Opinion Piece

Showcasing our work in the agricultural sector to the global stage

Just over 25 years ago when the Competition Act was drafted, it sought, among other things, to take the best practices from competition authorities across the globe and develop a regulatory framework that would foster a growing and deconcentrated economy for the benefit of all South Africans. South Africa, in turn, has become a leader on the world stage actively contributing to competition regulation discourse, promoting advocacy as a crucial engagement tool for competition regulators, and illustrating the impact public interest provisions have on protecting jobs and reducing barriers to the market for new entrants.

At the recently held 23rd International Competition Network (ICN) Conference in Brazil, Commissioner Doris Tshepe led the Competition Commission delegation that participated in a series of plenary discussions that focused on topics such as the interaction between global markets and local agriculture and food markets. Agricultural markets have always been one of the Commission’s priority areas for many reasons, including that for lower income households around 70% of the income goes towards the purchasing of food. Another salient reason why the Commission has prioritised food markets, has been the high level of food inflation, particularly in the past four years. Our focus on food markets has exposed many competition shortcomings in the value chain that either exacerbated inflation or took advantage of that for profiteering reasons.

Let’s unpack some of the ways the Commission has sought to address these concerns.

The current competition regulation dispensation empowers competition authorities to play a role in contributing meaningfully to the immense interest from the public to better understand how the prices of food items come about. At the ICN’s plenary session, Commissioner Tshepe highlighted the role of the Essential Food Pricing Monitoring (EFPM) Report as a mechanism to ensure more transparency with regards to the pricing of food. Our research team uses various methodologies to break down the cost and margins throughout the value chain to determine if price increases are justified. Our research work has helped to inform the public and enabled the Commission to call out what may be exploitative practices by processers or retailers. In addition, the information could be used to initiate investigations or advocate for retailers or processers to reduce prices. For example, an EFPM Report indicating the high prices of cooking oil resulted in processers reducing their prices.

One of the key competition issues in the agricultural sector is the market structure, and in South Africa’s agriculture supply chain there are features that are conducive to potential anti-competitive conduct. Market Inquiries also offer us a platform to investigate industries, for example, our Fresh Produce Market Inquiry (FPMI) has over the last 14 months examined features in the fresh produce market that could impede, restrict or distort competition in the value chain of apples, citrus, bananas, pears, table grapes, potatoes, onions, carrots, cabbage, tomatoes and spinach. This undertaking included public hearings with retailers, visits in rural areas with small scale farmers, and meetings with different associations to gain a holistic view of the market and understand the competition issues that may be negatively impacting the participants at different levels of the value chain. And to ensure transparency and public participation, the hearings were live-streamed enabling the public full access to the proceedings.

From a South African point of view there has been a growing focus on using agriculture as a cornerstone for the participation of Small and Medium Enterprises (SMEs) and as a tool for growth and employment to actively deconcentrate these markets to not only improve structure but to ensure market resilience. Imposing public interest provisions on mergers to protect contracts and agreements with small-scale farmers and processors are another avenue through which the Commission can aid the agricultural sector to become stronger.

Much like the agricultural sector does not operate in a vacuum, nor does the Commission. Our work in this field has been used by non-governmental organisations such as the DG Murray Trust to try and look at possible interventions. Other soft law tools such as leveraging the watchdog role of the media to hold firms accountable and call for transparency when it comes to the pricing of food has become essential. The Commission believes it is crucial to ensure that the country’s households can access food at reasonable prices. Therefore, we will continue to conduct market inquiries, advocacy work, and research studies to understand the issues that have the potential to effect competition throughout the value chain of food items and play a pivotal role in allaying these competition concerns.

Siyabulela Makunga is spokesperson for the Competition Commission of South Africa. The views expressed in this article are not the views of Mzansi Agriculture Talk.

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