South Africa has a unique and dynamic fresh produce retailing industry, defined by an intense level of competition and an extraordinarily diversified customer base. Consumer demands range from the basic needs of the rural and urban poor to the sophisticated choices by the rich and wealthy, mostly in the cities. Even though food retailing is dominated by the major supermarket chains, which control the larger part of produce supplies, they are also diversified according to its segmented consumers. Smaller supermarket chains, independent retailers and, especially, the informal market also play a significant role. Informal markets are small entrepreneurs and agents who purchase fresh produce at the wholesale market and then resell within their local communities. There are tens of thousands of informal traders in South Africa.
The segmentation at the retail level complicates the supply chain, as it ultimately requires different product ranges and even standards and quality. A segmented retailing environment is served by segmented supply chains and, accordingly, segmented production. Generally, it is perceived that a homogenized system could function more effectively, but in reality this system provides a unique environment of market access in developing countries, such as South Africa. It provides for a vast market, serving a wide variety of customers, and therefore buying from a wide variety of producers.
The supermarkets require very high standards and practices, according to the consumers’ demand. The larger, more sophisticated producers deliver to these expectations and thereby secure their markets. Small-holder farmers and emerging fresh produce agents generally do not have the ability to deliver, as they mostly do not have financial backing, research, technology, market information, standardized products, quality control, technical assistance and infrastructure at their advantage. But, it seems that these are not always necessary to achieve market access, as the diversified market does provide for different quality and structure. The challenges, which elevate the risk they are exposed to, include inconsistent prices and the lack of secure offtake agreements or contracts.
Improving market access for small-holder farmers and emerging fresh produce agents have been widely discussed and debated. Ultimately it requires the involvement of and interventions by the private sector, specifically buyers, to create access. In the South African context of inequality, both in income and economic participation, the sustainability of the economy and the fresh produce sector relies on sustainable market access for small-holder farmers and emerging fresh produce agents. And the social responsibility adds to the drive to have interventionist measures, in the form of projects, to enable the different supply chains; from different levels of production through to retailing.
Collectively, the industry is seeking desperately needed solutions. In recognition of government objectives, special focus is placed on the provision for Enterprise and Supplier Development programs, under the Broad-Based Black Economic Empowerment (BEE) policies; these solutions also serve for land reform beneficiaries and government-supported black emerging farmers. The one element policies and government programs cannot create, is sufficient market access.
Supermarket procurers, market agents, fresh produce markets, and various other supply chain actors have collectively come to the party to find solutions. After a number of years of involvement, costly and sometimes painful lessons have been learnt, but most importantly, various success stories have come to light. Success stories, like Siyalima Farms and DW Fresh Produce Pretoria and Johannesburg, serve as the basis for motivation for other small farmers as well as supermarkets and other procurers.