UK Marketing agents envy us

Along with several other fresh produce sector colleagues, I recently had the pleasure of addressing a group of visiting UK potato farmers and traders hosted by Potatoes SA.

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A small contingent of local fresh produce industry role players were on hand to escort the visitors through the Joburg Market.

In the UK, there are no commission markets and the potato industry is virtually ‘captive’ to a small group of powerful buyers, mostly supermarkets. Needless to say, the visiting farmers were impressed by our system. They told us that they could not take the risk of planting a crop if there was no deal with a buyer – usually made a year in advance. And the price is determined more by the buyer than supply, demand and quality.

The fact that our farmers can send their potatoes to a market and be rewarded according to the tenets of a free market appealed to them. I’m fairly certain that they did not expect to see the level of sophistication in our marketing system that makes it unique in the world. Although I’m a staunch supporter of the free market and the commission selling system, I’m not blind to its shortcomings. But it’s my contention that most of these are man-made, as opposed to being inherent weaknesses.

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When used correctly by farmer and market agent, the commission system works very well. As Pieter du Toit, a senior market agent on the Joburg Market, pointed out: “When supply dips by 5%, demand rises by around 30%.” This illustrates the elasticity and sensitivity of the free market to the vagaries of supply and demand.

Catch that upswing
It’s also important for a farmer to understand and utilise the free market to his advantage. A farmer who understands this will make sure his products are on the market to take advantage of that 30% upward spike so that when the pendulum swings the other way, his averages will still look good.

Our UK potato friends were impressed by the potato industry they saw in this country and the visit to the Joburg Market was certainly an eye-opener. They left us with these parting words: ”You’ve got something special with your marketing system, don’t lose it!”