Robust and organic price discovery plus low barriers to entry undergird this engine of economic growth

South Africa's fresh produce market system shone during lockdown

South African fresh produce markets are back to trading at normal volumes, having weathered the turbulent lockdown period which showed up the market's strength in credible and transparent price discovery, said Jaco Oosthuizen, CEO of RSA Markets yesterday during a PMA webinar.

"We lived up to our vision of being the Wall Street of fresh produce," he said.

Equally the value of informal traders - making up around 50 to 60% of buying power on the markets, noted Hendrik Eksteen, CEO of Grow Fresh Produce Agents - was highlighted by the initial ill-considered but short-lived ban on informal traders at the markets.

On the other hand, the strains produced by unprecedented conditions shone a light on the strengths and weaknesses of management and leadership at the various fresh produce markets.

Eksteen praised the management of the Durban Fresh Produce Market in the eThekwini Municipality for their firm and quick response to lockdown exigencies, facilitated by good relationships between roleplayers at the eThekwini market.

The number of informal buyers at the market has increased as more people are forced to look for trading opportunities with low barriers of entry as unemployment and layoffs rise. 

"There's a place for everyone, from the smallest to the biggest buyer and producer at the market," he continued, which makes the fresh produce markets extremely important both for food security as well as for income creation.

Low barriers of entry at South Africa's fresh produce markets stimulate economic participation

Gauteng markets are price barometers for whole industry
He also warned that the functioning of the system of credible and fair price discovery was very heavily dependent on the two main markets in Gauteng - Johannesburg and Pretoria/Tshwane - which act as price barometers for the entire fresh produce market system. Therefore, a disruption to the functioning of the Gauteng markets are felt nationwide.

There has been an increase in direct farm-gate sales as buyers attempt to avoid crowds and in response to logistical challenges.

Food service service closure depressed potato and lettuce demand, while school closure dampened apple demand, but the return to normalcy has improved the prospects for these commodities.

Pineapple prices which experienced a threefold jump have now returned to normal levels of below R7 (0.36 euros) per kilogram, as liquor stores have been allowed to re-open and home brewing presumably has decreased.

 


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