Market agents arrive from 3am at the Johannesburg fresh produce market in City Deep where ten to fifteen thousand buyers daily start trading at 5am. Forty-eight percent of South Africa’s fresh produce market trade is conducted here, much of it destined to cross South Africa’s borders.
Ecosystem of the market
Tuesdays and Thursdays are strong market days when greengrocers and bigger buyers visit the market for fresh vegetables, harvested the day before and brought overnight to the market.
Buyers who come on Mondays often buy long-storage products like apples and other fruit.
Fridays are the days when most informal buyers (street sellers and spaza or small shop owners) visit the market ahead of the weekend, and they make up over 50% of the market’s buyers.
Very few of them have their own transport, so there is a whole sub-sector of transport providers operating at the market as well.
The total revenue of the fresh produce markets is expected to reach R19 billion (1,04 million euros) this year, a R2 billion (109.6 million euro) price-driven increase on 2019.
On Fridays the number of small-scale buyers increase fivefold at the Johannesburg fresh produce market
A day in the life
Last week when FreshPlaza visited the market as the guest of the Grow Fresh Produce market agency, it had been a brisk day on the tomato floor.
The oversupply from the previous two weeks was being cleared and prices were rebounding from R3,50 (0,19 euro) the previous week to R8 (0.43 euro) to R10 (0.54 euro) per kilogram.
Right: Jannie Potgieter, GROW BothaRoodt tomato agent at the Johannesburg market
Johannesburg has a 61% market share of the national tomato market and plays an important role in price-formation across the country.
There were around 400,000 10kg bags of potatoes on the market floor, a full floor.
Recent high potato prices, three times the normal price, made national headlines.
A full potato floor at the Johannesburg market
In the fruit hall, where the atmosphere is serene compared to the buzz of the vegetable hall, the very last citrus was coming in from the Eastern Cape, while cherries from the Free State and long-awaited litchis from Mpumalanga were arriving. The grape season has also been late; the first Limpopo grapes now arriving.
Summertime means watermelons in South Africa: about 15,000 units were sold on the day.
Nelson Rebelo and Praneetha Moodley of GROWMarco. The entire display is re-assembled every morning
Critical mass of product and buyers
“What makes a market work?” asks Hendrik Eksteen, CEO of the Grow Group. “It’s bringing together all of the product and all of the market forces under one roof.”
In the case of the Johannesburg market, under three roofs, he explains: the fruit hall, the vegetable hall and the potato and onion hall, together covering 75,000m2 (which has become insufficient over thirty years; the market is running out of trading space and needs serious expansion), excluding ripening and other facilities.
Lehlogonolo Shogole and Rest Shikunelu at GROWBothaRoodt in the potato and onion hall
South Africa’s fresh produce marketing system is perhaps unique in the world: the product enters the market with no price attached and agents represent the product for a commission negotiated with producers (called an ad valorem commission).
Supply and demand determine the price and what’s more, Deon van Zyl, Grow Group chief operating officer, notes, is that there is no contract concluded between the producer and the agents. The trust relationship between producer and agency rests on a handshake, based on an expectation that the trader will “discover the right price”.
The produce is never owned by the market agency and if a producer is unhappy, he or she has the option to supply a different agent.
“We don’t sell potatoes, we sell potato peels”
At the Johannesburg market, the Grow Group handles a third of the vegetables, a third of the potatoes and around 20% of the onions.
Deon van Zyl, chief operating officer at Grow Fresh Produce, discusses new stock with Zane Ladeira, potato trader at GROWBothaRoodt
On the potato floor Deon van Zyl discussed the days’ trading with two of the Grow Fresh potato traders, Zane Ladeira and Adrian Haas.
Deon estimates there are about eight potato varieties on the market; the vast majority are Sifra, Mondial and Lanorma. South African consumers like a floppy, oily potato chip (French fry), Deon explains, although the crispier chips made from Lanorma potatoes at a certain fast food outlet have been voted South Africa’s best.
Adrian Haas, potato trader at GROWBothaRoodt, at the Johannesburg market
Adrian quotes his mentor in the potato trade who used to say: “We don’t sell potatoes, we sell potato peels”. Pale-skin potatoes command the highest prices, often sold at high-end retailers, with limited attention to the particular culinary uses of various varieties.
“The most important thing that a farmer does, is to build a brand,” Adrian explains. Zane adds that a brand with a strong reputation can pull the product through a difficult season.
Kane and Steve Michael of GROWMarco: six months of the year they specialise in watermelons
Jhb market forms firm foundation of food security
An oversupply of potatoes in 2016, which caused prices to plummet, brought new buyers to the market for whom trade in potatoes was suddenly possible as well as new consumers. “Low prices enhance per capita consumption, where extreme high prices cause the low income sector to seek alternatives,” Deon explains.
The unfortunate flipside in a year like this, when potato prices rose to R100 (5.48 euros), even R120 (6.6 euros) for a 10kg bag, is a segment of consumers who cannot follow the price and return to consumption of other starches.
There have been a lot of new buyers at the market since Covid-19; the market’s low barrier to entry attracts entrepreneurs.
Fresh produce procured at the Johannesburg fresh produce market is taken far over South Africa's borders
“It is important that we protect our markets because over 50% of our buyers are from the informal sector, forming a very important support to food security.”
Industry role players are concerned about the lack of re-investment into fresh produce markets by the local municipalities, owners of the fresh produce markets (except in Cape Town). This is a threat to food security and the price discovery system, they posit.
The Johannesburg fresh produce market has a new CEO in Leanne Williams; her plan of action for the market encourages them but it is a complex and political task, given its ownership by the municipality.
Five companies within the Grow Group
Grow Fresh Produce Agents was established in 2017 as a result of a partnership between Thebe Investment Corporation, a pioneering black-owned company and community-based trust which included, at the time, Nelson Mandela and Walter Sisulu among others.
The Grow Group now incorporates GROW Botha & Roodt agency, GROW Marco and GROW Green Network (the latter fully owned by the GROW Group). In February last year the Grow Group acquired 51% of the Noordvaal agency at Tshwane market and in December the same agreement was concluded with Port Natal agency at the Durban market, now GROW Port Natal.
“It’s important for us to offer the full spectrum of commodities in every business under the GROW umbrella,” Deon says.
For more information:
Deon van Zyl
Grow Fresh Produce
Tel: +27 11 613 6981
Email: info@growfreshproduce.co.za
https://growfreshproduce.co.za/