The Johannesburg, Tshwane and Cape Town fresh produce markets dominate, with a combined turnover of R5 billion or 60% of the total market share of all fresh produce markets in South Africa. Mike Cordes spoke each CEO to find out what makes their markets competitive.
The Fresh Produce Markets in South Africa have a history dating back to the early settlers in the Cape. About 60 years ago, there were over 130 markets scattered around the country. Today, only 25 remain, of which 19 on the Freshmark System had a combined turnover exceeding R8 billion for 2007/08. This accounts for around 30% of the total fresh produce business, including exports generated in this country. Significantly, three markets – the Johannesburg Fresh Produce Market (Pty) Ltd (JFPM), Tshwane Market (TM) and Cape Town Market (CTM) contribute over 60%, or around R5 billion, of the Freshmark System’s R8 billion figure.
Johannesburg dominates with a R3 billion+ turnover, followed by Tshwane at R1,4 billion and Cape Town at R927 million. |fw
Kgosientso Ramokgopa: JOHANNESBURG FRESH PRODUCE MARKET (JFPM) CEO
The City of Johannesburg (CoJ) chose the corporatised ownership model. What benefits does it hold for farmers?
Following the recommendations of the National Agricultural Marketing Council, the City of Johannesburg (CoJ) elected to establish JFPM as a private company in which the city is the sole shareholder. Transformed from a department of the municipality to a company with a board of directors appointed from the industry, the CoJ is steered by people who understand the business. They focus the operation on efficiency, customer needs and profitability.
Food Safety, HACCP and traceability are buzzwords. Please elaborate.
Food safety is a key focus area and a state-of-the-art laboratory has been established to conduct various tests, including chemical residue testing.
A workgroup has been established, where experts in food safety and from leading supermarket groups will develop an all-inclusive food safety strategy, complying with relevant legislation and customer requirements. JFPM plans to become compliant with the new ISO 22 000 standard, which could make it the first of its kind internationally. We also aim to assist farmers in achieving these standards.
What is the proposed new Premium Hall?
The name Premium Hall was misinterpreted by some as a single hall providing a complementary service to existing trading. It was renamed Market of the Future to reflect the focus on upgrading the entire trading operation to comply with the latest and projected industry requirements.
Research was done to establish trends in the industry, and identify an appropriate and optimal positioning for JFPM.
A model was then developed and tested widely with interested stakeholders. It’s been approved by the JFPM board and will soon be submitted to the CoJ for approval. A detailed viability study confirmed the project is economically feasible and sustainable. A far better value proposition can therefore be offered to the industry, without increasing the cost. Once final approval has been granted, the road ahead will be discussed in more detail with the industry.
What is the JFPM doing to ensure it plays the role of “referee” and applies the rules fairly to all roleplayers?
As an objective player, the JFPM ensures that transactions are fair, transparent and according to the rules. This role can be more effective if farmers approach market management more often when they’re aware of misconduct, or they feel unfairly treated. Where producers experience any problems, they can count on these matters being dealt with in confidentiality and with empathy. The JFPM has easily identifiable staff on the trading floors and provides contact details on their website to assist stakeholders in reporting a problem. (Refer to Fact File on pg 50 for contact details).
How do you see the future of fresh produce markets in South Africa?
I’m excited about the future. Markets will be needed to provide producers with a platform to sell their produce. This will give them exposure to a vast number of buyers to achieve market-related prices. It will also create an environment without concerns about receiving payment. No other facility offers these benefits to a farmer.
Markets will only be able to provide these services on a sustainable basis if they comply with industry requirements and are brave enough to implement the required changes in this ever-changing industry.
Heidelberg Road, City Deep, Johannesburg. PO Box 86007, City Deep 2049. Tel: 011 992 8000. Fax: 011 613 8375, Confidential fraud
hotline: 0800 002 587. www.jfpm.co.za,
E-mail [email protected].
Christo Groenewald: TSHWANE MARKET (TM) CEO
TM is the second-largest market in South Africa. Apart from being in the commercial heart of the country, what other reasons ensure that you stay at the top?
