The Competition Commission has launched a probe into South Africa’s lucrative fresh produce industry in an attempt to rein in surging prices and the dominance of big farming companies that are mostly white-owned.
The competition watchdog on Friday published the terms of reference for its impending market inquiry into the sector that is said to register sales of about R90-billion annually.
“The commission is of the view that the fresh produce market inquiry is essential in order to understand the state of competition within the industry, the market features affecting price outcomes, and the challenges currently faced by farmers [especially small-scale and emerging farmers],” reads the terms of reference in part.
“More broadly, the importance of the sector to both the economy and employment, and the nutrition and welfare of its citizens, gives further weight to the need for such an inquiry.”
The main fruits produced and consumed in the country include apples, bananas, oranges, pears, avocados and grapes, and the main vegetables include potatoes, onions, tomatoes, carrots and cabbage.
The announcement of an investigation into the sector that is expected to take about 18 months follows findings of the commission’s study on the levels of concentration in the South African economy, released in November last year.
The study found that while large farms make up just 6.5% of all farms, they accounted for 67% of total income in 2017/18.
The competition tzar also said its inquiry will look into efficiency of the value chain, market dynamics and impact of key inputs for growers, barriers to entry in relation to the regulatory environment and small and high density planting growers, and participation.
The investigation will assess the country’s 21 national fresh produce markets. The four largest markets can be found in Johannesburg, Tshwane, Cape Town and Durban.
They play a critical role in price-setting, distribution and marketing of fresh produce in South Africa.
The inquiry will zoom in on the costs of all inputs for farmers and their impact on overall pricing, producer costs and pricing and the existence of price discrimination in the sale of inputs.
The commission said it will also investigate access to land and market access by small farmers.
Black fresh produce farmers have over the years complained about barriers to entry in the sector.
“Where applicable, the market inquiry will draw on specific case studies relating to small and/or high density planting growers, specifically relating to growing of the most common fresh produce such as potatoes, onions, tomatoes and cabbage,” the commission said.
Members of the public have been given until the end of April to comment on the terms of reference for the inquiry.
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