Essay

Securing small farmer participation in supermarket supply chains in South Africa

5.3.2 Advantages and disadvantages to the farmers

The advantages are that the relationship with the supermarket is now well established, with considerable trust and transparency between the parties, and the farmers benefit from having access to credit and receiving production and marketing advice. The engagement by the supermarket has led to improved prices for the farmers – largely as a result of better coordination of deliveries, improved production volumes and better quality produce because of the training of the growers and their improved skills. The poor technical farming and business skills of the growers, the poor communication between growers, the poor quality of produce and the non-availability and high costs of transport leave the farmers prone to opportunistic behaviour because they do not communicate among themselves, have no bargaining power and have to accept all the terms set out by SPAR.

3.1 Fresh produce sources

Supermarket chains have significantly modified their ways of buying fresh fruit and vegetables since their inception years. They have shifted from sourcing for individual stores off the spot markets such as the municipal fresh produce markets to buying from specialized sourcing and procurement companies and contractors. For example Shoprite stocks and manages a fresh produce inventory and makes it available to all its outlets through a subsidiary.

These procurement specialists are increasingly buying directly from farmers, using verbal contracts (Louw et al., 2004), but despite this trend supermarkets are still among the top buyers off the municipal fresh produce market floors where produce is predominantly (about 90 per cent) from the commercial farmers (personal communication, 2006, T Dobbs, General Manager, Tshwane Fresh Produce Market).

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