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2015/16 ANNUAL PROGRESS REPORT ON PROJECT REBIRTH FOR REVIVAL OF NATIONAL FRESH PRODUCE
MARKETS
2015/16 ANNUAL PROGRESS REPORT ON PROJECT REBIRTH FOR REVIVAL OF NATIONAL FRESH PRODUCE MARKETS Page 1
TABLE OF CONTENTS
1. INTRODUCTION AND BACKGROUND ................................................................................... 3
2. PROJECT REBIRTH ................................................................................................................... 4
3. INTERVENTIONS BY THE STEERING COMMITTEE DURING THE 2015/16 ................. 5
3.1 Meetings of the Steering Committee ................................................................................. 5
3.2 The Codes of Best Practice ................................................................................................ 5
3.3 Standard Operating Procedures and Scorecard as management tools ...................... 6
3.3.1 Springs Fresh Produce Market .................................................................................. 6
3.3.2 Pietermaritzburg Fresh Produce Market ................................................................... 8
3.3.3 Tshwane Fresh Produce Market .............................................................................. 12
3.4 Interaction with Municipalities ........................................................................................... 13
3.5 Establishment of a Mentorship program ......................................................................... 15
3.6 Interaction with DCOGTA.................................................................................................. 16
3.7 Ethical trading in the NFPMs ............................................................................................ 18
3.9 Promotion of National Fresh Produce Markets .............................................................. 19
4. CHALLENGES ............................................................................................................................ 20
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ACRONYMS
APAC: Agricultural Produce Agents Council
APS: Agricultural Product Standards
BEE: Black Economic Empowerment
CFO: Chief Financial Officer
CoBP: Codes of Best Practice
DAFF: Department of Agriculture, Forestry and Fisheries
DCOGTA: Department of Cooperative Governance and Traditional Affairs
DGs: Directors General
FSA: Fruit South Africa
HACCP: Hazard Analysis Critical Control Point
IDP: Integrated Development Plan
IMASA: Institute of Market Agents of South Africa
MIG: Municipal Infrastructure Grant
MIS: Management Information System
NAMC: National Agricultural Marketing Council
NFPMs: National Fresh Produce Markets
PMA: Produce Marketing Association
PPECB: Perishable Products Export Control Board
PSA: Potatoes South Africa
SAUFM: South African Union of Food Markets
SLA: Service Level Agreement
SOPs: Standard Operating Procedures
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1. INTRODUCTION AND BACKGROUND
Historically, the marketing of fresh agricultural produce (fresh fruits and vegetables)
in South Africa has been mainly undertaken through National Fresh Produce Markets
(NFPMs). Most of these markets were established more than three decades ago and
have since undergone little or no substantive operational and transformational
changes in line with the macroeconomic and industry reforms currently taking place
in South Africa since 1994. These resulted in substantial declines in throughput and
participants in these markets over the past two decades.
NFPMs are strategic, public marketing infrastructure that play a critical role in both
national and household food security. In addition, these markets serve as:
• Suppliers of fresh produce to fresh produce
marketers/hawkers/vendors/traders who sustain their families from them thus
enhancing local economic development;
• Outlets where large buyers, mainly the large retail chain stores (such as Pick
‘n Pay, Shoprite-Checkers, Spar, Fruit & Veg City, Fruit Stop etc.) procure
fruits and vegetables;
• Trading facilities for fresh produce industry stakeholders (smallholder and
commercial farmers, market agents, traders, etc.);
• Providers of employment opportunities (at the markets and market agencies);
• Low-cost marketing channel for large scale/commercial and smallholder
producers (producers pay 12.5% fee to sell their produce through this
channel); and
• Price forming mechanism in that, prices established at the NFPMs are used
as national reference prices, mainly for fruits and vegetables.
As early as 1997, there were concerns regarding the National Fresh Produce
Markets mainly arising from the significant deterioration in infrastructure and service
standards, together with collapse in management which seriously affected the
rendering of efficient and commercially competitive services to farmers, market
agents and buyers, and thereby also on the ability of the domestic fresh produce
marketing system to transform and provide market access to smallholder producers.
