Many South Africans aren’t aware of just how robust and resilient the country’s fresh produce supply chain is, or of how big a role informal traders, independent retailers and small businesses play in the buying and selling of fresh produce, especially in rural communities and townships.
South Africa’s supermarket shelves have remained stocked with fresh produce during the COVID-19 lockdown, reassuring those consumers able to access supermarkets that they do not have to worry about food shortages during this time. Unfortunately, many of the country’s street hawkers, independent retailers and small businesses have seen their operations significantly curtailed, causing supply disruptions for those consumers who rely on these traders.
South African street food trade sector
Street hawkers have played a central part within the South African fresh produce supply chain for many decades. Their flexible, mobile businesses offer easy access for many people to fresh fruit and vegetables. Similarly, independent retailers and family-owned greengrocers play an important, but unacknowledged, role in their own suburban and peri-urban communities.
According to an article by leading academics on the Institute for Poverty, Land and Agrarian Studies’ website, Plaas.org.za, the South African street food trade sector alone supports an estimated 500 000 livelihoods nationally, and accounts for 40% of the informal township economy. In addition, the article says surveys suggest that up to 70% of households usually source food from informal outlets.
Helping the informal trade
A halt in trading is thus not only a huge issue for these businesses, many of which operate on a subsistence level, but also for their customers, who often live far away from supermarkets and who rely on the convenient access they offer for essential nutrition.
“Government recently announced that it is taking steps to try and help the informal trade, and this is 100% correct and necessary. They play an essential role in ensuring national food security and as players within the fresh produce supply chain,” says Jaco Oosthuizen, CEO at RSA Group, the country’s largest fresh produce sales organisation.
According to Oosthuizen, the South African fresh produce supply chain is a national asset, and South Africans are experiencing its benefits during lockdown in the form of reliable, nationwide access to fruit and vegetables.
“A lot of people have no idea where the fresh produce sold in supermarkets and taxi ranks comes from,” Oosthuizen adds, “but we would all be affected if the system broke down for any reason.”
Effective price discovery
Trading at South Africa’s fresh produce markets is based on free market principles, which means they offer all participants the advantage of effective price discovery. No matter the size of the farmer or the buyer, every business interacting at the market is able to participate in – and contribute to – a price discovery process that factors in a wide range of supply and demand forces; from weather, to seasonal demand, to unique forces such as the COVID-19 pandemic.
Crucial to the mix are the sales agencies, which enable effective price discovery and which act as the matchmaker between sellers and buyers. Think of the market as the aggregator, and the sales agencies as the force that allows farmers and buyers to interact effectively with each other on the platform.
“The platform is neutral and price discovery doesn’t favour any one party,” says Oosthuizen. “This means small farmers can supply big retailers, while informal traders and other small, independent businesses are able to gain access to the same quality product, at the same price, as major supermarket chains.”
The fresh produce market model
The story of the Mooketsi and Polokwane regional markets illustrates the development potential of the private fresh produce market model. The original Mooketsi Market featured one producer and only a handful of buyers. After the establishment of a commission-based free market system and the addition of the Polokwane market, both markets evolved within months to feature more than 600 producers and a full basket of products, sold to more than 15 000 registered buyers. In less than 60 months (up until 30 June 2019), the combined producer sales and volumes at the two markets reached R242 744 761, via trades of 67 812 tons per annum.
Once retailers have secured their supplies from the fresh produce market, they follow different sales paths. Supermarkets need economies of scale to make a profit, while street sellers can match or beat supermarket prices because their overheads and cost of operation are low. Regardless, and irrespective of where or how they shop, South African consumers enjoy access to quality fresh produce within an affordable price range. Oosthuizen points out that this should never be taken for granted.
“The lockdown has shown us just how fortunate we are in terms of fresh produce food security. We have an aggregated, functional system that serves a wide variety of producers, retailers and consumers at all levels,” he says.
“With this in mind, we must do whatever we can to support our small, informal and entrepreneurial fresh produce operators. They’re an essential part of a successful supply chain that we can’t afford to compromise.” – Press release, RSA Group