Fruit and veg cartel allegation is ‘ludicrous’
Major fresh-produce market agents this week lashed out in response to accusations that they were operating a cartel to push out small competitors and fix the commissions they charged South Africa’s farmers.
The Competition Commission raided the offices of large agents in Johannesburg and Tshwane on Thursday, and expanded the operation to Cape Town and Durban on Friday.
The agents operate at the 19 municipal markets where much of South Africa’s farm produce is sold.
The complaint leading to the raids was laid almost two years ago, in July 2015, by Mogala Mamabolo, the director of marketing at the department of agriculture, forestry and fisheries.
The fresh produce markets sell about 3.4 million tons of fruit and vegetables a year, worth about R14 billion. A small group of large agents is responsible for most of these proceeds.
The Johannesburg market accounts for 43% of sales. Tshwane accounts for 20%, while Cape Town and Durban each account for about 10% of sales.
The commission does not yet have an estimate of the extent to which the agents allegedly distorted prices – or when the alleged collusion started, said spokesperson Sipho Ngwema.
The commission suspects the agents of price fixing – more specifically, that they allegedly manipulate prices down early in the day to force smaller agents to sell out their goods at lower cost, before raising prices near the end of the trading day to benefit themselves. The markets operate between 5am and 11am. The commission also claims that the big agents are colluding to fix the commission rate they charge farmers for selling their goods at the markets.
If these allegations are true, the alleged cartel would be manipulating the channel through which roughly half of all South Africa’s fresh farm produce gets sold.
The rest is exported or sold directly from farms.