Markets selling agricultural products have been with humankind for many thousands of years. They have adapted and changed over time but the fundamental reason for their existence has never changed i.e. where supply and demand meet to establish a value for a product so that a sale can be made.

There are different types of agricultural markets, such as farmers’ markets where the farmer is on hand to sell his products, or wholesale markets where a wholesaler has purchased the products from the farmers and sells those products for a profit, or a commission markets where market agents sells the products on behalf of the farmers.

In South Africa we have the added option of Informal Markets which are a feature of our national landscape as they can be found along main roads, outside bus stations, taxi ranks, alongside existing fresh produce markets and in rural towns. Informal Markets in various forms can also be found in many African countries. In this country they are essentially wholesale markets, as the vendors have purchased their products from farmers or the bigger markets to resell again to the public and tourists. They are classified as Informal Markets because they are not subject to the same formal structures and laws that govern the fresh produce markets.

Markets traditionally sold all farm products but as times changed so did the selling and distribution requirements of agricultural products. Specialisation has become the key and in this country we now have fresh produce markets, flower markets and livestock markets (auctions).

South Africa’s fresh produce markets are the only system of fresh produce commission markets in the world (see Jansen, 2017 – “Websites & publications” heading).

Local business environment

Registered Market Agents sell produce on behalf of farmers. They are governed by Act 12 of 1992 (amended 2003) which prescribes, amongst other requirements, how they will handle the farmer’s money. These agents register with the Agricultural Produce Agents Council (APAC) and after complying with certain requirements of Act 12 can open for business.

The Act requires a Market Agency to open a Trust Account on behalf of its farmers thereby ensuring that their money is controlled and regulated. Market Agents must submit a Trust Account Reconciliation to APAC every month. Market Agents must by law pay their farmers within 5 working days after completing the sale of a consignment.

Act 12 also provides for a Market Agents’ Fidelity Fund to which only they contribute annually and which guarantees farmers’ money under specified circumstances. Find the notes on the Fidelity Fund and when a farmer can claim against it under heading 4.

The majority of the Fresh Produce Commission Markets in South Africa are linked to the Freshmark System which is an IT network providing a comprehensive range of daily, weekly and monthly information on sales as well as national statistics (see www.freshmarksystems.co.za).

By reacting to the laws of supply and demand on a daily basis, fresh produce commission markets remain the purest form of price establishment available to farmers and buyers.

Find the list of registered fresh produce market agencies at www.apacweb.org.za/registered-fresh-produce-agents

Farmer points of interest

Tips to Farmers – from Your Market Agent

The following advice to farmers is based on a ‘picture’ that has evolved over many years on how to interact with your market agent and is based on an informal survey undertaken amongst market agents.

  • Be honest and open about your products and marketing plans.
  • Be loyal to your market agent and don’t jump from agent to agent, allegedly seeking better prices. Farmers who do this on a regular basis develop a poor reputation amongst market agents and buyers, which reduces their chances for better service and prices.
  • Give the market agent a fair chance over a reasonable period of time to produce results.
  • Try to visit the market as frequently as possible to understand the market agent better who is handling your product/s and to learn about the modus operandi of the market.
  • A farmer should evaluate a market agent on performance and not hearsay or perceptions.
  • Ensure a consistent supply to the market – through thick and thin. This builds confidence and trust from the market agent as well as the buyers. This will be reflected in your average price at the end of the day – which is more important than a few high prices you might receive along the way.
  • Keep in constant touch with the market agent in terms of products, varieties, volumes, planned deliveries and other relevant information.
  • Listen to, and accept constructive criticism on your products from the market agent.
  • Listen to what the market agent tells you about the state of the market and supply accordingly.
  • Keep the market agent advised of your medium to long-term production plans so that the latter can advise you on the marketing prospects for that crop and also start preparing the groundwork for sales.
  • Avoid attempts at price manipulation by playing agents off against each other. They see right through it and it is an insult to their intelligence.
  • Share product information with the market agent – storage requirements, holding temperatures, unique selling points, delivery arrangements, seasonal projections and marketing objectives.
  • Finally, look upon the market agent as your own marketing and sales manager on that market.

