South Africa’s fresh produce market agents are operating as an oligopoly that must be broken because it is impeding competition.
South Africa’s fresh produce market agents are operating as an oligopoly that must be broken because it is impeding competition. Blue chip property owners, meanwhile, must transform shopping malls by leasing space to small, emerging greengrocers.
These were among the findings and 31 recommendations in the Competition Commission’s Fresh Produce Market Inquiry report that deputy commissioner and chairperson of the inquiry, Hardin Ratshisusu, handed to Minister of Trade Industry and Competition Parks Tau at its launch in Pretoria on Monday.
Commissioner Doris Tshepe said the inquiry, which began in March 2024, had provided an opportunity to better understand the country’s R53 billion fresh produce market and to identify features that “may be impeding or restricting or distorting competition and participation”.
Tshepe said complaints alleging anti-competitive conduct in the value chain and the findings of its 2020 concentration study — which revealed high levels of concentration (where a small number of businesses own a significant share of the market) in the agricultural sector — had prompted the investigation.
“The commission has been conducting essential food price monitoring reports since 2020 and the findings of these reports, the last one published in September 2024, depict alarming levels of price increases and volatility in pricing for various food products, including fresh produce,” Tshepe said.
“In some instances, these price increases surpass the annual inflation rate, which raises this question about drivers of such increases. This has a disproportionate effect on poor and low-income earners, who must spend a great portion of their income on purchasing essential products.”
Ratshisusu said the inquiry had focused on structural features and practices in the fresh produce market value chain. It focused on five fruits — apples, citrus (particularly oranges and soft citrus), bananas, pears and table grapes — and six vegetables: potatoes, onions, carrots, cabbage, tomatoes and spinach.
“The inquiry conducted its assessment under three themes that cover the entire fresh produce value chain, namely: efficiency of the value chain, with an emphasis on the dynamics around fresh produce market facilities; market dynamics of key inputs such as fertilisers, agrochemicals and seeds and its impact on producers and barriers to entry, expansion and participation,” he said.
“The inquiry has identified barriers to competition across the fresh produce value chain as well as features of the market that impede, distort or restrict competition.”
These concerns included the inefficiency of municipal fresh produce markets; inefficiencies in the value chain; the conduct of fresh produce market agents; high input costs, particularly for certain fertilisers and seeds; regulatory obstacles and systemic barriers to entry for small-scale, emerging and historically disadvantaged farmers.
“The inquiry noted that the fresh produce market in South Africa, valued at over R53 billion annually (excluding informal sales channels and exports), presents significant opportunities for growth and inclusion. However, the share of participation by historically disadvantaged farmers and market agents remains low.
“This underrepresentation is a stark reminder of the sector’s historical inequities and the urgent need for meaningful participation in the economy and transformation,” he said.
Ratshisusu said disruption of the status quo required “dynamism through new and diverse, lower-cost models of retailing that allow greater pass through of farmgate and supplier prices” to consumers.
“Localised competition, particularly from SMMEs and historically disadvantaged persons and independent retailers with diverse models, including through greater procurement from national fresh produce markets (NFPMs) is required for more dynamic competition in fresh produce retail,” Ratshisusu said.
He said the inquiry had identified that, although there appeared to be a sizable number of agents operating across markets, there were only a few with significant share. The largest players were the RSA Group, the Grow Group and Subtropico.
“The inquiry’s analysis confirmed exceptionally high concentration levels among market agents. In particular, and for essential produce such as potatoes, apples, bananas, onions and tomatoes, the four largest market agents account for at least 70% market share in major NFPMs. All factors considered, the market agents’ space is an oligopoly,” Ratshisusu said.
He added that the inquiry had identified that investment company African Rainbow Capital holds significant cross-shareholding in two of the largest market agents — RSA Group and Subtropico.
“The two market agents/agencies hold between 50% and 90% market share in major NFPMs for essential produce, particularly the trading of potatoes, apples, bananas, onions and tomatoes. The level of market concertation in the market agents or market agencies space is of great concern,” he said.