These concerns triggered the then Minister of Agriculture and Land Affairs (Minister
Thoko Didiza) through the National Agricultural Marketing Council (NAMC) to launch
2015/16 ANNUAL PROGRESS REPORT ON PROJECT REBIRTH FOR REVIVAL OF NATIONAL FRESH PRODUCE MARKETS Page 4
investigations termed Section 7 Committee Investigations (in terms of section 7 of the
Marketing of Agricultural Products Act, 1996).
The Section 7 Committee identified five key themes which then constituted the main
framework for its investigations; these were on ownership and management of
NFPMs, legal framework within which they operate, the commission system,
transformation, market access as well as infrastructure. The Section 7 Committee
produced and published three successive reports with similar sets of
recommendations, which were later consolidated by the Ministerial Interim
Committee (MIC) on Fresh Produce Markets appointed by Minister Lulu Xingwana in
2009, as an effort to pave the way towards implementation.
2. PROJECT REBIRTH
In 2013, the continuing deterioration in service standards in the NFPMs triggered key
stakeholders in the fresh produce industry, mainly fresh produce market agents
through IMASA (Institute of Market Agents of South Africa) and producers through
PSA (Potatoes South Africa) to eventually approach the Department of Agriculture,
Forestry and Fisheries (DAFF) for immediate intervention and partnership to address
the persistent challenges faced by the markets. This led to the evolution of a new
initiative termed “Project Rebirth” aimed at improving the operations, service
standards and transforming the fresh produce markets of the republic.
Consequently, a National Steering Committee on Project Rebirth for NFPMs was
established. The National Steering Committee is chaired by Mr. HM Mamabolo, the
Director of Marketing in the DAFF and is composed of representation from the
following industry stakeholders: Institute of Market Agents of South Africa (IMASA,
representing fresh produce market agents); Agricultural Produce Agents Council
(APAC, regulatory body for market agents); Potatoes South Africa (PSA,
representing potato producers); Fruit South Africa (FSA, representing fruit
producers); South African Union of Food Markets (SAUFM, representing fresh
produce market managers); Department of Cooperative Governance and Traditional
Affairs (DCOGTA) and the National Agricultural Marketing Council (NAMC).
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The Terms of Reference for the National Steering Committee are as follows:
To facilitate a process to solicit inputs from key stakeholders (producers, market
agents and market managers) to develop the Codes of Best Practice (CoBP) for
NFPMs, that will pertain to the three stakeholders;
In order to achieve this the National Steering Committee was tasked and
expected to:
Interrogate submissions from the three key stakeholders and separate the
strategic aspects from the operational issues;
Consider whether transformation in NFPMs can be addressed by the
committee or it should be addressed separately;
Assist with infrastructure audit and investments in NFPMs; and
Establish any linkages to the legislative and regulatory framework.
Once the CoBP are finalised, the Steering Committee must identify key impediments
towards implementation and propose ways to solve them.
3. INTERVENTIONS BY THE STEERING COMMITTEE DURING THE 2015/16
FINANCIAL YEAR
3.1 Meetings of the Steering Committee
During the 2015/16 financial year the National Steering Committee held four sittings
in its effort to address the Terms of Reference. The meetings were held outside the
departmental premises at the offices of Potatoes SA on the 19th June 2015, the
NAMC on the 1st September 2015 and the Tshwane FPM Council Chamber on the
1st December 2015 respectively. The last sitting was held on the 08 March 2016 at
the Johannesburg Market.
3.2 The Codes of Best Practice
Through the National Steering Committee, the CoBP for NFPMs (Annexure 2) have
been developed and adopted by the fresh produce industry stakeholders. The CoBP
are aimed at assisting fresh produce markets to improve their service standards and
operations and are centred around ten pillars, which are on compliance to the
2015/16 ANNUAL PROGRESS REPORT ON PROJECT REBIRTH FOR REVIVAL OF NATIONAL FRESH PRODUCE MARKETS Page 6
regulatory environment; communication and stakeholder engagement; consignment
control and inspections; food safety, hygiene & cleanliness; safety & security;
information management; risk & financial management; transformation; infrastructure
and human capital development.
3.3 Standard Operating Procedures and Scorecard as management tools
The Steering Committee evaluated the Standard Operating Procedures (SOPs) of
the top three fresh produce markets (Cape Town, Tshwane and Johannesburg) and
developed generic SOPs that can be adopted (with some adaption) to assist fresh
produce markets with implementation. The SOPs are on consignment control
procedure, ripening and cold room management, risk and financial management as
well as cleaning procedures.
