fresh produce market

Fresh produce markets ‘can’t conspire’

Some of the country’s biggest market agents are accused of cartel activities, despite South Africa having mechanisms in place to prevent the practice.

RSA Groups, one of the largest agencies, said it believes allegations of the Competitions Commission – that nine agencies are colluding to determine prices to push out smaller agents and black farmers – are based on “a number of misconceptions as to how the markets operate”.

Jaco Oosthuizen, CEO of the RSA group, said electronic management systems act as “gatekeeper” for prices, since all transactions are registered live. Any unusual prices can be observed immediately. He said this leads to full transparency and a level playing field.

Even though agents might react in a similar way to different factors which have an influence on price making – like supply and demand, the weather and product quality – it doesn’t necessarily indicate a conspiracy.

“In fact, salespeople frequently adjust prices in different directions, according to their context in reading the market. Collusion for any purpose – whether to compete with major competitors or to drive out small players – is fundamentally at odds with how a price discovery market functions,” Oosthuizen said.

He said a regulator appointed by the responsible minister, monitors the markets.

According to Oosthuizen, complaints that farmers’ commission is established beforehand, don’t make sense.

Commissions negotiated with producers vary according to the type of product being sold and the relationship between the producer and the agency.

“Negotiating is at the heart of our business, it’s our core income,” Oosthuizen said.

“It would destroy the flexibility that is required to succeed in this business.”

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