Report blasts retailers

Cape Town - The competition commission may be asked to look into the role of retailers in the country's food chain.

The National Agricultural Marketing Council (NAMC) said it will make a recommendation to the minister of agriculture to request the investigation.

A provisional inquiry into the dominating role of retailers in their relationship with farmers and food poducers offered enough proof to justify the proposed investigation.

The University of Pretoria's Professor Johann Kirsten conducted a study in his capacity as a member of NAMC to determine how powerful supermarkets are and if they pose a threat to farmers and food poducers.

"NAMC recommends that the minister of agriculture make the report available to the competition commission to consider an investigation. Attention should be given to the importance of new regulations to govern the relationship between suppliers and supermarkets"

An issue discussed in the report is the dominating role supermarkets acquire because of their buying power.

The report stated that retailers' clout enables them to determine trade conditions. Such an arrangement may put the country's food security in jeopardy.

Kirsten said his investigation had to rely on anecdotes, which suggest that retailers contravene various aspects of the Competition Act.

An example is a threat by a senior retail manager to delist a supplier's products, should the supplier sell stock at a lower price to another retailer.

Kirsten said the Competition Act does not make sufficient provision for the nature of the relationship between suppliers and buyers, nor for the fact that these relationships are usually dominated by the buyers.

- Sake24

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