In addition, to facilitate implementation of the CoBP, a Scorecard was developed to
assess the level of compliance at all markets. The scorecard is comprised of 45
indicators reformulated as a questionnaire to assist market managers, market
agents, producers and other service providers to undertake a self-assessment
exercise and identify gaps that require short-term, medium-term and long-term
attention. During this financial year the scorecard has been applied (through the
leadership of DAFF) in four markets, namely the Cape Town Fresh Produce Market,
Springs Fresh Produce Market, Tshwane Fresh Produce Market and
Pietermaritzburg Fresh Produce Market. Preliminary results were shared with the
above mentioned markets and indicate the level of compliance to the ten pillars of the
codes with recommendations for improvement in the various areas. The results of the
scorecard are summarised in sections 3.3.1 to 3.3.3 below.
3.3.1 Springs Fresh Produce Market
Figures 1 below shows the current levels of compliance to the CoBP at the Springs
Fresh Produce Market.
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Source: Springs Fresh Produce Market and own calculation
It can be observed that the Springs FPM complies fully with respect to Safety and
Security, Information Management, Infrastructure and Risk and Financial
Management with compliance levels of 100%. This is attributed to the following
facts:
• The municipality has injected an amount of R 24 million over the past two
years which has been used for market infrastructure upgrades and
maintenance and the level of security was also improved, with new CCTV
security system erected across the market and monitored at all times. There
is already an approved master plan to expand the market which is expected
to commence during the year 2016;
• The market has its own account separate from the municipal account, and the
market management is the only one with login credentials and powers to
transfer funds to agents on a daily basis; and
• The market utilises a Freshmark system which is updated, maintained
properly and accessed by relevant individuals only.
Areas that require attention are compliance to the regulatory environment,
stakeholder management, transformation and human capital development that have
compliance levels below 50%. The main reasons for lower compliance levels to the
above pillars are as follows:
• The market does not have enough human resource capacity to carry out
regular stock inspection to ensure compliance to the Agricultural Product
44% 43%
73%
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60%
100% 100% 100%
28% 40%
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80%
100%
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Figure 1 :Springs FPM Compliance level per CoBP pillar
2015/16 ANNUAL PROGRESS REPORT ON PROJECT REBIRTH FOR REVIVAL OF NATIONAL FRESH PRODUCE MARKETS Page 8
Standards Act (APS Act) but the market is addressing the weakness as they
acquired the services of PPPECB to build capacity of its staff in the area of
quality control inspections. The market is also finalising an organisational
structure with new additional inspectors expected to fill the gap on human
capacity;
• The market does not have a skills development plan for its personnel;
• There are no existing and signed performance agreements or workplans
between the market manager and market employees;
• The market manager has not signed a performance agreement with the
municipality;
• The stakeholder engagements are taking place but they need to be
strengthened, formalised, be inclusive of all stakeholders and have Terms of
Reference; and
• The level of transformation was found to be low, but the Springs Market has
plans to make available more market floor space to cater for two BEE market
agents and to identify black sales persons.
Consignment control and Food Safety, Hygiene and Cleanliness are above
satisfactory with scores just above the 50% compliance level. The market is on par
with regular cleaning routines and the level of cleanliness is notable across the
market floor and outside the premises. The market does implement proper
consignment control procedures but the main reason that led to lower compliance is
that market management has not formally documented procedures which clearly lays
out the processes.
3.3.2 Pietermaritzburg Fresh Produce Market
Figures 2 below shows the current levels of compliance to the CoBP at the
Pietermaritzburg Fresh Produce Market.
2015/16 ANNUAL PROGRESS REPORT ON PROJECT REBIRTH FOR REVIVAL OF NATIONAL FRESH PRODUCE MARKETS Page 9
Source: Pietermaritzburg Fresh Produce Market and own calculations
It can be observed from Figure 2 that the Pietermaritzburg Fresh Produce Market
complies fully with respect to Safety and Security, Infrastructure, Information
Management and Risk and Financial Management with a compliance level of
100%. This is attributed to the following facts:
Safety and Security: The level of security has been strengthened, with new
CCTV security system installed across the market and cameras monitored by
personnel at all the times. The local municipality has also provided the market
with full time security to ensure that there is no crime taking place and this is
supported by the fact that there has not been any case of crime incidents in
the market.
