The South African fresh produce market system is unique in the world because it functions on a commission basis, as Attie Horn, president of the Institute of Market Agents of South Africa (IMASA) and Michael Cordes, general manager of IMASA, explain to FreshPlaza. This system is governed by legislation that protects the seller (the farmer) and the Agricultural Produce Agents Council (APAC) which trains, licenses and, if need be, disciplines market agents. It enables a farmer to be more of a “price maker” than a “price taker”.
There is currently an ongoing investigation into alleged price-fixing at some markets after a complaint was laid at the Competition Commission, but no charges have yet been laid. Potatoes SA released a statement in defence of the free market system of selling fresh produce, stating “it provides the ideal, inclusive and transparent trading environment to all fresh produce producers, be they small-scale, emerging or commercial producers, to sell their produce directly to buyers.”
Some major producers like ZZ2 have so much faith in this system of fresh produce trading, that not only does the vast majority of their produce (in excess of 80%) go to the fresh produce markets, but they have helped to establish two markets in Polokwane and Mooketsi to service the north of the country.
IMASA is of the opinion that there might be an imperfect understanding of how the system functions, perhaps because of the volatility of prices which are acutely sensitive to as many as 45 pricing factors, of which the main ones are supply and demand, quality, continuity of supply and communication between farmer and market agent. It is a purely free market system, with no fixed baseline prices.