• Latest
  • Trending
  • All
  • News
  • Lifestyle
South Africans should be prepared to pay more for their food in the new year, says local economists. Photo: Supplied/Food For Mzansi

Retailers ‘use bully tactics to squeeze farmers’

18th February 2021
Willem Booise (left) is a trustee and has won the industry’s Specialist Agricultural Worker of the Year award in 2018. Photo: Supplied/Hortgro

Fruit farm shows there’s power in transformation

11th August 2022
Many people love avocados, but did you know that the introduction of just one of these fruits per day can improve the overall quality of your diet? Photo: Pixabay

An avocado a day can keep the doctor away

10th August 2022
ADVERTISEMENT
Davidzo Chizhengeni, animal scientist, founder of KvD livestock, Ika Cronje, farmer and participant in the Corteva Women Agripreneur 2022 programme, Vuyokazi Makapela, a Director at Afrivet, and permaculture farmer, Stephanie Mullins. Photo: Supplied/Food For Mzansi

Podcast: Prevent rabies with vaccination

10th August 2022
Control and prevent downy mildew on crops

Control and prevent downy mildew on crops

10th August 2022
The value of South Africa’s informal farming sector is understated, experts say, and many farmers say that they prefer trading to this segment of the economy. Photo: Supplied/Food For Mzansi

New farmer? Informal markets ‘the way to go’

10th August 2022
Gauteng police recovered and confiscated sheep and goats in Sedibeng this week. Photo: Supplied/SAPS

ICYMI: Police recover stolen livestock

10th August 2022
Ecological farming the answer to food insecurity

Ecological farming the answer to food insecurity

9th August 2022
Setting up a regenerative smallholding

Setting up a regenerative smallholding

9th August 2022
Determination drives this #SoilSista to succeed

Determination drives this #SoilSista to succeed

9th August 2022
The women who dared to start farming in Mzansi when few others would. Photo: Food For Mzansi

She bosses: ‘We see farming changing for good’

9th August 2022
Refiloe Molefe has vowed to build a new urban farm after the City of Johannesburg bulldozed the site she built in Bertrams. Photo: Supplied/GroundUp

ICYMI: Mama Fifi determined to rise again

9th August 2022
Agripreneur 101: Creating a beauty brand

Agripreneur 101: Creating a beauty brand

8th August 2022
  • Home
  • News
  • Changemakers
  • Lifestyle
  • Farmer’s Inside Track
  • Food for Thought
11 GLOBAL MEDIA AWARDS
Thursday, August 11, 2022
Food For Mzansi
  • Home
  • News
  • Changemakers
    • All
    • AgriCareers
    • Entrepreneurs
    • Farmers
    • Groundbreakers
    • Innovators
    • Inspiration
    • It Takes a Village
    • Mentors
    • Movers and Shakers
    • Partnerships
    Agripreneur 101: Creating a beauty brand

    Agripreneur 101: Creating a beauty brand

    Claire and Martin Joubert have sacrificed and struggled to become top breeders of Ankole cattle in South Africa. But giving up was never an option, because they wanted to offer only the very best Ankole genetics in the country. Photo: Supplied/Food For Mzansi

    Farming couple lives and breathes Ankole cattle

    Tackling climate change, one tree at a time

    Agricareers: Veterinary science not for the timid

    Agricareers: Veterinary science not for the timid

    Once struggling farm now a family heirloom

    Optimal yields now at farmers’ finger tips

    Some of the children with the ECD practitioner Yolanda Shabalala. Zero2Five Trust promotes holistic Early Childhood Development in formerly disadvantaged areas by improving learners’ health and education outcomes with nutrition and education programmes. Photo: Supplied/Zero2Five Trust

    Zero2Five: Giving hope to KZN flood victims

    Agripreneur 101: Kupisa Sauce is going places

    Agripreneur 101: Kupisa Sauce is going places

    Ncumisa Mkabile, is a farmer, community activist that has won numerous awards for her work in agriculture. Photo: Supplied/Food For Mzansi

    Farmer, influencer, go-getter – Ncumisa’s all that

  • Lifestyle
  • Farmer’s Inside Track
  • Food for Thought
No Result
View All Result
Food For Mzansi

Retailers ‘use bully tactics to squeeze farmers’

by Duncan Masiwa
18th February 2021
in News
Reading Time: 7 mins read
A A
South Africans should be prepared to pay more for their food in the new year, says local economists. Photo: Supplied/Food For Mzansi

South Africans should be prepared to pay more for their food in the new year, says local economists. Photo: Supplied/Food For Mzansi

For many up-and-coming farmers, gaining access to retailers is a critical step in transitioning to commercial farming. However, Duncan Masiwa reports that many are subjected to “unfair bully tactics” that leave them vulnerable and exploited.

