report of the steering committee on project rebirth …webapps.daff.gov.za/amisadmin/upload/report 1...

REPORT OF THE STEERING COMMITTEE ON PROJECT REBIRTH FOR REVIVAL OF NATIONAL FRESH PRODUCE

MARKETS

Report 1

10/28/2014

Report of the SC on Project Rebirth for National Fresh Produce Markets (NFPMs) Page 1

Table of Contents

1. Introduction and background ........................................................................... 3

2. Steering Committee on Project Rebirth ........................................................... 4

3. The Codes of Best Practice (CoBP) ................................................................ 5

4. Piloting of the Codes of Best Practice ............................................................. 6

5. Positive developments & outcomes ................................................................. 7

6. Critical Success Factors (CSF) ........................................................................ 8

7. Future Plans .................................................................................................... 9

8. Acknowledgements ....................................................................................... 10


ACRONYMS

APAC: Agricultural Produce Agent Council

APS: Agricultural Products Standards

BBBEE: Broad-Based Black Economic Empowerment

CEO: Chief Executive Officer

CoBP: Codes of Best Practice

CSF: Critical Success Factors

DAFF: Department of Agriculture, Forestry and Fisheries

DCOGTA: Department of Cooperative Governance and Traditional Affairs

FSA: Fruit South Africa

IMASA: Institute of Market Agents of South Africa

MIC: Ministerial Interim Committee

NAMC: National Agricultural Marketing Council

NFPMs: National Fresh Produce Markets

PMA: Produce Marketing Association

PSA: Potatoes South Africa

QMS: Quality Management System

SAUFM: South Africa Union of Food Markets

SC: Steering Committee

SLAs: Service Level Agreements

SOPs: Standard Operating Procedures

ToR: Terms of Reference


1. Introduction and background

National Fresh Produce Markets (NFPMs) play a critical role in both national and household

food security in the following ways:

Suppliers to informal fresh produce marketers / hawkers, who earn a living by selling

their produce in the cities and townships. Empirical data suggests that 60% of buyers

in the NFPMs are hawkers who then resell to earn a living thus contributing to local

economic development;

They serve as an outlet/channel where large buyers (mainly supermarkets and other

retail stores) procure fruits & vegetables;

Markets provide trading facilities and a trading platform for fresh produce industry

stakeholders (smallholder and commercial farmers, market agents and buyers);

They provide a low-cost marketing channel for large scale / commercial and

smallholder producers;

Function as a price forming mechanism – prices generated through trading at these

markets are used as national reference prices for fruits and vegetables; and

They are a revenue generating asset for municipalities, who own the majority of this

infrastructure.

As early as 1997, there were concerns regarding the South African 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

Agricultural and Land Affairs (Minister Thoko Didiza) through the National Agricultural

Marketing Council (NAMC) to launch 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 National

Fresh Produce Markets, legal framework, 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.


In 2013 the continuing deterioration in service standards in the National Fresh Produce

Markets 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 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.

The Department of Agriculture, Forestry and Fisheries (DAFF), Directorate Marketing also

undertook a scoping exercise to gather first-hand information and visited the various fresh

produce markets to assess their status and held numerous discussions with market

management, municipal officials, market agents and buyers. The following became apparent

during the scoping exercise:

Poor state of infrastructure;

Poor hygiene standards and cleanliness;

Health and safety remains a major concern;

Non-existence of consignment and stock control procedures;

Poor state of security (easy entry and exit at the market facilities);

Non-adherence to market by-laws; and

Restrictive practices in course of conducting business on the market floor.

2. Steering Committee on Project Rebirth

In June 2013, the first open fresh produce industry stakeholder workshop was held in

Pretoria, facilitated by the DAFF during which a Steering Committee on Project Rebirth

for Revival of National Fresh Produce Markets was established. The Steering Committee

is chaired by Mr. HM Mamabolo, DAFF Director of Marketing and is composed of

representation from the following 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).


During the fresh produce industry stakeholder workshop referred to above, the Steering

Committee’s overall Terms of Reference (ToR) were formulated and agreed as follows:

Facilitate a process to solicit inputs from key stakeholders (producers, market

agents and market managers) to develop the Codes of Best Practice (CoBP) for

National Fresh Produce Markets, that will pertain to the three stakeholders;

To achieve this the Steering Committee was tasked and expected to:

Interrogate submissions from the three 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 in the NFPMs; and

Establish any linkages to the legislative and regulatory framework.

Once the Codes of Best Practice (CoBP) are finalized, the Steering Committee

must identify key impediments towards implementation and propose ways to

solve them.

3. The Codes of Best Practice (CoBP)

The Steering Committee held numerous sittings in its effort to execute the Terms of

Reference. The Steering Committee representatives (producers, market agents and market

managers) consulted their members to solicit inputs towards the development of the Codes

of Best Practice for the markets. The three stakeholders produced three separate drafts

which were analysed and integrated into a composite document and termed “Codes of Best

Practice (CoBP) for National Fresh Produce Markets as it pertains to market

managers, market agents, producers, labour and service providers” (Annexure 1).