Infrastructure: The provincial department of Co-operative Governance and
Traditional Affairs has injected an amount of R15 million which has been used
for market infrastructure upgrades and maintenance, these have allowed the
market manager to revive the depilating infrastructure. The local municipality
also invested in the market through the provision of operational budget which
is used for infrastructure maintenance and is reviewed quarterly.
Information Management: The market utilises Freshmark system which is
updated, maintained properly and accessed by relevant individuals only.
Additionally, the system is being audited by municipal auditors to review if it’s
being implemented and utilised efficiently, and whether certain individuals
don’t access certain parts of systems illegally.
63% 71%
94% 100%
80%
100% 100% 100%
67%
33%
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Pillars of the CoBPs
Figure 2 : Pietermaritzburg FPM Compliance rate per CoBP pillar
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Risk and Financial Management: The market has its own separate account
and is being accessed by the municipality’s CFO who has login credentials to
the system and transfers funds to agents on a daily basis. Market agents have
also asserted that there has not been any delays with regards to transfer of
funds to their accounts from the municipality. There is an existing contract
with a commercial bank and the market funds are also insured against
unforeseen circumstances.
Food Safety, Hygiene and Cleanliness, Consignment Control, Transformation,
Stakeholder Engagement and Compliance to the Regulatory Environment are
satisfactory with compliance levels above 50%. This is attributed to the fact that there
are still weakness that both market management and market agents must address to
ensure full compliance and these are highlighted as follows:
Food Safety, Hygiene and Cleanliness: Currently the market utilises the
Hazard Analysis Critical Control Point (HACCP) rules which serve as
guidelines for food safety. The market is implementing a cleaning routine
which is being monitored at all times and it can be observed throughout the
market floor, ablution facilities, market platforms that hygiene and cleanliness
is maintained. In terms of food safety, the agents are also playing a major role
as they do not accept any produce that does not comply with food safety
regulations.
Transformation: There is only one BEE agent in place but currently the
municipality wants to allocate more space to black agents and they have
made available an additional R 560 000 for pallet banks and R 170 000 for
internal fencing to support new black agents. Promotion of the market to black
farmers is taking place continuously but one of the concerns is that some of
old existing agents are reluctant to help new black owned agencies as they
perceive them as competition.
Stakeholder engagement: A buyers’ forum has just been established where
a platform is given to buyers to raise and discuss issues related to the market
and a forum between market management and market agents is taking place
each month. There is an existing lease agreement between the market and
tenants as well as service level agreements between the market with the
security company, banks, Freshmark and cleaning providers. There are no
SLAs between the market and market agents but the process is being
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finalised as the SLA is with municipal legal services for review. Daily sales
reports are emailed to producers and some of the producers closer to the
market undertake market visits occasionally. There is an existing Performance
Agreement between the market manager and municipality but the market
manager must ensure that it formulates work plans with its labour force based
in the market.
Regulatory Environment: The market by-laws have been reviewed in the
year 2014 and swiftly implemented (i.e. market agencies are required to pay a
certain shortfall amount within 24 hours if stock shortages are experienced in
his/her agency). Quality Inspections are also taking place and carried out by
Prokon and DAFF. DAFF does product quality inspections twice a week but
they don’t share the results with the market, which is an area that the market
management needs to rectify as it will serve as guidance on areas that need
major attention and improvements in terms of product quality. DAFF is also
part of market management and market agents forum to guide agents about
inspection and minutes are available. With regard to compliance to the APS
Act, large scale farmers grade and mark according to the Act but smaller
emerging farmers do not comply and the market agents are advised to further
provide guidelines on the APS Act to these farmers when undertaking visits
and ensure that they comply. Some of the market agents do not accept the
produce if they are not properly graded and marked.
Consignment Control: Condemnation of Stock that is unfit for human
consumption is undertaken in collaboration with the municipality’s division of
environmental health. The market does have an SOP for consignment control
in place and the market manager is currently enforcing its implementation.