While gaining access to retail markets may be fundamental to the growth of promising small-scale farmers, a multi-award-winning producer in Gauteng admits that working with retailers are becoming a major headache.

The farmer supplies high value vegetable crops to leading retailers, food processors and fresh produce markets across South Africa and has the courage to say what many farmers have been whispering for years. Some retailers exploit farmers through their selfish tendencies and unfair demands.

Speaking to Food For Mzansi, the farmer asked the publication not to use her real name, as she fears victimisation for speaking out, so we are referring to her as Mirriam Sithole.

“Retailers can play bullying tactics, like asking you to supply exclusively to them and no other retailers. But that’s unfair,’ says Sithole.

ADVERTISEMENT

Practically speaking, this means that such retailers would only buy a portion of harvested produce, leaving the farmer stuck with the rest.

A farmer who has, for example, harvested ten tonnes, would be left with six tonnes if a retailer seeking exclusivity only takes four tonnes.

“What happens to the remaining tonnes when I’m forced into a exclusivity contract?” she asks.

‘Unfair expectations’

Another issue raised by Sithole is that food producers are often restricted on who they can purchase packaging material from. This is due to existing relationships that retailers may have with packaging manufacturers.

“As a farmer, you can’t shop around for better prices. You are obligated to buy from them.”

This does not help farmers like Sithole at all. Even when manufacturers increase their prices, she would be stuck with them. This is due to the agreement with retailers who call the shots.

She tells Food For Mzansi, “You are bullied into buying from the more expensive supplier. This is regardless of what the retailer is offering you per kilogram or tonne for a specific product. When packaging companies increase their prices, it automatically increases the farmer’s production cost.”

ALSO READ: Industry barriers will be removed, says Didiza

Furthermore, many retailers have been known to run promotions on a whim. When this happens, Sithole says farmers are bullied into dropping their prices too. This, even though the farmer already budgeted their income.

She also highlights the fact that farmers always have to go via retailers’ preferred processing company, instead of supplying directly to the distribution centre. This, Sithole says, lengthens the process in which a farmer can supply their goods or services to a retailer.

ADVERTISEMENT

Legal perspective

Meanwhile Marlese von Broembsen, a lawyer specialising in global supply chains, says retailers use two legal mechanisms to exercise control over small and medium-sized suppliers.

Marlese von Broembsen, a lawyer specialising in global supply chains. Photo: Twitter
Marlese von Broembsen, a lawyer specialising in global supply chains. Photo: Twitter

These are supply contracts, and production and hygiene standards.

The typical supply contract between supermarkets and their suppliers outlines the basis on which the retail market places orders. The retailer and the supplier agree on a supply price and the retailer’s mark-up for each product.

However, some suppliers take issue with this.

“The complicating factor,” says Von Broembsen, is that ”whilst the supplier nominally receives payment based on the agreed supply price, most supermarkets charge suppliers a rebate commission.”

Rebate commissions range between 6% and 16% per order. It comprises different fee components, including incentives, advertising, settlement and swell allowance for which food producers are liable. A swell allowance covers the cost of spoiled foods.

Von Broembsen believes that opportunities for small and medium-sized suppliers to grow are even further constrained by their bargaining power compared to retailers. The majority, she says, are without a powerful brand and have little to no bargaining power.

Policy intervention

Furthermore, “suppliers generally report that they are unable to contest their contract terms, as they will simply be ‘blacklisted’ and their products ‘de-listed’ and no longer stocked by a retailer,” Von Broembsen states.

ALSO READ: ‘Who needs big retailers when you’ve got taxi ranks?’

She also believes that the rise of private production and hygiene standards, and the costs of compliance have a negative impact on smallholder producers.

