Inquiry aims to protect township business

Inquiry into the grocery retail sector presents an opportunity to begin to look for ways to tackle the challenges faced by informal traders

The inquiry into the grocery retail sector presents an opportunity to begin to look for ways to tackle the challenges faced by informal traders, and to level the playing field, say various groups including the Sustainable Livelihoods Foundation.

The National Development Plan — the government’s blueprint for eliminating poverty and reducing inequality — earmarks small, medium and micro-enterprises, and the informal sector as key jobs drivers.

The Sustainable Livelihoods Foundation, acting in partnership with the DST-NRF Centre of Excellence in Food Security and the Institute for Poverty, Land and Agrarian Studies at the University of the Western Cape, has made a written submission to the grocery retail sector market inquiry.

The Competition Commission initiated a market inquiry into the grocery retail sector in 2015 arguing that there was reason to believe features of the sector prevented, distorted or restricted competition. The commission is due to conclude its work later this year.

"Our submission argues that formal sector grocery retail is distorting food economies in ways which disadvantage other stakeholders of food value chains," foundation director Leif Petersen said on Wednesday.

The effects of these distortions were felt in the packaging, processing and production of food as well as among informal-sector grocery retailers. The latter, Petersen said, had negatively affected township grocers who were pushed out by large corporates who create monopolies through shopping malls.

Procurement requirements and formal-sector grocery retailers contracts set exclusionary standards that favoured large, capital-intensive corporations while disadvantaging small, independent operators, Petersen said.

The formal market was a particularly hostile environment for smallholder farmers as supermarket business practices favoured large producers who could guarantee volumes and quality, according to schedules set long in advance and with the capital necessary to carry costs including labelling, standards compliance, refrigeration and transport, he said.

"These standards disadvantage smaller producers and suppliers and hinder their ability to compete. Much of the change required to level this playing field and limit the unfairness of structural conditions falls to government," Petersen said.

"This includes activities such as amending and relaxing town planning laws to incorporate the residential reality of township informal grocery retailing, and easing the requirements for permitting and licensing in order to bring township business into a regulatory framework," he said.