The FPMI report, released in June, contained allegations that various stakeholders in the fresh produce industry, from seed suppliers to market agents, were acting uncompetitively.
The report was, however, littered with inaccuracies, casting doubt over its validity and ability to provide a constructive way forward.
Inaccuracies included referring to market share of companies that no longer exist, confusing company sales with commercial sales, and discussing the role of genetically modified (GM) seed when no GM fresh produce varieties exist in South Africa.
In analysing the prices of seedlings, the report compared the prices of Swiss chard, commonly known as spinach, with those of baby spinach, which differ drastically.
The report stated that mark-ups for seeds supplied by Starke Ayres, notably cabbage, tomatoes and spinach, were high. The FPMI recommended: “Starke Ayres should reduce the mark-ups of cabbage, spinach and tomato seeds to the average of the mark-ups of its entire seeds category.”
In response, Frikkie Bam, managing director of national operations at Starke Ayres, said the seed industry was highly competitive and that farmers quickly switched varieties if the seeds did not perform.
“Loyalty is not guaranteed, and seed companies must provide the best seed possible for farmers to continue purchasing them. We believe our seeds are priced fairly in accordance with the value they give to the farmer, while balancing the enormous reinvestment required by the seed company.”
He added that the recommendation to reduce mark-ups to an average across all categories “made no sense”.
“Each crop has its own cost structure, but so too does each variety within a crop, based on research and development, input and testing costs, and currency fluctuations. Exclusive varieties and proprietary crops have different values, and then there is a supply and demand element that must be factored in. This is a difficult recommendation to understand given the free market system.”
Simba, owned by PepsiCo, came under firing in the report and was accused of preventing third parties from gaining access to its FL2006 potato seed varietal, shortly before the expiration of the protective period.
Debbie Sharwood, communications lead for PepsiCo in South Africa, said the company had explained its operating model yet they maintained their preliminary findings regarding Simba, despite the lack of any data to support it.
“Simba withdrew this varietal almost five years prior to the expiry of plant breeder’s rights to replace it with a stronger varietal. This sub-par varietal was proven to be inferior to many other varietals, including other potato growers and our competitors. These facts were shared extensively during Simba’s engagement in the FPMI.”
