Competition Commission: Smallholder farmers survival threatened

In a carpeted report titled Essential Food Price Monitoring, the Competition Commission of South Africa unmasks the wretched course smallholder farmers find themselves in. Compounded by Covid-19 and the recent unrests that occurred in July, smallholder farmers were in toto on their own. 

“The latest report shows that the agricultural value chain in South Africa is highly industrialised and characterised by the super commercialisation of production via large-scale farming as well as concentrated upstream inputs and concentrated processing” it said. 

As if falling from the edge of Chapman’s peak mountain, smallholder farmers were squeezed by the unforgiving forces of the agricultural value chains and ‘low product prices from processors with buying power’ which threatened their survival in the market. 

Competition Commission summarised smallholder farmers challenges in an excellent and yet laudable order; 

  • insufficient finance and technical capabilities 
  • a lack of operational knowledge, 
  • the inability to create scale economies, 
  • low bargaining power, 
  • a lack of market access to important production inputs (like quality seeds and fertilizers), 
  • poor infrastructure and logistics (due to the poor condition of available transportation systems like road and rail) 
  • unsustainable farming practices which have caused the degradation of agricultural soils

Black farming unions in particular, have been vocal since the emerging days of smallholder farmers about the ‘lethargic exercise of institutions legislated to assist smallholder farmers’ to tackle these identified challenges.

Typical example is the 23 National Fresh Produce Markets operating countrywide. Combined, farmers in the fresh produce markets generated R1,5 billion with “only 1% (R150 million) going to smallholder farmers” according to the Council for Black Market Agents (CBMA) Thomas Mawasha presentation during the Fresh Produce Market Information Day. 

25 years into democracy, institutions such as Agricultural Produce Agents Council (APAC), Land Bank, Agricultural Research Council (ARC), National Agricultural Marketing Council (NAMC) have still not coordinated their efforts to assist smallholder farmers to access such markets. 

But it is more complex than it appears. The Competition Commission has acknowledged that high inputs cost and the price of seeds have become more commodified “with the major seed companies touting hybrid and genetically modified seeds as better options for African smallholder agriculture.” 

Alarmingly, the Competition Commission also found that seed costs drove smallholder farmers to incur debts when using hybrid seeds. “These seeds are not able to be replanted each year like traditional seeds, while contracts or technology agreements between farmers and seed companies generally dictate how farmers should grow their crops and force farmers to buy new seeds each year.”

Emanating from this shocking discovery, questions remained about the service the South African National Seed Organization (SANSOR) offered to smallholder farmers. Smallholder seed companies have long called for SANSOR to be reconstituted from an NPO to operate much more like APAC, as in its current form, it was perceived to represent the interests of commercial seed companies.

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