One of the that needs further enhancement is the recording of delivery notes
which are recorded by agents alone not the market personnel, but the market
is currently rectifying the issue as they are in a process of building a suitable
structure at the loading zone to render this service. The cashiers are the ones
currently conducting stock counts/audits and the market was advised to
transfer that responsibility to the inspection officer and his team.
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3.3.3 Tshwane Fresh Produce Market
Figure 3 below shows the current levels of compliance to the CoBP at the Tshwane
Fresh Produce Market.
Source: Springs Fresh Produce Market and own calculations
It is notable that the market fully complies with five pillars which are Safety and
security, Food safety, hygiene and cleanliness, Infrastructure, Information
management, and Human capital development with compliance levels of 100%.
This is based on the following rationale:
The market has official documents in place which lays out its protocols, SOPs and
their implementation thereof. The market has a CCTV security system in place
which is monitored for 24 hours and visible armed security, and during the past
year there has not been records of crime incidences. The market has invested
heavily in the upgrading of facilities such as new pallet banks, storage facilities,
upgraded market agents building, upgraded client service centre, waste disposal
centre and new perimeter walls;
The market has cleaning protocols which are being implemented especially by
most market agents who also took it upon themselves to clean their market floors;
and
The market has its own account separate from the municipal account.
The remaining pillars are satisfactory with compliance levels above 50%. Currently
the market is improving compliance to transformation as they have acquired three
89% 85%
65%
100% 100% 100% 100%
67% 67%
100%
0%
20%
40%
60%
80%
100%
120%
Co
mp
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%)
Pillars of the CoBPs
Figure 3: Tshwane FPM Compliance rate per CoBP pillar
2015/16 ANNUAL PROGRESS REPORT ON PROJECT REBIRTH FOR REVIVAL OF NATIONAL FRESH PRODUCE MARKETS Page 13
new BEE market agencies. The market is also in a process of converting into a
municipal entity. The market also intends to introduce an auction system for
discarded produce, which is selling of produce deemed unfit for human consumption
to be used for other purposes. The market has recently entered into an agreement
with Botswana for export of fresh fruit and vegetables to that country while they will
introduce sales of meat on the market floor on a commission basis.
3.4 Interaction with Municipalities
As part of addressing infrastructure backlogs as well as improving service standards
and operations of NFPMs, the National Steering Committee on Project Rebirth for
NFPMs engaged directly with various municipal authorities that own fresh produce
markets. Engagements were held with the Nelson Mandela Bay Metropolitan
Municipality (Port Elizabeth Fresh Produce Market), Sedibeng District Municipality
(Vereeniging Fresh Produce Market), Sol Plaatje Local Municipality (Sol Plaatje
Fresh Produce Market), Matjhabeng Local Municipality (Matjhabeng Fresh Produce
Market), Pietermaritzburg Local Municipality (Pietermaritzburg Fresh Produce
Market) and the City of Johannesburg Metropolitan Municipality (Johannesburg
Fresh Produce Market). Engagements with the above mentioned municipalities were
aimed at lobbying for the following:
• To negotiate with municipal authorities to ring-fence a portion of the market
fee generated from sales in the National Fresh Produce Markets (NFPMs)
(5% market fee) for use as capital and operational expenditure for
infrastructure upgrades and maintenance in the markets;
• To negotiate with municipalities owning National Fresh Produce Markets
(NFPMs) to prioritize them as projects for funding through the Management
Information System (MIS) of the Municipal Infrastructure Grant (MIG) as an
immediate intervention to upgrade infrastructure in these markets;
• Kick-start a process with municipalities to provide the NFPMs with some
degree of operational and financial independence within the framework of
municipal legislation; and
• To negotiate with municipal authorities to provide full support to its NFPMs
staff and ensure that there is permanency and continuity at market
management level.
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A direct interaction between municipalities and the Department of Agriculture,
Forestry and Fisheries (DAFF) has yielded some positive results at several markets.
