Farmers and workers have called for the appointment of an ombudsman to police the relationship between the major retailers and their suppliers.
The calls follow the recent appointment of a “supermarket ombudsman” in the UK and come in the wake of mounting tensions in the agricultural sector as farmers figure out ways to respond to the 52 percent hike in the basic minimum wage for farmworkers.
Throughout the months-long protests by farmworkers in the Western Cape, farmers argued that they could not afford to increase wages because they were squeezed by the powerful retailers.
Yesterday Elize van der Westhuizen, the senior manager for labour relations at Agri SA, said the establishment of an ombudsman would be “a great idea”, because farmers were price-takers and were getting only about 50 percent of what their goods were sold for by retailers. “We need to look more closely at the relationship between the farmers and other players in the industry.”
Mercia Andrews of Trust for Community Outreach and Education, a rural NGO, called for the appointment of an ombudsman. “The value chain, and who is getting what share of the value, is extremely important in this industry.”
However, Gareth Ackerman, the chairman of Pick n Pay, said it would not be an effective move given the comparative complexity of the local food retail sector.
He said that, unlike the UK, there were what could be described as three levels in South Africa: large producers supplying large retailers in the first level, smaller producers supplying retailers in the next level, and the informal sector.
“An ombudsman would have considerable difficulty working through this complex structure,” Ackerman said.
He stressed that there were “strong market dynamics” underpinning the local food retail sector.
On the issue of the retrenchments following the announcement of the wage hike, Van der Westhuizen said she could not verify the numbers of workers who were being retrenched but there was a process of “giving notices to farmworkers across the country”.
She said it would affect the labour-intensive sectors – such as vegetables, fruit and sugar cane – more than the grain and meat sectors.
Labour costs account for 12.7 percent of the total costs in the agricultural industry, but there are significant variations among the sectors.
Van der Westhuizen said that farmers’ ability to mechanise or to switch to produce that was not labour intensive depended on the type of goods currently produced.
“There is limited scope to mechanise if you produce soft fruit and vegetables, and grape production involves years of investment, which farmers will not easily abandon.”
She described the current situation as “very emotional” and indicated it would be some time before the full extent of job losses would be known.
Business Report was not able to get a response from either the Department of Labour or the Department of Trade and Industry.