 

A Good Market Agent – from the Farmer’s Perspective

The relationship between farmer and market agent is a delicate one at the best of times. It is something that has to be constantly and carefully nurtured. The onus for making the relationship work rests equally on both parties, and the foundation of the relationship is trust. Many farmers and market agents can boast of successful relationships and they will tell you that mutual trust has been the cement of that relationship. In the eyes of a farmer, a market agent should:

  • Be someone who has the ability to sell.
  • Treat the farmer’s products with respect.
  • Be able to evaluate a product in money terms – in other words, be able to put a fair value on the product given quality and market conditions at the time.
  • Be able to assess the product in terms of appearance, colour, packing and packaging, grade, variety and market conditions.
  • Be able to assess, or “read”, the market in terms of supply and demand and all the other factors that impact on the final price of the product.
  • Have the integrity to deal with both farmer and buyer in an open, friendly, honest and businesslike manner.
  • Support his/her farmer through innovative sales techniques, attractive displays, visual samples, promotion and other sales generating techniques as well as good stock control.
  • Be up to date on market conditions in general and more specifically on product availability and demand.
  • Ensure that his/her farmer is kept informed on market prices and conditions on a regular basis – even daily if necessary.
  • Give his/her farmer an honest assessment of his/her products and not be afraid to offer constructive criticism.
  • Actively canvass and visit buyers to build a solid client base and promote products on offer.
  • Have the backing of a reputable market agency that can provide all the support services which add to the final package. These include prompt payments backed by efficient and accurate accounting procedures.
  • Be the type of person who can remain positive, even through difficult times; has the will to sell and the desire to improve himself/herself all the time.
  • Because of the unique position of trust that a market agent occupies between farmer and buyer, his/her business dealings should be impeccable at all times.
  • Finally, a market agent will never become “truly perfect” if he or she is not prepared to get up very early six mornings a week!
Source: Michael Cordes, Institute of Market Agents of South Africa (IMASA) and PAMBILE Africa Training (Pty) Ltd

National strategy and government contact

The Agricultural Policy Action Plan (APAP) identifies revitalising fresh produce markets as a key output to address trade and market opportunities for SMMEs including smallholder farmers.

  • Department of Agriculture, Forestry and Fisheries (DAFF) Directorate: Inspection Services Tel: 012 319 8760 www.daff.gov.za
  • Department of Agriculture, Forestry and Fisheries (DAFF) Directorate: Marketing Tel: 012 319 8455 www.daff.gov.za

Read about requirements for Food Business Operators (FBOs) at http://fbo.daff.gov.za. This is a prerequisite for, amongst others, retailers and municipal markets.

In terms of the Agricultural Produce Agents Act. Act 12 of 1992 (amended 2003) the Minister of Agriculture is required to establish an Agricultural Produce Agents Council (APAC) – a Statutory Body – to administer the Act on behalf of the Minister. The basic reason for having the Act and for the establishment of APAC is because Agricultural Produce Commission Agents act on behalf of their clients – farmers – in a financial capacity and the Act is there to protect the farmers’ interests.

APAC is a Statutory Body established in terms of Act 12 of 1992 and administers the Act on behalf of the Minister of Agriculture. Members of the Council are appointed by the Minister and represent role-players in the marketing of fresh produce as well as appropriate Government departments. In terms of the Act any person who wishes to trade as an agricultural produce commission agent must register with APAC. The objective of APAC is: “to regulate the occupation of fresh produce, export and livestock agents and to maintain and enhance the status and dignity of those occupations and the integrity of persons practicing these occupations”.

 

Fidelity Fund

The Department of Agriculture established a Fidelity Fund many years ago at the request of Fresh Produce Market Commission Agents in the event of there not being sufficient funds in the Trust Account to pay the farmers, or if a market agent was found guilty of any fraudulent actions with farmers’ money. In such cases a farmer who has sold his fresh produce through a registered commission agent may claim for his losses from the Fidelity Fund. Market Commission Agents pay a levy each year determined by APAC which is based on their annual turnover. It is part of APAC’s function to administer and control this Fidelity Fund in terms of Act 12.

