Emerging farmers could face market barriers

Dardlea is facilitating emerging farmers into cooperatives in order to enhance their business capacity.

MBOMBELA – The establishment of the International Fresh Produce Market is under way and is expected to cost approximately R966 million, but its benefit to fresh-food producers is being questioned by industry players.

The provincial government has said that the market will provide local emerging farmers with a market for their produce, either locally or internationally, and give retailers and distributors access to fresh fruits and vegetables at their doorstep.

Also read: Cost of International Fresh Produce Doubles 

Goods will be collected from various farmers through the three agri-hubs to the main market. Yet, government has failed to clearly outline its plan for the market.

The cost has been projected by the current feasibility study but depending on the demand, the market might be extended by 27 000 square metres, that will increase the budget to R1,2 billion.

The MEC for finance, Mr Eric Skhumbuzo Kholwane announced that a total of R300 million has been made available to complete civil works for the market in the financial year.

Also read: International Fresh Produce ready to roll 

According to government, the bulk of the R1,2 billion to be used to bring the three phases of the project to completion, will be sourced from private-sector partners through various mechanisms.

The Mpumalanga Economic Growth Agency (MEGA) has been entrusted with the responsibility to source funding for the project but it has failed to explain how it plans to do that. The agency also failed to demonstrate how it will establish relationships with retailers.

MEGA could not outline its business model. It referred the newspaper to the Department of Economic Development and Tourism and the Department of Agriculture, Rural Development, Land and Environmental Affairs (Darlea).

This is despite the department saying, “The Fresh Produce Market is a MEGA baby and not Darlea’s. We therefore suggest MEGA as they are best placed to provide accurate responses.”

The economic development department said approximately R100 million had been spent since the project’s inception in 2014.

“This amount of money has been used mainly for the various stages of feasibility assessment, the acquisition of land and the construction of bulk services infrastructure,” said spokesman, Mr Letshela Jonas.

Another feature of the market is to link small-scale producers and cooperatives with the main market while improving the local supply logistics chain through the agri-hubs.

It is unclear how this will work. Most local supermarkets acquire their vegetables and fruits through their distribution centres (DCs) which are mostly in Johannesburg.

Although they buy supplementary fresh produces locally, the bulk ones are acquired through their DCs.

Mr Bennie Roos from Fruit & Veg City Nelspruit said the store does support local producers but they also consider the freshness and quality of the products.

“We look at the consistency when it comes to supply because we will expect the supplier to be able to deliver whenever we want the produces,” he said.

According to Agrisa’s Mr Johan Pienaar, penetrating the market and creating new partnerships takes time.

“There exists sufficient evidence that generally emerging farmers could not as yet adhere to these demands as they are not clued up on commercial farming.”

Also read: Mpumalanga’s food production drops dramatically 

Officially, Darlea is facilitating the organisation of emerging farmers into cooperatives (primary and secondary) in order to enhance the business capacity and acumen of the farmers so that they will be able to organise themselves to supply the market.

The department also did not explain how this is being done.

Pienaar said the emerging farmers will have to understand commercial farming in order to gain trust from the retailers.

“Commercial farmers already have established supply chains, so to expect diversion by these groupings towards new structures will require major economic incentives which in a free market dispensation I can’t see happening,” he said.

The success of major markers, Pienaar said, can be attributed to the fact that they are situated mainly in the major city centres.

“They can reap economies of scale in terms of logistics and specifically distribution. The South African population becoming more urbanised may dictate more and larger urban based fresh produce markets,” he said.

  AUTHOR
Trevor Hlungwani
Journalist

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