CEO of retail group Pick n Pay Sean Summers says the decision by minister of agriculture John Steenhuisen to revoke the designation of Leaf Services as an assignee responsible for inspecting grain and grain products in SA has saved the industry millions of rand in “unnecessary” costs.
Steenhuisen harkened to the industry’s multiyear concerns over the appointment of Leaf Services, basing his decision on what he said was the company’s failure to consult transparently on inspection fees and delays in fulfilling its regulatory duties.
Summers, who is leading the turnaround of the retail major, welcomed the minister’s decision, arguing that the appointment would have forced industry to pay for a service that was free of charge in the past.
“When applying this to Pick n Pay alone, the inspection methodology proposed by Leaf Services, which included three annual inspections at each of our 920 stores across the country, raised significant concerns,” Summers said.
“The sampling process would have required duplicate samples from each batch and size of bread, drawn from the point of sale. Given that our batch codes are determined by the day’s production, this methodology would have substantially increased the operational complexity and cost for our business, and that of all other retailers.”
Based in Pretoria. Leaf Services was established in 2015 to provide “cost effective and innovative inspection, grading and sampling for official quality assurance services to businesses across SA that are producing a variety of grains, oilseeds and grain products intended for sale.”
The company was in 2016 assigned by the department of agriculture to inspect grains and grain products (wheat bread, durum bread, soft wheat, maize, maize products, wheat products, rice, sorghum, soya beans, sunflower seeds, dry beans, canola and barley).
Its appointment letter states that the minister reserves the right to revoke the assignment “should circumstances dictate otherwise” — a decision that Steenhuisen has now taken — after just a year in office.
Grain SA also welcomed the revocation, saying the decision represents a R600m saving for grain producers.
Summers said no research was conducted at all to establish the level of compliance in the baking industry to see if there was an actual need to conduct inspections in the first place.
“Since foundation, we have baked and sold billions of loaves of bread across our stores, consistently of high quality. We have never encountered issues with compliance, which underscores our commitment to maintaining these standards voluntarily,” Summers said.
“The introduction of this new inspection regime by Leaf Services would have represented an unnecessary cost burden that could be better allocated to further enhancing the value and affordability we provide to our consumers,” he said.
“Had the minister not revoked this contract, the cost to Pick n Pay alone would have been in the region of R10m a year, excluding the additional costs with speciality breads and other types of bread produced in our in-store bakeries. With Boxer it would have been about R15m — for a service that was free in the past.”
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