Fresh produce market inquiry makes 29 recommendations in provisional report

The fresh produce market inquiry says it found the state of the national food produce markets infrastructure was concerning.  

“The mostly dilapidated infrastructure at national food produce markets (NFPMs) across the country poses challenges to producers, agents and buyers, specially where ripening rooms and cold storage facilities are non-operational and cause fresh produce delivered to the market to wilt and rapidly deteriorate,” the inquiry said. 

On Tuesday the Competition Commission released provisional findings on aspects and features that could impede, restrict or distort competition in the fresh produce market. 

This was in respect to NFPMs, the role of market agents in the markets, concentration of market agents, pricing of certain inputs (mainly some fertilisers and some seeds), barriers to entry in the fresh produce value chain, access to formal retail space and pricing of fresh produce with a detailed analysis of potatoes, onions and tomatoes.  

The inquiry found the domestic fresh produce market was estimated at more than R53bn annually, comprising R21bn for fresh produce sold through NFPMs and R32bn through formal retail. 

Though the size of the market was relatively big, the inquiry found the share of black-owned farms, market agents and small-scale farmers was negligible in general.   

The inquiry identified 29 practical and reasonable provisional remedial actions and recommendations that could address distortions in the fresh produce market.  

The inquiry said market agents indicated some NFPMs did not reinvest the 5% commission into the market, and this was reflected in the poor state of infrastructure, security and maintenance of the market facility. 

The inquiry recommended municipalities should change the operating and governance models for NFPMs. This could take the form of corporatisation of NFPM operations through companies owned by municipalities, with particular emphasis on the need for a separate budget, procurement lines and accountability through a stable board of directors. 

This could also be achieved through the creation of public-private partnerships with municipalities retaining ownership of the NFPMs infrastructure. 

The inquiry also recommended municipalities should ring-fence profits earned from the market to fund capital expenditure and, where feasible, increase budget allocations for NFPMs from municipal budgets, over and above the revenue generated by the fresh produce markets. 

It noted that small-scale farmers, historically disadvantaged  persons (HDP) farmers and small, medium and micro enterprise (SME) farmers found it difficult to sell their produce in the NFPMs, despite the markets being the least costly route to markets.  

It has been estimated less than 1% of gross value of sales in the NFPMs come from smallholder and HDP/SME farmers.  

The inquiry said the HDP/SME market agents also found it difficult to enter and grow in the NFPMs.  

“Where entry occurred, this was limited and the survival rate was low.”  

The inquiry said HDP market agents found it difficult to compete with established agencies as they did not have access to the most tradeable produce such as potatoes, tomatoes, onions and bananas. 

It recommended all NFPMs should set targets to increase annual sales of small-scale and HDP farmers through the markets.  

“These targets should be a minimum of a 10% increase annually in sales from SME and HDP farmers combined.” 

The inquiry encouraged stakeholders to constructively engage the provisional report and the associated remedial actions and recommendations.  

Public comments should be submitted by email to freshproduceinq@compcom.co.za by July 16.   

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