DURBAN - The Competition Commission has invited members of the public to submit comment on the proposed terms of reference for the market inquiry into the fresh produce market.
The draft terms of reference of the inquiry were gazetted on March 25 and the public have until April 25, 2022 to comment on the scope of the inquiry.
The commission said the inquiry will focus on fresh produce markets, with the aim of identifying features that may impede, restrict or distort competition and market outcomes.
It said fresh produce includes unprocessed products such as fruit and vegetables and forms an important part of South Africa’s wider agriculture industry.
The main fruits produced and consumed in South Africa include apples, bananas, oranges (and other citrus), pears, avocados, and grapes, and the main vegetables include potatoes, onions, tomatoes, carrots and cabbage.
The inquiry will focus on particular issues at each layer of the value chain. More specifically, the scope will cover aspects from the sale of fresh produce by the farmer to the customer, retailer, processor or export market.
Exclusions from the inquiry include the interaction of retailers and end consumers as well as the sale and distribution of processed products by food processors.
The commission has identified four broad themes which cover the features that may impede, restrict or distort competition and market outcomes.
The themes include:
- The efficiency of the value chain;
- Market dynamics and impact of key inputs for growers
- Small and HDP growers and participation;
- Barriers to entry in relation to the regulatory environment.
According to the draft, the purpose of the inquiry is to examine whether there are any features in the fresh produce value chain which lessen, prevent or distort the competitiveness of the South African fresh produce market.
“The commission is of the view that the inquiry is essential in order to understand the state of competition within the industry, the market features affecting price outcomes, and the challenges currently faced by farmers, especially small-scale and emerging farmers.
“More broadly the importance of the sector to both the economy and employment, and the nutrition and welfare of its citizens gives further weight to the need for such an inquiry,” it said.
The commission said it has investigated a large number of complaints with respect to price gouging conduct since the start of the Covid-19 pandemic and the declaration of the state of national disaster.
Basic food and fresh produce products accounted for the vast majority of complaints and subsequent investigations:
- The commission’s records show that, of 1 254 excessive pricing investigations related to Covid-19, 713 related to basic food and fresh produce.
- Of these, 391 investigations related to basic food products and a further 322 relate to ginger and garlic for which significant price increases (some of more than 300%) were observed over the second wave of late 2020 and early 2021.
“This shows the importance of fresh produce, but in the same breath, the potential for abusive conduct where market circumstances change,” said the commission.
Upon completion, the commission will publish a report of the inquiry in the gazette and will also submit the report to the Minister of Trade, Industry and Competition.
The public is invited to submit comments on these draft Terms of Reference by April 25. Written submissions can be sent to [email protected] for the attention of Ms Mapato Ramokgopa.