The close relationship we have with our clients through continuous interaction provides us with a sound understanding of their needs. We also strive to provide the best facilities and services to satisfy such needs. We ensure that we stay abreast of national and international market standards, market developments and new technology.
In addition to a clean market, we also provide an environment that makes it easy and pleasant for our clients to do business.
TM has remained a municipal market – what advantages does this hold?
The TM enjoys an excellent relationship with both the administration of the City of Tshwane and the political incumbents responsible for the market. Their support and understanding has ensured that the profits are ploughed back into the market every year. We have therefore, been able to provide excellent facilities/services and have invested in new developments. We are, however, studying alternative service delivery options.
As executive director you’ve overseen a number of developments.
The market has regularly invested in infrastructure to remain competitive. New investments in agroprocessing and storage facilities are planned for the 2009/10 financial year onwards. An investigation is presently underway to determine the need for outlets in the north of the city.
The market will continue to support small, medium and macro enterprises through developmental programmes and provide assistance with tender processes. We take pride in the successful introduction of a BEE market agency.
We’ll continue to provide cost-effective services of excellence, introduce the latest information technology and streamline our systems to be user-friendly.
A new release of the market’s trading system will be implemented within the next few months.
Currently, both market and market agents are upgrading their computer systems. The present study into an alternative service delivery mechanism for the TM can unlock immense potential for the market and improve on what we currently offer our clients.
What is TM doing to ensure it plays the role of “referee” and applies the rules fairly to all roleplayers.
Management interacts with market roleplayers on the market floor, at farmer’s days and during individual visits. We have a consignment control team that focuses on regular audits, consignment and quality control to protect the interests of producers and market agents alike.
Market users have access to management 24 hours a day and customer service centres are on our premises to assist our clients.
450 President Burgers Street, Pretoria West. PO Box 266, Pretoria, 0001. Tel: 012 358 2347/2398. Fax: 012 358 2301. Customer care lines: 012 358-2398/1394. www.tshwane.gov.za.
Rob Lowe: CAPE TOWN MARKET (CTM) CEO
CTM is the third-largest market, but as a terminal market, it’s unique. Why is this?
Being at the end of the line and surrounded by two oceans has advantages and disadvantages. The distance from the producers and markets has an effect on price. It also means we’re a captive market for some producers and buyers who are deterred by the high costs associated with for example, transport.
The industry has been discussing ownership models for markets for years. The City of Cape Town elected to privatise CTM. How does this benefit farmers?
A management team with a successful track record who understand the challenge of getting all stakeholders to work together; the urgent need to reintroduce integrity; that the farmer has choices; that he is at risk and must be treated as “client No. 1”. It’s also a market run without reference to municipal or political masters.
CTM is the only market with a covenant for its customers.
The covenant was signed by shareholders, employees, market agents, salesmen and leading farmers on 28 November 2007. It contains pledges that underpin integrity and trust.
As CEO you’ve overseen a number of developments and innovations.
We’ve established a healthy mutual respect and dialogue between the stakeholders, underpinned by the sale of equity in the market to all our market agents and to about 40 leading producers in 2007. When I became responsible for the market, there was hostility between the stakeholders.Two producers sit on the board and add enormous wisdom to our deliberations.During 2007/08 representatives from the CTM attended every annual producer meeting and made presentations on our new business plan to the delegates.
Also, through the sponsorships of the All Fresh, Potatoes South Africa and other conferences, we’ve successfully established the brand of the CTM and our ethics.
How do you see the future of fresh produce markets in South Africa?
The post-deregulation challenges are enormous. Farmers have choices and the markets probably didn’t respond to the new order as well as they should have.
If they get their respective acts together, they will have a compelling message to send to farmers.
I’m optimistic about the future and happy to share our successes and failures with the other fresh produce markets.
We hope that collectively, we can preserve and develop these wonderful national institutions.
PO Box 1, Eppindust, 7475. Gunners Circle, Epping Industria, Cape Town. Tel: 021 531 2191. Fax: 021 531 5291. www.ctmarket.co.za.