The Competition Commission has launched a public market inquiry into the fresh produce market to examine whether there are any features in its value chain which lessen, prevent or distort competitiveness.

The terms of reference of the Fresh Produce Market Inquiry were published in the Government Gazette on March 25. A market inquiry is a general investigation into the state, nature and form of competition in a market, rather than a narrow investigation of specific conduct by any particular firm.

"The commission is of the view that the Fresh Produce Market Inquiry is essential in order to understand the state of competition within the industry, the market features affecting price outcomes and the challenges currently faced by farmers, especially small-scale and emerging farmers.

"More broadly, the importance of the sector to the economy and employment, and the nutrition and welfare of citizens, gives further weight to the need for such an inquiry," the commission says.

Agriculture plays a significant role in the South African economy as it contributes to food production, job creation, raw material supply to agro-industrial and manufacturing sectors, as well as export-driven foreign exchange income.

"The commission has prioritised the food and agroprocessing sector since 2008 owing to the sector being a source of staple food and the potential of the sector to create significant employment opportunities, thereby serving as a driver of inclusive growth in the South African economy," it says.

The Fresh Produce Market Inquiry will focus on particular issues at each layer of the value chain. Specifically, the scope of the inquiry will cover aspects from the sale of fresh produce by the farmer to the customer, whether the retailer, processor or export market.

The interaction of retailers and end consumers will not be considered, as this was previously covered by the Grocery and Retail Market Inquiry. The sale and distribution of processed products by food processors will also be excluded from the inquiry.

"The commission has identified four broad themes, which cover the features that may impede, restrict or distort competition and market outcomes. The first is the efficiency of the value chain, which is focused on determining how the value chain and differing levels of concentration at various levels and route to market impact prices and efficiency with a focus on the fresh produce market," it notes.

Further, the market dynamics and impact of key inputs for growers theme will include seeds, fertilisers, agrochemicals, including herbicides, fungicides and pesticides, and farm equipment. Many of these inputs are imported or priced based on international bases and can lead to significant cost effects at the grower. This theme is focused on the upper-end of the production value chain, the commission adds.

Another theme will look at small and historically disadvantaged persons growers and participation, centred on the lower-end of the production value chain.

"Specifically, the inquiry will consider the barriers to entry specifically facing small and historically disadvantaged persons growers and issues around access to fresh produce markets or retailers through contract farming," the commission says.

The final theme is barriers to entry in relation to the regulatory environment, which will focus on the broader regulatory environment which prevails in the fresh produce industry.

The public and/or any interested party is invited to comment on the proposed terms of reference on or before April 22.

Comments can be submitted to ccsa@compcom.co.za.