The Competition Commission will unveil the final report of its Fresh Produce Market Inquiry on Monday.
The event marks the culmination of an in-depth investigation into the fresh produce sector, after the release of a preliminary report in June 2024.
“Over the past months, the inquiry has engaged in comprehensive consultations with stakeholders, gathering invaluable feedback on its findings and recommendations. These engagements have been critical in shaping the final report, ensuring that it reflects the diverse perspectives of industry participants.
“The final report will provide detailed insights into the competition dynamics of the fresh produce market, with actionable recommendations aimed at promoting fairness, inclusivity, and sustainability in the sector,” said the Government Communication and Information System (GCIS).
The inquiry, initiated in March 2023, investigated the fresh produce value chain, identifying issues that restrict competition and hinder the participation of historically disadvantaged persons and small and medium enterprises (SMEs).
In the provisional report, the commission found challenges in national fresh produce markets, including deteriorating infrastructure, inconsistent bylaws, and limited SME participation. Despite generating sufficient revenue, the report found that national fresh produce markets do not allocate funds adequately for maintenance and future development, while varying bylaws across markets disadvantage small farmers.
The report also found that historically disadvantaged persons and SME farmers struggle to access these markets and face difficulties competing with established players. Market agents’ practices, such as stock reservation and credit sales, with high concentration and structural linkages, limit competition in the wholesale market.
In retail, the inquiry found sustained high markups for fresh produce, suggesting a lack of competition. The report said the retail sector remains dominated by five supermarket chains (Shoprite, Pick n Pay, Woolworths, Spar and Food Lover’s Market), with little change after the disbandment of exclusive leases.
Price transparency is a concern, as inconsistent metrics prevent consumers from making informed price comparisons, the report found. Furthermore, historically disadvantaged persons and SME farmers face slow integration into retailer supply chains, limiting their market access, according to the report. These barriers perpetuate inequality within the sector, with large players maintaining dominance and smallholders unable to scale up.
At the input level, the report found that SA’s reliance on imported fertiliser, agrochemicals and seeds exposes the agricultural sector to global risks, as seen during the Covid-19 pandemic and the Russia-Ukraine war. The inquiry said practices such as exclusive agreements and territorial allocations distort competition in these markets.
In the seed industry, high prices and restricted access to certain seed varieties disadvantage historically disadvantaged persons and SME farmers. Moreover, defunding of the Agricultural Research Council (ARC), which plays a critical role in seed development, worsens these challenges, particularly for smallholder farmers dependent on public resources for seed access, the report said.
The report said barriers to entry for farmers are further compounded by the interdependence of financing and water access, with many banks declining loans to farmers lacking water rights. While efforts are being made to streamline water application processes, the report found that delays in implementing tools such as the blended finance scheme hinder progress in supporting historically disadvantaged persons and SME farmers.
To address these challenges, the inquiry proposed 29 remedial actions aimed at improving infrastructure, enhancing competition, fostering SME participation and boosting local production capabilities for agricultural inputs.
Key proposals included setting sales targets for small-scale and historically disadvantaged farmers, allocating retail space in malls for historically disadvantaged persons, SME and emerging retailers, and encouraging dominant market agents to partner with SMEs for skills transfer. It also suggested that the department of trade, industry & competition establish a fund to support new market entrants, support the domestic fertiliser industry and create a unified support programme for small-scale farmers.
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