In order to understand how much small players are being sidelined in the fresh produce market, the Competition Commission has launched a public inquiry. The inquiry’s aim is to understand the state of competition in the industry, the market features affecting price outcomes, and the challenges facing farmers, especially smaller and emerging farmers.
The commission said that the inquiry would focus on issues impacting the entire value chain. “Market dynamics and impact of key inputs for growers as well as the participation of small and previously disadvantaged groups are two of our themes for this inquiry,” commission spokesperson Sipho Ngwema told Vutivi News. “These will help us immensely in our effort to stimulate this sector and improve the plight of small growers.”
He said that once the inquiry was completed, the commission would be able to use legislation to ensure that anything that “seeks, distorts, prevents or lessens competition will be resolved,”. “Where we will have to consult other stakeholders or change policy, we will endeavour to do so.” The inquiry, which was launched this week, was a general investigation into the state, nature, and form of competition in the market, rather than a narrow investigation of the specific conduct by any particular entity, the commission said.
“The scope of the Fresh Produce Market Inquiry will cover aspects from the sale of fresh produce by the farmer to the customer (the retailer, processor, or export market,” it said. “The inquiry will consider the barriers to entry, specifically facing small and HDP (historically-disadvantaged persons) growers and issues around access to fresh produce markets or retailers through contract farming.”
It will also focus on the efficiency of the value chain. “This theme is focused on determining how the value chain and differing levels of concentration at various levels and route to market impact prices and efficiency with a focus on the fresh produce market,” the commission said. And on market dynamics and the impact of key inputs for growers, such as seeds, fertilisers, agrochemicals and farm equipment, will also be covered.
“Many of these inputs are imported or priced based on international bases and can lead to significant cost effects at the grower,” the commission noted. It said the inquiry was significant due to the importance of the sector in the economy, creating employment, and ensuring that the nation was fed. A report, the commission released last year on essential food prices revealed that there were high and growing levels of concentration across parts of the agricultural value chain.
“A key aspect where its agro-food chains struggle is the high levels of concentration at the input as well as the processor and intermediary levels of the value chain, which create a squeeze for smaller farmers and threaten their survival in the market as they face both high input and intermediary costs, in addition to low product prices from processors with buyer power,” last year’s report read. Ngwema said the commission hoped to collect valuable data through the inquiry, and once it was completed, it would publish its findings and recommendations.