Pick n Pay welcomes Ministry of Agriculture’s revocation of Leaf Services contract

A contract with Leaf Services originally proposed in 2016 and challenged by the Consumer Goods Council of SA, Grain SA, the Chamber of Baking and others, has finally been revoked by John Steenhuisen, Minister of Agriculture, strongly supported by Pick n Pay.

Pick n Pay CEO Sean Summers said that while they and all others involved fully accepted and supported that pan bread was legally regulated in terms of the APS Act, they found it difficult to understand why the Department originally found it necessary to appoint an assignee (Leaf Services) which in turn would force industry to pay for a service that was free of charge in the past.

Summers said that the appointment was successfully challenged in court in 2021 by the CGCSA and a new “equally unreasonable business model” was submitted.

According to Summers, no research was conducted at all to establish the level of compliance within the baking industry to see if there was an actual need to conduct inspections in the first place. Bread quality is managed by producers, millers and retailers and the Department in the past provided a free service to control quality.

The proposed service was not about food safety; it would have simply have looked at composition. It was completely unnecessary.

“When applying this to Pick n Pay alone, the inspection methodology proposed by Leaf Services, which included three annual inspections at each of our 920 stores across the country, raised significant concerns. The sampling process would have required duplicate samples from each batch and size of bread, drawn from the point of sale. Given that our batch codes are determined by the day's production, this methodology would have substantially increased the operational complexity and cost for our business, and that of all other retailers.

“Since foundation, we have baked and sold billions of loaves of bread across our stores, consistently of high quality. We have never encountered issues with compliance, which underscores our commitment to maintaining these standards voluntarily. The introduction of this new inspection regime by Leaf Services would have represented an unnecessary cost burden that could be better allocated to further enhancing the value and affordability we provide to our consumers.

“Had the Minister not revoked this contract, the cost to Pick n Pay alone would have been in the region of R10-million a year, excluding the additional costs with specialty breads and other types of bread produced in our in-store bakeries. With Boxer it would have been about R15-million – for a service that was free in the past.

“Grain SA maintained that had the proposed R4-per-ton fee by Leaf Services been implemented in 2016 as intended, it would have cost its members more than R600- million to date.

“This would have unquestionably raised the price of staples. As it is, basic bread is a low or zero margin product given that it is a staple for most South Africans, especially those under considerable financial strain.

”We are obviously relieved that the Minister listened to concerns raised by so many, and took the right decision. This would have been an unconscionable waste of money, to no benefit.”

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