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Informal trade may hold the key to food security

| Economic factors

Government's lack of support for informal traders, combined with ongoing attacks on foreign food traders – lately also by prominent politicians – is creating a toxic mix that jeopardises not only the food security of the growing numbers of urban poor, but also divests them of important livelihood opportunities and throttles the economy.

About 40% of informal workers are involved in trading and, of those who trade, 67% trade in food.

Several research papers flowing from the DST/NRF Centre of Excellence: Food Security based at the University of the Western Cape poke holes in some of the conventional wisdom that seems to inform all three levels of government policy regarding food security and informal traders.

It is important, in this period of renewed tensions regarding informal food trade – always tinged with xenophobia – to reflect on some of the key findings of the Centre of Excellence papers.

Urban food insecurity – a critical problem

In a paper that focuses on the policy environment, Scott Drimie argues that despite the fact that more than 60% of South Africans are now urbanised, South Africa's official approach to food security (as outlined in the National Policy on Food and Nutrition Security of the Department of Agriculture, Forestry and Fisheries) pays little attention to urban food insecurity.

Instead, official policy focuses on developing rural livelihoods with the aim to promote increasing food production and distribution as well as supporting community-based and smallholder production.

When attention is given to urban food security, it is undermined by policy makers' view that urban food production, e.g. urban food gardens, etc., is the answer to solve hunger.

In a recent survey of the City of Cape Town conducted by the African Centre for Cities (ACC) only 4% of respondents said they grew any food, and less than 0.1% made any income from urban agriculture.

That the urban poor can survive by managing their own urban food gardens therefore seems to be a pipedream.

Enough food vs. access to food

Caroline Skinner and Gareth Haysom from the University of Cape Town argue that the narrow conception of food security that flows from this rural orientation and the emphasis on the production of food jeopardises the urban poor's food security. They point out that producing enough food is only one part of the food security equation; another part is ensuring South Africans' access to food. Effective food distribution systems are therefore as critical to food security as the production of food, particularly for the majority of South Africans who now live in urban areas.

According to Skinner and Haysom, poor people's access to food in urban areas is determined by a few key factors:  proximity to food shops; low prices; appropriate quantities; and access to credit.

Firstly, given that most of the urban poor live on the margins of South African cities, they generally live far from supermarkets.

Due to high transport costs, most can afford to visit a supermarket only once a month, which is when they buy non-perishable food, often in bulk. 

Secondly, given that many poor people do not have regular access to electricity or fridges, they are forced to buy fresh food on a needs basis at shops that are more conveniently located for them: usually from spaza shops and informal street traders, either within walking distance from their customers' houses or located near transport hubs (such as taxi ranks or trains stations) that people pass on their way to and from work.

Jane Battersby, of ACC, found that the practice of street traders "breaking up bulk" further facilitates access: food is sold in smaller quantities which makes it more affordable to the poor. Moreover, AFSUN found that spaza shops – especially those run by foreign migrants – often provide food on credit to cash-strapped customers.

Joining the informal and formal sectors

Research also found that informal traders do a lot of business with the formal sector, shattering the false divide of a "separate" formal and informal economy that operate in isolation from each other.

Informal traders source predominantly from big retailers such as Shoprite, Makro and Metro Cash and Carry. Many large food firms also deliver directly to traders in informal settlements. Fresh food traders daily frequent municipal fresh food markets and cart their wares to informal areas.

Hence, there is a strong and co-dependent relationship between street traders and the formal food system. 

In fact, as Dr Stephen Greenberg points out, South Africa's 'modern' food retailers (such as supermarkets, hypermarkets and discounters) constitute only between 44 and 54% of the total food wholesale and retail market.

The balance consists of smaller so-called 'traditional' grocery retailers and independent grocers and a large number of informal spaza shops.

Greenberg points out that currently the latter sub-sector is treated as secondary in policy and is often considered a backward system in need of modernisation.

"The idea that in aggregate the informal or small could be similar to, or even larger than, the formal in monetary terms is very significant because it suggests that while corporate wholesalers and retailers have concentrated market power…there is also a wide base of economic activity beyond corporations," he writes.

Moreover, it is estimated that the five big retailers only employ about 25% of all retail workers – the vast majority of retail workers work in spaza shops or as street traders. 

Informal traders are crucial

The implication of the research findings is that informal food trading plays a critical role in food security, facilitating access to food by poor people living in urban areas, but also in creating livelihoods. 

This means that government policy, whether national, provincial or local, regarding the informal economy more broadly or informal food traders more specifically, has important implications for food security.

Skinner and Haysom therefore express surprise at government's largely unsupportive policy environment for informal traders, which they describe as "at best benign and at worse actively destructive, with serious food security implications".

The negative implications of poorly conceived policy are compounded by the perception by many South Africans and political leaders that foreign street traders are "stealing South Africans' jobs", with the result that they are chased from townships and their stores looted.

Skinner and Haysom warn that if policy approaches do not formally recognise the importance of the informal economy with regard to food security, whoever the traders are, the negative consequences will not only be shrinking employment and greater reliance on a resource-poor state, but growing food insecurity, which will place further burdens on the state and society.

Margareet Visser is a researcher at the Labour and Enterprise Policy Research Group, University of Cape Town.

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