He said to remedy this, the inquiry would recommend to the Competition Tribunal that African Rainbow Capital must divest its shareholding in either the RSA Group or Subtropico and that the buyer of divested shares must be a firm wholly owned and/or controlled by a historically disadvantaged person. This remedy would be suspended for six months to allow the company to voluntarily implement it.
The inquiry also found that there are inefficiencies at most municipal-owned markets which are impeding, restricting or distorting competition. At the core of these inefficiencies is inadequate funding, the lack of participation by SMME and historically disadvantaged farmers and the inconsistency of key bylaws.
He said the commission’s inquiry recommended that municipalities, in collaboration with the South African Local Government Association and the South African Union of Food Markets must change market operating and governance models.
It recommended that markets should be corporatised through state-owned companies owned by municipalities, emphasising accounting separation, including a separate budget, procurement lines and accountability through a board of directors or, alternatively, through the creation of public-private partnerships, with municipalities retaining ownership of market infrastructure.
Municipal markets must also introduce measures to increase the annual sales of small-scale and historically disadvantaged farmers and within three years harmonise bylaws regarding trading hours, rules for fresh produce market agents and the use of cold storage and ripening facilities.
Ratshisusu said the inquiry had recommended that “large or strategic” shopping centre property owners should use “reasonable commercial endeavours” to provide vacant floor space to SME retailers, on terms acceptable to both parties. These property owners are: Accelerate Property Fund, Atterbury Property, City Property Administration, Hyprop Investment, Mowana Properties, Old Mutual Property, Pareto, Redefine, Resilient Property Fund, SA Corporate Real Estate and the Vukile Fund.
“The [Department of Trade, Industry and Competition] should work towards the creation of a fund to assist new entrants in the retailing of fresh fruits and vegetables in shopping centres,” he said.
It was also recommended that Shoprite Checkers, Pick n Pay, Woolworths, SPAR and Food Lover’s Market maintain and expand their supplier development programmes.
In addition, the inquiry found that supermarket sales and pricing revealed instances of high mark-ups of total revenue over what suppliers are paid for some products, he said.
“However, net margins after the high costs of supermarket chain operations are accounted for are slim. This indicates concerns in the value chain where high rents may be extracted at the supermarket level of the value chain,” he said.
“The implication is that under the current models of modern food retailing, supermarket chains are not efficiently transmitting prices obtained from farmers to consumers for these produce categories. This suggests that competition in the formal retailing of fresh produce is not as healthy as it could be,” he said.
It also suggested that retailers display the per 100g price of fruit and vegetables because it is difficult for consumers to shop around as retailers sell produce in different size packs ranging, for example, from 700g to 3kg.
Regarding the impact of input costs such as fertilisers, agrochemicals and seeds, the inquiry found that reliance on imports exposes the fresh produce supply chain and agricultural sector to global price fluctuations, which creates uncertainty and potentially restricts competition. It advised that the department should implement measures to support the local fertiliser industry, where there is domestic capability.
It also identified pricing concerns regarding seeds supplied by Sakata Seeds and Starke Ayres which, as part of the inquiry’s remedy, have agreed to establish a development programme targeting 700 small-scale farmers over the next three years. The companies will provide seeds at up to 10% discount to the farmers and provide R200 000 for development funding.
Tau, who will table the report in parliament in the coming weeks, said the issues highlighted distorted competition and reinforced historical inequalities and inequities in the economy.
“The 31 remedies presented in this report offer a clear and actionable road map for addressing these challenges, from enhancing the efficiency of fresh produce markets to reducing barriers to entry and supporting small-scale, emerging and historically disadvantaged farmers and to revitalising the local fertiliser industry,” Tau said.
He said the measures aligned with the government’s broader priorities of inclusive growth, food security, poverty reduction and transformation.
“The task ahead is not one for the government alone — transforming the fresh produce value chain will require collaboration across the public and private sectors, as well as robust engagement with communities and stakeholders. We must all share in the responsibility to create a sector that fosters growth, inclusion and resilience,” he said.
“The findings and recommendations of this market inquiry should translate into tangible reforms that benefit all South Africans, particularly those who have been historically excluded from economic participation.”
