Wednesday, February 21, 2024

Competition Commission kicks off fresh produce market inquiry

Estimated reading time: 3 minutes

The Competition Commission’s Fresh Produce Market Inquiry was officially launched on 24 March in Pretoria after initial probes indicated alarmingly high levels of market concentration along the South African fresh produce value chain.

The inquiry will commence on 31 March, and the Commission will need to finalise a report on the inquiry within 18 months after that launch date. The purpose of the investigation is to examine whether there are issues within the value chain that impede, restrict, or distort competition, leading to higher food prices.

Doris Tshepe, commissioner of the Competition Commission, told journalists during the media launch in Pretoria that there is an alarming level of price issues within these chains and fresh produce price increases have surpassed annual inflation levels, which prompted the commission to launch this investigation.

Read more about the IFPA Southern Africa conference.

Areas of focus

According to Doris Tshepe, the investigation will be split into three main focal areas. Firstly, the investigation will look into value chain efficiencies and routes to markets. Here, the role of market agents, as well as direct contracts between retailers and farmers, will be investigated. The way price discovery takes place is one of the central issues that will be looked at.

Secondly, market dynamics, especially with regard to input products, will be examined. The main inputs such as seed, fertilisers, chemicals, and the roles of international players will be of particular interest. Tshepe added that amendments to the Competition Act (Act 98 of 1998), which were made in 2019, would have a significant impact on this part of the investigation.

Read more about the South African table grape industry.

Lastly, the commission will look at barriers hampering new and previously disadvantaged growers from entering into the market. Here, issues such as access to financing, water, and relationships with input suppliers and output markets will be investigated.

Tshepe said the commission was planning to visit farmers in all provinces of the country to gain greater insight into the way fresh produce markets might be hampering competition in the country. She urged members of the public to participate in the investigation because the more people participate, the clearer the commission’s understanding becomes.

Produce of interest 

The inquiry will focus on the entire value chain of five fruit (apple, pears, citrus, bananas, and table grapes) and six vegetables (potatoes, onions, carrots, cabbage, tomatoes, and spinach). “We decided to focus on these products because this encompasses 70% of the country’s fresh produce and we wanted to work with products that really have an impact on households, rather than focusing on produce that only a handful of people buy,” said Ruan Maré, head investigator of the Fresh Produce Market Inquiry.

“This investigation is not something that individual farmers should fear, but they should rather view it as an opportunity,” Maré told AgriOrbit. “This is producers’ opportunity to tell us what their issues are. We have a vague idea what the problems are, but we need to hear from them. They need to let us know, so that the problems can be addressed.” – Susan Marais, AgriOrbit

Readers who would like to contact the Competition Commission regarding the Fresh Produce Market Inquiry can send an e-mail to freshproduceinq@compcom.co.za and address it to Ruan Maré.

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