Some municipalities are currently investing in the infrastructure of their markets and
there are also signs of improvements on the hygiene and management of these
markets. The following positive outcomes emerged since the department began
engaging with various municipalities and their market authorities:
• The Ekurhuleni Metropolitan Municipality invested substantially in the
upgrading of the Springs Fresh Produce Market. The municipality has
contributed R 25 million over a two year period which was primarily utilised to
upgrade the market infrastructure and there is already an approved R160
million budget from the municipality for expansion of market infrastructure
during 2016/17;
• The Provincial Department of Cooperative Governance and Traditional Affairs
in KwaZulu-Natal contributed R15 million towards the infrastructure upgrades
of the Pietermaritzburg Fresh Produce Market which have been concluded in
September of the current financial year;
• The City of Tshwane Metropolitan Municipality invested substantially in the
upgrading of the Tshwane Fresh Produce Market having spent a total of R37
million over the past three years in infrastructure upgrades. In January 2016,
the market received a letter of approval from the National Treasury that an
amount of R390 million will be allocated to the Tshwane FPM for market
expansion and currently a feasibility study is being conducted on expanding
the market;
• During the 2015/16 financial year, the Gauteng Department of Agriculture and
Rural Development assisted the Vereeniging Fresh Produce Market through
an investment of R5.8 million which was utilised to revamp cold rooms,
ripening rooms, access gate, roof and to install new surveillance cameras. An
additional R4 million is allocated by the Sedibeng District Municipality to
revamp the butchery and to build a processing plant and R20 million is
allocated for the 2017/18 financial year for market expansion. Negotiations
are underway with the Development Bank of South Africa (DBSA) for a loan
of R40 million to use for market infrastructure refurbishment and expansion;
and
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• DAFF in collaboration with the DCOGTA will be gazetting the CoBP so that
they serve as national norms and standards for all the fresh produce markets
in the country.
In addition to the above, the Steering Committee on Project Rebirth for National
Fresh Produce Markets under leadership of the Department of Agriculture, Forestry
and Fisheries (DAFF) engaged the City of Joburg to discuss governance, operations
and infrastructure backlogs at the Joburg Market. Furthermore, the engagement was
also aimed at discussing the key role that the Joburg Market should be playing in
assisting smaller fresh produce markets regarding mentorship program in
implementing efficient Standard Operating Procedures (SOP) as well as
implementing some key provisions of the Codes of Best Practice (CoBP) for NFPMs.
With regard to ownership and management issues in the Tshwane, Springs and
Pietermaritzburg FPMs efforts are underway to convert these markets into municipal
entities and the process is at an advanced stage. There are also recent
developments at the Cape Town FPM with regard to ownership and management, as
the municipality has entered into a new lease agreement with a consortium of
producers organisation, market agents and BEE market agencies to improve
operational efficiencies of the market.
3.5 Establishment of a Mentorship program
A mentorship program championed through the Tshwane Fresh Produce Market
(FPM) (as a mentor) was established to assist ailing markets to swiftly implement the
Standard Operating Procedures (SOP) and CoBPs. The mentorship program focuses
on building the capacity of market management and its market staff on six key areas
of Consignment (Stock) Control, Risk and Financial Management, Information
Management, Stakeholder Management, Hygiene, Cold Rooms and Ripening Rooms
management as well as compliance to the Regulatory Environment.
During the current financial year a team from Tshwane FPM assisted the Vereeniging
FPM, Pietermaritzburg FPM and Port Elizabeth FPM in normalising current situation
with development and application of the SOPs, By-Laws and Service Level
Agreements (SLAs).
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The introduction of the mentorship program at the Pietermaritzburg FPM and
Vereeniging FPM has yielded substantial notable changes. The revenue of the
market at the Vereeniging FPM increased by 25% within a month after the
introduction of the mentorship program just by tightening consignment control as well
as risk and financial management process signalling that improper business conduct
were taking place in the market. The above mentioned changes immediately
triggered the Gauteng Department of Agriculture to assist the market with
infrastructure upgrades, and farmers also indicated their willingness to sell their
produce through the Vereeniging market due to positive developments taking place.
At the Pietermaritzburg FPM, with the introduction of the mentorship program the
volume of produce sold through the Pietermaritzburg FPM during the year 2015
increased substantially as compared to the previous year at the same period. A total
volume of 88 785 tons of fresh produce worth R 319 million were sold through the
Pietermaritzburg FPM from January to December 2015 while 85 449 tons worth
R264 million were sold during the same period of 2014. This represents a reasonable
average growth of 0.96% in volume in the year 2015 as compared to 2014. The
increase in volume saw the market overtaking Springs FPM as the fourth top market
from the month of June 2015. The level of hygiene and cleanliness at the market has
also improved tremendously.