Marlese von Broembsen, a global supply chains legal expert, believes policy intervention is needed to curb retailers who abuse their market power. Photo: Supplied/Food For Mzansi
Marlese von Broembsen, a global supply chains legal expert, believes policy intervention is needed to curb retailers who abuse their market power. Photo: Supplied/Food For Mzansi

A need for policy intervention is evident. Some retailers abuse their market power, and undermine the growth and job creation potential of suppliers, Von Broembsen says.

She therefore argues for policy intervention in three areas. “First, the state should regulate the contracts between supermarkets and small suppliers as it does other relationships marked by unequal power relations,” says Von Broembsen.

Secondly, government must regulate how private standards may be enforced. Thirdly, the practice of rebate commissions has to be scrutinised.

Complaints platform needed?

“Finally, small and medium-sized suppliers should enjoy representation, as supermarkets do, on the South African Bureau of Standards, the retail committee of the National Empowerment Fund, and the National Economic Development and Labour Council, which make policy decisions.”

Meanwhile, in the United Kingdom suppliers can now use a confidential platform to report bad and questionable retailer behaviour. The “Tell the GCA” platform, launched earlier this year, was set up by the Groceries Code Adjudicator (GCA).

Suppliers can report issues via a secure third-party platform.

Food For Mzansi approached different food retailers for their perspective on the matter, but have not received any comment.
Tags: GCAGroceries Code AdjudicatorMarlese von BroembsenNational Empowerment FundretailersSABSSouth African Bureau of StandardsSupermarkets
Previous Post

Scam alert: How 3 farmers were conned

Next Post

How a Zim refugee became a top vegan restaurateur

Duncan Masiwa

Duncan Masiwa

DUNCAN MASIWA is a budding journalist with a passion for telling great agricultural stories. He hails from Macassar, close to Somerset West in the Western Cape, where he first started writing for the Helderberg Gazette community newspaper. Besides making a name for himself as a columnist, he is also an avid poet who has shared stages with artists like Mahalia Buchanan, Charisma Hanekam, Jesse Jordan and Motlatsi Mofatse.

Related Posts

No Content Available
Next Post

How a Zim refugee became a top vegan restaurateur

Control and prevent downy mildew on crops
Advertorial

Control and prevent downy mildew on crops

by Nicole Ludolph
10th August 2022
0

ADVERTORIAL: Broccoli and cauliflower farmers need to watch out for downy mildew, a plant fungus common in wet conditions. Simon...

Read more
The value of South Africa’s informal farming sector is understated, experts say, and many farmers say that they prefer trading to this segment of the economy. Photo: Supplied/Food For Mzansi

New farmer? Informal markets ‘the way to go’

10th August 2022
Gauteng police recovered and confiscated sheep and goats in Sedibeng this week. Photo: Supplied/SAPS

ICYMI: Police recover stolen livestock

10th August 2022
Ecological farming the answer to food insecurity

Ecological farming the answer to food insecurity

9th August 2022
Setting up a regenerative smallholding

Setting up a regenerative smallholding

9th August 2022

Make Mokgadi’s impepho-smoked cauliflower

Farmer 101: Exploring alternative energy fixes

Farming couple lives and breathes Ankole cattle

60m. mouths to feed: ‘We’ve got you, Mzansi’

Control and prevent downy mildew on crops

Agripreneur 101: Creating a beauty brand

THE NEW FACE OF SOUTH AFRICAN AGRICULTURE

With 12 global awards in the first three years of its existence, Food For Mzansi is much more than an agriculture publication. It is a movement, unashamedly saluting the unsung heroes of South African agriculture. We believe in the power of agriculture to promote nation building and social cohesion by telling stories that are often overlooked by broader society.

Fruit farm shows there’s power in transformation

An avocado a day can keep the doctor away

Podcast: Prevent rabies with vaccination

Control and prevent downy mildew on crops

New farmer? Informal markets ‘the way to go’

ICYMI: Police recover stolen livestock

  • Our Story
  • Contact Us
  • Cookie Policy
  • Privacy Policy
  • Copyright

Contact us
Office: +27 21 879 1824
News: info@foodformzansi.co.za
Advertising: sales@foodformzansi.co.za

No Result
View All Result
  • Home
  • News
  • Changemakers
  • Lifestyle
  • Farmer’s Inside Track
  • Food for Thought

Copyright © 2021 Food for Mzansi

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.