The Fidelity Fund guarantees a farmer’s money. This system of financial security for South African farmers is unique in the world.

When can a farmer claim against the Fidelity Fund?

Act 12 makes provision for a farmer to claim for financial losses under the following circumstances:

  1. When there are insufficient funds in the Trust Account to pay the farmer
  2. When a market agent is found guilty of fraud or any misconduct involving the farmer’s products

A farmer who wishes to make a claim against the Fidelity Fund must do so within three (3) months of the alleged offence. Full details are available from APAC.

Trust Account

In terms of the Act a Market Agency must open a Trust Account at a registered banking institution on behalf of their farmers. This Trust Account has only two purposes:

  1. To deposit the proceeds from the sales of farmers’ products; and
  2. To pay the farmers.

It must be a separate bank account from the Market Agency’s normal business account. Every Market Agency must submit a Trust Account reconciliation to APAC monthly before the 21st. The Trust Account therefore, controls the farmer’s money.

When does a farmer get paid?

  • Rule 25 of Act 12 stipulates that if a consignment of fresh produce is not fully sold within three business days after the receipt thereof, the fresh produce agent must inform the producer of the extent and condition of the unsold quantity.
  • Rule 26 of Act 12 stipulates that a fresh produce agent shall within 5 business days after having sold the produce pay the farmer as well as issue a statement with detail such as date of receipt of the consignment, kind and class of fresh produce, the amount and nature of each deduction, the amount of commission deducted, etc.

The most important difference that sets our commission markets apart from others (wholesale markets) – locally or abroad – is the security of payment for producers – see earlier note. This security is vital in a country as large and as diverse as ours. Producers hail from the farthest corners of our land, distances to markets are often great and personal contact between farmer and agent can be limited at times. The knowledge that his money is safe and that legislation requires the agent to pay him within 5 working days ensures that a farmer can market his produce with confidence.

 

This is very important in a South African context when seen against the background of our commercial farmers and the many thousands of small-scale future farmers. The former are geared for commercial farming and most have the ‘tools’ for marketing. But a future, resource poor farmer has to struggle with many obstacles before landing his produce on the market floor. He generally will not have the marketing skills of his commercial neighbour so protection of his money on the market is absolutely essential.

 

Another benefit of our fresh produce commission markets is the competition which exists on the floor between producers, products, packaging, presentation, quality, the market agents and the buyers. There is probably no better way for a farmer to learn about the complexities of fresh produce marketing than to have his/her produce on a market floor competing against so many other producers.

 

Source: Michael Cordes, Institute of Market Agents of South Africa (IMASA) and PAMBILE Africa Training (Pty) Ltd 

Another piece of legislation that applies to fresh produce markets is Regulation R638 under the Foodstuffs, Cosmetics and Disinfectants Act. This Regulation outlines hygiene requirements for food handling establishments. There is also a Agricultural Produce Marketing Agencies Bill, introduced in 2013 but still in the pipeline.

The fresh produce markets

There are 13 municipal markets (like Tshwane (Pretoria) and Durban). The Johannesburg market is corporatized, while the Cape Town market and another 10 are in private hands. Some of these markets are listed below:

