Farmers at mercy of retailers

INLSA

Nick Vink

Many farmers are at the mercy of retailers in setting prices for their goods, an agricultural expert says, after Cosatu called for protest action to force the major food retailers to pay farmers more.

Professor Nick Vink, chairman of the department of agricultural economics at Stellenbosch University, said a distinction should be made between farmers who were price-takers and those who were price-makers when discussing prices of agricultural produce, as some vegetable and fruit farmers were able to negotiate better prices.

Vink said some vegetable and, to a lesser extent, fruit farmers, were typically price-makers, as many large-scale producers were “selling from a quasi-monopoly position”.

If large producers felt prices were too low, they could hold back their produce until prices increased.

It was unclear exactly how much major food retailers paid farmers for fresh produce, he said. “These are private transactions. They will differ between different retailers and producers… in the end we don’t know what they pay.”

He also noted that South African fresh produce producers sold to international supermarket chains in the UK.

Vink said producers of most field crops, such as maize and wheat, in addition to milk, were price takers.

Here, typically, no large group was able to influence the market, and farmers had little opportunity to influence prices as their products were internationally traded commodities.

If they tried to hold back their produce, retailers could buy on the international market, or from many other small producers.

Cosatu, meanwhile, denied its call for protest action against “profiteering” food retailers to get them to pay more for farm produce would lead to a rise in food prices.

The federation’s Western Cape provincial chairman, Dan Malapi, said while “rises in food prices will always be there”, retailers should be able to pay farmers more for fresh produce, field crops and meat, while keeping prices stable.

Reasonable

“We are saying retailers can give farmers reasonable prices,” said Malapi. “We are fighting for the rights of both farmers and farmworkers.”

Earlier, Cosatu said it would stage protests outside major Western Cape branches of major food retailers on February 27, as they “pay farmers a pittance for products produced on South African farms”.

The federation said if retailers paid farmers more for their produce, farmers would be able to pay their workers more.

A Cosatu affiliate member, the Food and Allied Workers Union (Fawu), which represents about 5 percent of Cosatu’s 2.2 million members, said yesterday it agreed “in principle” with the federation’s call for protests against retailers.

“Retailers squeeze farm owners in terms of profit margins,” said Fawu general secretary Katishi Masemola. However, Fawu was still awaiting “clear details” on the exact objectives of Cosatu’s call.

Boycott

Masemola said blanket calls for boycotts could at times be unhelpful, noting that Fawu had distanced itself from Cosatu’s call last month to boycott South African agricultural products during the farmworkers strike in the Western Cape.

Malapi said he hoped major retailers would engage with Cosatu before the proposed strike, adding it would be called off if demands for higher prices for farmers were met. He said the federation had received no reply from retailers.

Woolworths said yesterday it had not received notification of any formal protest action.

It had a “long history of investing in local suppliers”.

“Pricing is often a joint exercise. We try to ensure fair prices for our suppliers as well as our customers. We expect our suppliers to comply with fair labour practices,” it said.

Tamra Veley, spokesman for Pick n Pay, said it “has and will continue to enjoy constructive and mutually beneficial relationships with its suppliers”.

Sarita van Wyk, corporate communications manager at the Shoprite Group, said earlier the retailer paid prices on a par with international retailers for South African produce.

Other retailers have not responded to requests for comment. jan.cronje@inl.co.za