The CoBP document isolates ten key pillars to revive the operations of NFPMs, which are:

Regulatory environment;

Communication / stakeholder engagement;

Consignment control & inspections;

Food safety, hygiene and cleanliness;

Safety & security;

Information management;

Risk & financial management;

Transformation;

Infrastructure; and


Human capital development.

Supporting each pillar in the CoBP are ten Strategic Outcomes envisaged to be achieved

with each. In order to ensure that each pillar is achieved, the CoBP identifies six variables to

assist stakeholders with implementation, namely:

Purpose/s of each pillar;

Indicators of performance;

Activities;

Evidence of compliance;

Time-frames; and

Responsibility and/or accountability.

4. Piloting of the Codes of Best Practice

The Steering Committee, in its effort to identify impediments and Critical Success Factors

(CSF) towards implementation decided to pilot the Codes of Best Practice (CoBP) and

prioritized eight fresh produce markets for the piloting exercise. Those markets are Springs

FPM, Pietermaritzburg FPM, Matjhabeng (formerly Welkom) FPM, Matlosana (formerly

Klerksdorp) FPM, Vereeniging FPM, East London FPM, Sol Plaatje (formerly Kimberley)

FPM and Port Elizabeth FPM which were visited during the period between July and

September 2014. The Steering Committee identified certain pillars from the CoBP as short-

term interventions that must be prioritized by the identified markets, which are:

Consignment Control and Inspections;

Stakeholder Engagement;

Review of market by-laws and compliance to relevant national legislation;

Safety and Security;

Information Management;

Food Safety, hygiene and cleanliness; and

Financial Management.

The medium to long term interventions identified by the Steering Committee from the CoBP

are the following:

Human capital development, including mentorship;

Infrastructure refurbishments; and

Transformation.


To support the piloting exercise with regard to the short term interventions, the Steering

Committee evaluated the Standard Operating Procedures (SOPs), Service Level

Agreements (SLAs) of the top three fresh produce markets (Cape Town, Tshwane and

Johannesburg) and developed generic SOPs and SLAs that can be adopted (with some

adaptation) to assist fresh produce markets with implementation.

5. Positive developments and outcomes

Over the past year and half since the inception of the Steering Committee on Project Rebirth

there have been some notable positive developments in some of the Fresh Produce Markets

and improved cooperation and support from municipal authorities that own these markets.

The following positive developments are worthy of note:

The Port Elizabeth Fresh Produce Market, which has recently been a flashpoint, has

acquired a new acting market manager who is busy establishing an operational team

and reviving internal controls within the market. The revenue of the market is

stabilising and there is positive feedback and cooperation between the market agents

and the new market manager. The Steering Committee is quite confident that the

market is heading towards the right direction and a turnaround strategy is being

developed to detail major interventions and steps that the market will undertake to

revive its operations, along the lines of the CoBP. There are notable positive changes

with regard to maintenance of the basic market infrastructure (after the R1.4m

injection from the municipality), hygiene standards and involvement of municipality in

the affairs of the market.

The East London Fresh Produce Market has been allocated a budget of R10 million

to be used for market infrastructure refurbishment and resuscitating the operations of

the market. The market will draft its turnaround and investment plan and define how

the budget will be utilized efficiently to achieve the outcomes envisaged in the CoBP.

A new market manager has also been recently appointed at the market.

The Pietermaritzburg Fresh Produce Market is experiencing constraints due to a lack

of permanency and continuity at market manager level. The market is currently

undergoing some notable infrastructure renovations and efforts are underway to

improve the state of hygiene and cleanliness, after the Msunduzi Municipality

allocated R15 million for infrastructure upgrades.


The total collapse of management at the Vereeniging Fresh Produce Market will soon

be remedied with the Sedibeng District Municipality committed to appointing an

acting market manager to resuscitate the operations of the market who will be

supported by a specialist project team from the municipality. The municipality has

further requested human resource capacity / mentorship from the Tshwane Fresh

Produce Market to support the newly appointed acting market master for a period of

six months. A draft project plan to resuscitate the operations of the market has been

drawn up.

The Springs Fresh Produce Market has acquired a new market manager who is

steering the market on a new trajectory. Major infrastructure renovations begun in

2013 after the municipality allocated R24 million towards reviving the operations of

the market and there is positive collaboration among the stakeholders at the market.

The Matjhabeng Local Municipality has committed itself to sort out management

capacity at the market and to re-invest a portion of the revenue generated by the

facility towards the upkeep and maintenance of the infrastructure.

The Cape Town Market Management together with the market agents and producers

are to craft a strategy/business plan outlining the value proposition and unique selling

points of the market, to allow it to compete with parallel channels around it.

