Chief of these is that the agency opens a trust account on behalf of its farmers at a recognised banking institution. This complements the Fidelity Fund, which guarantees the farmer’s money in certain circumstances. The obvious benefit of a trust account is that the farmer’s money remains separate at all times and doesn’t become mixed up with the market agency’s business account. There are also measures to ensure the trust account balances at all times and the account isn’t affected by an agency declaring bankruptcy. The farmer’s money remains safe, making the trust account a valuable ‘asset’ in the farmer’s marketing arsenal.
The trust account is managed by the market agency. Those few who attempt to fiddle the account are inevitably caught out. The APAC can compensate the farmer for their loss and then take legal steps to recover the money from the guilty party.
This can involve a long, tedious legal process, but at least our farmers have an unique facility which protects them in certain cases of wrong-doing by a market agent.
When one considers the huge sums of farmers’ money generated through markets – R10,5 billion in 2011/2012 – then the need for financial safeguards becomes evident. Some of the markets will keep the farmers’ money separate from other municipal funds. This is an added safeguard for the farmer. Yes, there have been cases where the farmer’s money has been swallowed up in a market’s ‘bottomless municipal pit’, leading to delayed payments and much unhappiness in the process – but these are isolated cases and remain unacceptable.
The act might not say it in as many words, but the control and management of the farmer’s money is closely linked to the trust relationship between farmer and agent, who acts in a fiduciary capacity on behalf of his client – a big responsibility.
While the relationship between farmer and market authority isn’t quite as intimate, this doesn’t relieve the market from its fiduciary responsibility towards the farmer as well.
Contact Mike Cordes at [email protected]. Please state ‘Market floor’ in the subject line of your email.