Marketing fresh produce

TechnoServe South Africa is providing small-scale fruit and vegetable growers, who often have difficulty in finding established markets, with a ready market for their produce. The organisation’s operations director, Mandla Nkomo, talks to Stanley Karombo.

Marketing fresh produce
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All farm enterprises, regardless of size, have to find a market for their produce. Most industries have established marketing systems in place but these aren’t always able to accommodate small-scale producers who are constrained by size and locality. This is of special relevance to small-scale fruit and vegetable farmers.

Mandla Nkomo, operations director of TechnoServe SA, and a small-scale fresh fruit and vegetable grower himself, says prospective growers have to identify and research the market carefully before launching their enterprises.

“Emerging fruit and vegetable growers generally have difficulty in discovering established markets or marketing systems tailored to their unique situations,” he says. Selling directly to retailers is an option but this would mean that growers would have to package their produce according to retail standards and deliver it to the retailers.

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Packhouse management
Packhouses are complex businesses, however. To operate them successfully, good management skills and a thorough understanding of the market are essential. “Packhouses are generally perceived as great business opportunities for black entrepreneurs, yet the rate of success is very limited, given the operating complexities and financial requirements,” says Mandla.

“To build and maintain a successful unit, managers need to nurture and maintain relationships with both retailers and buyers. “In addition, fresh produce retail and distribution units are under enormous pressure to support black economic empowerment.

E-Fresh model – a new approach
TechnoServe SA’s extensive experience in the fresh produce industry has enabled the organisation to create a workable model, called E-Fresh, to successfully address these challenges. Although E-Fresh markets purchase produce nationwide, they are primarily committed to buying locally from established and small-scale farmers. This has created, for the first time, secure markets for local developing farmers.

The E-Fresh model is challenging the packhouse norm in the sense that buyers collect produce from the packhouse. “The market comes to us – we don’t go to the market,” says Mandla. This market, he explains, comprises bakkie traders, local traders, commercial packhouses, retailers, hospitals, correctional services and feeding schemes.

The design of the E-Fresh model involves a tiered process of selling to local traders, distributing produce for local farmers, and packaging local produce for retailers and national distribution entities. Only specialised packing is still required for their operational mix. So far, there are two established E-Fresh markets – in Tonga, Limpopo, and eLukwatini, Mpumalanga, which have a collective turnover of R15 million annually and are showing profit.

The model has been in operation for two years.

Plans to expand its operations
TechnoServe SA is currently considering establishing six E-Fresh market/ packhouse/distribution centres (MPDCs) in rural areas where the organisation is already supporting developing commercial farmers. Estimates show that a single MPDC could create a revenue of over R21 million per year, while supporting more than 500 jobs.

Six MPDCs would therefore produce a turnover of R125 million and generate over 3 000 jobs. Just 20 units could result in a R400 million turnover and well over 10 000 jobs. As part of this development, a central management unit (CMU) will be based in Bushbuckridge close to Nelspruit, as this area is highly populated.

The current E-Fresh management team will play an integral role in establishing the CMU from scratch. The primary goal of the CMU will not be profit but development. As its name suggests, this will be the hub where the operation will be managed, the brand developed, and new centres planned. A high percentage of surplus funds will be ploughed back into these activities, helping to create credible, efficient structures to develop traditional and emerging commercial farmers.

Small-scale Development
The last element in the model is the development of the small-scale farmers earmarked to supply the MPDCs.
According to Mandla, his organisation provides support to new farming entrepreneurs and has, to date, assisted more than 600 farmers in five provinces: Limpopo, Mpumalanga, Eastern Cape, North West and KwaZulu-Natal.

TechnoServe SA has injected about R70 million into a farmer support programme for five years – 2010 to 2015.
A system based on sustainable, commercial values, ensures that farmers are not set up to fail or to waste investors’ money.

Mandla says that the selection of farmers for the project is rigorous and based on, among others, the willingness of the farmer to till the land. A farmer must also have access to land, irrigation and land preparation equipment, up-to-date skills, social capital, and finance.

“Our farmer mentorships programme takes three to five years before we can let a farmer stand on his own,” says Mandla, adding that his organisation had been concerned about the sustainability of some of the projects soon after they had been ‘weaned’ off their programme.

A win-win situation
In sum, the company aims to create a strong brand, ensure that the customer always gets what he is looking for and at fair prices, maximise trade for local small-scale and commercial farmers, and help to build entrepreneurship at all levels. This in turn will help to achieve food security in rural communities.

Two additional benefits, according to Mandla, are improved BEE scorecards for businesses, and the convenience of a centralised location.

Phone Mandla Nkomo on +2711 482 6005/4/1.