Fiduciary responsibility

Act 12 of 1992, which regulates market agents, places strong emphasis on what a market agent may and may not do with a producer’s money.

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Among its provisions is the requirement that every market agency must open a trust account on behalf of the farmer. This is solely for depositing the proceeds from a sale and paying the farmer. It has no other function and is closely monitored by the Agricultural Produce Agents’ their own internal rules and arrangements for handling farmers’ money.

The role of the agency director
A good agency director will be aware of the consignment sent in by the farmer and have a sound grasp of the prices realised and other pertinent aspects of that consignment. However, he will not have been involved in any of the negotiations with buyers or the handling and storage of the produce. These aspects are overseen by the market agent (the salesperson).

If the latter commits a fraudulent act with the producer’s stock/money, he or she is obviously responsible. But the director of the market agency can also be held responsible, even though this person had no knowledge of the wrongdoing. Some might argue that this is harsh on a director. On reflection, however, one must concede that the buck has to stop with the director. It’s this person’s responsibility to ensure that the necessary safeguards and legal requirements are in place. This includes carrying out the agency’s own internal disciplinary procedures and taking early preventative steps where necessary.

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The right calibre
It stands to reason that the agency should employ people with integrity. This is not easy, but it’s something that should be strived for at all costs. And dealing with the ‘bad apples’ may include weeding out or disciplining senior salespeople who virtually run their own businesses under the banner of the agency.

We don’t live in a perfect world, so no market agency is going to achieve a 100% scorecard. But the objective should be to get as close as possible. And it all starts with leading by example, as well as motivation, support and training.