Additionally, a full-time deputy CEO has been appointed to focus on the affairs of the

fresh produce market to address the perceived absence of market management.

The generosity of both the Tshwane and Joburg Markets to avail human resource

capacity to assist the smaller markets that experience bottlenecks needs to be

acknowledged.

6. Critical Success Factors (CSF)

The success of Project Rebirth for Revival of National Fresh Produce Markets is heavily

dependent on the following:

Continued cooperation and support from IMASA, APAC, producer associations (FSA,

PSA), buyers and labour;

Cooperation from municipal authorities who are owners of the majority of the fresh

produce markets;


Managerial capacity in the NFPMs – this determines the extent to which the CoBP

can be assimilated and implemented;

Stability at market management level

An effective and well organised SAUFM; and

Ability of owners of market agencies, IMASA, APAC to uphold ethical trading

practices and maintain integrity of the commission system; and

Commitment from the DAFF to champion the program.

7. Future plans

The Steering Committee will continue concluding and piloting the Codes of Best Practice in

other markets. The broader fresh produce industry stakeholders are afforded an opportunity

to provide inputs on the draft Codes of Best Practice document until the end of January 2015

before its conclusion.

As an effort to address some of challenges, the Steering Committee in collaboration with

other stakeholders will embark on the following set of actions:

Facilitate implementation of short term interventions as identified in section 4 of this

report in the prioritised fresh produce markets and other markets that will be included

in the priority list. The experiences and best practices of operation personnel from the

bigger markets will be used in implementing various SOPs, introduction of SLAs,

review of market by-laws, and improving consignment control procedures in the

prioritized markets.

The implementation and up-scaling of a Quality Management System (QMS) in the

NFPMs, which will focus mainly on expanding quality control inspections to comply to

the Agricultural Products Standards Act. The Executive Officer of the APS Act will

provide direction with regard to this process and the appointment of a neutral service

provider / referee to manage the program. Additionally, laboratory analytical services

will be introduced to complement inspections through the utilization of DAFF’s food

control laboratories and a network of other laboratories.

Negotiations will begin with municipal authorities regarding the viability of ring-fencing

a certain proportion of the 5.7% market fee (revenue) for reinvestment into the

operations of the markets to maintain and upgrade the market infrastructure. The

goal is to have a long term and sustainable financing model that allows a portion of


market revenue to be reinvested into the market to use for market infrastructure

refurbishment and maintenance.

A public relations campaign / program to communicate positive developments

emanating from Project Rebirth at various fresh produce markets is to be explored

through producer associations’ farmer days and AGMs, Produce Marketing

Association (PMA), Retailers Association, relevant industry publications/magazines

and local media platforms.

8. Acknowledgements

The work of the Steering Committee on Project Rebirth could not have been possible without

the active support and cooperation of key fresh produce industry stakeholders and

individuals. In this regard the Chairperson of the Steering Committee is grateful to and

wishes to acknowledge the active support of Mr. Grant Norman and Mr. Deon Van Zyl of the

Institute of Market Agents of South Africa (IMASA), Mr. Rudolph Badenhorst of Potatoes

South Africa (PSA), Ms. Lizel Pretorius of Agricultural Produce Agent Council (APAC), Mr.

Richard Hurndall from Fruit South Africa (FSA), Ms. Mathilda van der Walt of the National

Agricultural Marketing Council (NAMC), Mr. Patrick Mphahlele of the South African Union of

Food Markets (SAUFM) and DCOGTA.

The Steering Committee is also indebted to Mr. Moses Letsoalo, the Director of Operations

at the Tshwane Fresh Produce Market for continued availability and support provided in

piloting of Codes of Best Practice and his Executive Director, Mr Patrick Mphahlele for

making his services available to the Steering Committee.

I am also grateful for the support of Mr Stanford Manthata, Deputy Director for marketing

infrastructure and Mr Hunson Ndlovu, Senior Agricultural Economist for the efficient

secretariat and logistical support provided to the Steering Committee and to Mr Billy

Morokolo, Chief Director: Agro-processing & Marketing for allowing and supporting me to

undertake this task.

My appreciation also goes to the Executive Officer of the Agricultural Products Standards

Act, Mr Billy Makhafola and the DAFF’s laboratory manager, Mr Ephraim Moruke for making

their services and expertise available to support the work of the Steering Committee.

Contributions from Dr Madime Mokoena, Director BBBEE Charters Compliance are also

greatly acknowledged during the finalisation of the CoBP.


Mogala Mamabolo Chairperson: Steering Committee on Project Rebirth for National Fresh Produce Markets Tel: 012 319 8455 Fax: 012 319 8131 Email: [email protected]

report of the steering committee on project rebirth …webapps.daff.gov.za/amisadmin/upload/report 1...

Documents