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Walmart impact on agriculture dissected

Oct 16 2011 12:09 City Press

Company Data

MASSMART HOLDINGS LIMITED [JSE:MSM]

Last traded 140.48
Change -1.21
% Change -0.01
Cumulative volume 101408
Market cap 30.50bn

Last Updated: 31/07/2014 at 04:27. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - South African farmers are yet to realise what the Walmart/Massmart Holdings [JSE:MSM] deal is doing to do to them, according to Agriculture Minister Tina Joemat-Pettersson.

The minister raised her concerns with City Press shortly before Cosatu general secretary Zwelinzima Vavi announced that the labour federation was supporting the South African Commercial, Catering and Allied Workers Union’s Competition Tribunal appeal against its approval of the Massmart/Walmart merger.

Vavi had also supported the ministries of economic development, trade and industry, and agriculture’s call for a legal review of the May 31 tribunal decision.

This was based on the fact that it had unreasonably denied government departments access to information in the possession of the merging parties and took a far too narrow view of the merger.

Joemat-Pettersson said: “We are so apprehensive about the Walmart/Massmart intervention because if you bring cheap food into the country it is going to underscore and put our local farmers under so much pressure.”

She added that if farmers ever thought that cheap inputs elsewhere were jeopardising the industry, “give us Walmart/Massmart and you will see what it is going to do to agriculture in this country”.

She further said: “I don’t think commercial farmers have thought about it carefully.

“They sell food very cheaply for the first, second, third year. Their prices are so reduced that they put your Pick n Pays and Shoprite/Checkers out of business.

“Once they have the monopoly after four, five years all their prices will shoot up,” said Joemat-Pettersson.

By then South African production prices would not be able to meet Walmart’s requirements, meaning the company would “import from the cheapest Chinese, from the cheapest Vietnamese, the cheapest Taiwanese farmers, the subsidised farmers”, the minister said.

“Cheap subsidised agricultural products will flood into our country and I don’t think our farmers have thought about it. Yes, they say they will procure locally, but not everything,” she said.

According to her, this emerged from an SMS she received from a local olive farmer who had supported her concerns, saying: “I contacted them but they say they are going to import their olives and olive oil and not make use of us because they buy cheaper overseas.

“This will mean that the community projects we are involved in will not be taken up by them. They don’t even want to talk to us.”

According to Vavi, the Competition Act required the tribunal to consider the competition and public-interest effects of a proposed merger – whether it promoted employment and advanced the social and economic welfare of South Africans – and not just the narrow interests of the firms who intend to merge.

The merger’s initial conditions of approval included that it set up a R100-million supplier development fund to help local producers, that there should be no merger-related redundancies for two years, and that the company must honour existing union agreements for three years.

Walmart has consistently tried to allay fears raised by unions and government by promising 346 new stores across Africa, which would create thousands of new jobs.

It has also announced that it planned a 50% increase in Massmart’s food business.

This week, Vavi said: “Cosatu insists that the application needs to be judged against the background of the job-loss bloodbath which has hit the country in recent years.”

Unemployment stood at 36.6%, and the labour market had been depressed for so long that many unemployed people were no longer looking for work.

There was no evidence to back Walmart’s claim in the tribunal that it would create 15 000 retail jobs in the next three years.

“And any such jobs could be more than cancelled out by the tens of thousands of jobs that could be lost in other local retailers and the local factories that currently supply Massmart,” said Vavi.

walmart  |  massmart holdings  |  farming  |  agriculture
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