3.6 Interaction with DCOGTA
There have been continuous engagements between the DCOGTA (as owners of the
markets) and the DAFF to discuss ways in which the two departments can
collaborate in improving service standards and operations of the NFPMs. On the 11th
May 2015 a meeting between Mr. Vusi Madonsela (Director General: COGTA) and
Prof Edith Vries (former Director General: DAFF) took place and the key issues for
discussions were five-fold:
Participation of the Department of Cooperative Governance in the Steering
Committee on Project Rebirth; a matter that has been raised as a major concern
by fresh produce industry stakeholders and which has the potential to be an
impediment in the implementation of some provisions of the CoBP;
The options and possibilities of gazetting the CoBP as official national norms and
standards for fresh produce markets by DCOGTA. DAFF does not have the
2015/16 ANNUAL PROGRESS REPORT ON PROJECT REBIRTH FOR REVIVAL OF NATIONAL FRESH PRODUCE MARKETS Page 17
mandate to execute this since it only regulates the trading aspects of markets
and not the physical infrastructure (overall operations of the markets);
Ring-fencing and reinvestment of a portion of the 5% (commission charged for
utilising the market infrastructure) municipal revenue generated by fresh produce
markets, into the operational expenditure for fresh produce markets;
The use of the Municipal Infrastructure Grant (MIG) for infrastructure upgrades
and expansion in the fresh produce markets. Currently, smaller municipalities in
particular do not prioritize fresh produce markets in their proposals and
submissions to the MIG; and
Improvement in the operational efficiencies of fresh produce markets, in terms of
converting some fresh produce markets into municipal entities to provide them
with some degree of operational independence. The possibilities of considering
multi-jurisdictional entities is also an option.
The discussions between the two Directors-General generated the following
resolutions:
DG Madonsela committed himself to establish which component of the MIG is
designed to support fresh produce markets in terms of infrastructure support and
will revert back to DG Vries. Should there be no provisions for fresh produce
markets he committed to take up the matter with National Treasury to open that
window in the MIG;
DG Madonsela further committed himself to steer a process of collaborating with
municipalities to consider the best management/ownership model for fresh
produce markets;
He further impressed that the initiative on the fresh produce markets is an ideal
candidate for Outcome 13 and the two DGs resolved to table the initiative at the
Social Protection Cluster;
The initiative and its successes and challenges need to be tabled to the Forum
that DCOGTA has with municipal managers. DG COGTA will provide the
meeting schedules and contacts to DAFF;
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The two DGs agreed on the need to engage the Department of Health as a key
partner in respect of monitoring adherence to health and food safety regulations
in the markets;
The presentation to be adapted for use by DG Madonsela, to include among
other things the following: the financial implications of implementing the Codes of
Best Practice, positive success stories emanating from Project Rebirth and data
(in monetary values) of the 5% municipal revenue generated by the markets; and
DAFF to draft a letter to DG COGTA, appreciating the meeting, requesting
nomination of an official from DCOGTA to participate in the Steering Committee
on Project Rebirth.
Subsequent to this an official from DCOGTA was nominated by DG:COGTA to
participate in the Steering Committee who has since participated in the previous
three sittings. The DCOGTA representative agreed in principle that the DAFF will be
invited to participate in the municipal Integrated Development Plan (IDP) planning
processes at local level and has already communicated to the affected municipalities
to prioritize NFPMs in their plans for 2016/17. This will allow the DAFF to work
directly with the affected municipalities in ensuring that the investments required by
the NFPMs in various municipalities are reflected in the IDPs.
