ETHICS IN THE FRESH PRODUCE TRADE

 
By Michael Cordes
Ethics in business is always a tricky topic to cover because of the many variables and perceptions that can be encountered. That however, does not mean we should conveniently ‘look the other way’ simply because ethical issues are sensitive to some. In fact, the opposite is true - we need to explore ethical issues and understand their important role in business.
Stuart Symington CEO of the Fresh Produce Exporters Forum, has an excellent presentation on ‘Ethics in the Fruit Trade’ (my words). Symington points out that South African fruit export farmers are required by many overseas multiples (supermarkets) to comply with GlobalGAP and other rigorous protocols if they want to be listed as suppliers. He doesn’t have a problem with the compliance aspect per se, but he does pose the question, “what about the trade practices of the multiples?” He mentions for example, the practice of over ordering and then cancelling when they find they have enough product. The producer, through his export agent, sits with the problem of what to do with a shipment that has already landed overseas and now he has to scramble around looking for a buyer. Is the multiple being ethical?
He cites another example closer to home when earlier this year dock workers in our harbours went on strike. This had a crippling effect on the export fruit industry which was ‘building up a head of steam’ for the season ahead. What did the shipping companies do? They promptly passed on the demurrage surcharges to the producers who had nothing to do with the strikes. Were the shipping companies being ethical? Were the dock workers being ethical when, despite the right to strike, they sacrificed the country’s valuable fruit export trade on the ‘alter’ of their demands?
Those two examples were played out on the larger global fresh produce stage. But what about ethics within the local fresh produce markets sector? Are producers squeaky clean? Are market agents playing by the rules? Do market authorities really have the interests of markets at heart?
The depth of a real trust relationship between farmer and market agent is such that if either one ‘crosses the ethical line’ then that trust is broken and often irreparable damage is done to the relationship. A simple example is when a farmer decides to split his consignments to a market under the illusion that he will be keeping his existing agent ‘on his toes’ while getting top prices from the ‘new’ agent.
The first ethical damage is seen in the trust relationship between farmer and agent ‘A’ being broken. Agent ‘A’ would have every right to begin doubting the integrity of his ‘once loyal’ client. And now, something which probably took many years to nurture and build is suddenly thrown to the winds on the expectation of higher prices from another agent. Add to this the probability that agent ‘B’ in canvassing for the farmer’s business made promises about prices or created unrealistic expectations in the farmer’s mind. This is the second part of the ethical damage.
Promising prices to a farmer when trading on a commission market is not only unethical, it is unsustainable. Agent ‘B’ might be able to get higher prices on one or two consignments but it’s going to depend on quality and the supply / demand situation at any given time. In the longer term it becomes unsustainable as market forces hold sway and the luckless agent ‘B’ has to resort to further unethical dealings if he wants to keep the promise he made to the farmer.
Unless agent ‘A’ is really useless the chances are the farmer will soon realise that he was conned by agent ‘B’ and will return his full support to agent ’A’. The challenge now facing the farmer – more than agent ‘A’ – is to pick up the pieces of a damaged relationship. It wasn’t agent ‘A’ who made the decision to split the consignments; it was the farmer, so he would need to start repairing things as soon as possible.
The breaking of a trust relationship is highly unethical!
The Market Authority or owners of the market are not directly involved in trading as their role is to provide facilities and services to support the sale of the farmers’ fresh produce. Can they be unethical in managing a fresh produce commission market? In the cases of most of our markets in South Africa the answer is an unequivocal, “yes”!
The farmers pay 5% Market Dues to the Market Authority on everything sold by their agents on the market. This money is supposed to cover the running expenses of the market and any excess should be allocated for maintenance, improvements in infrastructure and even towards future expansion. In reality on most markets that money vanishes into the bottomless pit of a general municipal account and you’re lucky if there’s enough to cover costs. Money for maintenance and so on becomes a pipe dream as municipalities feed like piranhas off the income they derive from farmers without any thought of giving something back via an improved market. 
It is implicit in the paying of the 5% that the owner of the market will not only meet expenses but also invest in maintaining and upgrading the facility. This does not happen except in isolated cases, which means there’s a clear breach of agreement by the municipality. That makes the behavior of most municipal market owners unethical and even bordering on the criminal.
I’ve listed some simple examples to illustrate the potential damage that can be caused by the unscrupulous. The ‘oil’ of trust between role-players is soon turned to sludge by the unethical dealings of the unscrupulous and the uncaring.