Devan Pillay

New South African Review 4


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pack their produce on the farms, ready for distribution through Massmart’s controlled cold chain.

      The R200 million fund that ultimately was mandated by the Appeal judgment was thus limited to developing the capacities of small-scale producers. As Morris puts it in his contribution to the expert committee report, the task is ‘how to institutionally build the competitive capabilities of small and medium size enterprises within these supply chains’ (Morris 2012:9, italics in original). As he notes, retailers ‘do not do so as acts of beneficence to suppliers, but because it is in direct corporate interest’ (Morris 2012:14, italics in original).

      There is a longer history of supplier programmes that focus on bringing small-scale producers into the market. The current fixation is on integrating smallholders in the production and distribution of fresh fruit and vegetables into supermarket supply chains. Thus, the extended discussion into Massmart/Wal-Mart’s supplier fund becomes a condensation of the logics of the development agenda, in which retailers are well aware of the political imperatives of smallholder ‘inclusion’.

      In 2009, the ANC positioned agricultural production at the centre of its focus on rural development which, in turn, highlighted smallholder production as an arena of intervention.12 Because of the concentration within the agro-food system in South Africa, any development of smallholders is seen to rest on access to local supermarket shelves rather than through production for export (Greenberg 2013; Aliber 2013).13 Furthermore, job creation in agriculture is understood by DAFF as being best facilitated through smallholder schemes and agro-processing through inclusion into value chains (Aliber 2013).14

      This policy shift toward smallholder development corresponds to a growing consensus within the state that food security rests primarily on access by consumers to cheaper food (rather than, for instance, through subsistence farming), with a new-found enthusiasm for the expansion of supermarkets to rural areas and townships (for example, the Comprehensive Rural Development Programme, DRDLR 2009, as cited in Greenberg and Paradza 2013: 55). In general, the state’s approach to food security has been through providing social grants to underpin food purchases.

      In short, the state sees supermarkets as an efficient means of coordination and distribution which can bring cheaper food to rural areas and townships and can provide small-scale producers with market channels. Within the long history of dominance by large-scale, capital-intensive agricultural production in South Africa reinforcing high barriers to entry, the state now looks to retailers to provide markets to small-scale farmers rather than transforming the embedded power of capitalist agriculture in South Africa.

      Yet if we examine the food value chain, corporate concentration increases (along with deregulation) in the 1970s around the world (McMichael 1994) as well as in South Africa. Private coordination relies on power in the chain. As Greenberg (2010:3) writes: ‘It does not merely replace the state, but alters the terms of governance and regulation to serve specific interests.’ In South Africa, the deregulation and privatisation of single-channel marketing and pricing systems, starting in the 1970s and clinched with the 1996 Marketing of Agricultural Products Act, shifted power to corporate retailers over producers, who had previously had a guaranteed price for their product.15 The corporatisation of former commodity cooperatives occurred at the same time that trade liberalisation in South Africa increased imports of foodstuffs – also accentuating the power of retailers, as they could now source food products globally (Greenberg 2010; Kenny 2012a). We enter the terrain of buyer-driven commodity chains, where retailers exact increasing control over product development and specification by controlling marketing channels (Gereffi 1994). While the state may set regulatory limits on, for instance, quality and health standards for food, it is private standards that have worked to enforce compliance and also to help shift power towards retailers who list preferred suppliers by their ability to meet volume, consistency, presentation and quality measures, increasingly defined and agreed at a global corporate level (Greenberg 2010).16 The corporate retail control of food chains has introduced ever stricter entrance barriers to producers.

      Smallholders are encouraged to participate in programmes which can facilitate their access to retailers’ chains yet many of these programmes have low rates of success of sustainability (Nkomo 2013). TechnoServe SA, an international nonprofit organisation that ‘empowers entrepreneurs’ (Mashala 2013:48) manages the contract for Massmart’s Direct Farm programme within its Supplier Development Fund. It has also run similar projects to bring small, medium and micro-sized enterprises (SMMEs) into other retailers’ chains. Working with projects in Limpopo, Mpumalanga and KwaZulu-Natal, it provides training and assistance in finding markets and finance. TechnoServe reports that forty smallholder farmers currently supply Massmart with fresh produce (Mashala 2013:48). Given the skewed resource and skills sets that mean that large scale agriculture dominates South Africa, their interventions assist smallholders to build sustainability within this highly concentrated environment. A key way in which they ensure that a farmer may reach this goal is ‘stringent’ selection (Mashala 2013:49) – TechnoServe works with farmers who are better resourced, with their own access to land, equipment, labour, and those who have an ‘already demonstrable access’ to markets (Nkomo 2013:40). TechnoServe also argues that it focuses on value chains where commercial farmers are not already dominant because the competition would be too high. Beyond choosing feasible commodities, the farmer has to show some ability ‘to access correct seed variables’; to know the crop requirements; to access and use fertilisers; to ‘meet minimum quality requirements and understand these requirements from a market perspective’; and to have access to infrastructure, including irrigation and tillage equipment, storage facilities and pack-houses, and logistics in the form of cold-chain friendly trucks to deliver produce (Nkomo 2013:40).We have little research that details the relationship and nature of contract of suppliers to retailers – highly sensitive information frequently governed by nondisclosure clauses (but see Mather 2005; Mather and Kenny 2005). Recent research by the Institute for Poverty, Land and Agrarian Studies (PLAAS) begins to detail the requirements of smallholders who participate in these programmes. Survey results from smallholder tomato farmers in Limpopo show that net incomes are higher for farmers supplying traditional market channels than through supermarkets or agro-processors (Chikazunga 2013), participation in which, as has consistently been found, requires ‘production infrastructure such as greenhouses and irrigation technology’ and enough land. ‘Given poor yields, inferior quality and production risks, traditional channels are more relevant to the majority of the smallholder farmers’ in the area (Chikazunga 2013:22).

      Another study of a development programme aimed at getting smallholder farmers in the Vhembe district into the avocado value chain to supermarkets found that growers felt they benefited from the secured market of retailers, but nevertheless found that most farmers had turnovers below production costs because their farming units were too