Are you legal?

Market agencies are required to register with the Agricultural Produce Agents Council (APAC) before they may conduct business.

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However, it does happen occasionally that an agency which changes ownership will continue trading with the ‘old licence’.
The law requires a new owner to make separate application to APAC for a Fidelity Fund Certificate (FFC) – licence to trade – and they may not conduct business until the certificate has been issued. This extremely important document means a producer who might incur financial losses through a market agent is compensated for those losses from the Fidelity Fund (FF).

It’s understandable that when somebody takes over a business they’re keen to get started and generate much-needed income. Equally, the market authority would like to see ‘business as usual’ on the market floor.

But it should also ensure that the agency has fulfilled all legal requirements before allowing it to open its doors for business. Some don’t do this, though, and so the ‘new’ agency sails along merrily, selling fresh produce. Meanwhile, the APAC – for whatever reason – hasn’t completed its investigation into the new applicant and hasn’t issued a FFC.
All of this means the agency is trading illegally.

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A further complication is if the new owner, as an individual, isn’t registered with APAC, or may have had their FFC withdrawn on another market, but is trading anyway. This happens. With 19 markets in SA and 100 market agencies employing over 800 salespeople, it’s difficult for the APAC to keep tabs on all of them.

Occasionally, an illegal operator slips through the cracks. Even with the ‘legal wheels’ in motion, it can still take an inordinate amount of time to bring the person to book, which means that, unless market management is strong, they’ll trade as if nothing is amiss.

Two serious issues come to mind. The first is the damage to the relationship with the producer, who’s sending produce in good faith to this unregistered agency. The market agent omits to tell the whole truth to the producer, thus creating false expectations. The second issue is if the farmer should claim against the FF, they wouldn’t have a leg to stand on as the agency is illegal. The moral of the story? Make sure your market agent is registered.

Contact Mike Cordes at [email protected]. Please state ‘Market floor’ in the subject line of your email.