The National Fresh Produce Markets – the lifeblood of the agriculture industry

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There is a lot of negative propaganda around, concerning the National Fresh Produce Markets (NFPM). People accuse the NFPM of being a “dying system”, but in reality Greenway Farms believes the NFPM is vital to the sustainability of the fresh food market in South Africa.

The advantages of spot market pricing
The NFPM provides transparent spot-market pricing driven by the forces of supply and demand. The benefit with a spot-market is that the price is always determined by the needs of the market. When a product is in short supply, the price goes up, when it is in strong supply, the price goes down.

This means the farmer always has a safety net – a price which always moves in a direction that will stabilize his income. In contrast a pre-negotiated (or futures) price removes the safety net. If the farmer has low yields at the time of delivery he loses on both volume and price and his business suffers the shock of a very low turnover, which can lead to bankruptcy. Conversely if the pre-negotiated price is above the market price he loses again. If he is out-priced he can’t clear his crop and so loses income. And consumers have to pay higher prices for food while the farmer destroys the part of his crop he cannot sell. A travesty on many levels.

Building brand identity
The NFPM allows farmer brands to be established. This type of transparency benefits the customer and the producer. Today’s healthy-minded consumers like to know where their food comes from. If there are no brands allowed – as in the stores of many retail traders – the customer could be buying food of any quality, from anywhere in the world. For the farmer this is a devastating prospect, as all the money he spends on improving the quality of his product is not recognised. If the brand on the packet is just generic branding, the farmer has no incentive to improve his produce quality because he is no longer recognised or rewarded for his incentive and effort

Keeping alive the spirit of competition
The NFPM is a highly competitive environment. There are many producers and many buyers who are all competing to do a better job in order to get ahead. This spirit of competition is the best solution to food security in any country. Food security is seriously compromised when monopolies are allowed to occur in the food chain. In any nation in the world where NFPMs have been closed down, there is an immediate concentration of players in the produce trade and small traders cannot compete in this environment.

The result? Farmers go out of business and consumers pay escalating prices for food. No one wins except the monopolies. The world might blame issues like global arming or overpopulation f, but in reality it’s simply the concentration of produce marketing in the hands of fewer and fewer intermediary players

Greenway Farms is committed to the NFPM
If it wasn’t for central markets back in the day when Greenway Farms was only 20Ha in size, with little or no access to funds, it could not have survived. Rugani carrots is today one of South Africa’s well known and loved fresh produce brands. If it weren’t for a competitive free market, Greenway Farms’ success would not have been possible. So it’s not surprising Greenway Farms supports the National Fresh Produce Markets so passionately.

 

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