD MARKETS’ other mandated activity and function include the provision of equitable space on the trading floor for new entrants especially black market agents.
A quick scan analysis of the country’s 19 FOOD MARKETS, however, reveals that the above is not the case. If anything, FOOD MARKETS have been skidding transformation and failing to tackle the cozy and dominion like relations between large commercial farmers and white market agents for very long, leading to the marginalization of small black producers and black-owned market agencies, thus derailing the much-needed transformation of the horticulture sector.
By tackling the cozy dominion relations between large commercial farmers and white market agents, we don’t mean that they “must fall”, but that the playing field must be leveled as it is clear that business, as usual, is not working and urgent action is needed, lest the status quo remains and black “agripreneurs” continue to grovel at the bottom of survival buckets.
As a channel, FOOD MARKETS are estimated to account for 70% of fruit and vegetable channeling in the local South African market and have earned stakeholders huge amount of revenue, approximately R12,2 billion to farmers, R1,1 billion to market agents in the form of 7,5% commission and about R700 million to local municipal authorities in 5% commission revenue in 2016 financial year alone.
Despite the above successes, meaningful participation by blacks especially in relation to market agents services and production and supply of top-4 fast moving commodities, namely: potatoes, onions, tomatoes, and bananas are glaringly missing except as booking clerks or farm laborers.
In fact, there is not a single black market agent that sells potatoes and onions in all 19 FOOD MARKETS. Obscenely, the two commodities account for about 35% of total FOOD MARKETS turnover of R14 billion per annum. Thus, black market agents and by extension, black farmers, are precluded from benefiting from the two lucrative commodities that contribute R4,9 billion to FOOD MARKETS coffers.
That one can count in one hand the number of black producers for these commodities, some decades into our democracy, perhaps point to the feebleness of the effort made to date to transform the agriculture production sector, with black, women, youth or people living with disability constituting fewer than 1% of market agents and salespeople trading on FOOD MARKETS floor.
In light of the above, it cannot be argued that the dominance by the duo (large commercial farmers and white market agents) should be overlooked for the sake of food security as many would argue, as the damage done and cost to the sector is far-reaching and is to the detriment of interest of the majority citizens.
Clearly, historically disadvantaged South Africans must have meaningful control of the FOODMARKET and broader agribusiness sector. This is even more so the case particularly, but not only because the success of land agrarian reform depends on a thriving FOODMARKET that reflects the country’s demographics in terms of participation and control.
It must be acknowledged with concern that the drawing of the AgriBEE Charter did not achieve substantial increased black participation at all levels of the population across the value chain as envisaged. Whilst necessary to acknowledge the muted achievement of land agrarian reform, transformation upstream remains substantially elusive and clearly unacceptable.
Given this frightening reality, it is about time that binding and enforceable BEE transformation targets are set with stringent penalties for defaulters to ensure that transformation is effected and that the FOODMARKET trade floor reflects the country’s demographics.
The above measure is the only way to de-racialize the horticultural industry and associated value chain including loosening the vice grip like control and total dominance of the sector by white market agents supported by large-scale commercial farmers.
With 24 years having already lapsed since the dawn of democracy in South Africa, anything less than a legislated law that promotes inclusion, growth, and competitiveness of the previously disadvantaged will not succeed in undoing the dominance of the sector by few.
As is, nothing is said by way of policy strategy document from the South African Union of Food Markets (SAUFM) or National Agriculture Marketing Council (NAMC), the two legally mandated bodies to control and regulate trade activities in FOOD MARKETS in the interests of the public, about addressing the above concern, and how, if at all, they are going to be addressed.
Author: Thomas Mawasha
About the Author:
Thomas Mawasha is the Managing Director of Brand New Harvest (BNH), an accomplished agro-produce commodity trading company. BNH, through its consulting division, specializes in developing concepts to address gaps in the agriculture value chain with special emphasis on transforming the industry to become more inclusive.
The views expressed in this article do not necessarily reflect those of AgriFoodNetwork.