3.7 Ethical trading in the NFPMs
In recent years, there have been concerns in respect of the conduct of some fresh
produce market agents who operate on the NFPMs and who trade in fresh produce,
which may be considered anticompetitive behaviour. The concerns relate specifically
to the following:
Produce reservation - this refers to a practice wherein fresh produce (of
particular grades, quality, etc) marketed by certain intermediaries/agents is
reserved for specific buyers (mostly large buyers). This leaves especially small-
scale buyers (hawkers) with fewer options in terms of the produce that is offered
for sale across the markets;
Late Sales - this refers to a practice wherein certain volumes are sold in the
markets during certain late hours of trading at the markets with an express
intention to manipulate prices to move in certain and desired directions. This has
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an effect of distorting the normal and efficient marketing of fresh produce in
South Africa;
Credit sales by agents - this refers to instances where agents buy produce from
themselves on credit and at unusually low prices with the aim of selling the same
produce at higher prices to other buyers. Credit sales are not allowed in terms of
the rules unless they are done with the express concern of the principals of the
produce concerned;
Price discrimination based on identity of the buyers – in this instance, the
market agents treats buyers differently depending on quantities or volumes
bought by the different buyers. This raises the issue of unequal access to fresh
produce by different buyers in the markets purely on account that a buyer is
large or small;
Cancellations - wherein stock/consignment is booked on the official trading
system and is not sold and is later on cancelled from the system. The stock can
either be sold through late sales or through other channels outside of the official
trading platform of the markets; and
Stock shortages - wherein a fresh produce market agent/sales person is unable
to reconcile his/her consignments between the stock received and sold. These
shortages might exist due to stock being sold as late sales or being sold outside
of the formal trading platform.
Subsequently the DAFF’s request for an investigation into the ethical trading
(business) conduct of fresh produce market agents was accepted and approved by
the executive of the Competition Commission. The objective of this investigation is to
enhance fair competition, improve fair access to produce by buyers and enhance
development of statutory rules and regulations for market agents. The Competition
Commission has agreed to conduct the investigation which is expected to unfold in
2016/17.
3.9 Promotion of National Fresh Produce Markets
The panel of Project Rebirth partners participated in the PMA Fresh Connections
Conference and Expo on the 12-13 August 2015 in Cape Town at a breakaway
session where it presented the main role the industry plays in the NFPMs and on the
implementation of the CoBP. Furthermore, two publications termed “Fresh Produce
Market Monitor” which communicates recent developments and work of Project
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Rebirth were developed and published on websites of various fresh produce industry
stakeholders, departmental and municipal websites.
The Steering Committee has also participated in the 75th Annual General Meeting
(AGM) of the IMASA on the 17-18 September 2015 to communicate positive
developments emanating from Project Rebirth and to lobby for support of market
agents particularly with regard to ethical trading and transformation in the Fresh
Produce Markets. During the AGM, DAFF was awarded the Shiny Red Apple Award,
which is an award presented to a fresh produce industry role-player in recognition of
their leadership and innovation in customer relations and communications within the
fresh produce sector.
4. CHALLENGES
Over the past year the National Steering Committee encountered several challenges
with regard to implementation of the CoBPs in a few markets and are as follows:
As an effort to ensure that fresh produce sold through the NFPMs is safe for human
consumption, the Steering Committee in collaboration with the DAFF, Directorate:
Food Safety and Quality Assurance introduced a food testing program in the
NFPMs. The initiative began at the Tshwane FPM and ran for a period of two
months in March and April 2015. Unfortunately the process of food testing was
halted due to the introduction of tariffs by DAFF Laboratory services at a cost of
R541.00 per sample. The costs associated with sample testing were not warmly
welcomed by market management, market agents and producers because it would
be a burden to the market and farmers in terms of costs and administration;
The introduction of product quality inspection/control service in the markets could
not be implemented because of lack of human resource capacity at DAFF but the
department is currently engaged in a process of appointing assignees to conduct
product quality inspections throughout the NFPMs across the Republic of South
Africa;
Lack of continuity and stability at market management level was also a major
challenge as it hampered efficient implementation of SOPs and CoBP, and in most
cases where management exist, they lack the capacity to efficiently run the market;
Most municipalities are unable or unwilling to reinvest a portion of 5% market
revenue generated from sales into markets to use for market infrastructure
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refurbishments, leading to potential for collapse of markets. This is because many
smaller municipalities are cash-strapped;
An effective and well organised SAUFM is a challenge, as its passivity in the work
of Project Rebirth makes it difficult to implement most provisions of the pillars within
the Codes of Best Practice; and
The ability of market agents and sales persons to uphold ethical trading practices
and maintain integrity of the commission system.
________________________________
H.M. Mamabolo Chairperson: Steering Committee on Project Rebirth for National Fresh Produce Markets Tel: 012 319 8455 Fax: 012 319 8131 Email: [email protected]