Are you covered?

Producers send huge volumes of fresh produce to the markets – over three million tons a year at last count. A large proportion of this is either placed in cold storage or ripening chambers.

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But things can go wrong, and there are occasions when farmers lose large sums of money through somebody else’s mismanagement. There could be many reasons for a cold storage failure, say, and establishing precisely who is responsible is not always easy. Take a look at the supply chain to see what I mean. The producer consigns a load to the market agent, who accepts responsibility for selling the products, as well as the safe handling and storage of the consignment.

Who takes responsibility?
If cold storage or ripening is required, the agent hands over the product to the market authority, who charges a fee for such services. Obviously, if all goes well, everybody is happy. But what happens when things go wrong while the produce is in the care of the market authority? Most people would argue that the market authority should bear the responsibility, since the produce was in its care when the problem occurred.

But things are not that simple. The farmer consigned the produce to the market agent, so he looks to the agent for compensation. The agent is an extension of the farmer’s marketing actions, so he turns to the market authority for relief. The latter, in turn, argues that the farmer must carry the loss because he is the owner – and, anyway, the market only has insurance to cover the infrastructure, not the product.

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Par for the course
Although in line with municipal and national legislation, this abrogation of responsibility seems crazy to a businessperson, but I suppose it’s par for the course for a bureaucrat. There have even been instances in recent times where market agents have eventually picked up the tab to keep their clients happy. But every producer using market cold storage or ripening facilities should check the situation with each market authority to get clarity on this serious matter.