By: Lindie Stroebel- General Manager of the Produce Marketing Association Southern Africa and Tommie van Zyl - Chief Executive Officer of ZZ2 and Country Council Chairperson of the Produce Marketing Association Southern Africa
As a firm supporter of a free and open market system, PMA endorses competitive practices, which is inclusive of all role players throughout the fresh produce value chain. Fair and transparent price forming mechanisms are critical to bring about equal access to the market place. In principle, the Fresh Produce Markets, together with the integrated role of market agents, are critical to the South African and southern African industry to enable market access for all producers and buyers. The market system in South Africa, within which agents’ function, can be credited for the fact that prices are discovered by the transparent interaction of supply and demand in a free relationship between producers, agents and buyers that share the same goal of serving the consumer. This system enables large and small producers to have equal access to markets, whether domestic regional fresh produce markets, metropole fresh produce markets or the export markets.
The agents serve as efficient aggregators of market forces from the supply and demand side. Even a weak market signal of supply or demand can be translated into a price. Farmers in South Africa are spared the frustration of producing products with weak or no demand and no prices as is happening in many parts of the world dominated by bilateral agreements or contract markets at wholesale or retail level. To the credit of the agency system of selling, continuity of supply of products in South Africa is enabled by the price signal which drives rational behaviour by producers, buyers and their customer, the consumer, reacting to the market forces. This has enabled the South African farming sector to be competitive in world terms. This supply only gets disrupted by extreme and damaging weather, not the market. Consumers can rely on the steady supply of products they need and that they are willing to pay for, enabled by the activities and diligent and interactive agents conveying the demand to producers. The number of Southern African neighbours active at the national fresh produce markets to
procure fruit and vegetables for their countries is proof of the value created in terms of mass supply of product by the undistorted fresh produce market in South Africa.
It is therefore important for the industry to recognise that the very competitive sales environment in South Africa is enabled by the sales commission system. The agency system of sales is definitely not under siege. The stress test put to the system of sales by fresh produce market agents might in the end be a blessing for the occupation in the sense that the debate can shed light on the value that it adds to our industry and society.