  • Butterworth Tel/fax: 047 491 4294
  • Cape Town (Epping) Tel: 021 531 2191/2 or 021 817 7800 www.ctmarket.co.za
  • Durban (eThekwini) Tel: 031 311 5100 / 40 www.durban.gov.za
  • East London (Buffalo City) Tel: 043 705 9500 www.buffalocitymetro.gov.za
  • Ekurhuleni – see Springs
  • George (Eden District) Tel: 044 875 1286
  • Johannesburg Tel: 011 992 8000 info [at] jfpm.co.za www.joburgmarket.co.za A satellite market, the Mandela People’s Market, is run on the property giving informal traders the opportunity to generate their own income.
  • Kei (Mthatha) Tel: 047 531 1593
  • King William’s Town Tel: 043 642 3520
  • Klerksdorp Tel: 018 469 1241
  • Mangaung (Bloemfontein) Tel: 051 410 4500 Find information at www.mangaung.co.za/planning-economic-development/fresh-produce-market/
  • Mooketsi Tel: 015 395 2040 / 076 533 1092
  • Mpumalanga (Nelspruit) Still to be completed
  • Nelspruit Tel: 013 755 2768
  • Noord-Einde Tel: 041 451 3216
  • Pietermaritzburg Tel: 033 392 3101
  • Polokwane c/o Farm Gate Exchange Tel: 086 102 8887
  • Port Elizabeth (Nelson Mandela Bay) Tel: 041 461 1409 www.nelsonmandelabay.gov.za
  • Sol Plaatje (Kimberley) Tel: 053 830 6662 www.solplaatje.org.za
  • Springs Tel: 011 815 6909
  • Tshwane Tel: 012 358 2398 www.tshwane.gov.za/tshwanemarket
  • Uitenhage Tel: 041 992 1634
  • Vereeniging Tel: 016 451 1021
  • Welkom Tel: 057 355 2382

 

Fresh produce markets role players

Find the list of registered fresh produce market agencies at www.apacweb.org.za/registered-fresh-produce-agents

  • Find details of the Agricultural Produce Agents Council (APAC) and Department of Agriculture, Forestry and Fisheries (DAFF) under the “National strategy and government contact” heading.
  • Farm Gate Exchange (FGX) Tel: 086 102 8887 www.fgxplatform.co.za A web-based alternative to fresh produce markets
  • Freshmark Systems Tel: 043 721 1121 www.freshmarksystems.co.za “Information solutions partner for the fresh produce industry” (find the paragraph on the Freshmark Electronic Sales Processing System in Jansen’s article under “Websites & publications” heading)
  • Fruit SA Tel: 012 007 1150 www.fruitsa.co.za
  • Institute of Market Agents of South Africa (IMASA) Tel: 012 326 8821 agripres [at] mweb.co.za www.imasa.africa IMASA was founded in 1945 and represents the registered Market Agents in South Africa. Membership is voluntary.
  • National Agricultural Marketing Council (NAMC) Tel: 012 341 1115 www.namc.co.za The NAMC is a Statutory Body established in terms of the Marketing Act to advise the Minister of Agriculture on matters regarding the marketing of all agricultural products.
  • National Regulator for Compulsory Specifications (NRCS) Tel: 012 482 8700 www.nrcs.org.za
  • Produce Marketing Association (PMA) www.pma.com Lindie Stroebel at 079 497 1594 is the Southern Africa contact for the PMA.
  • PROKON (Produk Kontrole) Tel: 012 325 4579 www.prokonsa.co.za Prokon is an independent inspection body which provides product inspections on all the main fresh produce markets in South Africa
  • Software Farm Tel: 012 365 2683 www.softwarefarm.co.za/Duet.php The management program for marketable produce, Duet, is coupled with Technofresh, enabling you to import all market sales electronically into Duet
  • Technofresh Tel: 043 721 1123 / 3585 www.technofresh.co.za Market information products and software for agents and farmers

 

Training & research

The Market Agents’ Fidelity Fund funds a comprehensive and unique training programme for fresh produce commission market salespeople. This programme requires a new salesperson to successfully complete the three module training programme as well as a number of audits in the workplace within a given time frame before being registered by APAC as a Fresh Produce Commission Salesperson. There is no other training programme like this in the world.

  • APAC offers online learning. See www.apacweb.org.za/online-learning.
  • PAMBILE Africa Training (Pty) Ltd Tel: 073 637 6105 agripres [at] mweb.co.za Comprehensive, professional training and consulting services
  • University of Pretoria Department of Agricultural Economics, Extension and Rural Development Tel: 012 420 5772 Andre.louw [at] up.ac.za

Websites & publications

 

Some articles

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